Using an HSA With Direct Primary Care: What You Need to Know

A Health Savings Account, or HSA, is a tax-advantaged account you can open if you are enrolled in a qualifying High Deductible Health Plan, often called an HDHP. You contribute pre-tax dollars, the money grows tax-free, and you can withdraw it tax-free to pay for qualified medical expenses. The IRS sets the rules for what counts as a qualified expense. For 2024, the IRS defines these rules in IRS Publication 969.

To be eligible to contribute to an HSA, you must be enrolled in an HDHP and cannot have other disqualifying health coverage. The IRS sets annual contribution limits that adjust each year. Because HSAs are governed by federal tax law, the rules apply the same way whether you live in Texas or Vermont, with some limited exceptions at the state level. You can find current contribution limits and eligibility rules directly at IRS.gov.

Direct Primary Care practices charge a flat monthly or annual membership fee. In exchange, patients get unlimited or near-unlimited access to a primary care doctor, often including same-day visits, phone and text access, and basic in-office procedures. That fee structure is what creates the HSA question, because the IRS generally requires that HSA funds be used for specific medical care expenses, not for access or membership arrangements.

According to IRS Publication 969, qualified medical expenses are defined by reference to Section 213(d) of the Internal Revenue Code. The IRS has not issued a formal ruling that DPC membership fees qualify as HSA-eligible expenses under federal law. In fact, the IRS has historically treated direct primary care fees more like a prepaid retainer for access to a physician than a direct payment for a specific medical service. This means using HSA funds to pay a DPC membership fee could be considered a non-qualified withdrawal, which would be subject to income tax and a 20% penalty if you are under age 65. Always confirm the current IRS position with a tax professional before spending HSA funds this way.

Some states have passed legislation that specifically addresses DPC and HSAs. A handful of states have enacted laws declaring that DPC agreements do not constitute insurance and that DPC fees may be treated as qualified medical expenses for state income tax purposes. However, state law cannot override federal IRS rules for federal tax purposes. A state law saying DPC fees are HSA-eligible does not automatically make them eligible under the federal rules that govern your HSA.

This is exactly why the guidance of a qualified tax professional matters so much here. The interaction between your state's laws and federal IRS rules is not always straightforward. If you live in a state that has passed DPC-friendly legislation, a tax professional can help you understand what that actually means for your specific situation and whether any federal guidance has changed since those state laws passed.

Even if the monthly DPC membership fee itself is not HSA-eligible, many services you access through or alongside a DPC practice may still qualify. For example, if your DPC doctor orders lab work and you pay for it separately out of pocket, that lab fee is generally a qualified medical expense under IRS rules. The same logic applies to imaging, specialist visits, prescription medications, and other specific medical services you pay for directly.

Some DPC practices offer itemized receipts or separate billing for specific services beyond the membership fee. If a service is billed and documented separately as a specific medical expense rather than as part of the membership, it may have a different HSA eligibility status. Ask your DPC practice how they document and bill services, and then bring that documentation to your tax professional to confirm what qualifies. Keep records of every payment you make so you can support any HSA withdrawal if the IRS ever asks.

Many people who join a DPC practice also carry a high-deductible health plan for catastrophic coverage, such as hospitalizations, surgeries, or specialist care outside the DPC practice. This combination is sometimes called a DPC-plus-HDHP model. The idea is that the DPC membership handles the vast majority of everyday primary care needs at a predictable flat cost, while the HDHP protects against large unexpected medical bills.

From a cost comparison standpoint, this model can be attractive because DPC membership fees are typically transparent and fixed, meaning you know exactly what you are paying each month. HDHP premiums tend to be lower than traditional plan premiums, which can offset some of the DPC membership cost. However, you should run the full numbers for your own situation, including the HDHP deductible, out-of-pocket maximum, and any services your DPC practice does not cover. A financial advisor or benefits consultant can help you model the total annual cost before you commit.

First, read IRS Publication 969, which is available free at IRS.gov. It explains HSA rules, qualified medical expenses, and the penalties for non-qualified withdrawals in plain language. Pay attention to any updates or notices the IRS has issued since the most recent publication date, because guidance can change. Second, consult a qualified tax professional, such as a CPA or enrolled agent, who is familiar with health savings accounts. Bring documentation from your DPC practice that explains exactly what the membership fee covers and how services are billed.

Third, contact your HSA administrator. Some HSA custodians have their own guidance or tools to help you determine whether a specific expense qualifies. While the HSA administrator's guidance is not a substitute for IRS rules or professional tax advice, it can give you a starting point. Finally, keep thorough records. If you decide to use HSA funds for any DPC-related expense, document the specific medical service, the date, the provider, and the amount. Good records protect you if your HSA withdrawal is ever questioned.

DirectMedicine is a directory of direct-pay, cash-pay, and direct primary care doctors across the United States. When you are comparing DPC practices, one of the most important factors is pricing transparency. DirectMedicine lets you see which practices publish their membership fees openly, so you can compare costs before you ever pick up the phone. That transparency is especially useful when you are trying to model the total cost of a DPC-plus-HDHP arrangement.

Because DPC membership fees and HSA rules interact in ways that require professional tax guidance, DirectMedicine does not provide tax advice. What the directory does is make it easier to find practices that are upfront about what they charge and what is included in their membership. Once you have found a few practices that fit your budget and location, you can bring their fee schedules to your tax professional to get a clear picture of what may or may not be HSA-eligible. Transparent pricing from the start makes that conversation much simpler.