Instructions For Form 8853 - Archer Msas And Long-Term Care Insurance Contracts - 2010 Page 8
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8Example 1
Step 1. They complete a statement for
Step 4. Mrs. Smith, Sam, and Deborah
Mrs. Smith for the first LTC period as
each complete Form 8853 as follows.
Mrs. Smith was chronically ill throughout
follows.
Mrs. Smith’s Form 8853:
2010 and received 12 monthly payments
on a per diem basis from a qualified LTC
1st LTC
2nd LTC
Line
Amount
insurance contract. She was paid $2,000
Line
Period
Period
Form 8853
per month ($24,000 total). Mrs. Smith
20
$12,000 ($2,000 x 6 mos.)
incurred expenses for qualified LTC
20
$12,000
$12,000
$24,000
services of $150 per day ($54,750) and
21
$52,490 ($290 x 181 days)
was reimbursed for one-half of those
25
$38,915
$12,000
$50,915
22
$27,150 ($150 x 181 days)
expenses ($27,375). She uses the equal
26
$ -0-
$-0-
$-0-
payment rate method and therefore has a
23
$52,490
single benefit period for 2010 (January
Sam’s Form 8853:
24
$13,575 ($75 x 181 days)
1 – December 31). Mrs. Smith completes
Form 8853, lines 20 through 26, as
25
$38,915
1st LTC
2nd LTC
follows.
Line
Period
Period
Form 8853
26
$ -0-
Step 2. They complete the aggregate
Line
Amount
20
$-0-
$18,000
$18,000
statement for the second LTC period as
25
$-0-
$16,536
$16,536
follows.
20
$24,000 ($2,000 x 12 mos.)
26
$-0-
$ 1,464
$ 1,464
21
$105,850 ($290 x 365 days)
Line
Amount
Deborah’s Form 8853:
22
$54,750 ($150 x 365 days)
20
$42,000 ($7,000 x 6 mos.)
23
$105,850
1st LTC
2nd LTC
Line
Period
Period
Form 8853
21
$53,360 ($290 x 184 days)
24
$27,375 ($75 x 365 days)
22
$27,600 ($150 x 184 days)
25
$78,475
20
$-0-
$12,000
$12,000
23
$53,360
26
$-0-
25
$-0-
$11,024
$11,024
24
$13,800 ($75 x 184 days)
Example 2
26
$-0-
$
976
$
976
25
$39,560
The facts are the same as in Example 1,
26
$2,440
except Mrs. Smith’s son, Sam, and
daughter, Deborah, each also own a
Step 3. They allocate the aggregate per
qualified LTC insurance contract under
diem limitation of $39,560 on line 25
which Mrs. Smith is the insured. Neither
among Mrs. Smith, Sam, and Deborah.
Sam nor Deborah incurred any costs for
Because Mrs. Smith is the insured, the
qualified LTC services for Mrs. Smith in
per diem limitation is allocated first to her
2010. From July 1, 2010, through
to the extent of the per diem payments
December 31, 2010, Sam received per
she received during the second LTC
diem payments of $3,000 per month
period ($12,000). The remaining per diem
($18,000 total) and Deborah received per
limitation of $27,560 is allocated between
diem payments of $2,000 per month
Sam and Deborah.
($12,000 total). Mrs. Smith, Sam, and
Allocation ratio to Sam: 60% of the
Deborah agree to use the equal payment
remaining limitation ($16,536) is allocated
rate method to determine their LTC
to Sam because the $18,000 he received
periods.
during the second LTC period is 60% of
There are two LTC periods. The first is
the $30,000 received by both Sam and
181 days (from January 1 through June
Deborah during the second LTC period.
30) during which the per diem payments
Allocation ratio to Deborah: 40% of
were $2,000 per month. The second is
the remaining limitation ($11,024) is
184 days (from July 1 through December
allocated to Deborah because the
31) during which the aggregate per diem
$12,000 she received during the second
payments were $7,000 per month ($2,000
LTC period is 40% of the $30,000
under Mrs. Smith’s contract + $3,000
received by both Sam and Deborah
under Sam’s contract + $2,000 under
during the second LTC period.
Deborah’s contract).
An aggregate statement must be
completed for the second LTC period and
attached to Mrs. Smith’s, Sam’s, and
Deborah’s forms.
-8-
Instructions for Form 8853 (2010)
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