Can a Small Employer Pay for Direct Primary Care for Employees?

August 20, 2025

Healthcare costs have been climbing faster than wages for years. Premiums, deductibles, and out-of-pocket expenses are squeezing employees, but they're also cutting into employers' budgets and, ultimately, their competitiveness.



Thankfully, direct primary care offers a cost-effective alternative to traditional insurance. This option can lower costs, provide employees with better access to quality healthcare, and contribute to happier and more productive teams.


The key is understanding how to implement direct primary care effectively while staying compliant and ensuring it works for both your business and its people.

A male Doctor PCP and a woman are sitting at a table with a laptop.

What is Direct Primary Care?

Direct primary care is a healthcare model where employers pay a predictable, flat monthly fee per employee for unlimited access to primary and preventive care. Think of it as an all-access pass to essentials like routine checkups, chronic condition management, same-day or next-day appointments, and vaccinations, without the surprise of copays, deductibles, or coinsurance.


However, direct primary care isn't designed to cover everything. Specialist visits, hospital stays, major procedures, and certain advanced tests typically fall outside its scope. That's why many employers pair direct primary care with supplementary options, such as health sharing plans or high-deductible health plans, to provide broader protection. Together, they create a more comprehensive and budget-friendly alternative to traditional insurance options.

Why Direct Primary Care Makes Sense for Small Employers

For small employers, direct primary care offers a rare combination of affordability, predictability, and employee appeal. Here's why it works:

  • Cost savings: Predictable monthly expenses make budgeting easier and allows you to lower business costs. Reduced administrative overhead frees up resources for other priorities.
  • Employee satisfaction and retention: Longer, more personalized visits with providers, faster access to care, and a stronger provider-patient relationship contribute to the overall health and happiness of employees.
  • Increased productivity: Timely care reduces absenteeism and presenteeism, keeping employees healthier and more focused at work.
  • Competitive advantage: In industries where benefits are limited, offering direct primary care can help attract top talent and differentiate your business from competitors.
  • In short, direct primary care is a strategic investment in workforce well-being and company performance.

Tax Treatment and Compliance Considerations

Starting January 1, 2026, new rules under H.R. 1 will make direct primary care even more attractive for small employers.


Direct primary care arrangements will no longer be considered health plans, and fees (capped at $150 per month for individuals or $300 for families) will be officially recognized as medical expenses. That means they can be paid using tax-advantaged accounts such as Health Savings Accounts (HSAs), Health Reimbursement Arrangements (HRAs), and Flexible Spending Accounts (FSAs).

Past barriers have also been lifted. The 21st Century Cures Act removed the threat of hefty IRS fines for small employers offering direct primary care under certain conditions, making implementation far less risky.


Still, compliance matters. Employers should confirm that employees maintain minimum essential coverage (MEC) if required and understand that on-site or near-site direct primary care clinics may fall under ERISA rules for employee welfare benefit plans. Knowing these requirements upfront ensures your direct primary care program remains effective and legally sound.

A woman is sitting at a table with a doctor and writing on a clipboard.

Steps Small Employers Should Take to Implement Direct Primary Care

Successfully implementing direct primary care in a small business starts with a clear plan.


  • Step 1: Begin with a thorough cost analysis. Understand your budget, estimate the return on investment, and determine how direct primary care could reduce both direct and indirect healthcare costs.
  • Step 2: Research potential providers carefully. Look for one whose services, location, and philosophy align with your company's needs and values.
  • Step 3: Communicate the benefits to employees in plain, compelling terms. Address any concerns about coverage gaps early to build trust and understanding of the program.
  • tep 4: Pair direct primary care with supplementary coverage, such as a health sharing plan or a high-deductible health plan, to ensure employees are protected for specialist visits, hospitalizations, and other non-primary care needs.
  • Step 5: Commit to ongoing evaluation. Regularly gather feedback from employees and your direct primary care provider. Adjust the plan as needed to maintain its value.


When these steps are followed, direct primary care can become a high-impact part of your small business benefits strategy.

Overcoming Challenges When Offering Direct Primary Care to Employees

While direct primary care offers clear benefits, small employers may encounter a few hurdles when implementing and maintaining it in the long term.


  • Limited provider availability can be a challenge, especially in certain regions. Expanding your search to nearby areas, partnering with direct primary care groups that have multiple locations, or incorporating telemedicine options can help bridge this gap.
  • Employee resistance is another common issue. This reluctance is often rooted in unfamiliarity. Educate your team on how direct primary care works and consider offering incentives to encourage them to utilize the resource and prioritize their health.
  • Integrating direct primary care with your existing benefits requires careful coordination and planning. Working with an insurance broker or third-party administrator can help you design a hybrid model that blends direct primary care with supplementary coverage.


With proactive planning, these challenges can be turned into opportunities for an even stronger healthcare offering.

Tips for Direct Primary Care Clinics Looking to Partner with Small Businesses

Up to this point, we've looked at direct primary care from the perspective of small employers considering it for their workforce. But the clinics on the other side of the equation are just as important. After all, for this model to thrive, providers need effective strategies for connecting with and serving businesses in their communities.


Here are some steps direct primary care clinics should consider when creating partnerships with employers:


  • Understand each employer's unique needs and goals. This insight enables you to craft a proposal that addresses their priorities directly, whether it's cost savings, employee access to care, or improved staff retention.
  • Market your services. Develop clear, compelling materials, participate in community and industry events, and reach out directly to decision-makers.
  • Negotiate terms. Once interest is established, negotiate the partnership terms in detail, covering services, pricing, and expectations on both sides.
  • Implement the partnership. This is your chance to make a strong first impression. Ensure employees understand what's included, how to access care, and the value the program brings.
  • Commit to ongoing evaluation. Regular check-ins help you measure success, address challenges early, and maintain a beneficial relationship for both the clinic and the employer.


Direct primary care clinics are gaining momentum as a personalized, patient-focused alternative to traditional healthcare. By partnering with employers, clinics can expand their business, strengthen community ties, and offer businesses a compelling healthcare solution for their teams.

Why Choose White Olive CPA, LLC for DPC Accounting?

If your business is considering the transition to a direct primary care model for your practice, or has already made the shift, now is the time to contact White Olive CPA for your accounting services.


Whether you're a clinic offering direct primary care or a small business looking to add this benefit, our experienced team can help you manage your financial operations while ensuring full compliance with regulations specific to direct primary care. Contact us today to learn more.

Share Article