What is the difference between an onsite employer clinic and a DPC contract?
An onsite or near-site employer clinic is a clinic an employer sets up for its own workforce, at the workplace or close to it, and pays for whether or not employees walk in. A direct primary care (DPC) contract buys memberships for employees at an independent practice that also cares for other patients, for a fixed monthly fee per enrolled person. The first model gives a large employer a clinic of its own and all the fixed costs that come with it, while the second gives employers of almost any size the same kind of direct, unhurried primary care without building anything. Both raise ERISA and HSA questions, and the rules treat them differently.
This guide is written for DPC physicians and owners who sell to employers, and for anyone helping an employer weigh the two models. It explains how the pieces work, not what any one company should do, so the legal and tax points here are a starting place for a conversation with an ERISA attorney, a CPA or the employer's benefits broker.
Onsite, near-site and DPC contracts at a glance
The three models overlap in what patients feel (quick access to a primary care clinician who has time for them), but they differ in who owns the clinic, who carries the cost and where the care happens.
| Onsite clinic | Near-site clinic | DPC contract | |
|---|---|---|---|
| Where care happens | Inside the employer's building or campus | A nearby site, sometimes shared by several employers | The DPC practice's own office, plus phone, text and video |
| Who runs it | The employer, or a clinic management company it hires | The employer, a group of employers, or a management company | An independent physician or practice that owns the clinic |
| How the employer pays | Funds the space, staff, equipment and vendor fees directly | Funds its share of the site and staff, or pays per use or per member | A fixed monthly fee per enrolled employee or family |
| Who else the clinic sees | Only that employer's people | The sponsoring employers' people | Every member of the practice, including individuals and other employers |
| Fits best | One large workforce at one site | Several sites or employers within a short drive | Small to mid-size employers, or any employer with people spread out |
If you sell DPC to employers, our guide on how to sell direct primary care to employers covers the pitch, the contract terms and the eligibility files, and this post focuses on how DPC compares with the clinic an employer might build instead.
How common are onsite and near-site clinics?
They are a real part of the employer benefits landscape, not a rarity. KFF's 2026 Employer Health Benefits Survey, collected from January 5 to July 13, 2026 and published on October 22, 2026, found that among firms with 50 or more workers that offer health benefits, 24% have an on-site or near-site clinic at at least one of their major locations, with 7% having an on-site clinic and 20% a near-site clinic (some firms have both).
Among firms with 200 or more workers that offer health benefits, KFF found that 24% have an on-site or near-site clinic. Across all large firms, KFF puts the shares at 13% with an on-site clinic and 17% with a near-site clinic (some firms have both).
KFF describes these as clinics "staffed by health professionals" that "may treat work-related or non-work-related conditions." That range matters, because a first aid room and a full primary care clinic are treated very differently under federal benefits and tax law, as the sections below explain. KFF defines a near-site clinic as "a health care facility located near the workplace that contracts to provide services to employees and may serve multiple employers," so its near-site figures can include clinics shared by several employers, not only one an employer sets up for its own workforce.
How the cost structure differs
The biggest practical difference is who carries the fixed cost.
An onsite clinic is mostly fixed cost for the employer. Someone has to pay for the exam rooms, the equipment, the clinician and staff salaries or the management company's fees, the malpractice coverage and the software, and those bills arrive whether ten employees come in that week or two hundred. The employer gets control in return, since it decides the hours, the services and the staffing, but it also owns the risk that the clinic sits half empty.
A DPC contract is mostly variable cost for the employer. It pays a fixed monthly fee for each enrolled employee or family, so the bill rises and falls with enrollment, and the practice carries the rent, the staff and the equipment. The employer gives up some control over hours and services in exchange for not building anything, and it can start with a small group and grow.
A near-site clinic shared by several employers spreads the fixed cost across more people, which puts it between the other two in both cost and control.
We looked for an independent, current study comparing the total cost of onsite clinics with DPC contracts and found none. When a vendor or a practice quotes a savings figure for either model, it is fair for an employer to ask for the data behind it and to have its broker or consultant model the options against its own claims history.
For the DPC side of the math, our posts on how much to charge for a DPC membership and break-even panel size show how a practice sets an employer rate it can sustain.
