Public Law No. 119-21: Why Employers Should Start Planning Now

Beginning January 1, 2026, a federal policy update will go into effect that allows Health Savings Account (HSA) funds to be used for Direct Primary Care (DPC) membership fees. This change—part of ongoing efforts to modernize healthcare access and affordability—may prompt employers and brokers to re-evaluate how they design and deliver health benefits in the years ahead.

Often referred to in industry circles as the “Big Beautiful Bill,” Public Law No. 119-21 alters the definition of qualified medical expenses for HSA usage and opens new possibilities for benefit design involving High Deductible Health Plans (HDHPs), DPC models, and even Individual Coverage Health Reimbursement Arrangements (ICHRAs).

This article outlines what’s changing, how it impacts HSA-eligible plans, and what considerations employers should begin exploring now.

What’s Changing in 2026

Currently, IRS guidelines do not allow HSA funds to be used for fixed monthly fees paid to DPC providers, which typically include services like same-day appointments, chronic condition management, basic labs, and telehealth. These fees are considered a health plan themselves, which disqualifies them as a reimbursable HSA expense.

Starting January 1, 2026, that restriction will lift. Under the new rule, DPC membership fees will become eligible medical expenses under Section 213(d) of the Internal Revenue Code, meaning employees will be able to use HSA funds—pre-tax—to pay for DPC membership fees.

This change aligns DPC with other qualified expenses covered by HSAs and expands the potential for pairing DPC with HDHPs or ICHRAs in a compliant manner.

Implications for HDHP + HSA + DPC Models

The combination of Direct Primary Care with a High Deductible Health Plan and Health Savings Account has been gaining attention as an alternative to traditional group health plans. In this setup:

• The HDHP covers major medical events such as hospitalizations and specialist visits after a high deductible is met.
• The DPC provider delivers unlimited primary care services for a flat monthly fee, paid directly by the employee.
• The employer can contribute funds to the HSA as a tax-deductible benefit expense. These contributions can then be used by the employee, pre-tax, to pay for their DPC subscription.
• The HSA offers a tax-advantaged way for employees to cover qualified medical expenses.

With DPC fees becoming HSA-eligible in 2026, employees will be able to use pre-tax dollars to pay for these memberships, potentially reducing their out-of-pocket burden and increasing the overall appeal of this model.

From an employer standpoint, this arrangement can shift routine care away from the group insurance pool, potentially lowering claims utilization and improving renewal rates. Additionally, the lower premiums typically associated with HDHPs may help reduce total healthcare spend.

Implications for ICHRA + HSA + DPC Strategies

Another option that could be affected by the new eligibility rules is the use of Individual Coverage HRAs (ICHRAs) paired with HSA-compatible individual plans and DPC memberships.

With an ICHRA, employers reimburse employees a set amount each month to purchase their own health insurance. If the selected plan is HSA-compatible, employees may also fund an HSA—either individually or with employer contributions.

Once DPC fees become HSA-eligible, employees enrolled in this type of subscription could also use their HSA funds to pay for their DPC membership. This combination gives employers a fixed-cost, ACA-compliant benefits model, while providing employees flexibility in choosing their coverage and providers.

Because DPC operates independently of insurance networks, it can offer consistent access to care regardless of which health plan an employee selects.

Considerations for Employers in 2026

Although the policy change won’t go into effect until 2026, employers may want to begin evaluating how this may influence their benefit design in future plan years. Here are several factors to consider:

• Provider Access: DPC practices often have limited panel sizes. Employers exploring this model may benefit from identifying local DPC options and evaluating availability early.
• Employee Education: Understanding how HSAs, HDHPs, and DPC models work together may require additional education for employees, especially those accustomed to traditional PPO plans.
• Plan Design Alignment: For those using ICHRAs or HDHPs, ensuring plan compatibility and compliance will be essential for enabling full HSA eligibility and DPC access.
• Budget Planning: Employers exploring DPC-based models may wish to access how this change could affect total cost of care, premium structure, and claims experience over time.

How MEDSURETY Can Help

As an experienced HSA administrator, MEDSURETY is uniquely positioned to help employers and brokers implement these emerging models successfully. We support every step of the transition—from configuring ICHRAs or HDHPs, to administering HSAs, to integrating DPC billing and compliance.

We also provide educational resources and onboarding materials. With our turnkey solutions, employers don’t need to navigate this shift alone; we make the move seamless, strategic, and scalable.

Conclusion

The 2026 change allowing HSA funds to be used for Direct Primary Care fees represents a noteworthy shift in healthcare policy. While it does not mandate any immediate action, it may present opportunities for employers to rethink how they offer and structure healthcare benefits—especially for those seeking more cost control, plan flexibility, and alternative care models.

As always, understanding how new rules interact with existing benefits is critical to maintaining compliance and maximizing value. Employers and brokers who begin evaluating these options now will be better positioned to make informed, strategic decisions heading into 2026.

If you’d like support evaluating HSA, HDHP, ICHRA, or DPC strategies for your organization, contact MEDSURETY.