What This Bill Does
This bill changes tax rules to treat direct primary care service arrangements (a type of healthcare agreement between a patient and doctor) as medical care. It allows people to use money from health savings accounts (special tax-advantaged savings accounts for medical expenses) to pay for these arrangements without losing tax benefits.
Who It Affects
Individuals who have direct primary care service arrangements. Employers who provide these arrangements to employees. The Internal Revenue Service and the Secretary of Health and Human Services.
Key Provisions
• Direct primary care service arrangements now count as medical care for tax purposes, but only up to monthly fee limits (Sec. 2(a)(1))
• A direct primary care service arrangement is defined as an agreement where a patient receives primary care services from a primary care doctor for a fixed periodic fee with no other compensation (Sec. 2(a)(3))
• Certain services are excluded from primary care services, including procedures requiring general anesthesia and laboratory services not typically done in an ambulatory primary care setting (Sec. 2(a)(3))
• Direct primary care arrangements cannot be treated as health plans or insurance, so they don't disqualify health savings account contributions (Sec. 2(b))
• Employers must report direct primary care service arrangement fees on employee W-2 forms (tax documents) (Sec. 2(c))
What Changes
If this bill becomes law, people can deduct direct primary care arrangement fees on their taxes as medical care. Health savings account owners can use these accounts to pay for direct primary care without losing their tax deductions. Monthly fees are limited to $150 per person or $300 if the arrangement covers more than one person.
Important Definitions
Direct primary care service arrangement: An agreement where a person receives primary care services from a primary care doctor for a fixed periodic fee and no other compensation.
Eligible fee amount: The fixed periodic fees paid for direct primary care in a month, capped at $150 per person or $300 for arrangements covering multiple people.
Primary care services: Healthcare services provided by primary care doctors, excluding procedures requiring general anesthesia and laboratory services not normally done in an ambulatory primary care setting.
Effective Date
The amendments apply to months beginning after December 31, 2023, in taxable years ending after that date (Sec. 2(d)).
II
118TH CONGRESS
1ST SESSION
S. 628
To amend the Internal Revenue Code of 1986 to provide for the treatment
of direct primary care service arrangements as medical care, to provide
that such arrangements do not disqualify deductible health savings ac-
count contributions, and for other purposes.
IN THE SENATE OF THE UNITED STATES
MARCH 2, 2023
Mr. CASSIDY (for himself, Mrs. SHAHEEN, Mr. SCOTT of South Carolina, and
Mr. KELLY) introduced the following bill; which was read twice and re-
ferred to the Committee on Finance
A BILL
To amend the Internal Revenue Code of 1986 to provide
for the treatment of direct primary care service arrange-
ments as medical care, to provide that such arrange-
ments do not disqualify deductible health savings account
contributions, and for other purposes.
Be it enacted by the Senate and House of Representa-
1
tives of the United States of America in Congress assembled,
2
SECTION 1. SHORT TITLE.
3
This Act may be cited as the ‘‘Primary Care En-
4
hancement Act of 2023’’.
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•S 628 IS
SEC. 2. TREATMENT OF DIRECT PRIMARY CARE SERVICE
1
ARRANGEMENTS.
2
(a) AMOUNT TREATED AS MEDICAL CARE.—
3
(1) IN GENERAL.—Section 213(d)(1) of the In-
4
ternal Revenue Code of 1986 is amended by striking
5
‘‘or’’ at the end of subparagraph (C), by striking the
6
period at the end of subparagraph (D) and inserting
7
‘‘, or’’, and by inserting after subparagraph (D) the
8
following new subparagraph:
9
‘‘(E) for direct primary care service ar-
10
rangements.’’.
11
(2) LIMITATION.—Section 213(d)(1) of such
12
Code, as amended by paragraph (1), is further
13
amended by adding at the end the following: ‘‘In the
14
case of a direct care primary service arrangement,
15
only eligible fee amounts (as defined in paragraph
16
(13)) shall be taken into account under subpara-
17
graph (E).’’.