Who runs it, and who the clinician works for
In an onsite clinic, the clinician works for the employer or for a clinic management company the employer contracts with, where state law allows it. California's medical board, for one, prohibits non-physicians owning or operating a business that offers patient evaluation, diagnosis, care or treatment, so check your state's corporate practice of medicine rules. That means the employer is in the business of running a medical practice, with licensing, records, privacy and staffing to oversee or delegate.
In a DPC contract, the physician owns the practice and the employer is one customer among many. Employees see the same doctor as the practice's individual members, so the relationship can continue if they change jobs or the employer ends the contract, as long as the contract lets them convert to an individual membership.
Capacity is the honest limit on the DPC side. The AAFP reports an average panel of 504 patients in 2025 across all its survey respondents, 53% of them in DPC, up from 402 in 2024, so a single employer contract can fill a meaningful share of one physician's panel. A practice that plans for employer growth ahead of time, with phased enrollment or a cap per employer, protects the patients it already has.
Some employers want a clinic of their own without running it, and that is where a DPC practice can step in as the operator of a near-site arrangement. If you go that way, the space, the staffing and the referral rules all need a careful look, and our guides on DPC office space and anti-kickback and Stark basics are good places to start.
Is an onsite clinic or a DPC membership an ERISA plan?
ERISA's definition of an employee welfare benefit plan, in 29 U.S.C. 1002(1), covers any plan, fund or program an employer maintains to provide its employees "through the purchase of insurance or otherwise" medical, surgical or hospital care or benefits.
The Department of Labor carves out a narrow exception. Under 29 CFR 2510.3-1(c)(2), a welfare plan does not include "the maintenance on the premises of an employer of facilities for the treatment of minor injuries or illness or rendering first aid in case of accidents occurring during working hours." A first aid room fits that exception. A clinic offering broader primary care to employees, and sometimes their families, likely does not, which means it can be a group health plan with the plan documents, disclosures and fiduciary duties that ERISA brings.
COBRA follows a similar line. The Treasury regulation at 26 CFR 54.4980B-2, Q&A-1 says health care is provided under a plan "whether or not provided through an on-site facility," and excludes an on-premises facility only when the care is primarily first aid during working hours, it is available only to current employees and employees are not charged for using it.
One rule works in the onsite clinic's favor. Federal regulations list "coverage for on-site medical clinics" among the benefits excepted in all circumstances from the HIPAA portability and related group health plan requirements, at 29 CFR 2590.732(c)(2)(viii). Being an excepted benefit for those rules does not take a clinic out of ERISA or COBRA, which is a distinction worth putting in front of counsel.
For a DPC contract, the same broad ERISA definition applies to what the employer is paying for, which is primary care for its employees. We found no Department of Labor guidance written specifically about employer-paid DPC memberships. The closest federal statement is in a 2020 IRS proposed rule, never finalized, whose preamble says the Department of Labor advised that an employer's funding of an arrangement providing health benefits to employees is, "in most circumstances," enough to make it an ERISA-covered plan. Whether a particular contract is its own plan or part of the employer's existing plan, and what documents and notices that requires, is a question for the employer's ERISA attorney. A DPC practice should expect the question and be ready to share its contract, its member agreement and a plain description of what the membership covers. Our post on DPC and self-funded employer plans covers how a membership sits next to the employer's main plan.
State law adds its own layer for DPC. Washington's RCW 48.150.050, for example, limits what a direct practice's contract with an employer may cover, so check your state's DPC statute in our DPC laws by state guide before you draft anything.
Can employees with an HSA use an onsite clinic or a DPC membership?
For onsite clinics, the rule is still IRS Notice 2008-59, Q&A-10. An employee does not lose HSA eligibility "merely because the individual has access to free health care or health care at charges below fair market value from an employer's on-site clinic if the clinic does not provide significant benefits in the nature of medical care (in addition to disregarded coverage or preventive care)." The IRS example of a clinic that passes is a manufacturing plant offering physicals and immunizations, allergy injections with antigens the employee supplies, aspirin and other nonprescription pain relievers, and treatment for injuries from accidents at the plant. The example that fails is a hospital that gives its employees free or discounted care for all their medical needs.
An employer that wants a full primary care clinic and an HSA-eligible plan has to design around that line, for example by charging fair market value for non-preventive visits, and that design is a job for its benefits counsel.
