Business Leaders Intermediate 9 min read

How Direct Primary Care + Self-Funded Health Plans Lower Claims Costs

Pairing DPC with a self-funded plan moves primary care utilization out of the insurance claims pipeline — improving employee experience and reducing employer claims spend.

By Kingsfoil Health Editorial Team, Employer Benefits Desk Published April 24, 2026

The most interesting application of direct primary care (DPC) for employers is pairing it with a self-funded or level-funded health plan. The combination changes the economics in concrete ways: primary care utilization moves out of the insurance claims pipeline, the employer captures the savings directly, and employees get a better primary care experience. For self-funded employers in markets with strong DPC access, this is one of the higher-leverage benefits design moves available.

Here’s how the DPC + self-funded combination works, the economics, the implementation considerations, and when it makes sense.

The basic structure

In a traditional self-funded plan with no DPC:

Employees access primary care through in-network providers
Primary care visits, basic labs, and minor procedures generate claims
The employer pays those claims directly
Primary care utilization accumulates against the employee’s deductible
The TPA processes claims and applies cost-sharing

In a self-funded plan with DPC layered on:

Employees access primary care through their DPC practice
DPC visits, basic labs, and many minor procedures happen at the DPC — outside the insurance plan
These services don’t generate insurance claims
The DPC handles wholesale-cost generic prescription dispensing for many common medications
For specialty care, surgeries, hospitalizations, ER visits, and most prescriptions, employees still go through insurance — and the self-funded plan handles those claims normally

The structural change: routine primary care moves out of the insurance system. The DPC handles it via the membership fee; insurance handles everything else.

Why this matters financially

The financial logic depends on who captures the savings.

In a self-funded plan, the employer pays claims directly. When primary care utilization moves out of the claims pipeline, the employer’s direct claims spend goes down by an equivalent amount (minus the DPC membership cost). The savings flow to the employer.

In a fully-insured plan, the carrier pays the claims. When primary care utilization decreases, the carrier benefits — the employer’s premium is fixed regardless. The employer doesn’t capture the savings; the carrier does. (At renewal, lower claims experience may translate into a more favorable rate, but the connection is indirect.)

This is why DPC pairs especially well with self-funded plans. The savings are direct and capturable.

How the math works

A typical primary care year for an employee might include:

1-2 annual physicals and preventive visits
2-4 sick visits, urgent issues, or follow-ups
Ongoing chronic disease management visits (for affected employees)
Basic labs (annual blood work, screenings)
A handful of routine prescription fills
Occasionally minor in-office procedures

In a traditional plan, all of these generate claims. The negotiated rates flow through the TPA, the employer pays them, and the costs accumulate against deductibles and OOP maximums.

In a DPC + self-funded structure, all of these happen at the DPC practice — without generating any insurance claims. The employer pays the DPC membership; the insurance plan pays nothing for these services.

Whether this saves money depends on the specific math:¹

Total annual claims cost for primary care in your current claims data (if available)
Annual DPC membership cost per employee (and family if covered)
Plan design differences (HDHP vs. PPO; HSA contributions; etc.)

For most workforces, the DPC investment offsets the claims reduction roughly even, with employee experience as the net win. For workforces with high primary care utilization, the DPC investment produces net employer savings on top of the experience improvement.

The HDHP pairing

DPC pairs especially well with HDHPs (high-deductible health plans paired with HSAs). The combination delivers:

Lower HDHP premium (high deductible structure)
No deductible accumulation for primary care (DPC happens outside the plan)
Tax-advantaged HSA savings (with appropriate plan design — IRS rules around DPC and HSA eligibility have evolved)²
Catastrophic and specialty coverage through the HDHP for everything beyond primary care

The employer cost stack:

HDHP plan funding (claims + admin + stop-loss for self-funded)
DPC membership fee per employee
Optional HSA contribution

The combined cost is comparable to or lower than a richer non-HDHP plan without DPC, with the experience benefits of DPC layered on top.

What about the deductible interaction?

A common question: if DPC is moving primary care out of the insurance plan, doesn’t that mean employees no longer accumulate deductible from primary care?

Yes. And that’s fine, by design. Here’s why:

In a traditional plan, primary care utilization helps employees hit their deductible faster, but the cost of those services is real. Hitting the deductible doesn’t make care free; it just shifts when the plan starts paying.
With DPC, primary care has no cost to the employee at all (it’s covered by the membership). The employee never needs to “use up” their deductible on primary care.
For specialty and catastrophic care (where insurance pays significantly), the deductible still applies, and employees rarely hit it just from primary care anyway.

The trade-off is real but favorable in most cases. Employees pay less out of pocket for routine care, they have the same protection for major medical events, and the employer’s claims spend goes down or stays flat.

Implementation considerations

Setting up DPC + self-funded requires coordination:

1. Verify DPC practice availability

The biggest constraint. Map your employee geography against DPC practice locations. Without practice access, the model can’t deploy. Multiple practices in each major employee location is ideal. One practice per location is workable. No practices means the model doesn’t apply.

2. Choose contracting model

Two common employer-DPC contracting models:

Employer pays the membership directly to the DPC practice for each enrolled employee
Per-employee-per-month (PEPM) employer commitment to the DPC, with the practice handling the operational details

The choice affects HR workflow and admin overhead.

3. Coordinate with the TPA

Your self-funded plan’s TPA needs to know:

Members are using DPC for primary care
Claims for those services aren’t expected
Specialty referrals will route through insurance
Cost-sharing on the insurance side may or may not apply to DPC-related items

Most TPAs are familiar with DPC integration. Confirm before assuming.

