Proposed direct primary care regulations threaten HSAs

The current regulation is drafted in a way that would not allow an individual covered by a direct primary care arrangement to participate in a health savings account (or HSA). (Photo: iStock)

On June 10, 2020, the IRS issued proposed regulations to “treat expenses related to certain types of arrangements, potentially including direct primary care arrangements . . . as eligible expensed under Section 213(d) [of the Internal Revenue Code]” in accordance with an Executive Order issued by President Trump last summer.

In layman’s terms, the President directed the IRS to update its rules to allow for direct primary care, often called concierge medicine, to be treated as a medical expense for tax purposes. If finalized, the new rules will allow individuals to claim retainers paid to a primary care physician for guaranteed as a medical expense. They would also allow employers to help pay for a direct primary care doctor on behalf of their employees through the use of a health reimbursement arrangement. More details on how this works are available here.