Each of the clinic rules above speaks of a clinic on the employer's premises or an on-site clinic, so don't assume a near-site clinic gets the same treatment.
For DPC memberships, Public Law 119-21 added a separate rule. From January 1, 2026, a direct primary care service arrangement is not treated as a health plan that would block HSA contributions, as long as it provides only primary care from primary care practitioners for a fixed periodic fee that does not exceed a monthly cap, as IRS Notice 2026-5 explains.
For 2027, IRS Rev. Proc. 2026-24 keeps that cap at $150 a month for one person and $300 a month for an arrangement covering more than one person.
Three answers in Notice 2026-5 matter most to employers. Under Q-18, fees the employer pays, including through salary reduction in a section 125 cafeteria plan, are compensation excluded from the employee's income under section 106, and they are not the employee's expense to reimburse from an HSA. Under Q-15, the high-deductible plan itself cannot pay for the membership before the deductible, so the employer pays it outside the plan. The notice does not say outright that an employer's payment outside the plan protects HSA eligibility, so have counsel confirm. Under Q-14, whether an arrangement qualifies depends on its terms, not on what a member happens to use, so labs and other items sold separately should be outside the membership and offered to members and non-members alike (Q-11, Q-12). Our DPC HSA rules for 2027 post goes deeper on the exclusions.
We found no IRS guidance on whether an employer's own onsite clinic could qualify under the new DPC rule instead of the 2008 onsite clinic rule. A clinic paid by a fixed fee may be called DPC, but under Notice 2026-5 the arrangement's terms decide the HSA question, not the label.
Which model fits which size of employer?
KFF's survey shows on-site clinics at 5% of offering firms with 50 to 199 workers, 13% of those with 200 to 4,999 and 22% of those with 5,000 or more, and we found no federal source that sets a workforce size where one model starts to make more sense than the other. What decides it is the shape of the workforce, and a few questions sort it out quickly.
- How many employees work at one site? An onsite clinic only pays off when enough people work in one place to keep a clinician busy for the hours the clinic is open. A company with a few hundred people spread across several towns may have no single site that can do that.
- Are families included? A DPC membership can cover spouses and children at the practice, and an onsite clinic built for employees during working hours may not be set up for kids or evening visits.
- Does the employer want to own operations? An onsite clinic means hiring or contracting clinicians and overseeing a medical practice. A DPC contract means managing one vendor relationship and an eligibility file.
- Does the employer offer an HSA-eligible plan? The onsite clinic rule and the DPC rule draw their lines in different places, as the section above explains, and the plan design has to respect whichever one applies.
- How quickly does the employer want to start? A DPC contract can begin at the next enrollment window with an existing practice, while a new clinic needs a space, a license and staff first.
Put those answers together and a small or mid-size employer, or one whose people are spread out, points toward a DPC contract. A large employer with a big workforce at a single campus has a real choice, and it can use both, with an onsite clinic at headquarters and DPC memberships for people at smaller sites or working remotely. A near-site clinic shared with other employers suits a cluster of mid-size companies in one area. A clinic that unrelated employers fund together can be a multiple employer welfare arrangement under ERISA, which states may regulate and which generally has to file a federal Form M-1, so ask counsel first.
How DPC practices can talk to employers that already have a clinic
An employer with an onsite clinic is not a lost cause, and it is an informed buyer, because it already believes in direct access to primary care. The useful conversation is about the gaps its clinic leaves.
Ask who the clinic does not reach. Remote employees, smaller offices, night shifts, spouses and children can all fall outside a clinic designed around one building and one schedule, and a DPC contract can cover those groups without the employer building a second clinic. A remote employee in another state generally needs a physician licensed there, or covered by that state's exception or registration.
Ask what happens after hours and after an employee leaves. A DPC practice that answers texts in the evening and lets departing employees keep their doctor on an individual membership offers a kind of continuity that a clinic built around one workplace isn't designed to provide.
Bring your reporting. Employers that run clinics are used to seeing visit counts and service mix, so a simple monthly report on enrollment, visits and response times, without anything that identifies a patient, makes a DPC contract easier to compare. If your employer contracts include patients with ongoing conditions, our post on DPC chronic disease management covers the follow-up routines that come up in employer conversations.
