What Is Direct Primary Care?
A doctor. A flat fee.
No insurance in the middle.
Direct Primary Care (DPC) is a primary care delivery model built on a simple premise: instead of billing insurance for every visit, the provider charges a flat monthly membership fee — and in return, members get unlimited access to primary care with no copays, no claims, and no administrative friction.
Employees get a personal physician who actually has time for them. Longer appointments. Same-day or next-day access. Texts and calls between visits. Chronic condition management without a claim attached to every interaction. For employers, DPC functions as a first-line filter — keeping routine and preventable health issues out of the claims pool entirely.
DPC is not insurance. It does not replace your major medical plan. It works alongside it — absorbing the high-frequency, low-severity utilization that drives up your trend and clogs the ER with things that could have been handled in a 15-minute call.
The core idea
DPC removes the insurance billing layer from primary care. Your employees pay a monthly fee — or your organization does — for unlimited access to a primary care physician. Claims that would have hit your plan never get generated in the first place.
$0
Copay or visit fee for employees under a DPC model
26%
Less costly care paths when employees use virtual primary care with nurse navigation
45%
Average employee utilization rate reported by high-performing virtual DPC programs
The 2026 Regulatory Change
OBBBA changed the rules.
Most employers don't know it yet.
For years, one of the biggest friction points in DPC adoption was the HSA. Employees enrolled in a High Deductible Health Plan (HDHP) — the most common self-funded plan structure — couldn't contribute to an HSA if they also held a DPC arrangement, because DPC was treated as a disqualifying benefit under IRS rules. That tension made plan design complicated and limited DPC's appeal for cost-conscious employers.
The One Big Beautiful Budget Act (OBBBA), signed July 4, 2025, changed that. Effective January 1, 2026, DPC arrangements are explicitly recognized as compatible with HSA contributions under defined conditions — codified in IRS Notice 2026-05. This is the regulatory unlock that makes DPC a viable, scalable component of an HDHP-based benefit strategy for the first time.
Here is what the new rules actually say — and where the boundaries are.
The Rules, Exactly
| Parameter | What the Rule Allows | The Compliance Trap |
|---|---|---|
| Monthly Fee Cap — Individual | Up to $150/month per individual, indexed for inflation going forward | DPC fees above this cap disqualify the arrangement for HSA compatibility — even if everything else is structured correctly |
| Monthly Fee Cap — Family | Up to $300/month per family, indexed for inflation | Same — cap applies to the arrangement, not per-member within a family enrollment |
| Covered Services | Primary care services only, delivered by primary care practitioners — consistent with ambulatory primary care | DPC arrangements that include general anesthesia, prescription drugs (except vaccines), or lab services not typical for ambulatory primary care are excluded and will disqualify HSA eligibility |
| Provider Type | Services must be provided by a primary care practitioner as defined under the rule | Specialist-inclusive DPC arrangements or concierge practices covering surgical services fall outside the definition — this catches some broader "direct care" models |
| HDHP Pre-Deductible Coverage | HDHPs still cannot pay DPC fees pre-deductible | The HDHP itself cannot fund DPC fees before the deductible is met — this is a common misread. The HSA compatibility change does not alter HDHP coverage rules |
| FSA & HRA Reimbursement | Not yet addressed — further IRS guidance pending | DPC fees are NOT currently reimbursable through FSAs or HRAs. Employers pairing DPC with FSA/HRA designs need to wait for additional guidance before assuming reimbursability |
| ERISA Implications | Employer-sponsored DPC arrangements may trigger ERISA plan status | If the employer pays or contributes to DPC fees as a benefit, the arrangement may need to be structured as an ERISA plan — requiring SPD, fiduciary compliance, and reporting obligations. Do not skip this analysis. |
A direct note from your benefits consultant
Some brokers are pitching DPC + HSA as "free money" in 2026. It is not. The fee caps are real. The service exclusions are real. The FSA and HRA exclusion is real. The ERISA analysis is real. This is a genuine opportunity — but only if the plan design is structured correctly from the start. If your broker isn't flagging these compliance traps, ask why. The analysis matters before the enrollment decision, not after.
How DPC Works in an Employer Plan
What your employees
actually experience.
Employer-sponsored DPC typically operates as a membership benefit layered alongside the major medical plan. Here is what the experience looks like end to end:
01
Employer enrolls employees in a DPC arrangement.
The employer selects a DPC provider and pays a flat per-employee per-month (PEPM) fee — typically well within the $150/month individual cap. Employees are pre-enrolled and need only activate their account to begin using the benefit.
02
Employee gets unlimited primary care — with no claims generated.
Urgent care visits, preventive screenings, chronic condition management, mental health triage, prescription guidance — all handled through the DPC physician relationship. None of these interactions produce a claim against the major medical plan. The employer pays the flat fee; the carrier sees nothing.
03
The DPC physician navigates the employee through the system.
When a specialist, imaging, or procedure is needed, the DPC team coordinates referrals to in-network, cost-effective providers — not just whoever is convenient. Care navigation is built into the relationship, not sold as an add-on. For self-funded employers, this is where significant downstream claim avoidance occurs.
04
Major medical covers what DPC doesn't.
DPC handles primary care. The HDHP or self-funded major medical plan handles hospitalizations, surgeries, specialist care, and catastrophic events. The two structures are complementary — DPC keeps the everyday volume out of the claims pool, preserving the major medical plan for what it was designed to do.
