HSAs, or health savings accounts, continue to be one of the most powerful financial tools for helping families manage health care expenses on a tax managed basis, but there are a few things to be aware of when using your HSA with concierge medicine.
Health savings accounts help make other tools more cost effective, and unlock synergies within the health care payments system that help HSA owners have a much better health care experience – at discounted prices, since they qualify as a cash payer.
This article looks at how HSAs combine exceptionally well with today’s evolution of concierge medicine, direct primary care.
In this piece, you’ll learn how to use HSAs and DPC plans in tandem, along with health sharing, to protect yourself and your family against unexpected health care costs, while enjoying better access to routine primary medical care.
Concierge Medicine and Direct Primary Care (DPC)
For years, wealthier Americans have been opting out of bloated and inefficient traditional insurance-based primary care doctors’ practices and choosing a concept called concierge medicine.
Today, innovative healthcare companies are expanding that concept and making it an affordable, realistic option. The new concept, direct primary care, or DPC, pairs very well with health sharing, generating big savings compared to traditional health insurance costs, while improving access to primary care.
Here’s how concierge medicine works: Instead of using insurance to see their primary care doctor, these patients pay a monthly, quarterly, or annual subscription to see doctors that don’t even take insurance patients.
This is in addition to carrying a major medical insurance policy. So they wind up paying twice for the same access.
DPC takes that concept one step further – to actually save consumers money: Just as their primary care doctors don’t take insurance patients, DPC plan patients often don’t even carry health insurance.
Instead, many pair a DPC membership with a health sharing plan that picks up where the DPC plan leaves off: Health sharing takes care of specialist care, hospitalizations, surgeries, and ER visits, while the DPC takes care of routine and preventative care.
Let’s take a closer look at these key concepts:
Benefits of Concierge Medicine
Concierge medicine – and by extension, DPC medicine – has a number of benefits for doctors:
First, many of these doctors are happy to get rid of the massive overhead and hassle of billing departments. Dropping the insurance model also allows them to avoid the uncertainty of reimbursements from increasingly difficult private carriers, Medicare, and Medicaid payers.
The constant battle to get paid by patients’ insurance companies for services provided is both time-consuming and expensive.
Instead, these doctors have found that concierge and DPC medicine allows them more time to focus on patient needs, and they can spend more time with each patient.
They’re remembering why they got into medicine in the first place: It wasn’t to spend half their day inputting codes and dealing with insurance bureaucrats and training billing staff. They want to enjoy meaningful relationships with their patients and provide them with the best health care possible.
The benefits for patients are also significant: Overall, concierge patients enjoy a superior health care experience compared to what they were getting by trying to access primary care through their insurance companies.
Yes, in the past it was expensive: Concierge medicine patients pay traditional insurance premiums like everyone else. They pay their concierge doctors their subscription or membership fee on top of that.
Even with the cost, concierge medicine has been exploding in popularity among both patients and the doctors who open concierge practices. Because it’s worth it!
Not Just for the Wealthy Anymore
Until now, however, the benefits of concierge medicine – more time spent with physicians who can finally take time to understand their needs, a better relationship with doctors, shorter waits for appointment times, and better health outcomes – were available only to people who could afford to pay hundreds of dollar per months in subscription costs.
But that’s rapidly changing. The direct primary care movement is making it possible for more and more people to bypass the inefficient insurance middleman, improve their access to their primary care doctors, and actually save money by doing it.
And it’s taking the primary care medicine world by storm.
How Direct Primary Care Works
DPC plans are very simple. The basic structure is similar to a health club membership:
- As the patient, you choose a Direct Primary Care physician in your area.
- You sign up for a membership. The monthly fee is typically between $75 and $110. No insurance is involved. You pay the membership fee directly to your provider.
- You enjoy unrestricted access to routine primary, preventive, and – in some cases –, chronic care* services.
- Supplement your DPC plan with an additional plan that covers things your DPC does not. These include catastrophic health events, ER visits, hospitalizations, physicians’ charges, X-rays and other imaging, and prescription drugs.
Why Direct Primary Care?
Direct primary care offers ordinary Americans a way to obtain the benefits of a relationship with a concierge doctor – at a cost they can actually afford!
These benefits include:
- Greater access to physicians
- More personalized health care
- More preventive services
- More access to wellness education
- No additional cost sharing, like copays, coinsurance, or deductibles. Other than the monthly retainer fee, DPC patients face no further out-of-pocket costs for primary care.
- Shorter or non-existent wait times. Same-day appointment availability is routine.
- Email access to doctors.
- Easy access to doctors via telemedicine
- House calls (in some cases)
The key difference between concierge medicine and the direct primary care model is cost savings: The DPC patient isn’t usually paying an insurance company twice for primary care benefits. The concierge patient is still paying premiums to a traditional health insurance company – and effectively paying twice for primary care benefits they don’t even plan to use!