Running employer contracts well comes down to the work between your systems. Eligibility files arrive and need to match your billing, new enrollees need a welcome and a first visit, and messages, labs and follow-ups need to land with the right person on your team. Tabflows is a dedicated tech team that connects the tools a practice already uses, such as the EHR, billing and messaging, so those tasks and the patient context behind them sit in one place and get finished.
The short version
An onsite or near-site clinic is the employer's own clinic, with the employer carrying the fixed cost and the operating work, and it fits large workforces concentrated in one place. A DPC contract buys memberships at an independent practice for a monthly fee per person, and it fits employers of almost any size, especially those with people spread out or families to cover. Both can be ERISA plans, and they follow different HSA rules, Notice 2008-59 for onsite clinics and the 2026 DPC rule for memberships, so the employer's attorney and broker belong in the room before anything is signed.
If you are building a practice that will serve employers, start with the 2027 guide to starting a DPC practice and the DPC business entity guide, then come back to the employer contract once the foundation is set.
FAQs
What is the difference between an onsite employer clinic and a DPC contract?
An onsite or near-site clinic is a clinic the employer sets up for its own workforce, at the workplace or close to it, run by the employer or by a clinic management company it hires. The employer carries the fixed costs of space, staff and equipment whether employees use it or not. A direct primary care contract buys memberships for employees at an independent practice that also serves other patients, so the employer pays a fixed monthly fee per enrolled person and the practice carries the overhead. Onsite clinics suit large workforces concentrated at one site, and DPC contracts suit employers of almost any size, including those with people spread across a region.
Is an onsite employer clinic covered by ERISA?
It can be. ERISA's definition of a welfare plan covers any plan an employer maintains to provide medical care to employees, through the purchase of insurance or otherwise. The Department of Labor's regulation at 29 CFR 2510.3-1(c)(2) carves out only facilities on the employer's premises for treating minor injuries or illness, or giving first aid, for accidents during working hours. A clinic that offers broader primary care is likely a group health plan, with ERISA and COBRA duties, although federal rules list coverage for on-site medical clinics as an excepted benefit for the HIPAA portability and market reform rules. An ERISA attorney should review the specific design.
Can employees with an HSA use an onsite employer clinic?
Yes, if the clinic's free or below-market care does not include significant benefits in the nature of medical care beyond preventive care and other disregarded coverage. IRS Notice 2008-59, Q&A-10, gives the example of a plant clinic offering physicals, immunizations, allergy injections, nonprescription pain relievers and treatment for workplace injuries, which does not disqualify employees. A clinic that gives free or discounted care for all medical needs does disqualify them. We found no later IRS guidance that changes this rule for onsite clinics.
Can an employer pay for DPC memberships for employees on an HSA plan?
Likely yes, from 2026. Public Law 119-21 lets a qualifying direct primary care service arrangement sit alongside an HSA-eligible plan, as long as the monthly fees do not exceed a cap, which IRS Rev. Proc. 2026-24 sets at $150 a month for one person and $300 for a membership covering more than one person in 2027. IRS Notice 2026-5 says employer-paid fees are excluded from the employee's income and cannot also be reimbursed from the employee's HSA, and that the high-deductible plan itself cannot pay the membership before the deductible. The notice does not say outright that an employer's payment outside the plan protects HSA eligibility, so have counsel confirm.
Which is better for a small employer, an onsite clinic or DPC?
For a small employer, a DPC contract is the simpler fit, because the employer pays per enrolled person and does not have to fund a clinic, a clinician and a space that only its own workforce uses. An onsite clinic needs enough employees at one location to keep a clinician busy. A near-site clinic shared by several employers sits between the two. Every employer's numbers differ, so a benefits broker or consultant should model the options for the specific workforce.
How many employers have an onsite or near-site clinic?
KFF's 2026 Employer Health Benefits Survey, collected January 5 to July 13, 2026 and published October 22, 2026, found that 24% of firms with 50 or more workers that offer health benefits have an on-site or near-site clinic at at least one major location. Among firms with 200 or more workers that offer health benefits, 24% have one, with 13% of these large firms having an on-site clinic and 17% a near-site clinic, and some firms have both.