A system and method for handling packets includes receiving the packets at a layer 3 handler in a network device, determining whether the packets are diagnostic packets by examining bit patterns of the packets, determining whether an application in the network device can handle the diagnostic packets when the packets are the diagnostic packets, delivering the diagnostic packets to the application for handling when the application in the network device can handle the diagnostic packets, receiving response packets from the application, and transmitting the response packets. In some embodiments, the bit patterns include a reserved bit of an IP header that is set to one when the packets are the diagnostic packets. In some embodiments, application packets and the diagnostic packets include a same source IP address, a same destination IP address, a same source port, and a same destination port.