A change buried in last year’s tax law is now reshaping a corner of employee benefits that has quietly tripped up thousands of workers: signing up for a direct primary care membership, the flat-fee subscription model some doctors use instead of billing insurance, used to mean losing the right to fund a health savings account. The Internal Revenue Service has now confirmed that this conflict is gone, provided the membership fee stays under a specific dollar ceiling written into the tax code. For a household comparing a subscription-style doctor’s office to a traditional insurance-based practice, that ceiling now decides whether tax-free HSA contributions stay available.
How A 2025 Tax Law Rewired the HSA Rule
Under Section 223 of the tax code, a worker can only contribute to an HSA if they are enrolled in a high-deductible health plan and have no other coverage that pays medical costs before the deductible is met. The IRS had long treated a direct primary care membership as exactly that kind of disqualifying coverage, because the flat monthly fee covers physicals, vaccinations, urgent care and lab work before any deductible applies. A worker who paid a doctor $75 or $100 a month for unlimited primary care visits could lose HSA eligibility entirely, even while carrying an otherwise-qualifying high-deductible plan.
Section 71308 of the One, Big, Beautiful Bill Act, signed into law on July 4, 2025, added a new provision, Section 223(c)(1)(E), that changes the outcome. The Treasury Department and IRS spelled out how the provision works in Notice 2026-05, and the agency’s news release describes it as one of three separate HSA expansions under the law, alongside a permanent telehealth safe harbor and a rule letting bronze and catastrophic marketplace plans count as high-deductible coverage.
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The $150 And $300 Monthly Ceilings That Decide Eligibility
The new rule is not unlimited. A direct primary care arrangement stops counting as disqualifying coverage only if the aggregate monthly fee is at or under $150 for one person, or $300 for an arrangement covering more than one person in the household. Cross that line, even by a dollar, and the IRS treats the membership as ordinary health coverage again, which can knock a worker out of HSA eligibility for every month the arrangement runs above the ceiling.
The Revenue Procedure 2026-24 confirms that these same dollar ceilings, $150 and $300, carry into 2027 unchanged. The amounts are built to adjust for inflation starting with months after December 31, 2026, but the first adjustment cycle left the numbers exactly where they started.
What Counts As A Qualifying Direct Primary Care Membership
The definition is narrower than “pay a flat fee to a doctor.” Notice 2026-05 limits a qualifying arrangement to primary care delivered by a physician, nurse practitioner, clinical nurse specialist or physician assistant, and it excludes procedures requiring general anesthesia, prescription drugs other than vaccines, and lab work that would not typically happen in a primary care office. The fee also has to be the sole form of payment for that care; an arrangement that bills a patient’s insurance separately for services on top of the membership fee does not qualify, even if it looks like a direct primary care membership on paper.
The guidance also settles a practical question for households that pay annually rather than monthly: a yearly or quarterly fee still qualifies as long as it works out to no more than $150 or $300 a month on an annualized basis, for example $1,800 a year for one person.
How the Fee Ceiling Sits Alongside HSA Contribution Limits
The direct primary care fix does not change how much a worker can put into an HSA once they qualify. Those limits move on their own inflation schedule. Revenue Procedure 2026-24 sets the 2027 HSA contribution ceiling at $4,500 for self-only coverage and $9,000 for family coverage. A worker who clears the direct primary care fee test still has to meet the separate high-deductible plan requirements: for 2027, a minimum deductible of $1,750 for self-only coverage or $3,500 for family coverage, with out-of-pocket costs capped at $8,700 and $17,400. Those figures apply on top of the direct primary care ceiling, not instead of it, so a household can qualify under both rules in the same year the standalone contribution cap rises even though the $150 and $300 fee ceilings stay flat.
One Piece Of A Broader HSA Overhaul
The direct primary care fix is the narrowest of the three HSA changes the IRS detailed in its December 2025 guidance, but it is the one most likely to matter to a household actively choosing between a subscription doctor’s office and a conventional practice. The telehealth and bronze-and-catastrophic-plan changes affect what kind of insurance a worker can carry; the direct primary care rule affects what kind of membership they can add on top of it without losing tax-advantaged savings. The IRS invited public comment on all three provisions through March 6, 2026, a window that has since closed, and the dollar figures that followed, set in Revenue Procedure 2026-24, are the ones now controlling calendar year 2027.
What a frozen account does not explain
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This article was produced with AI assistance and reviewed by a human editor. Figures are linked to their primary sources; where a claim could not be verified from the public record, we say so.
