From 2026, an employee in a qualifying DPC arrangement can still contribute to a health savings account. When the employer pays the DPC fee, IRS Notice 2026-5 says the employee can't also reimburse that fee from their HSA, because it isn't the employee's expense. Here's what that means for your contracts and your books.
The basic rule
A qualifying DPC arrangement is not treated as a health plan that blocks HSA contributions. To qualify, the only payment for the care has to be a fixed periodic fee, the care has to be primary care, and the fee can't be more than $150 a month for one person or $300 a month for an arrangement covering more than one person. The limits are adjusted for inflation after 2026.
Some things are left out of what a qualifying arrangement can cover, including procedures that need general anesthesia, prescription drugs other than vaccines, and lab work not usually done in a primary care office. This post covers the rule change in more detail.
When the employer pays
The Notice addresses employer payment directly. If the employer pays the fee, including through employees' pre-tax salary reductions, the payment is not the employee's expense, so the HSA can't reimburse it. The Notice also says those employer payments are excluded from the employee's income under section 106 of the tax code.
The practical point for employers: an employee shouldn't use HSA money to pay themselves back for a fee the employer covered. If the employee pays part of the fee themselves, after tax, that part is the employee's expense. Here's how split payments work in your billing.
Watch the limit on family coverage
If the employer pays for an employee and family, the $300 limit applies to the arrangement covering more than one person. In a made-up example, you charge $90 for an employee and $60 for each dependent. An employee with a spouse and two children comes to $270, under the limit. Add a third child and it's $330, over it. Price family tiers with the limit in mind if your employer clients care about HSAs.
Annual or quarterly billing
The Notice allows fees billed for more than a month, if the total stays within the monthly limit on an annual basis. For a single person in 2026, that's up to $1,800 for a year.
What to set up in your books
- Record employer payments and employee payments on separate revenue lines.
- Keep invoices that show who paid what, by month.
- Be able to give an employee a statement of what they paid themselves.
What I'd do this week
- Check each employer contract's per-person and family amounts against the limits.
- Note which contracts include any employee-paid share.
- Ask your attorney or CPA to confirm your arrangement and your wording.
Common questions
Does the employer paying the fee affect the employee's HSA eligibility?
The eligibility rule depends on whether the arrangement qualifies, including the fee limits. Who pays affects whether the HSA can reimburse the fee. Have the employer's advisors confirm their setup.
Can the employee pay their share from their HSA?
A share the employee pays themselves, after tax, is their own expense. Pre-tax salary reductions count as employer payments under the Notice. The employee's tax advisor can confirm their situation.
Is this tax advice?
No. It's a summary of IRS Notice 2026-5 for planning. Your CPA or attorney should confirm how it applies to you.
Want employer and employee payments kept apart in your books?
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