How DPC Plans Save Money
Because the DPC handles routine, predictable care at no additional charge, patients are empowered to use more efficient, money-saving strategies elsewhere. For example, you can choose a high-deductible health plan option that allows you to contribute to a health savings account.
Or use a health sharing plan that helps provide protection against unexpected catastrophic health care costs – usually at 40-50% less per month than unsubsidized traditional insurance policies.
These strategies are particularly effective if you don’t qualify for a subsidy under the Affordable Care Act, or if you’re self-employed.
Combining DPC With Health Sharing
Unlike concierge medicine patients, the direct primary care patient typically doesn’t have an insurance policy at all! Instead, they contract with a health sharing organization that facilitates the sharing of large medical expenses among like-minded members.
Unlike traditional health insurance policies, health sharing arrangements aren’t forced to wrap primary care and routine, predictable expenses into their benefits packages – an arrangement that adds costs to health insurance while doing little or nothing to help with risk.
Simultaneously, DPC patients contract with a direct primary care (DPC) organization that handles ordinary, routine, and preventive care, updating prescriptions, checking strep throat, writing work excuse notes, administering vaccines, etc.
The health sharing organization picks up the risk of catastrophic costs, while the DPC organizations handle the routine, basic medical services they were previously getting from a primary care doctor.
Don’t Duplicate Medical Care Coverage!
Meanwhile, you only pay once, not twice, for primary care services. And physicians can charge much less through DPC plans than they do for traditional insurance because they don’t need to maintain a small army of billing clerks to document and request payments from insurance companies – a massively inefficient endeavor, especially when it comes to primary care.
By pairing a properly-structured health sharing plan together with a Direct Primary Care plan, you get a full spectrum of medical needs addressed between the two types of plans – and usually at a fraction of the monthly cost of an unsubsidized traditional health insurance plan: Your DPC covers the basics, and your health sharing plan is there for the major events and hospitalizations.
HSA-Eligible Health Sharing and Direct Primary Care
Health savings accounts, or HSAs, are a powerful way for patients to save money on taxes and health care costs while taking more direct control of their healthcare. With an HSA, you can set aside money pre-tax to pay for qualified health care expenses. And withdrawals to pay these expenses are tax free.
So you can use HSAs to pay for out-of-pocket healthcare costs with tax-free dollars.
The catch: You have to be enrolled in a qualified high-deductible health plan in order to contribute to an HSA.
Fortunately, you can now take advantage of a lower-cost health sharing solution that qualifies you to make HSA contributions.
For example, many people are combining MPowering Benefits’ Zion health-sharing program with an HSA-eligible Minimum Essential Coverage plan that is specially designed to minimize monthly costs while still preserving your HSA eligibility.
HSAs are a great way to save up money for medical expenses your high-deductible health plan (HDHP) doesn’t cover, like deductibles, copays, dental care, glasses, or alternative therapies like acupuncture.
Meanwhile, any amounts you contribute to an HSA also double as retirement savings: Assets in HSAs grow tax-free, and if not used for health care, can be accessed penalty-free for retirement once you turn age 65. You just pay income taxes on the amounts you withdraw, similar to a 401(k) or traditional IRA.
Contractors, Solo Business Owners, and Couples
One unique and innovative plan, MPB Secure, is designed specifically for solo entrepreneurs, independent contractors, and ‘mom and pop shops. These small business owners and contractors typically don’t qualify for employer-provided group health care plans, and benefit strongly from having access to health savings accounts, while keeping overall health care costs low.
MPB Secure combines the advantages of health sharing with a health savings account, and allows members to save thousands in health insurance premiums and taxes compared to the cost of an unsubsidized major medical insurance plan.
MPB Secure also includes unlimited virtual sessions with a board-certified MD, as needed, 24 hours per day.
Click here for more information on MPB Secure, and fill out the short form on the bottom of the page if you are interested in enrolling.
Using HSAs to Cover Direct Primary Care Costs
Currently, the law currently prohibits using tax-free HSA proceeds to pay directly for individual health care services you receive through either a concierge medicine arrangement or a direct primary care plan.
But there’s a workaround: While you can’t just use HSA money to pay your DPC subscription cost, you can get an itemized invoice from your DPC physician listing the cost of each service.
You can then use HSA funds to reimburse yourself for these costs.
Assume you paid $2,500 for your concierge or DPC membership for the calendar year.
Through your membership, you received $1,000 during that year in medical services that were qualified medical expenses, but were not reimbursed by insurance.
If your physician provides an invoice that shows the actual cost of qualified medical expenses received under your concierge agreement, then you can reimburse yourself for that $1,000 from your HSA.
