Publication 969 - Health Savings Accounts And Other Tax-Favored Health Plans

health coverage that is not an HDHP. However, you can

Form 8853, Archer MSAs and Long-Term Care Insurance

still be an eligible individual even if your spouse has

Contracts.

non-HDHP coverage provided you are not covered by that

Example 1. You have an HDHP for your family all year

plan. However, you can have additional insurance that

provides benefits only for the following items.

in 2010. The annual deductible is $5,000. You can contrib-

ute up to $3,750 ($5,000 × 75%) to your Archer MSA for

•

Liabilities incurred under workers’ compensation

the year.

laws, torts, or ownership or use of property.

•

Example 2. You have an HDHP for your family for the

A specific disease or illness.

entire months of July through December 2010 (6 months).

•

A fixed amount per day (or other period) of hospitali-

The annual deductible is $5,000. You can contribute up to

zation.

$1,875 ($5,000 × 75% ÷ 12 × 6) to your Archer MSA for the

You can also have coverage (whether provided through

year.

insurance or otherwise) for the following items.

If you and your spouse each have a family plan,

•

Accidents.

you are treated as having family coverage with

TIP

the lower annual deductible of the two health

•

Disability.

plans. The contribution limit is split equally between you

•

Dental care.

unless you agree on a different division.

•

Vision care.

Income limit. You cannot contribute more than you

•

Long-term care.

earned for the year from the employer through whom you

have your HDHP.

If you are self-employed, you cannot contribute more

Contributions to an MSA

than your net self-employment income. This is your income

from self-employment minus expenses (including the

Contributions to an Archer MSA must be made in cash.

one-half of self-employment tax deduction, but not includ-

You cannot contribute stock or other property to an Archer

ing any self-employed health insurance deduction).

MSA.

Example 1. Noah Paul earned $25,000 from ABC Com-

Who can contribute to my Archer MSA? If you are an

pany in 2010. Through ABC, he had an HDHP for his family

employee, your employer may make contributions to your

for the entire year. The annual deductible was $5,000. He

Archer MSA. (You do not pay tax on these contributions.) If

can contribute up to $3,750 to his Archer MSA (75% ×

your employer does not make contributions to your Archer

$5,000). He can contribute the full amount because he

MSA, or you are self-employed, you can make your own

earned more than $3,750 at ABC.

contributions to your Archer MSA. Both you and your

employer cannot make contributions to your Archer MSA in

Example 2. Westley Lawrence is self-employed. He

the same year. You do not have to make contributions to

had an HDHP for his family for the entire year in 2010. The

your Archer MSA every year.

annual deductible was $5,000. Based on the annual de-

If your spouse is covered by your HDHP and an

ductible, the maximum contribution to his Archer MSA

excludable amount is contributed by your

would have been $3,750 (75% × $5,000). However, after

spouse’s employer to an Archer MSA belonging

deducting his business expenses, Joe’s net

CAUTION

to your spouse, you cannot make contributions to your own

self-employment income is $2,500 for the year. Therefore,

Archer MSA that year.

he is limited to a contribution of $2,500.

Individuals enrolled in Medicare. Beginning with the

Limits

first month you are enrolled in Medicare, you cannot con-

tribute to an Archer MSA. However, you may be eligible for

There are two limits on the amount you or your employer

a Medicare Advantage MSA, discussed later.

can contribute to your Archer MSA:

•

The annual deductible limit.

When To Contribute

•

An income limit.

You can make contributions to your Archer MSA for 2010

until April 18, 2011.

Annual deductible limit. You (or your employer) can

contribute up to 75% of the annual deductible of your

HDHP (65% if you have a self-only plan) to your Archer

Reporting Contributions on Your Return

MSA. You must have the HDHP all year to contribute the

full amount. If you do not qualify to contribute the full

Report all contributions to your Archer MSA on Form 8853

amount for the year, determine your annual deductible limit

and file it with your Form 1040 or Form 1040NR. You

by using the worksheet for line 5 in the Instructions for

should include all contributions you, or your employer,

Page 12

Publication 969 (2010)

Publication 969 - Health Savings Accounts And Other Tax-Favored Health Plans - 2010 Page 12

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