<<Disclaimer: Verify this information before applying it to your situation.>>

I am about to copy from a fax sent to the City of Bozeman about my special
foods.

This is not in the fax but was read to the woman at the city from the
company's computer.  This woman eats dog food.  This is from a denied claim a
few years ago when they agreed to cover my dog's food and vet care because he
is a service animal.  They denied my claims then and I should have kept that
in mind.

Robert W. Schulte is at Intermountain Administrators, Inc. Phone 877-721-2222
ext. 3237 or fax 877-424-3539 both numbers toll free in case any of you want
to speak with him.

He sent the following.  I will comment in () when the urge takes me, the un
() stuff is his.

xx. What expences can be reimbursed under a health FSA? (This is at the very
top of the page)

4.  Special Foods

     The IRS has ruled that amounts spent on special food that is a
substitute for the food an individual normally consumes and that satisfies
the taxpayer's nutritional needs is not medical care. 131
     In two cases, the Tax Court has held that the excess costs of obtaining
medically required foods can be deductible as expenditures for medical care.
132 And it has allow the foods that were prescribed specifically alleviate or
treat an objectively determinable illness or disease to the extent that their
cost exceeds the cost of a normal diet. 133 Mostly, however, the Tax Court
has rejected claims for deductions for special foods that were found to be
merely substitutes for foods normally consumed by an individual. 134
     In order to be a deductible medical expense {and reimbursable by a
health FSA}, the food in special diets must be necessary to cure or treat a
specific illness.  As is the case with other deductible health care
expenditures, the cost of foods and beverages recommended merely to promote
good health is not deductible.  As a practical matter, it will be difficult
for participants to substantiate and for the health FSA to verify that the
special food not only qualifies as Medicare, but the amount that exceeds the
cost of a normal diet.

(Now this text appears in a box.)

Administration Tip: Health FSA sponsors should consider excluding such
expenses from their plans {by plan amendment} because they rarely satisfy the
code 213 requirements.  In addition, such expences are only deductable to the
xtent that thir cost exceeds the cost of a normal diet. * Therefore a
participant must be prepared to show both the cost incurred for the special
items and the cost that would have been established by comparing prices at
the health food stores patronized by the taxpayer with average prices for
similar food in the area, as determined by the DOL's Bureau of Statistics.
As a practical matter, however, this excess cost will be difficult for
participants to substantiate and for the health FSA to verify.

*see e. g. Randolph v. Commissioner, 67 T. C. 481 (1976)
131 see Rev. Rul. 2002-16 T. R. B. 778 (Apr. 22, 2002)  Also see subsection
Q.4.
132 see Randolph v. Commissioner, 67 T. C. 481 (1976); Cohn v. Commissioner
38 T. C. 387 (1962)
133 see  Randolph v. Commissioner, 67 T. C. 481 (1976)
134 see massa v. Commissioner T. C. Mcmo 1999-63 (T. C. 1999) (citing cases)

This publication is dated June 2002 of Employee benefits institute of America
LLC (EBIA) page 567

Now it's me talking from here on...

Should I demand to see the plan amendment to see if they adopted this?  They
began telling me I could submit expenses in April or May when I first
inquired about this on this LISTSERV.  I could look up the dates.  They told
me I could simply submit my receipts and never once mentioned the math
involved.

I am going to call on Monday and hope some of you will use the toll free
number to make inquiries of your own.

What is your take on the issue?

Thanks...



Blessed Be!
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