DPC and ICHRA in 2027 (What the Rules Allow and Where They Are Silent)

Can an ICHRA pay for a direct primary care membership in 2027?

An individual coverage HRA (ICHRA) can reimburse premiums and other medical care expenses for employees who are enrolled in individual health insurance or Medicare, but a DPC membership can never be the coverage the ICHRA is built on. We found no final federal rule that settles whether a DPC fee counts as a reimbursable expense. A 2020 IRS proposal said an HRA may reimburse DPC fees, but a Federal Register search on November 6, 2026 turned up no final rule adopting it. And under current IRS guidance, an ICHRA that pays, before the deductible, for anything beyond premiums and limited vision, dental or preventive care generally costs the employee their HSA eligibility, which matters more now that Public Law 119-21 lets members of a qualifying DPC arrangement keep contributing to their HSAs.

This guide walks through the federal ICHRA rule, what changed in 2025 and 2026, how ICHRA, HSA and DPC fit together under IRS Notice 2026-5, and the questions the guidance still leaves open. It is written for physicians and owners who sell memberships to employers, or who get asked about ICHRAs by patients and HR teams. It is general information, not legal or tax advice, and any employer building a plan around it needs its own benefits attorney, CPA or broker.

What is an ICHRA, in plain terms?

An ICHRA is an employer-funded account that reimburses employees for health insurance they buy on their own, instead of the employer offering a traditional group plan. Treasury, the Department of Labor and HHS created it in a joint final rule published June 20, 2019, for plan years starting on or after January 1, 2020. The same rule sits in three places: 26 CFR 54.9802-4 for the IRS, 29 CFR 2590.702-2 for the DOL and 45 CFR 146.123 for HHS.

The core conditions in 26 CFR 54.9802-4(c) are worth knowing before you talk to an employer about one:

• Enrollment in individual coverage. Every participant and dependent must be enrolled in individual health insurance coverage (or Medicare, under paragraph (e)) for each month the HRA covers them, and reimbursements stop when that coverage ends.
• No choice with a traditional plan. An employer cannot offer the same class of employees both an ICHRA and a traditional group health plan.
• Same terms within a class. The HRA must be offered on the same terms to everyone in a class, though the amount can rise with family size and with age within the rule's limits.
• An annual opt-out. Employees must be able to opt out and waive reimbursements once each plan year.
• A written notice. Participants generally get a written notice at least 90 calendar days before each plan year.

The rule defines the expenses an ICHRA reimburses as "medical care expenses," which 26 CFR 54.9815-2711(d)(6)(ii) says means "expenses for medical care as defined under section 213(d)." An employer can also limit its ICHRA to premiums only, and the regulation's own Example 5 describes an HRA "that reimburses only premiums for individual health insurance coverage." That premium-only choice turns out to matter a great deal for HSAs, as you will see below.

There is no federal dollar cap on what an employer puts into an ICHRA. The employer sets the amount, within the same-terms rules for each class. An applicable large employer also has to weigh the ACA's standards for offering affordable coverage, or risk an employer shared responsibility payment.

Has anything changed for ICHRA in 2025, 2026 or 2027?

The ICHRA rule itself has not changed. The eCFR's version history for 26 CFR 54.9802-4 shows no amendment to the IRS text since August 2019, as of November 6, 2026.

The name did change. On September 3, 2026, HHS, CMS and the SBA announced CHOICE Arrangements, and CMS says they "were previously known as Individual Coverage Health Reimbursement Arrangements (ICHRAs)," so employers and brokers may use that term. The regulations above still say "individual coverage HRA." A joint proposed rule, Expanding Access to Individual Coverage Health Reimbursement Arrangements, went to OMB for review on October 5, 2026, and the Federal Register showed no document under its rule number as of November 6, 2026.

Congress came close. The House-passed version of H.R. 1 included section 110201, which would have written ICHRAs into the tax code as "custom health option and individual care expense arrangements" (CHOICE arrangements), plus section 110203, an employer credit for CHOICE arrangements. We found neither in the enacted Public Law 119-21, signed July 4, 2025. Its health tax chapter runs from section 71301 to section 71308, and we found no mention of health reimbursement arrangements in it.

What the law did change sits right next to ICHRA:

• Section 71307 treats bronze and catastrophic plans available as individual coverage through an Exchange as HSA-eligible high deductible plans, for months beginning after December 31, 2025.
• Section 71308 says a direct primary care service arrangement within the monthly fee cap is not treated as a health plan that blocks HSA contributions, and adds DPC fees to the list of expenses an HSA can pay.

Section 71307 runs through the individual market, which is where ICHRA employees buy their coverage. Section 71308 has no market limit, so it applies beside any HSA-eligible high deductible plan, including those individual plans. For the full HSA side of the story, see our guide to the 2027 DPC HSA rules.

The 2027 figures that touch ICHRA and DPC

These are the federal dollar figures for 2027 that come up when an employer pairs an HRA with a DPC membership.

Can an ICHRA reimburse DPC membership fees?