4. Design the HSA structure

If pairing with an HDHP and HSA, the plan design needs to navigate IRS rules on DPC-HSA interaction. Recent federal rules and IRS guidance have evolved; work with a benefits advisor familiar with current rules.²

5. Communicate to employees

DPC is a different model than traditional primary care. Employees need to understand:

How to enroll with the DPC practice
What the DPC handles vs. what goes through insurance
Specialist referral flow
Pharmacy nuances (DPC dispenses some medications; specialty drugs go through pharmacy benefit)

Without this communication, employees may not engage with the DPC, reducing the value of the investment. Enrollment Communications That Actually Work covers this for benefits changes generally.

Real-world structure

A typical DPC + self-funded structure for a small or mid-sized employer:

Self-funded HDHP through a TPA (using a leased PPO network for non-DPC providers)
Stop-loss insurance to cap catastrophic exposure (specific + aggregate)
DPC membership for each employee, paid by the employer
Employer HSA contribution to cushion the deductible for non-primary-care needs
Concierge or care navigation service to support employees navigating between DPC and insurance

The combined structure delivers:

Predictable employer cost (defined contribution to DPC + HSA + premium for HDHP + admin and stop-loss)
Better primary care experience (DPC)
Tax-advantaged employee savings (HSA)
Catastrophic protection (HDHP + stop-loss)
HR workload reduction (concierge handles benefits navigation; DPC handles primary care escalations)

For employers willing to assemble the components, the result is substantively better than the traditional fully-insured PPO they replaced, at comparable or lower total cost.

The DPC + self-funded combination is the structure where DPC’s promise becomes most concrete. Better primary care experience, lower claims spend, predictable cost, and a plan design that fits modern workforces. The only real constraint is geographic DPC availability.

When this combination doesn’t fit

DPC + self-funded doesn’t make sense in every situation:

Fully-insured employers can’t capture the claims savings, so the investment economics weaken
Geographically distributed workforces without DPC access in multiple markets can’t deploy uniformly
Workforces dominated by specialty utilization (rather than primary care) see less DPC benefit
Very small employers may struggle to negotiate the self-funded structure regardless of DPC

For those situations, the traditional fully-insured plan or level-funded plan without DPC is the right answer. DPC is a real upgrade for the right setup, but not a universal solution.

The practical takeaway

DPC + self-funded health plans is one of the more interesting benefits design moves available to small and mid-sized employers in markets with established DPC presence. The combination delivers better employee experience, more predictable employer cost, and often lower total spend than the traditional alternative.

For self-funded employers evaluating how to improve their benefits without inflating cost, DPC is worth a serious look. The implementation requires coordination but the structure is well-established and growing.

Want help evaluating whether DPC + self-funded fits your business? We can map DPC practice availability against your employees, model the claims-spend impact, and design the integration. Talk to us.

All primary care utilization and DPC investment cost statements are directional based on typical patterns. Actual outcomes depend on specific population demographics, primary care utilization rates, DPC practice pricing, and integration design. Modeling against your specific claims data is essential before committing to the structure. ↩
IRS guidance on Direct Primary Care arrangements and HSA eligibility has evolved through multiple notices and recent legislation. See IRS Publication 969 and current IRS guidance for the most recent rules. Plan design should reflect current guidance to preserve HSA eligibility. ↩ ↩²

Frequently asked questions

How does DPC reduce claims costs for self-funded employers?

DPC moves primary care utilization out of the insurance claims pipeline. Office visits, basic in-office labs, basic procedures, and wholesale-cost prescription dispensing happen outside the health plan — they don't generate claims. For a self-funded employer paying claims directly, fewer claims means lower direct claims spend. The savings depends on how much primary care utilization your population has, but for typical workforces, DPC investments often more than pay for themselves through claims reduction.

Why does DPC pair better with self-funded than fully-insured?

In self-funded plans, the employer pays claims directly, so claims reductions from DPC flow to the employer's bottom line. In fully-insured plans, the carrier pays claims, so the savings from reduced primary care claims flow to the carrier — the employer pays the same fixed premium regardless. The financial case for DPC is structurally stronger when the employer captures the savings.

How does DPC interact with HDHPs and HSA eligibility?

DPC pairs naturally with HDHPs: the HDHP handles catastrophic and specialty care, and DPC handles routine primary care that would otherwise count against the deductible. The IRS has issued guidance on the interaction between DPC and HSA eligibility, and recent legislation has expanded DPC-HSA compatibility in some scenarios. Plan design needs to navigate these rules carefully — work with a benefits advisor familiar with current IRS guidance.

What does it cost to add DPC to a self-funded plan?

The direct cost is the DPC membership fee per employee per month. Adult memberships are commonly in the $50-$150 per month range. The fee is offset by reduced claims spend in the self-funded plan, so the total-cost impact is often net-zero to net-positive. The employer pays the membership; the plan pays fewer claims. Whether the math works depends on your specific population's primary care utilization and the cost of the DPC membership.

How is DPC documented and integrated with the health plan?

Typically the DPC practice operates as a separate vendor relationship, with employees accessing the DPC outside the insurance plan. The TPA continues to handle the insurance claims pipeline normally. The DPC and the TPA coordinate on specialist referrals (DPC physician refers; specialist visit goes through insurance), but they're operationally distinct. Some advanced setups integrate DPC into the plan design more deeply, but this is more complex.

Should every self-funded employer add DPC?

Not every. DPC fits well when DPC practices are accessible in employee geographies and your population uses primary care meaningfully. For workforces in areas without DPC presence, or for populations that primarily access specialty care rather than primary care, the value is harder to capture. Evaluate practice availability and your claims utilization patterns before committing.

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