The double-dip promoter who wouldn't share plan documents

A double-dip promoter asked me to get on a Zoom to discuss their product. I asked them to send me their plan documents beforehand. They said the structure is proprietary. I’d need to sign an NDA first.

If a vendor pitched your finance team a “wellness program” or similar that pays employees $1,200 a month tax free and saves the company $640 PEPY in FICA, this post is for you.

I’ve explained why the structure doesn’t work. This one is about what happens when you ask the people selling it to show theirs.

The pitch isn’t that the IRS missed §105(b). It’s that some combination of §105, §106, and §125, wrapped in a fixed-indemnity insurance policy, makes this particular structure work. It doesn’t matter how the sections are stacked. §105(b) only excludes amounts paid to reimburse a medical expense the employee actually incurred. If the triggering activity costs the employee nothing, there’s no expense, and §105(b) is out before §106 or §125 even come up.

The insurance wrapper doesn’t save it either. Insurance requires a real risk of loss. A policy that pays $1,000 every month an employee fills out a survey isn’t insuring against anything. It’s a payroll mechanism in an insurance costume.

Rev. Rul. 2002-3, three Chief Counsel memos in 2016-17, and CCA 202323006 in 2023, which addresses this exact $1,200 fact pattern, all turn on those same threshold questions.

A §105(b) analysis isn’t proprietary. The Code is public. The regs are public. The case law is public.

If it works, it survives being read.