This is the central question for a practice talking with an ICHRA employer, and the honest answer is that we found no final federal rule that says yes or no. An ICHRA reimburses section 213(d) medical care, so everything turns on whether a DPC membership fee is a 213(d) expense.

The closest the IRS has come is a proposed rule published June 10, 2020 (REG-109755-19, "Certain Medical Care Arrangements"). It proposed treating amounts paid for direct primary care arrangements as medical care under section 213, and its preamble said that an HRA, "including a QSEHRA, an HRA integrated with a traditional group health plan, an HRA integrated with individual health insurance coverage or Medicare (individual coverage HRA), or an excepted benefit HRA, generally may reimburse expenses for medical care" and "thus, an HRA may provide reimbursements for direct primary care arrangement fees."

The catch is in the same document. The proposed rules were to apply only for taxable years beginning on or after the date a final rule is published, and a Federal Register search on November 6, 2026 shows the June 2020 proposal and a September 2020 hearing notice, with no final rule. A proposal states the IRS's thinking at the time, but it is not a rule an employer can rely on.

Public Law 119-21 adds a clue without settling it. Section 71308 defines a direct primary care service arrangement as one that provides "medical care (as defined in section 213(d))," and it adds DPC fees to the expenses an HSA may pay under section 223(d)(2)(C). That second change is written for HSAs only. We found nothing in the law or in Notice 2026-5 about HRAs reimbursing DPC fees.

In practice, the ICHRA's plan document decides what it reimburses. An employer that wants DPC fees covered should ask its ICHRA administrator and benefits counsel to look at the plan language, rather than relying on a practice's assurance either way.

Can the DPC membership be the coverage an ICHRA requires?

No, and this one is not a gray area. The rule requires enrollment in "individual health insurance coverage," and 45 CFR 144.103 defines that as "health insurance coverage offered to individuals in the individual market." The same section defines a health insurance issuer as a company "required to be licensed to engage in the business of insurance in a State." A membership a practice sells directly to a patient is not coverage from a licensed issuer, so an ICHRA cannot be built on a DPC membership alone.

There is one place where DPC and individual coverage can live in the same product. Footnote 5 of IRS Notice 2026-5 says bronze plans are treated as HDHPs whatever services they cover before the deductible. It then notes the Treasury's understanding that ACA section 1301(a)(3) allows qualified health plans to provide coverage through a direct primary care medical home plan, and says the notice gives no interpretive guidance on that provision. If an insurer in your state offers such a plan, how it works with an ICHRA or an HSA is a question for the insurer and the employer's advisors, because federal guidance doesn't interpret that provision, though a bronze plan stays an HDHP either way.

State law also shapes what a DPC membership is and is not. Check your state in our direct primary care laws by state guide before describing a membership to an employer.

How do ICHRA, HSA and DPC fit together under Notice 2026-5?

IRS Notice 2026-5 is the guidance that ties the three together. Its Q-5 says a bronze or catastrophic plan available as individual coverage "will not fail to be an HDHP because an employer-sponsored ICHRA is used to purchase the coverage." Its Q-8 adds that an ICHRA can be used to buy those plans even though small-group SHOP bronze plans generally do not get the same treatment.

The same answer carries a warning that matters for DPC. Right after Q-5, the notice says "generally, an HRA (including an ICHRA) is permitted to reimburse only premiums for the HRA to be a health plan that would not disqualify an employee from being an eligible individual," citing Notice 2008-59, Q&A-1. That older answer allows an HRA that pays vision, dental and preventive care on top of premiums. It does not list DPC fees, and we found no IRS guidance that adds them.

Put together, the current guidance points to these outcomes:

Two more points from the notice shape how a practice should set up its membership. Q-11 says the fixed periodic fee must be the "sole compensation" for care under the arrangement, so a membership that also bills members separately for the care it includes does not qualify. And Q-20 says a fee above the cap can still be paid from an HSA as a medical expense, but enrollment in it stops new HSA contributions.

An employer that pays a DPC fee directly, outside the ICHRA, needs counsel first. The ICHRA rule bars offering a traditional group health plan to the same class of employees, apart from a special rule for new hires, and defines that as any group health plan other than an account-based plan or one that consists solely of excepted benefits. The 2020 proposal, never finalized, said that when an employer pays a DPC fee, "that payment arrangement would be a group health plan." Plan status and reporting come up too, which we cover in DPC and self-funded employer plans, with the sales side in how to sell direct primary care to employers.

What about QSEHRAs and excepted benefit HRAs?

Two other HRA types come up in the same conversations, and both share the open 213(d) question.

A qualified small employer HRA (QSEHRA) is available only to employers that are not applicable large employers, and the 2020 proposed rule's preamble notes it "generally is not a group health plan." It reimburses 213(d) medical care up to a yearly limit, which for 2027 is set out in Rev. Proc. 2026-35.

For 2027 the QSEHRA limit is $6,700 for self-only coverage and $13,550 for family coverage.

