Letter to Treasury Secretary Mnuchin: Let Patients Use HSAs for DPC


June 14, 2018

The Honorable Steven Mnuchin
United States Department of the Treasury
1500 Pennsylvania Avenue NW
Washington, DC 20220

Dear Secretary Mnuchin,

We are thankful for the Trump Administration’s efforts to reduce the burdens past administrative overreach has inflicted on the American people.

In the coming weeks, the Departments of Labor and Health and Human Services are expected to finalize the easing of overregulation and empower patients and consumers with additional health plan options outside of the confines of “Affordable Care Act” exchanges. More specifically, the coming changes are expected to increase the flexibility and availability of Association Health Plans (AHPs) and Short Term Limited Duration Insurance (STLDI).

While we welcome these needed reforms, the Department of Treasury could take a simple yet crucial step to augment their impact and amplify consumer choice.

We ask that you expeditiously consider and implement a reversal of a flawed opinion issued by former IRS commissioner John Koskinen that is currently improperly impeding patient access to Direct Primary Care (DPC). In the DPC model primary care services and often access to basic commonly used drugs at wholesale prices are included in a fixed transparent price paid directly to the medical practice.

Commissioner Koskinen opined in a 2014 letter that consumers who enter into a periodic-fee DPC arrangement are ineligible to make contributions to their Health Savings Accounts (HSAs).  He compounded this error by failing to clarify that HSA funds can be used for DPC. Limiting HSAs in this way is clearly contrary to an inherent purpose of the accounts: to expand patients’ freedom to choose how to spend their own money for medical care. The policy also runs counter to the goal of reducing costs as DPC practices are proving to more efficiently deliver high-quality primary care that not only lowers the cost to patients, but reduces downstream government-subsidized spending.

On April 17, 2018, Senators Ted Cruz and Ron Johnson wrote to you with a similar request.  They succinctly explained the problem and solution like this:

Treasury has reached the questionable interpretation that direct primary care qualifies as a “health plan” that is not a high-deductible plan under 26 U.S.C. Sec. 223(c)(1)(A)(ii). … Therefore, we request that the Department of Treasury reconsider this classification of direct primary care as a “health plan” and cease forcing individuals to choose between their health savings accounts and their health care providers. … Rather than a “health plan,” Treasury should instead recognize payments for direct primary care for what they are–expenses for medical care under 26 U.S.C. Sec 213(d). A direct primary care model is not meaningfully different than one where patients simply pay their physicians per service out of pocket.”

Americans are eager for a resolution.  Recently, more than 1,125 patients and physicians co-signed a letter in support of a legislative fix, H.R. 365 / S. 1358, that would reverse Commissioner Koskinen’s overreach. We respectfully request that Treasury take immediate action to reverse the agency’s past misstep and also support the legislation that will prevent future administrations from similar error.

Especially in light of the coming reforms from DOL and HHS, the time is now for Treasury to take action so that American patients (and taxpayers) can maximize the value of dollars spent on medical care. If allowed, DPC arrangements would mesh particularly well with HSA-eligible, consumer-directed options available through AHPs and STDLI plans. Please make this possible.


Jane M. Orient, MD
Executive Director
Association of American Physicians and Surgeons