Pairing ICHRA & Direct Primary Care

In this week’s edition of ICHRA Insider, we discuss Direct Primary Care (DPC): Can it be paired with ICHRA? And if so, how?

What is Direct Primary Care?

Let’s start with the basics. Direct Primary Care (DPC) is a healthcare delivery model where patients pay a membership fee directly to a doctor’s practice.

This membership typically covers unlimited office visits, faster access to appointments, basic procedures and lab tests, and real-time communication with a physician or nurse practitioner via text, email, or phone.

DPC is growing in popularity due to its enhanced features and superior patient experience. While a typical primary care physician (PCP) sees 2,000 to 3,000 patients annually, a DPC provider typically sees only 600 to 800 patients. This lighter patient load offers patients a more personalized, high-touch experience.

In contrast, a “traditional” PCP often leads to long wait times, rushed visits, and unexpected medical bills.

Combining ICHRA + DPC

An increasing number of consumers are combining ICHRA with DPC. It's an especially powerful option for relatively healthy employees who want to proactively invest in preventive care.

Here’s how it works:

1. Your employer offers ICHRA funding for health insurance.
2. Employees select a health insurance plan of their choice, often opting for a lower-cost plan (e.g., Bronze or Silver) to free up extra funds.
3. Employees set up a DPC membership with a provider of their choice.

A handful of health insurers are integrating DPC into their offerings. For example, Taro Health includes DPC in all of its health insurance plans. But, for everyone else, the employee uses DPC for most healthcare needs. Their traditional health insurance is a backup for emergencies or acute care.

Let’s look at the finer details of how these two models work together.

Tax Treatment:

As a refresher, ICHRA allows employers to provide pre-tax money for health insurance and other medical expenses.

One might naturally conclude that DPC would qualify as one of those "other medical expenses." Here's the catch: how DPC is billed affects whether it qualifies as a pre-tax medical expense.

ICHRA members CAN use their Health Wallet to fund DPC expenses that are explicitly for medical care. In other words, your DPC provides an itemized medical service bill.

However, DPC memberships ARE NOT eligible for pre-tax treatment if the fees are for priority appointments, 24-hour access to medical care, or similar non-medical benefits).

You can still pair an ICHRA with a DPC membership. However, membership fees must be paid out-of-pocket and on a post-tax basis. At least for now.?Multiple efforts are underway to change the treatment of DPC.

Provider Referrals

DPC typically operates outside the traditional insurance model, meaning DPC providers can't make specialist referrals. If you're on an HMO plan, which typically requires a referral from your primary care doctor before seeing a specialist, it can be tricky if your DPC isn’t in the network. You might end up paying more or missing out on necessary care. It’s a good idea to check with both your DPC provider and your insurance to avoid unexpected costs.

Preventive Care

Under an ICHRA, well visits and preventive care are covered "for free" to you—meaning you’re already paying for these services through your insurance premiums.

If you also pay a monthly fee for DPC, you may double pay for the same services. The more personalized care and easier access to your doctors may make this extra cost worth it. For some consumers and employers, it may make DPC cost-prohibitive.

However, an upcoming Supreme Court case may change how preventive care is covered, potentially resolving this issue in the future.

The future of ICHRA + DPC

Despite the hurdles faced today, we believe that ICHRA, combined with DPC, represents the future of healthcare.

Why? It represents a consumer-driven system that prioritizes accessibility, convenience, and proactive health management, making it a compelling choice for those looking for a more personalized approach to their health.

What's your take?