An excepted benefit HRA works differently. Under 26 CFR 54.9831-1(c)(3)(viii), the employer must also make traditional group health coverage available to the employee, which an ICHRA class cannot have, so an excepted benefit HRA is an option for employers with a group plan rather than an add-on to an ICHRA.

For plan years beginning in 2027, Rev. Proc. 2026-24 sets the excepted benefit HRA amount at $2,250.

Notice 2026-5's premium-only language covers HRAs generally, so the same HSA caution applies to both. An excepted benefit HRA, though, generally must not reimburse premiums for individual coverage, so the premium-only route isn't open to it. Whether either one may reimburse DPC fees depends on the same unsettled 213(d) question and on the plan document.

What should a DPC practice tell employers about ICHRA in 2027?

The rules leave real uncertainty, so the most useful thing a practice can offer an employer is clarity about its own membership and an honest line about what nobody has settled yet. A few habits help:

• Know your fee against the cap. For 2027 the HSA cap is per individual per month, with a higher figure for memberships covering more than one person, and all of a person's DPC memberships count together. Our guides on membership pricing and family and child tiers walk through structuring tiers.
• Keep the fee the sole compensation. If your membership bills insurance or patients separately for care it includes, it fails Notice 2026-5 Q-11 for HSA purposes. A hybrid model needs a careful look at this.
• Check the services too. The arrangement must consist solely of primary care from primary care practitioners, with no prescription drugs other than vaccines, no procedures that require general anesthesia and no lab services beyond those typically administered in an ambulatory primary care setting. Notice 2026-5 Q-14 says whether an arrangement qualifies depends on its terms, not the services a member uses.
• Send clean statements. Itemized monthly or annual statements showing the member, the period and the fee make life easier for whoever handles reimbursement, whether that is an ICHRA administrator or an HSA custodian.
• Don't promise reimbursement. Tell employers that whether their ICHRA reimburses DPC fees is set by their plan document, and that paying DPC fees through an ICHRA generally affects HSA eligibility under current guidance.
• Point to the employer's advisors. Plan design, ERISA status and tax treatment are questions for the employer's benefits attorney, CPA or broker, and a practice that says so earns trust.
• Check fraud and abuse rules for any employer deal. Our anti-kickback and Stark basics cover the questions to raise with your own attorney.

Employer groups add real tracking work once they sign, from eligibility lists and new hires to renewals and the follow-ups between your billing system, your EHR and your inbox. That work between tools is where Tabflows helps, as a dedicated tech team that connects the systems a clinic already uses so tasks, patient context and follow-ups land in one place. Our guide to employer group enrollment tracking covers the workflow, and onsite employer clinics vs DPC helps when an employer is weighing a different model.

Where federal guidance is still silent

Based on the documents we checked on November 6, 2026, these questions have no final federal answer:

• Whether DPC fees are 213(d) medical care for HRA reimbursement. The 2020 proposed rule said yes, and we found no final rule adopting it.
• Whether an HRA that reimburses only premiums and capped DPC fees keeps employees HSA-eligible. Notice 2026-5 and Notice 2008-59 do not carve out DPC fees.
• How DPC medical home plans under ACA section 1301(a)(3) interact with HSAs or ICHRAs. Notice 2026-5 expressly gives no interpretation of section 1301(a)(3), though its footnote 5 says bronze plans are HDHPs whatever they cover before the deductible.
• Whether ICHRAs will be written into the tax code. We did not find the House-passed CHOICE arrangement sections in Public Law 119-21, and we found no later enacted change. The House passed CHOICE arrangement language again in section 103 of H.R. 6703 on December 17, 2025, and the bill's status record, read November 6, 2026, shows no Senate action since it was received there on December 18, 2025. Separately, the agencies began calling ICHRAs CHOICE Arrangements on September 3, 2026, and a joint proposed rule on ICHRAs has been under OMB review since October 5, 2026.

Notice 2026-5 asked for public comments by March 6, 2026, and section 71308 tells Treasury to issue regulations or other guidance on the excluded services. If employers in your market lean on ICHRAs, check the IRS newsroom and the Federal Register before each plan year, and see our 2027 DPC HSA rules and what insurance to pair with DPC guides for the patient side.

Related reading

• How to sell direct primary care to employers
• DPC and self-funded employer plans
• DPC HSA rules for 2027
• What insurance to pair with DPC
• Hybrid DPC with insurance and membership
• How to start a DPC practice in 2027

Sources checked November 6, 2026: 84 FR 28888, 26 CFR 54.9802-4, 26 CFR 54.9815-2711, 26 CFR 54.9831-1, 45 CFR 144.103, 85 FR 35398, Public Law 119-21, H.R. 1 as passed by the House, IRS Notice 2026-5, Notice 2008-59 in IRB 2008-29, Rev. Proc. 2026-24 and Rev. Proc. 2026-35.

This article summarizes federal rules and IRS guidance as of November 6, 2026. It is general information, not legal, tax or benefits advice. Employers should work with their own benefits attorney, CPA or broker on plan design, and practices should have a health law attorney review membership agreements and employer contracts.