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separate Form 8853, Section B, for each

date of death. The beneficiary completes

subject to an additional 50% tax unless

spouse. Write “statement” across the top

Form 8853 as follows.

one of the following exceptions applies.

•

Write “Death of Medicare+Choice MSA

of each Form 8853, fill in the name and

Exceptions to the Additional 50%

account holder” across the top of Form

SSN, and complete Section B. Next, add

Tax

8853.

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

•

Write the name(s) shown on your tax

The additional 50% tax does not apply to

statement Forms 8853 and enter those

return and your SSN in the spaces

distributions made on or after the date

totals on the respective lines of the

provided at the top of the form. Skip

that the account holder —

controlling Form 8853 (the combined

•

Section A.

Dies or

Form 8853 for both spouses). If either

•

On line 12, enter the fair market value

Becomes disabled (see page 1).

spouse checked the box on line 15a of

of the Medicare+Choice MSA as of the

If either of the exceptions applies to any

the statement Form 8853, check the box

date of death.

of the distributions included on line 14,

on the controlling Form 8853. Attach the

•

On line 13, enter qualified medical

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

two statement Forms 8853 to your tax

expenses incurred by the account holder

of the exceptions applies to all the

return after the controlling Form 8853.

before the date of death that you paid

distributions included on line 14, enter

within 1 year after the date of death.

zero on line 15b. Otherwise, complete the

Medicare+Choice MSA

•

Complete the rest of Section B.

worksheet below to figure the amount of

A Medicare+Choice MSA is an Archer

The distribution is not subject to the

the additional 50% tax to enter on line

MSA designated as a Medicare+Choice

additional 50% tax. Report any earnings

15b.

MSA to be used solely to pay the qualified

on the account after the date of death as

medical expenses of the account holder.

income on your tax return.

Section C—Long-Term

To be eligible for a Medicare+Choice

Line 12

Care (LTC) Insurance

MSA, you must be eligible for Medicare

and have a HDHP that meets the

Enter the total distributions you received

Contracts

in 2003 from all Medicare+Choice MSAs.

Medicare guidelines. Contributions to the

See Filing Requirements for Section C

These amounts should be shown in box 1

account may be made only by Medicare.

on page 6.

of Form 1099-MSA. This amount should

The contributions and any earnings, while

not include any erroneous contributions

in the account, are not taxable to the

Definitions

made by Medicare (or any earnings on

account holder. A distribution used

the erroneous contributions) or any

exclusively to pay for the qualified

Policyholder

amounts from a trustee-to-trustee transfer

medical expenses of the account holder is

The policyholder is the person who owns

from one Medicare+Choice MSA to

not taxable. Distributions that are not

the proceeds of the LTC insurance

another Medicare+Choice MSA of the

used for qualified medical expenses of

contract, life insurance contract, or viatical

same account holder.

the account holder are included in income

settlement and also may be the insured

and also may be subject to a penalty.

Line 13

individual. The policyholder is required to

report the income, even if payment is

Enter the total distributions from all

Death of Account Holder

assigned to a third party or parties. In the

Medicare+Choice MSAs in 2003 that

If the account holder’s surviving spouse is

case of a group contract, the certificate

were used for your qualified medical

the designated beneficiary, the

holder is considered to be the

expenses (see page 1).

Medicare+Choice MSA is treated as a

policyholder.

You may not take a deduction on

regular Archer MSA (not a

Qualified LTC Insurance Contract

Schedule A (Form 1040) for any

Medicare+Choice MSA) of the surviving

amount you include on line 13.

A qualified LTC insurance contract is a

spouse for distribution purposes. Follow

CAUTION

contract issued:

the instructions in Section A for Death of

•

Lines 15a and 15b

After December 31, 1996, that meets

Account Holder beginning on page 1.

the requirements of section 7702B,

Additional 50% Tax

If the designated beneficiary is not the

including the requirement that the insured

account holder’s surviving spouse, the

Medicare+Choice MSA distributions

must be a chronically ill individual

account ceases to be an MSA as of the

included in income (line 14) may be

(defined on page 6) or

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+Choice MSA on December 31, 2002?

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

Yes. Enter the value of your Medicare+Choice MSA on December 31, 2002

Enter the amount of the annual deductible for your HDHP policy

on January 1, 2003

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 - 2003 Page 5

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