05
HSA-eligible employees maintain contribution eligibility.
Under IRS Notice 2026-05, employees enrolled in an HSA-qualified HDHP can now also participate in a qualifying DPC arrangement without losing their HSA eligibility — provided the DPC arrangement meets all criteria above. The HSA continues operating independently; DPC does not draw from it or count against it.
DPC vs. Traditional Primary Care Access
What changes for employees —
and for your plan.
| Traditional Plan Primary Care | Direct Primary Care | |
|---|---|---|
| Access speed | Days to weeks for an appointment | Same-day or next-day; 24/7 virtual access |
| Visit length | 7–12 minutes average | 30–60 minutes; relationship-based |
| Employee cost per visit | Copay or deductible applies | $0 — covered by flat membership fee |
| Claims generated | Every visit creates a claim | No claims — flat fee only |
| Chronic condition management | Reactive, appointment-dependent | Proactive, continuous, built into the relationship |
| Care navigation | Employee on their own for referrals | DPC physician coordinates in-network, cost-effective referrals |
| ER and urgent care diversion | Low — no alternative for after-hours needs | High — 24/7 access eliminates most unnecessary ER visits |
| HSA compatibility (2026) | N/A | Yes — under qualifying arrangement within fee caps |
Is DPC Right for Your Organization?
The employers who get the
most out of this model.
Self-funded or level-funded employers with HDHP structures
The 2026 regulatory change is specifically designed for this configuration. HDHP + DPC + HSA is now a viable, compliant benefits stack — and the cost containment potential is significant when all three are designed together.
Employers with high ER or urgent care utilization in their claims
A large percentage of ER visits are for conditions that primary care could have handled — sinus infections, UTIs, minor injuries, anxiety presentations. DPC with 24/7 access directly diverts this utilization before it generates a claim. If your claims data shows ER as a top cost driver, DPC is a structural fix, not a wellness program.
Employers with workforce populations managing chronic conditions
Diabetes, hypertension, obesity, and musculoskeletal conditions are the primary drivers of long-term plan cost. DPC's continuous relationship model — longer visits, proactive management, no claim barrier to contact — directly addresses chronic condition management in a way a once-a-year PCP visit never can.
Employers planning 2027 renewal strategy now
The time to evaluate DPC as a plan component is in the design phase — before the renewal window, not during it. If you're considering pairing DPC with your HDHP for 2027, the design conversation needs to start now to allow time for proper feasibility analysis, compliance review, and enrollment communication.
Employers who want to add value without shifting cost to employees
DPC is one of the few benefits strategies that simultaneously reduces employer plan costs and improves the employee experience. Employees get better, faster access to a doctor they actually know. Employers reduce claim volume. Unlike higher deductibles or narrower networks, this is not a cost shift — it's a cost avoidance strategy that employees notice and appreciate.
Common Questions
Straight answers —
including the uncomfortable ones.
| Does DPC replace major medical insurance? | No. DPC covers primary care only — routine visits, chronic condition management, preventive care, urgent non-emergency issues, and care navigation. Hospitalizations, surgeries, specialist care, and catastrophic events still require major medical coverage. DPC works alongside your plan, not instead of it. |
| Can my employees still contribute to their HSA? | Yes — as of January 1, 2026, under IRS Notice 2026-05, employees enrolled in an HSA-qualified HDHP can participate in a qualifying DPC arrangement without losing HSA eligibility. The arrangement must meet the fee caps and service scope criteria. If it doesn't, HSA eligibility is at risk. This analysis must be done before enrollment. |
| Can DPC fees be reimbursed through our FSA or HRA? | Not yet. DPC fees are not currently reimbursable through FSAs or HRAs — further IRS guidance is pending. Do not design your plan assuming this capability until that guidance is issued. This is one of the most commonly misrepresented points in broker DPC pitches right now. |
| What if our DPC provider charges more than $150/month per employee? | Then the arrangement does not qualify under IRS Notice 2026-05, and employees cannot maintain HSA eligibility while enrolled. The fee cap is a hard line. Evaluate your DPC vendor's pricing against this cap before committing to a plan design that assumes HSA compatibility. |
| Does our DPC arrangement become an ERISA plan if we pay for it? | Potentially yes. If the employer sponsors and pays for the DPC arrangement as an employee benefit, it may trigger ERISA plan status — requiring a Summary Plan Description, fiduciary compliance, Form 5500 filing, and COBRA obligations. This analysis is not optional. Work with qualified ERISA counsel before implementing an employer-funded DPC benefit. |
| How does DPC affect our stop-loss coverage? | Positively, in most cases. By diverting routine utilization out of the claims pool and improving chronic condition management upstream, DPC tends to reduce the frequency of mid-size and large claims over time. Some stop-loss carriers are beginning to price this favorably — your broker should evaluate this as part of the overall plan design conversation. |
| When should we start this conversation for 2027? | Now. The compliance analysis, vendor selection, plan design integration, and employee communication timeline for a January 2027 effective date requires starting the conversation no later than mid-2026. If your current broker hasn't raised this as a 2027 strategy option, that's a gap worth examining. |
The 2027 design conversation starts now
If you're considering pairing DPC with your HDHP for 2027, the time to start the design conversation is now. The compliance review, vendor evaluation, and plan integration work takes time — and the employers who move early will have both the strategic advantage and the benefit of clean implementation. Reach out to start the analysis.