I frequently write about direct primary care (DPC) on the blog. DPC is an innovative health care delivery model that doesn’t accept insurance. Yes, you read that right. DPC doctors are primary care doctors that don’t take health insurance and instead treat patients for a small monthly fee, usually around $70 depending on age.
The number of DPC practices in the country is growing. The number would likely increase if Americans could use their tax-advantaged health savings account (HSA) dollars for the monthly membership fee.
Some may ask, why wouldn’t you be able to use HSA money, which is designated for qualified medical expenses, to purchase a monthly membership to a direct primary care doctor? That’s because the IRS views a membership fee for a DPC doctor as a second “health plan” and is therefore not a qualified HSA expense.
So let’s say you wanted to use your HSA dollars for a DPC membership while also holding a high-deductible wraparound plan. You would not be allowed to do this.
But not to fear! The IRS knows your health is important, so they have now allowed the use of HSA dollars for purchasing 23andMe test kits. From the Wall Street Journal:
Buyers of 23andMe Inc.’s genetic-testing kits will now have an easier time paying for the service with tax-advantaged health accounts after a favorable IRS ruling.
The decision offers more clarity to consumers and reduces the cost of the company’s service. It also highlights differences between the tax law’s permissive definition of medical care and health regulators’ more restrictive approach to direct-to-consumer testing products.
While I don’t believe that the law should ban the purchase of 23andMe tests as a qualified health expense for the purpose of using an HSA. I do believe that it’s backward for the federal government to allow this purchase while there is legislation in the House and Senate to codify the now disallowed use of HSAs for DPC membership fees. This change needs to be made via legislative action and it would benefit the American people greatly if they were allowed to use HSA dollars for DPC membership fees.
Americans should, within reason, be able to use their tax-advantaged HSA’s for as many medical purchases as possible, including DPC membership fees. Congress should act to make this change.