Here in North Carolina, we have a favorable direct primary care (DPC) climate, which allows for the creation and use of these primary care models. Many states have codified into law that DPC membership fees aren’t insurance premiums, thus exempting them from costly insurance regulations. Others, such as North Carolina are simply silent on the matter, allowing the physciains to set up shop as long as they are licensed in North Carolina. I frequently write about direct primary care on the Locker Room blog. Some may ask why?
First, it is a relatively unknown healthcare model that doesn’t accept insurance, so there may be some confusion as to how one would get affordable healthcare without health insurance. Second, I like to try and spread awareness of this healthcare model, so more doctors possibly adopt a DPC model, and more patients take-up a DPC doctor. Third, there are still laws in place that need to be changed for patients to have as much freedom as possible to use their dollars for DPC and other healthcare arrangements.
This blog post will address the latter of the three. Congress can fix these restrictive laws by allowing the monthly membership fee to a DPC doctor to be considered a “qualified expense” for a health savings account (HSA), which it currently is not. By making this fix, Americans who use an HSA could now use pre-tax dollars on a much more affordable primary care physician practice compared to traditional insurance.
There are similar bills in both houses of Congress that would allow for DPC membership fees to be an HSA qualified expense.
On the Senate side, S. 12 is summarized by the CRS as:
This bill modifies the requirements for health savings accounts (HSAs) to
- rename high deductible health plans as HSA-qualified health plans;
- allow spouses who have both attained age 55 to make catch-up contributions to the same HSA;
- make Medicare Part A (hospital insurance benefits) beneficiaries eligible to participate in an HSA;
- allow individuals eligible for hospital care or medical services under a program of the Indian Health Service or a tribal organization to participate in an HSA;
- allow members of a health care sharing ministry to participate in an HSA;
- allow individuals who receive primary care services in exchange for a fixed periodic fee or payment, or who receive health care benefits from an onsite medical clinic of an employer, to participate in an HSA;
- include amounts paid for prescription and over-the-counter medicines or drugs as “qualified medical expenses” for which distributions from an HSA or other tax-preferred savings accounts may be used;
- increase the limits on HSA contributions to match the sum of the annual deductible and out-of-pocket expenses permitted under a high deductible health plan; and
- allow HSA distributions to be used to purchase health insurance coverage.
The bill also: (1) exempts HSAs from creditor claims in bankruptcy, and (2) reauthorizes Medicaid health opportunity accounts.
The bill allows a medical care tax deduction for: (1) exercise equipment, physical fitness programs, and membership at a fitness facility; (2) nutritional and dietary supplements; and (3) periodic fees paid to a primary care physician and amounts paid for pre-paid primary care services.
On the house side, H.R. 603 is summarized as:
This bill modifies the requirements for health savings accounts (HSAs) to:
- increase the maximum contribution amounts,
- permit the use of HSAs to pay health insurance premiums and for direct primary care service arrangements,
- repeal the restriction on using HSAs for over-the-counter medications,
- eliminate the requirement that a participant in an HSA be enrolled in a high deductible health care plan, and
- decrease the additional tax for HSA distributions not used for qualified medical expenses.
As Congress grapples with difficult issues such as prescription drug prices, surprise medical bills, price transparency, as an easy win for the American people is sitting right in front of the faces of U.S. lawmakers. By granting Americans increased flexibility in how they can use their HSA dollars, new avenues of affordable primary care could be opened up.
Healthcare reform needs to focus on the patient’s interests first. Allowing more free use of American’s dollars for DPC arrangements is a step in the right direction.