Plan · Guide 2.6

Is a direct primary care membership insurance?

Usually not, but the answer comes from how the agreement is written and which state you are in, not from the label. A majority of states have passed a statute that settles it. In the rest, the ordinary test for the business of insurance applies, and two regulators have shown in writing where the line falls.

Last reviewed September 17, 2026

Sources (14)

1. 26 U.S.C. 223(c)(1)(E) and (g): direct primary care service arrangements and health savings accounts, as amended by Pub. L. 119-21, sec. 71308 (139 Stat. 326) (opens in a new tab)U.S. Code, via Cornell Legal Information Institute · Statute
2. 42 U.S.C. 18021(a)(3): treatment of qualified direct primary care medical home plans (opens in a new tab)U.S. Code, via Cornell Legal Information Institute · Statute
3. 45 CFR 156.245: treatment of direct primary care medical homes (opens in a new tab)Code of Federal Regulations, via Cornell Legal Information Institute · Regulation
4. Certain Medical Care Arrangements, proposed rule REG-109755-19, 85 FR 35398 (June 10, 2020) (opens in a new tab)Internal Revenue Service and Treasury, Federal Register · Regulation
5. N.C. Gen. Stat. 58-3-8: medical direct primary care agreements not subject to the insurance chapter (opens in a new tab)North Carolina General Assembly · Statute
6. RCW chapter 48.150: direct patient-provider primary health care (opens in a new tab)Washington State Legislature · Statute
7. Report on "Retainer" or "Boutique" or "Concierge" Medical Practices and the Business of Insurance, MIA-2008-12-002 (January 2009) (opens in a new tab)Maryland Insurance Administration · Agency guidance
8. Office of General Counsel Opinion 09-02-02: doing an insurance business (February 2, 2009) (opens in a new tab)New York State Insurance Department · Agency guidance
9. Office of General Counsel Opinion 09-07-03: medical membership programs (July 15, 2009) (opens in a new tab)New York State Insurance Department · Agency guidance
10. 18 Del. C. 7601(4): definition of "discount medical plan" (opens in a new tab)Delaware Code Online, Delaware General Assembly · Statute
11. House Bill 2096, 2025-2026 Regular Session: direct primary care and medical service agreements (opens in a new tab)Pennsylvania General Assembly · Legislative record
12. Direct Primary Care: State Approaches to Regulating Subscription-Based Medicine (January 2020) (opens in a new tab)Wisconsin Legislative Reference Bureau · Secondary source
13. State laws defining direct primary care as outside insurance (opens in a new tab)Direct Primary Care Frontier · Trade association
14. Direct primary care laws by state (opens in a new tab)Patient Options · Secondary source

What the sources say

Why the question exists

Maryland defines insurance as "a contract to indemnify or to pay or provide a specified or determinable amount or benefit on the occurrence of a determinable contingency." A flat monthly fee for whatever primary care a patient turns out to need can look like exactly that: the physician takes on the risk that a patient needs more care than the fee pays for, and spreads that risk across the panel.

A membership that charges a fair price for a defined set of services the practice can really deliver looks like prepaid medical care.

Maryland law defines insurance as a contract to pay or provide a benefit on the occurrence of a determinable contingency, and the state regulator has applied that definition to physician retainer fees.⁷

States that settled it by statute

Some state legislatures have answered the question by statute for agreements that meet the statute's terms.

North Carolina is a clean example. Its statute says a medical direct primary care agreement "is not insurance and is not subject to the provisions of this Chapter." To qualify, the agreement must be in writing, be signed by the provider and the patient, allow either party to terminate with written notice, specify the periodic fee, specify the primary care services the fee covers, specify the duration and any automatic renewal, and "prominently state in writing that the agreement is not health insurance." The statute sets no notice period in days and does not require a refund of prepaid fees, so an agreement can satisfy North Carolina law and still be thin on patient protection.

Washington goes further than an exemption. A direct practice that complies with its chapter is not an insurer, a health carrier, a health care service contractor or a health maintenance organization, but a provider may not hold itself out as a direct practice without filing an annual statement with the insurance commissioner. The agreement must carry a set disclaimer, must be terminable at will by the patient on written notice, and the practice must "promptly refund to the direct patient all unearned direct fees" when the agreement ends.

North Carolina declares a compliant direct primary care agreement not to be insurance and lists seven required contract terms.⁵
The North Carolina statute sets no minimum notice period and does not require a refund of unearned prepaid fees.⁵
Washington exempts compliant direct practices from its insurance laws but requires an annual statement to the insurance commissioner, a mandatory disclaimer, at-will termination by the patient and a prompt refund of unearned fees.⁶

States with no statute: two regulators show the line

Where the legislature has said nothing, the general test applies to your contract as written. Two insurance regulators have published their reasoning, and it is the best guide available for every state without a statute.

