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Exceptions to the Additional 15%

MSA) of the surviving spouse for

Section B—Medicare

distribution purposes. Follow the

Tax

Advantage MSA

instructions in Section A for Death of

The additional 15% tax does not apply to

Account Holder on page 2.

Distributions

distributions made after the date that the

If the designated beneficiary is not the

account holder —

Complete Section B if you (or your

account holder’s surviving spouse, or

•

Dies,

spouse, if filing jointly) received

there is no designated beneficiary, the

•

distributions from a Medicare Advantage

Becomes disabled (see page 1), or

account ceases to be an MSA as of the

MSA in 2008. If both you and your spouse

•

date of death. The beneficiary completes

Turns age 65.

received distributions, complete a

Form 8853 as follows.

If any of the exceptions apply to any of

separate Form 8853, Section B, for each

•

Enter “Death of Medicare Advantage

the distributions included on line 10,

spouse. Enter “statement” across the top

MSA account holder” across the top of

check the box on line 11a. Enter on line

of each Form 8853, fill in the name and

Form 8853.

SSN, and complete Section B. Next, add

11b only 15% (.15) of any amount

•

Enter the name(s) shown on your tax

lines 12, 13, 14, and 15b from the two

included on line 10 that does not meet

return and your SSN in the spaces

statement Forms 8853 and enter those

any of the exceptions.

provided at the top of the form. Skip

totals on the respective lines of the

Section A.

controlling Form 8853 (the combined

•

Example 1. You turned age 66 in

On line 12, enter the fair market value

Form 8853 for both spouses). If either

2008 and had no Archer MSA during

of the Medicare Advantage MSA as of the

spouse checked the box on line 15a of

date of death.

2008. Your spouse turned age 63 in 2008

the statement Form 8853, check the box

•

On line 13, for a beneficiary other than

and received a distribution from an Archer

on the controlling Form 8853. Attach the

the estate, enter qualified medical

MSA that is included in income. Do not

two statement Forms 8853 to your tax

expenses incurred by the account holder

check the box on line 11a because your

return after the controlling Form 8853.

before the date of death that you paid

spouse (the account holder) did not meet

within 1 year after the date of death.

If you (or your spouse, if filing

the age exception for the distribution.

•

Complete the rest of Section B.

jointly) received distributions from

Enter 15% of the amount from line 10 on

a Medicare Advantage MSA in

CAUTION

line 11b.

If the account holder’s estate is the

2008, you must file Form 8853 with a

beneficiary, the value of the Medicare

Form 1040 even if you have no taxable

Advantage MSA as of the date of death is

Example 2. Both you and your

income or any other reason for filing Form

included in the account holder’s final

spouse received distributions from your

1040.

income tax return.

Archer MSAs in 2008 that are included in

income. You were age 65 at the time you

The distribution is not subject to the

Medicare Advantage MSA

additional 50% tax. Report any earnings

received the distributions and your

A Medicare Advantage MSA is an Archer

on the account after the date of death as

spouse was age 63 when he or she

MSA designated as a Medicare

income on your tax return.

received the distributions. Check the box

Advantage MSA to be used solely to pay

on line 11a because the additional 15%

Note. If, during the tax year, you are the

the qualified medical expenses of the

tax does not apply to the distributions you

beneficiary of 2 or more Medicare

account holder. To be eligible for a

received (because you met the age

Advantage MSAs or you are a beneficiary

Medicare Advantage MSA, you must be

exception). However, the additional 15%

of a Medicare Advantage MSA and you

enrolled in Medicare and have an HDHP

tax does apply to your spouse’s

have your own Medicare Advantage

that meets the Medicare guidelines.

MSA, you must complete a separate

distributions. Enter on line 11b only 15%

Contributions to the account can be made

Form 8853 for each MSA. Enter

of the amount of your spouse’s

only by Medicare. The contributions and

“statement” at the top of each Form 8853

distributions included in line 10.

any earnings, while in the account, are

and complete the form as instructed.

not taxable to the account holder. A

Next, complete a controlling Form 8853,

distribution used exclusively to pay for the

Example 3. You turned age 65 in

combining the amounts shown on each of

qualified medical expenses of the account

2008. You received distributions that are

the statement Forms 8853. Attach the

holder is not taxable. Distributions that

included in income both before and after

statements to your tax return after the

are not used for qualified medical

you turned age 65. Check the box on line

controlling Form 8853.

expenses of the account holder are

11a because the additional 15% tax does

included in income and also may be

not apply to the distributions made after

Line 12

subject to a penalty.

the date you turned age 65. However, the

Enter the total distributions you received

Death of Account Holder

additional 15% tax does apply to the

in 2008 from all Medicare Advantage

distributions made on or before the date

If the account holder’s surviving spouse is

MSAs. These amounts should be shown

you turned age 65. Enter on line 11b,

the designated beneficiary, the Medicare

in box 1 of Form 1099-SA. This amount

15% of the amount of these distributions

Advantage MSA is treated as a regular

should not include any erroneous

included in line 10.

Archer MSA (not a Medicare Advantage

contributions made by Medicare (or any

Additional 50% Tax Worksheet—Line 15b

Keep for Your Records

1. Enter the total distributions included on Form 8853, line 14, that do not meet either of the exceptions to the additional

50% tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2. Did you have a Medicare Advantage MSA on December 31, 2007?

STOP

No.

Enter one-half of line 1 on Form 8853, line 15b

Yes. Enter the value of your Medicare Advantage MSA on December 31, 2007

3. Enter the amount of the annual deductible for your HDHP policy on

January 1, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4. Multiply line 3 by 60% (.60) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5. Subtract line 4 from line 2. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6. Subtract line 5 from line 1. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7. Enter one-half of line 6 here and on Form 8853, line 15b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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