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11b only 15% of the amount of your

Contributions to the account may be

The distribution is not subject to the

spouse’s distributions included in line 10.

made only by Medicare. The contributions

additional 50% tax. Report any earnings

and any earnings, while in the account,

on the account after the date of death as

Example 3. You turned age 65 during

are not taxable to the account holder. A

income on your tax return.

the year. You received distributions that

distribution used exclusively to pay for the

are included in income both before and

Line 12

qualified medical expenses of the account

after you turned age 65. You check the

Enter the total distributions you received

holder is not taxable. Distributions that

box on line 11a because the additional

in 2004 from all Medicare Advantage

are not used for qualified medical

15% tax does not apply to the

MSAs. These amounts should be shown

expenses of the account holder are

distributions you received after you turned

in box 1 of Form 1099-SA. This amount

included in income and also may be

age 65. However, the additional 15% tax

should not include any erroneous

subject to a penalty.

does apply to the distributions you

contributions made by Medicare (or any

received before you turned age 65. You

Death of Account Holder

earnings on the erroneous contributions)

enter on line 11b, 15% of the amount of

or any amounts from a trustee-to-trustee

If the account holder’s surviving spouse is

these distributions included in line 10.

transfer from one Medicare Advantage

the designated beneficiary, the Medicare

MSA to another Medicare Advantage

Advantage MSA is treated as a regular

Section B—Medicare

MSA of the same account holder.

Archer MSA (not a Medicare Advantage

Advantage MSA

MSA) of the surviving spouse for

Line 13

distribution purposes. Follow the

Distributions

Enter the total distributions from all

instructions in Section A for Death of

Medicare Advantage MSAs in 2004 that

Complete Section B if you (or your

Account Holder beginning on page 1.

were used for your qualified medical

spouse, if filing jointly) received

If the designated beneficiary is not the

expenses (see page 1).

distributions from a Medicare Advantage

account holder’s surviving spouse, or

MSA in 2004. If both you and your spouse

You cannot take a deduction on

there is no designated beneficiary, the

received distributions, complete a

Schedule A (Form 1040) for any

account ceases to be an MSA as of the

separate Form 8853, Section B, for each

amount you include on line 13.

CAUTION

date of death. The beneficiary completes

spouse. Write “statement” across the top

Form 8853 as follows.

of each Form 8853, fill in the name and

Lines 15a and 15b

•

Write “Death of Medicare Advantage

SSN, and complete Section B. Next, add

MSA account holder” across the top of

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

Additional 50% Tax

Form 8853.

statement Forms 8853 and enter those

•

Medicare Advantage MSA distributions

Write the name(s) shown on your tax

totals on the respective lines of the

included in income (line 14) may be

return and your SSN in the spaces

controlling Form 8853 (the combined

subject to an additional 50% tax unless

provided at the top of the form. Skip

Form 8853 for both spouses). If either

one of the following exceptions applies.

Section A.

spouse checked the box on line 15a of

•

On line 12, enter the fair market value

the statement Form 8853, check the box

Exceptions to the Additional 50%

of the Medicare Advantage MSA as of the

on the controlling Form 8853. Attach the

Tax

date of death.

two statement Forms 8853 to your tax

•

The additional 50% tax does not apply to

On line 13, for a beneficiary other than

return after the controlling Form 8853.

distributions made on or after the date

the estate, enter qualified medical

that the account holder —

expenses incurred by the account holder

•

Medicare Advantage MSA

Dies, or

before the date of death that you paid

•

A Medicare Advantage MSA is an Archer

Becomes disabled (see page 1).

within 1 year after the date of death.

•

MSA designated as a Medicare

If either of the exceptions applies to any

Complete the rest of Section B.

Advantage MSA to be used solely to pay

of the distributions included on line 14,

the qualified medical expenses of the

If the account holder’s estate is the

check the box on line 15a. Next, if either

account holder. To be eligible for a

beneficiary, the value of the Medicare

of the exceptions applies to all the

Medicare Advantage MSA, you must be

Advantage MSA as of the date of death is

distributions included on line 14, enter -0-

enrolled in Medicare and have an HDHP

included in the account holder’s final

on line 15b. Otherwise, complete the

that meets the Medicare guidelines.

income tax return.

worksheet below to figure the amount of

Additional 50% Tax Worksheet—Line 15b

(Keep for your records)

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

to the additional 50% tax

Did you have a Medicare Advantage MSA on December 31, 2003?

No. Enter the amount from line 1 on line 6 below and go to line 7.

Yes. Enter the value of your Medicare Advantage MSA on December 31, 2003

Enter the amount of the annual deductible for your HDHP policy

on January 1, 2004

Multiply line 3 by 60% (.60)

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

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

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

-5-

Instructions For Form 8853 - Archer Msas And Long-Term Care Insurance Contracts - 2004 Page 5

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