The Maryland Insurance Administration reviewed retainer practices in 2009. A practice that contracts to provide one annual physical exam does "not appear to be engaged in the business of insurance," because "There is no determinable contingency and no capitation payment made by patients." A practice that sells an annual physical plus unlimited office visits for one fee is different. The fee becomes "equivalent to a capitation payment," and the report concludes: "This type of arrangement, in the MIA's view, would constitute the business of insurance." The report lists five warning signs: a fee that covers unlimited visits or more services than the physician can reasonably deliver to the whole panel, no limit on the number of patients accepted, a fee that does not reflect the fair market value of the promised services, substantial financial risk for care delivered by other providers, and an agreement the patient cannot end during the year or that gives no pro-rated refund.

New York ruled on two membership plans the same year, using one test. A plan is an insurance business when its benefits depend on "the happening of a fortuitous event" beyond either party's control, unless the fees charged when care is needed "actually cover the cost of rendering the services, including reasonable overhead." In the first opinion, members paid $79 a month for preventive visits and $10 for each sick visit. The Department found it "unlikely that the $10 co-payment truly covers the cost" of a physician's services and concluded that the practice was doing an insurance business that requires a license. In the second, a physician group proposed an enrollment fee plus a reduced fee at each visit. The Department said that would not be insurance, "provided that the fee paid at the time of services" covers the actual cost of the service, including reasonable overhead. It never saw the group's prices, so that opinion is a conditional answer, not a clearance.

In Maryland, an annual retainer covering unlimited office visits is, in the regulator's view, the business of insurance, while a practice that contracts to provide only an annual physical exam does not appear to be.⁷
The Maryland regulator lists five indicators that a retainer practice may be engaged in the unauthorized business of insurance.⁷
New York treats a membership plan as insurance unless the fees charged at the time of service actually cover the cost of that service, including reasonable overhead.^{8, 9}
New York found one plan was doing an insurance business that requires a license because a $10 sick-visit fee was unlikely to cover the cost of the visit, and gave another plan only a conditional answer because no prices were provided.^{8, 9}

Federal law answers a different question

No federal law says whether your membership is insurance under state law. Two federal provisions are often quoted as if they did.

The Affordable Care Act lets a qualified health plan sold on an Exchange deliver its primary care through a "qualified direct primary care medical home plan," as long as the plan meets every other requirement and the services are coordinated with the insurer. That rule is about what an Exchange plan may contain. It says nothing about a private membership sold outside an Exchange.

The tax code now answers the health savings account question. In 2020 the IRS proposed rules that would treat membership fees as medical expenses under section 213. Those rules did not make members eligible for a health savings account. Congress did that in Public Law 119-21, section 71308. For months beginning after December 31, 2025, a "direct primary care service arrangement" is not treated as a health plan that disqualifies someone from a health savings account. The arrangement must consist solely of primary care services from primary care practitioners for a fixed periodic fee. Total fees may not exceed $150 a month, or twice that when the arrangement covers two or more people, with a cost-of-living adjustment for tax years after 2026. Primary care services do not include procedures that require general anesthesia, prescription drugs other than vaccines, or laboratory services not typically administered in an ambulatory primary care setting.

That is a federal tax rule. It does not make a membership "not insurance" under state insurance law, and a state is free to tax health savings accounts differently.

The Affordable Care Act and its regulation let an Exchange plan provide primary care through a direct primary care medical home. Neither addresses a private membership sold outside an Exchange.^{2, 3}
In 2020 the IRS proposed treating direct primary care fees as medical expenses under section 213 of the tax code.⁴
For months beginning after December 31, 2025, a qualifying direct primary care service arrangement does not disqualify a person from a health savings account, subject to a fee cap of $150 a month, doubled when two or more people are covered, and adjusted for inflation after 2026.¹
The federal definition excludes procedures requiring general anesthesia, prescription drugs other than vaccines, and laboratory services not typically administered in an ambulatory primary care setting.¹

Where they agree

The North Carolina and Washington statutes both require the agreement to specify the services it covers, to carry a written disclaimer about health insurance, and to let the patient end it on written notice.^{5, 6}
Both regulators that have published their reasoning test the fee against the care it pays for. Maryland asks whether the fee represents the fair market value of the promised services. New York asks whether the fee charged when care is needed covers the actual cost of that care, including reasonable overhead.^{7, 8, 9}
The federal provisions do not decide the state insurance question.^{2, 3, 1}

