South Carolina’s 2026 HSA Changes and What They Mean for Direct Primary Care

South Carolina’s 2026 HSA Changes and What They Mean for Direct Primary Care

Beginning in 2026, South Carolina residents may be able to use health savings account (HSA) funds to pay for direct primary care (DPC) memberships, including monthly plans at Palmetto Proactive. This update removes one of the biggest obstacles that patients face when considering DPC: uncertainty about whether tax-advantaged funds can be used for monthly membership fees.

For many individuals and families, this change will make DPC not only more affordable but also more practical. It allows patients to pair a transparent primary care membership with a high-deductible insurance plan for major medical needs, lowering overall healthcare costs without sacrificing access.

This article explains the upcoming changes, how HSAs work, how these funds can be used at Palmetto Proactive beginning in 2026, and why the combination of HSA + DPC can significantly reduce total healthcare spending.

What Is an HSA?

A Health Savings Account (HSA) is a tax-advantaged savings account available to individuals who are enrolled in a qualified high-deductible health plan (HDHP).

Key Features of HSAs

Feature	Explanation
Tax-free contributions	Contributions are pre-tax or tax-deductible.
Tax-free growth	Funds grow tax-free.
Tax-free withdrawals	Qualified medical expenses can be paid without tax penalty.
Portability	The account belongs to the individual, not the employer.
No “use it or lose it” rule	Unused funds roll over each year.

What Is Changing in 2026?

Historically, the rules surrounding whether direct primary care (DPC) memberships counted as a “qualified medical expense” were unclear, largely because federal definitions did not explicitly address subscription-based primary care. Beginning in 2026, updated guidance and state-level alignment allow HSA funds to be used for direct primary care arrangements, helping remove long-standing uncertainty for patients.

At the same time, federal agencies have shown growing support for primary care innovation and models designed to improve access and affordability. 

• The U.S. Department of Health and Human Services has highlighted initiatives focused on expanding access to affordable health coverage and essential services, reinforcing the importance of flexible, patient-centered approaches to care.
   

• Similarly, the Centers for Medicare & Medicaid Services has proposed policy changes aimed at strengthening preventive and primary care access, signaling continued federal interest in care models that reduce barriers and improve patient engagement at the primary care level.

Together, these efforts help place South Carolina’s 2026 HSA alignment in a broader national context—one that prioritizes accessible, cost-conscious primary care as the foundation of a more sustainable healthcare system.

What Does This Mean for Patients?

If you’re considering Palmetto Proactive, the ability to use HSA funds removes a major financial barrier. It means:

• You can now pay for everyday care using pre-tax dollars.
   

• Your membership cost becomes more affordable.
   

• You can combine DPC with a lower-premium HDHP and keep more money in your HSA for future needs.
   

• You get predictable, transparent pricing instead of visit-based billing.
   

For individuals and families, this is a significant step toward cost-controlled, reliable primary care.

How Can I Use My HSA at Palmetto Proactive?

Beginning in 2026, your HSA can be used for more than just isolated medical expenses—it can cover the routine, predictable primary care you receive every month.

Once the rules take effect, you will be able to use your HSA card for:

• Monthly or annual Palmetto Proactive membership fees
   

• Preventive visits
   

• Chronic condition management
   

• Sick visits
   

• In-house procedures
   

• Discounted labs
   

• Discounted imaging coordinated through our clinic
   

Instead of paying out-of-pocket each month, you will have the option to use pre-tax dollars to support ongoing care, reducing your real cost and giving you more predictable budgeting.

How Can Using an HSA with DPC Save Money?

Pairing DPC with HSA eligibility provides several financial advantages:

1. You use pre-tax dollars for membership fees.

This immediately lowers your after-tax cost.

2. Lower lab, imaging, and medication costs.

Palmetto Proactive offers transparent cash pricing that is often a fraction of insurance-billed rates.

3. Fewer urgent care or ER visits.

Fast access to your provider helps resolve issues earlier.

4. Ability to choose a lower-premium HDHP.

Many DPC patients pair membership-based care with a high-deductible plan because routine care is already covered.

This combination maximizes tax benefits while reducing unnecessary spending.

How Does DPC Compare to Using Insurance for Primary Care?

Category	Direct Primary Care (DPC)	Insurance-Based Primary Care
Visit access	Same-day or next-day	Often 1–3 weeks
Cost structure	Predictable monthly membership	Deductibles, copays, billing codes
Communication	Direct access to your provider	Limited availability
Lab and imaging costs	Discounted cash pricing	Highly variable insurance pricing
Scope of care	Preventive, chronic, acute needs	May require referrals or multiple visits

When DPC is combined with HSA funds, the value increases substantially due to tax savings.

If I Use HSA for DPC, What Do I Use My Health Insurance For?

Direct primary care does not replace insurance. Instead, the two work together efficiently.

Keep your insurance for:

• Hospitalization
   

• Surgery
   

• Emergency room visits
   

• Specialist care
   

• High-cost imaging
   

• Catastrophic illness or injury
   

Use Palmetto Proactive for:

• Preventive checkups
   

• Chronic care management
   

• Sick visits
   

• Procedures
   

• Labs and imaging at discounted rates
   

• Medication coordination
   

• Ongoing health guidance
   

This structure allows you to control both cost and access.

Frequently Asked Questions

1. Are these HSA changes definite for 2026?

South Carolina has already taken the necessary steps to classify direct primary care as medical care rather than insurance, which is required for HSA eligibility. Final application still follows federal guidelines, but the state’s framework is set for 2026.

2. Can I switch to a high-deductible health plan (HDHP) to maximize HSA savings?

Yes. HDHPs pair well with DPC because membership care covers most routine needs. For official requirements, patients should review IRS guidance on HSAs and HDHP qualification through IRS Publication 969.

3. Does Palmetto Proactive bill insurance?

No. By operating outside the insurance system, Palmetto Proactive provides transparent, predictable pricing without the limitations of insurance billing codes or claim approvals.

4. Can I use HSA funds for discounted labs or imaging through Palmetto Proactive?

Yes—beginning in 2026, as long as the service qualifies under IRS rules for medical expenses, you may use your HSA to pay for these services at Palmetto Proactive’s discounted cash rates.

5. What do I use my traditional insurance for?

You will still use insurance for high-cost or unpredictable healthcare needs such as hospitalizations, surgeries, emergencies, and specialist care.

6. Will using my HSA for DPC limit my ability to pay for other medical expenses?

No. HSAs are designed for flexibility. You can use HSA dollars for your membership and still allocate remaining funds toward specialist copays, prescriptions, or out-of-pocket costs tied to your insurance plan.

7. Does using HSA funds for DPC change anything about how I receive care at Palmetto Proactive?

No. Your care experience stays the same. The update simply gives you another way to pay for your membership using pre-tax dollars. You will still have the same access, same transparent pricing, and the same patient-centered model you rely on today.

A More Affordable Way to Access Everyday Primary Care

The upcoming 2026 HSA changes give South Carolina residents a new level of flexibility in how they pay for routine medical care. By allowing HSA dollars to cover direct primary care memberships, patients can combine predictable, relationship-driven care with the tax advantages they already use for other health expenses.

For individuals and families, this shift makes Palmetto Proactive’s model even more accessible. It supports a simpler, more transparent approach to healthcare—one where primary care is easy to reach, affordable to maintain, and built around what patients actually need.