Pairing ICHRA and Direct Primary Care Together: What Employers Need to Know

As healthcare costs continue to rise, employers are seeking innovative ways to offer flexible and effective healthcare solutions. Two concepts gaining traction are Individual Coverage Health Reimbursement Arrangements (ICHRA) and Direct Primary Care (DPC). This article overviews how ICHRA and DPC can work together to strengthen a company's health benefits.

What is ICHRA?

ICHRA is a flexible benefits model in which employers provide their employees with pre-tax cash to buy an individual health insurance plan and to pay for qualified medical expenses. This arrangement offers several benefits, including cost control for employers and personalized healthcare choices for employees.

What is Direct Primary Care?

Direct Primary Care (DPC) is a modern healthcare model where patients pay a subscription fee directly to their primary care provider for access to a range of services. This model typically includes unlimited messaging with doctors, annual check-ups, and other core services. DPC operates independently of traditional health insurance.

Most DPC providers operate on a membership model in which individuals pay a monthly fee to gain access to a menu of services. This approach is popular among employees because it guarantees them with quicker access to care and more predictable pricing. Individuals can avoid being hit with the "surprise bills" that can occur when your health insurance doesn't cover as much as expected.

The Intersection of ICHRA and DPC: Understanding Eligibility

Under an ICHRA, an employee could opt for a lower cost individual health insurance plan and use their Health Wallet to pay for DPC. But, to be in compliance with tax law, you need to know how your DPC plan is structured.

‍DPC is an ICHRA-eligible expense when costs are clearly allocable to the provision of medical services. For example, if a DPC practice offers an annual physical exam --that portion could qualify as medical care. However, the provider must provide an itemized bill that clearly shows that the fees charged directly relates to medical services.

DPC is NOT an ICHRA-eligible expense when the DPC membership covers access to services —such as priority appointments or 24-hour access to medical care. These expenses are not "qualified medical expenses" under the Section 213-d regulations that govern the ICHRA Health Wallet.

How to Structure DPC Memberships

‍To take full advantage of iCHRA, employers and employees should work closely with DPC providers to ensure that membership plans are structured appropriately. This may include negotiating itemized billing that clearly separates medical services from non-medical benefits. By doing so, employers can help employees effectively utilize their ICHRA benefits for DPC services.

Offering ICHRA and DPC to Your Employees

Integrating ICHRA with DPC not only enhances flexibility in healthcare choices but also provides a competitive edge in attracting and retaining top talent. A modern, patient-centered approach to healthcare aligns well with the preferences of today’s workforce, particularly as more employees seek personalized healthcare solutions. If you’re interested in exploring how ICHRA and DPC can work together in your organization, contact us today for more information.