Where they conflict

Public trackers do not agree on how many states have a statute. A Wisconsin legislative report counted 28 in January 2020. Two current trackers each list about thirty and differ on a handful of states. Do not rely on a count. Read your own state's law.^{12, 13, 14}
A statute like North Carolina's puts no limit on the number of visits, while unlimited visits are the single riskiest promise in a state with no statute. No regulator has said how many visits is too many.^{7, 8, 5}
A statute on a neighboring subject is not an answer. Delaware excludes physician arrangements from its definition of a discount medical plan, which says nothing about whether a membership is insurance.¹⁰
The law is still moving. Pennsylvania has no statute, and a bill to create one was referred to the House Insurance Committee on December 9, 2025.¹¹

How strong the evidence is

Settled by law: North Carolina declares a compliant direct primary care agreement not to be insurance and lists seven required contract terms.⁵
The North Carolina statute sets no minimum notice period and does not require a refund of unearned prepaid fees.⁵
Washington exempts compliant direct practices from its insurance laws but requires an annual statement to the insurance commissioner, a mandatory disclaimer, at-will termination by the patient and a prompt refund of unearned fees.⁶
The Affordable Care Act and its regulation let an Exchange plan provide primary care through a direct primary care medical home. Neither addresses a private membership sold outside an Exchange.^{2, 3}
For months beginning after December 31, 2025, a qualifying direct primary care service arrangement does not disqualify a person from a health savings account, subject to a fee cap of $150 a month, doubled when two or more people are covered, and adjusted for inflation after 2026.¹
The federal definition excludes procedures requiring general anesthesia, prescription drugs other than vaccines, and laboratory services not typically administered in an ambulatory primary care setting.¹
The North Carolina and Washington statutes both require the agreement to specify the services it covers, to carry a written disclaimer about health insurance, and to let the patient end it on written notice.^{5, 6}
The federal provisions do not decide the state insurance question.^{2, 3, 1}
A statute on a neighboring subject is not an answer. Delaware excludes physician arrangements from its definition of a discount medical plan, which says nothing about whether a membership is insurance.¹⁰
Agency position, not yet tested in court: Maryland law defines insurance as a contract to pay or provide a benefit on the occurrence of a determinable contingency, and the state regulator has applied that definition to physician retainer fees.⁷
In Maryland, an annual retainer covering unlimited office visits is, in the regulator's view, the business of insurance, while a practice that contracts to provide only an annual physical exam does not appear to be.⁷
The Maryland regulator lists five indicators that a retainer practice may be engaged in the unauthorized business of insurance.⁷
New York treats a membership plan as insurance unless the fees charged at the time of service actually cover the cost of that service, including reasonable overhead.^{8, 9}
New York found one plan was doing an insurance business that requires a license because a $10 sick-visit fee was unlikely to cover the cost of the visit, and gave another plan only a conditional answer because no prices were provided.^{8, 9}
In 2020 the IRS proposed treating direct primary care fees as medical expenses under section 213 of the tax code.⁴
Both regulators that have published their reasoning test the fee against the care it pays for. Maryland asks whether the fee represents the fair market value of the promised services. New York asks whether the fee charged when care is needed covers the actual cost of that care, including reasonable overhead.^{7, 8, 9}
Reported by secondary sources only: Public trackers do not agree on how many states have a statute. A Wisconsin legislative report counted 28 in January 2020. Two current trackers each list about thirty and differ on a handful of states. Do not rely on a count. Read your own state's law.^{12, 13, 14}
Unsettled: A statute like North Carolina's puts no limit on the number of visits, while unlimited visits are the single riskiest promise in a state with no statute. No regulator has said how many visits is too many.^{7, 8, 5}
The law is still moving. Pennsylvania has no statute, and a bill to create one was referred to the House Insurance Committee on December 9, 2025.¹¹

Our conclusion

A membership is not insurance because it is called direct primary care. It stays outside insurance law because of what the agreement promises and how the fee is set.

If your state has a statute, meet every term in it exactly, and then add what the statute leaves out. North Carolina, for example, requires neither a notice period nor a refund clause. Include both anyway.

If your state has no statute, write the agreement to pass the Maryland and New York reasoning: list the services, set a fee you can defend as the fair price of those services for the panel you will actually accept, cap the panel, do not take on the cost of care delivered by anyone else, let the patient leave at any time, and refund what has not been earned. Think hard before you promise unlimited visits.

Say in the agreement, in plain words, that it is not health insurance and that the patient should keep coverage for everything the membership does not include.

If you want the membership not to disqualify members from a health savings account, keep the fee within the federal cap, and leave procedures that require general anesthesia, prescription drugs other than vaccines, and laboratory services not typically administered in an ambulatory primary care setting out of the arrangement. Then check how your state taxes those accounts, because not every state follows the federal rule.

This guide does not cover a practice that also bills insurance for some patients, or a physician who has opted out of Medicare.