HI Plan

[Guest 2ronto]

GBurns posted messages regarding a "boot Leg" version and a real version of HI Plan. He did not specify who was who or if he had evaluated what they call "Due Dilligence".

Any info before we proceed.

Thank-you

Ross

[GBurns]

The amount of material that is available on the “bootleg” version of the Health Incentive Plan (HI Plan) is too extensive to be posted. I have been giving various pieces to some who have contacted me. The pieces vary by the reason that they need the info, prospective user, agent, advisor etc.

The decision as to which is “bootleg” or not will be up to the individual who looks at the facts etc.

I do not know what “due diligence” material you looked at or from whom, but I do suggest that you investigate and verify ALL claims thoroughly.

1. When, how and by whom was the plan developed?

2. When and how did the promoter, legal advisor, agent etc get involved?

3. What is the plan reimbursing or making the payment (the Incentive Allowance) for?

If the claim being made that the tax free payment is not a reimbursement for the expenses of medical care, What is the process for claims submission, claim substantiation and claims adjudication?

Is the claim being made that there does not have to be such claims processes because the pre-tax salary reduction is an expense of medical care as per the wording in Section 213(d)? This is one of the main false claims of the “bootleg” plan. Section 213(d) is in Part VII which is titled “ Addition Itemized Deductions…. “ whereas Sections 105, 106 and 125 are in Part III which is titled “Items Specifically Excluded from Gross Income”. Deductions are taken on a tax return and cannot be pre-taxed. Exclusions are taken pre-tax. The pre-tax deduction cannot be a reimbursable expense. There are many other reasons why the pre tax deduction (reduction) cannot be an employee amount. One is that 105(B) and 106 allows exclusion from the employee’s gross income of the premiums paid and the benefits received, but only if paid by employer contributions. That is why the amount has to be treated as employer contributions. In addition the amount of the salary reduction was never constructively received by the employee and therefore was ans has never been employee money. To treat it as employee money cause a whole new set of problems. I would hate to be taxed on the economic value of the medical treatment etc received.

4. Who is the TPA or Claims Administrator? Are they licensed in your state or any state for that matter?

5. Have you checked with your state DOI regarding any current ongoing investigations involving the promoter or that plan? Currently I am aware of 15 states that are investigating for unlicensed entities and insurance fraud violations. Georgia is not yet one of them.

6. Have you checked with the specialists (not the telephone reps) at the IRS. Mr. Beker or Mr. Zech will speak to legal representatives only regarding their investigation that has led so far to the inclusion of the plan in the Treasury Dept/IRS 2001 Priority Guidance Plan for the issuing of guidance as to why that plan does not work.

7. Have you read the numerous industry newsletters that have addressed that plan and its predecessor the MR106? The May 14, Grist Report by William M. Mercer addressed the plan and the promoter www.theredwoodgroup.com. While these articles have not been very good or accurate they should still serve to warn prospective users to investigate thoroughly ALL claims made by agents and the promoter.

The sales literature etc all outline an Accident and Health Plan/Medical Reimbursement Plan that reimburses the expenses of medical care but in operation the “bootleg” plan has no expenses that are reimbursed. The only thing that is done is a payroll recalculation to reimburse the pre-tax deduction which, for many reasons, is not a reimbursable expense.

There is much more to the issue, but I don’t think that I should take any more space. The point is What you see in the presentation etc is not what you get. Many clients have their legal advisors okay the concept, which is quite legal, but then they never get them to look at what is delivered.

How do I know all this?

I developed the original plan and filed the patent applications. That is why I am the central figure in the investigations by the IRS, the DOL, the FBI, the USPS and some of the state DOI.