Business Tax Strategy · ProfitGuard Plus
Is ProfitGuard Plus Legal?
The Double-Dipping Line
If your first reaction to "lower your payroll taxes and raise your team's pay" is doubt, good. You have seen programs like this get shut down. So have we. This page shows you the exact line those programs crossed, how ProfitGuard Plus stays on the right side of it, and the questions to put to anyone, including us, before you sign.
Quick answer
- Yes. ProfitGuard Plus is built on four long-standing sections of the tax code: 125, 106(a), 105, and 213(d).
- Being skeptical is smart. About half of the 'tax-saving benefit' programs marketed over the last decade got shut down under IRS audit.
- The programs that failed shared two flaws.
- First, they ran the reimbursement back through the Section 125 cafeteria plan. The IRS calls that double-dipping, and the reimbursement becomes taxable.
- Second, they reimbursed activities like step counts, gym memberships, and gift cards instead of real Section 213(d) medical care.
- ProfitGuard Plus is built the opposite way. Reimbursement flows through a Self-Insured Medical Reimbursement Plan under Treasury Reg 1.105-11, never the cafeteria plan.
- The care it reimburses is real 213(d) care: telehealth, mental health support, care navigation, and chronic condition support.
- Plan documents are written and reviewed by CPAs and ERISA attorneys before any plan goes live.
- Each employee must have major medical coverage somewhere. That Integrated 105 design keeps the plan clear of the ACA Section 4980D penalty.
Why the doubt is earned
Half of the "tax-saving employee benefits" programs marketed in the last decade got shut down under IRS audit. The owners who signed up were not foolish. The pitch sounded like this one. The difference was in the structure, and you could not see it from the brochure.
The two ways those programs failed
Flaw 1: Double-dipping through the cafeteria plan
They ran the medical reimbursement back through the Section 125 cafeteria plan. The employee had already taken a pre-tax break through that plan, so the reimbursement was a second bite at the same benefit. The IRS calls that double-dipping, and the reimbursement becomes taxable.
Flaw 2: Reimbursing activities instead of care
They paid for step counts, gym memberships, and gift cards and called it a medical plan. None of that is Section 213(d) medical care. IRS Chief Counsel memos targeted exactly this pattern.
The bright line
ProfitGuard Plus is built the opposite way on both counts.
- Reimbursement flows through a Self-Insured Medical Reimbursement Plan under Section 105 and Treasury Reg 1.105-11. Never back through the cafeteria plan.
- The care it reimburses is real Section 213(d) care: telehealth, mental health support, care navigation, and chronic condition support.
- Each employee must have major medical coverage somewhere. That Integrated 105 design keeps the plan clear of the ACA Section 4980D penalty.
That is the bright line. Where the reimbursement runs, and what it pays for.
ERISA-reviewed plan documents
A plan is only as good as its documents. ProfitGuard Plus plan documents are written and reviewed by CPAs and ERISA attorneys before any plan goes live. ERISA is the federal law that governs employer benefit plans. That review is a check that the plan is built the right way, not just described the right way. Your own CPA should read the documents too. We expect that, and we will loop them in.
Ask these questions before you sign
Put these to any promoter, including us. A real structure has short, clear answers to every one.
1. Where does the reimbursement run?
Through the Section 125 cafeteria plan, or through a separate Self-Insured Medical Reimbursement Plan under Section 105 and Reg 1.105-11? Only the second answer holds up.
2. What exactly gets reimbursed?
Real Section 213(d) medical care, or activities like step counts, gym memberships, and gift cards? If the answer includes rewards for activity, walk away.
3. Who wrote and reviewed the plan documents?
You want CPAs and ERISA attorneys, and you want to see the documents before anything goes live.
4. Does anyone's gross pay change?
It should not. With ProfitGuard Plus, gross compensation stays the same and the employer's FICA bill is the only line that drops.
5. Does every participating employee need major medical somewhere?
Yes. That is the Integrated 105 design that avoids the ACA Section 4980D penalty. A program that skips this gate is skipping a rule.
6. Does it replace my current benefits?
It should stack on top of your medical, dental, vision, and retirement benefits, not replace them.
7. Who does the work with my payroll provider?
We coordinate with your payroll provider and handle the plan documents. If a promoter leaves that to you, ask why.
Want this as a printable sheet? The 7 Questions Before You Sign audit sheet and the 10 Red Flags Decoder are free on the ProfitGuard Plus page.
Keep reading
The statute text itself is on the tax code behind ProfitGuard Plus. The numbers are on what it costs and what it saves. Everything else is in the ProfitGuard Plus Education Center.
Frequently asked questions
Is ProfitGuard Plus legal?
Yes. It is built on four long-standing sections of the tax code: Section 125, Section 106(a), Section 105 with Treasury Reg 1.105-11, and Section 213(d). Plan documents are written and reviewed by CPAs and ERISA attorneys before any plan goes live.
What is double-dipping?
Running the medical reimbursement back through the same Section 125 cafeteria plan that already gave the employee a pre-tax break. The IRS treats that as taking the same tax benefit twice, and the reimbursement becomes taxable. Programs that did this were shut down.
How does ProfitGuard Plus avoid double-dipping?
The reimbursement flows through a Self-Insured Medical Reimbursement Plan under Section 105 and Treasury Reg 1.105-11, on its own. It never goes back through the cafeteria plan. That separation is the bright line.
Why did the IRS shut down so many similar programs?
Two reasons. They ran reimbursements through the cafeteria plan, which is double-dipping. Or they paid for step counts, gym memberships, and gift cards instead of real Section 213(d) medical care. IRS Chief Counsel memos targeted exactly that pattern. ProfitGuard Plus avoids both by design.
What does ERISA-reviewed mean here?
The plan documents are written and reviewed by CPAs and ERISA attorneys before any plan goes live. ERISA is the federal law that governs employer benefit plans, so that review is a check that the plan is built the right way, not just marketed the right way.
What should I ask before I sign with anyone?
Ask where the reimbursement runs (through the cafeteria plan, or through a separate SIMRP), what gets reimbursed (real 213(d) medical care, or activities and gift cards), who wrote and reviewed the plan documents, and whether every employee must have major medical somewhere. The checklist on this page walks through them.
This is education, not tax or legal advice. Actual savings vary by payroll structure, participation, and state and local tax. Talk to your CPA about your specifics before you decide. ProfitGuard Plus is a marketing name for a structure built on IRS code sections 125, 106(a), 105, and 213(d).
See your ProfitGuard Plus number
Enter your W-2 headcount and see the combined value first. Then we'll run your exact numbers. You can also read the full walkthrough on the ProfitGuard Plus page or call +1 (586) 899-1003.
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