However, you cannot reimburse yourself from your HSA for concierge services that are more than your annual concierge fee.
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Qualification for Reimbursement
There are exceptions and qualifications, of course: You can reimburse your HSA or send payment to the medical concierge or DPC plan directly from your HSA regardless of the criterion of the medical expense. If you reimburse yourself for concierge services received, ensure you keep detailed records in case of an IRS audit of your HSA contributions.
If you do not have health insurance, but are a member of a health sharing ministry instead, you may be able to pay the concierge fees from your HSA, since you technically do not have another “plan” (health sharing plans are not considered to be health plans).
For medical services for which you are charged, make sure your doctor provides an itemized bill so you can use the HSA for qualifying expenses.
If you do use your HSA to pay for your treatments or concierge medicine fees, you can reimburse yourself from your HSA or send payment to the medical concierge directly from your HSA. If you reimburse yourself for concierge services received, ensure you keep detailed records in case of an IRS audit of your HSA.
You can go here to see a complete list of HSA-qualified expenses.
DPC and Medicare
You can even use a Direct Primary Care plan as a Medicare beneficiary. This enables you to enjoy the benefits of DPC without going through the hassle of an overworked, understaffed Medicare provider’s office. These include:
- Better health care access
- More “face time” with actual MDs
- Shorter or non-existent wait times
- Unlimited telemedicine access
- Faster and easier prescription renewals
- Discounts on lab fees and other medical services negotiated by your DPC provider.
The catch: DPC fees are not reimbursable under Medicare. You’ll have to pay the monthly DPC fees out of pocket.
Putting It All Together
As a result of these newly-unlocked efficiencies, thousands of Americans have been “jumping ship” from traditional insurance-based approaches to primary care access – and saving as much as 50% on monthly premiums under their old health care plans.
Health sharing is not insurance, and health sharing ministry organizations aren’t insurance companies. Instead, these organizations simply facilitate the voluntary sharing of medical bills among like-minded members. The result is a more affordable alternative to traditional insurance policies.
Pairing a DPC membership with a specialized DPC healthshare plan can reduce your overall healthcare risk without forcing you to pay for an expensive health insurance plan.
And using an HSA can help you take more direct, personal control of your health care, while allowing you save significant amounts in taxes.
Final Thoughts on Health Sharing, HSAs, Direct Primary Care, and Concierge Medicine
Health insurance costs continue to skyrocket. Despite the promises of the so-called “Affordable Care Act,” traditional health insurance is becoming less and less affordable for people who are excluded from the Obamacare subsidies. Especially if they want to be able to choose their own doctor!
Thousands of families are discovering that using a Direct Primary Care plan in combination with an HSA-qualified health sharing plan such as the MPB Secure Plan is far more cost-efficient than an unsubsidized Marketplace plan, and offers a better value across the board:
- A deeper and more fulfilling relationship with primary care doctors
- Much more affordable than health insurance premiums
- Freedom from narrow, limited HMO networks common in Obamacare plans
- The ability to choose your doctor
- The ability to get care anywhere in the country and not just in a limited coverage area
- Tax savings
- More control over your health care decisions and treatment options.
DPC isn’t designed to be used alone, of course. But combining a DPC plan with the tax advantages of a health savings account, the premium savings of an HSA-qualified high-deductible health plan, and the financial power of a health sharing account provides a full spectrum of protection against the high cost of healthcare – at a much more affordable price.
Whether to choose DPC or concierge medicine or not is an entirely personal decision. Much of it depends on whether you are happy with your current level of care through your primary care provider. You may also be limited by your geographic location; while this model of medicine is becoming more popular and therefore more available, you may not be able to find a concierge practitioner where you live.
There is growing political pressure to allow fees for fee-based concierge DPC charges to be paid for from health savings accounts. This would be a tremendous benefit for the growing number of consumers who are receiving medical care via this more personalized service.
Since my personal goal is to help you save money on your health care needs, including on both premiums and out-of-pocket expenses, I will say that there is no reason why you should not choose concierge medicine if it is available to you.
The overall expenses, including the annual fee, are not likely to be more than you are currently paying, and in many cases may even be less. This is especially true if your doctor offers discounted services for cash payments.
If you would like help deciding on your best health insurance options, schedule an appointment to speak with one of our Personal Benefits Managers.
Here are some additional articles on HSA insurance: Complete Guide to Direct Primary Care (DPC) | Health Savings Accounts Are Built for Alternative Therapies | How To Fix The Most Common HSA Mistakes
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Wiley is President of HSA for America. He believes that consumers should have choice and price transparency, so they can make the best healthcare decisions for their needs. Read more about Wiley on his Bio page.