Tax break for direct primary care could fragment insurance pools

What it does

This bill amends the tax code to allow individuals to pay for direct primary care services (ongoing doctor visits with a fixed monthly fee, up to $150/month) using pre-tax health savings account (HSA) dollars, similar to how they use HSAs for other medical expenses. It excludes these arrangements from being classified as health insurance plans, and requires employers to report DPC fees on W-2 forms if the arrangement is employment-connected.

Why we flagged it

The bill's core function is to create a tax advantage (HSA-eligible treatment) for a specific healthcare delivery model (direct primary care). While framed as 'enhancement,' it is fundamentally a tax carve-out that benefits workers enrolled in DPC arrangements and the employers/DPC providers who offer them.

What the text implies

• By excluding DPC arrangements from health plan classification, the bill may allow DPC providers to operate outside insurance regulations, reducing consumer protections (e.g., no requirement for coverage of emergency care, no appeals process for denied services).
• The $150/month cap ($300 for family plans) is indexed to inflation only after 2026, creating a lag that may erode the real value of the tax benefit over time.
• Employers offering DPC plans may reduce contributions to traditional health insurance, shifting risk to employees and potentially raising premiums for those remaining in conventional plans.
• The bill does not require DPC providers to maintain electronic health records or interoperability standards, potentially fragmenting medical records and complicating care coordination with specialists.

Who it affects

The bill may help some workers afford routine primary care by allowing tax-advantaged savings to cover DPC fees, lowering out-of-pocket costs for those with HSAs. However, it creates a two-tier system: workers with HSAs and employer DPC plans gain a tax subsidy, while lower-income workers without HSAs or employer plans do not. It also potentially fragments primary care by encouraging enrollment in standalone DPC arrangements outside traditional insurance networks, which could weaken the broader

Who stands to gain

• direct primary care providers and DPC platforms
• employers offering DPC plans (reduced health insurance costs)
• health insurance companies (if DPC enrollment reduces claims volume)
• workers with HSAs and employer DPC plans (tax savings)

Named in the bill

Internal Revenue Code Section 223 (HSA rules), Social Security Act Section 1833 (primary care practitioner definition), Direct primary care (DPC) providers, Health savings accounts (HSAs), Secretary of Health and Human Services (HHS), IRS

Where it stands

8 cosponsors: 5 Republicans, 3 Democrats.

• Feb 5, 2025 — Introduced · Congress.gov: “Introduced in House”
• Feb 5, 2025 — Referred to House Committee on Ways and Means · Congress.gov: “Referred to the House Committee on Ways and Means”

Dates and quoted wording are Congress.gov's action record; the timeline shows status changes, not every procedural step.

Money around this bill

1 lobbying clients named this bill on 2 disclosure filings across 2 quarters, Dec 2025 to Jun 2026. Those filings disclosed $1,715,904 in lobbying spend. A filing names 49 bills on average, so that figure is what each filing reported, not a share belonging to this bill.

More lobbying clients named this bill than 0% of bills with at least one filing.

Lloyd Smucker, the sponsor, reported $853,756 in PAC receipts in the 2026 cycle.

• American Academy of Family Physicians — $1,715,904 on 2 filings

Lobbying Disclosure Act filings through Jul 15, 2026. A filing shows who paid to lobby on a bill it names, not what changed.