18
(3) DEFINITIONS.—Section 213(d) of such
19
Code is amended by inserting after paragraph (11)
20
the following new paragraphs:
21
‘‘(12) DIRECT
PRIMARY
CARE
SERVICE
AR-
22
RANGEMENT.—
23
‘‘(A) IN GENERAL.—The term ‘direct pri-
24
mary care service arrangement’ means, with re-
25
spect to any individual, an arrangement under
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•S 628 IS
which such individual is provided medical care
1
(as defined in paragraph (1), determined with-
2
out regard to subparagraph (E) thereof) con-
3
sisting solely of primary care services provided
4
by primary care practitioners (as defined in sec-
5
tion 1833(x)(2)(A) of the Social Security Act,
6
determined without regard to clause (ii) there-
7
of), if the sole compensation for such care is a
8
fixed periodic fee.
9
‘‘(B) CERTAIN
SERVICES
SPECIFICALLY
10
EXCLUDED
FROM
TREATMENT
AS
PRIMARY
11
CARE SERVICES.—For purposes of this para-
12
graph, the term ‘primary care services’ shall not
13
include—
14
‘‘(i) procedures that require the use of
15
general anesthesia, and
16
‘‘(ii) laboratory services not typically
17
administered in an ambulatory primary
18
care setting.
19
The Secretary, after consultation with the Sec-
20
retary of Health and Human Services, shall
21
issue regulations or other guidance regarding
22
the application of this subparagraph.
23
‘‘(13) ELIGIBLE FEE AMOUNT.—
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•S 628 IS
‘‘(A) IN GENERAL.—The term ‘eligible fee
1
amount’ means, with respect to any individual
2
for any month, the amount of fixed periodic
3
fees paid for a direct care primary service ar-
4
rangement, to the extent that the aggregate
5
fees for all direct primary care service arrange-
6
ments with respect to such individual for such
7
month do not exceed $150 (twice such dollar
8
amount in the case of an individual with any di-
9
rect primary care service arrangement that cov-
10
ers more than one individual).
11
‘‘(B) INDEXING.—In the case of any tax-
12
able year beginning in a calendar year after
13
2024, the $150 amount contained in subpara-
14
graph (A) shall be increased by an amount
15
equal to—
16
‘‘(i) such dollar amount, multiplied by
17
‘‘(ii) the cost-of-living adjustment de-
18
termined under section 1(f)(3) for the cal-
19
endar year in which such taxable year be-
20
gins determined by substituting ‘calendar
21
year 2023’ for ‘calendar year 2016’ in sub-
22
paragraph (A)(ii) thereof.
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•S 628 IS
If any increase under the preceding sentence is
1
not a multiple of $10, such increase shall be
2
rounded to the nearest multiple of $10.’’.
3
(b) HEALTH SAVINGS ACCOUNTS.—Section 223(c) of
4
the Internal Revenue Code of 1986 is amended by adding
5
at the end the following new paragraph:
6
‘‘(6) TREATMENT
OF
DIRECT
PRIMARY
CARE
7
SERVICE
ARRANGEMENTS.—A direct care primary
8
service
arrangement
(as
defined
in
section
9
213(d)(12))—
10
‘‘(A) shall not be treated as a health plan
11
for purposes of paragraph (1)(A)(ii), and
12
‘‘(B) shall not be treated as insurance for
13
purposes of subsection (d)(2)(B).’’.
14
(c) REPORTING OF DIRECT PRIMARY CARE SERVICE
15
ARRANGEMENT FEES ON W–2.—Section 6051(a) of the
16
Internal Revenue Code of 1986 is amended by striking
17
‘‘and’’ at the end of paragraph (16), by striking the period
18
at the end of paragraph (17) and inserting ‘‘, and’’, and
19
by inserting after paragraph (17) the following new para-
20
graph:
21
‘‘(18) in the case of a direct primary care serv-
22
ice arrangement (as defined in section 213(d)(12))
23
which is provided in connection with employment,
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•S 628 IS
the aggregate fees for such arrangement for such
1
employee.’’.
2
(d) EFFECTIVE DATE.—The amendments made by
3
this section shall apply to months beginning after Decem-
4
ber 31, 2023, in taxable years ending after such date.
5
Æ
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