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Additional 50% Tax Worksheet—Line 13b

Keep for Your Records

Enter the total distributions included on Form 8853, line 12, that don't meet either of the exceptions to the additional 50% tax . . . . . . . . . . . . . .

Did you have a Medicare Advantage MSA on December 31, 2016?

No.

Enter one-half of line 1 on Form 8853, line 13b

STOP

Yes. Enter the value of your Medicare Advantage MSA on December 31, 2016

. . . . . . . . . . . . . . . . . . . .

Enter the amount of the annual deductible for your HDHP policy on January 1,

2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Multiply line 3 by 60% (0.60) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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 13b

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

If the account holder's estate is the

Exceptions to the Additional 50%

Per Diem Payments

beneficiary, the fair market value of the

Tax

Per diem payments are payments of a fixed

Medicare Advantage MSA as of the date of

amount made on a periodic basis without

death is included in the account holder's final

The additional 50% tax doesn't apply to

regard to actual expenses incurred. Box 3 of

income tax return.

distributions made on or after the date that the

Form 1099-LTC should indicate whether

account holder—

The transfer isn't subject to the additional

payments were per diem payments.

Dies, or

50% tax. The beneficiary should report any

Becomes disabled (see Disabled, earlier).

earnings on the account after the date of death

Chronically Ill Individual

If either of the exceptions applies to any of the

as income on the beneficiary's tax return.

distributions included on line 12, check the box

A chronically ill individual is someone who has

on line 13a. Next, if either of the exceptions

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

been certified (at least annually) by a licensed

applies to all the distributions included on

beneficiary of two or more Medicare Advantage

health care practitioner as—

line 12, enter -0- on line 13b. Otherwise,

MSAs or you are a beneficiary of a Medicare

Being unable to perform at least two

complete the

Additional 50% Tax

Advantage MSA and you have your own

activities of daily living (eating, toileting,

Worksheet—Line 13b

to figure the amount of

Medicare Advantage MSA, you must complete

transferring, bathing, dressing, and

the additional 50% tax to enter on line 13b.

a separate Form 8853 for each MSA. Enter

continence), without substantial assistance

“statement” at the top of each Form 8853 and

from another individual, for at least 90 days,

Section C—Long-Term

complete the form as instructed. Next, complete

due to a loss of functional capacity, or

Care (LTC) Insurance

a controlling Form 8853, combining the

Requiring substantial supervision to protect

amounts shown on each of the statement

the individual from threats to health and safety

Contracts

Forms 8853. Attach the statements to your

due to severe cognitive impairment. An

paper tax return after the controlling Form 8853.

individual must have been certified within the

See

Filing Requirements for Section

C, later.

past twelve months as meeting this condition.

Line 10

For more information, see Pub. 502.

Enter the total distributions you received in

Accelerated Death Benefits

Definitions

2017 from all Medicare Advantage MSAs.

These amounts should be shown in box 1 of

Generally, amounts paid as accelerated death

Policyholder

Form 1099-SA. This amount shouldn't include

benefits under a life insurance contract or for

any erroneous contributions made by Medicare

The policyholder is the person who owns the

the sale or assignment of any portion of the

(or any earnings on the erroneous

proceeds of the LTC insurance contract, life

death benefit as part of a viatical settlement, are

contributions) or any amounts from a

insurance contract, or viatical settlement, and

fully excludable from your gross income if the

trustee-to-trustee transfer from one Medicare

also can be the insured individual. The

insured is a

Terminally Ill Individual

(defined

Advantage MSA to another Medicare

policyholder is required to report the income,

later). Accelerated death benefits paid with

Advantage MSA of the same account holder.

even if payment is assigned to a third party or

respect to an insured individual who is

parties. In the case of a group contract, the

chronically ill generally are excludable from

Line 11

certificate holder is considered to be the

your gross income to the same extent as they

Enter the total distributions from all Medicare

policyholder.

would be under a qualified LTC insurance

Advantage MSAs in 2017 that were used only

contract.

for the account holder's qualified medical

Qualified LTC Insurance Contract

expenses (see

Qualified Medical

Expenses,

Terminally Ill Individual

earlier).

A qualified LTC insurance contract is a contract

issued:

A terminally ill individual is any individual who

You can't take a deduction on

After December 31, 1996, that meets the

has been certified by a physician as having an

Schedule A (Form 1040 or 1040NR) for

requirements of section 7702B, including the

illness or physical condition that can reasonably

any amount you include on line 11.

CAUTION

requirement that the insured must be a

be expected to result in death within 24 months

chronically ill individual (defined later), or

of the date of certification.

Lines 13a and 13b

Before January 1, 1997, that met state law

Line 15

requirements for LTC insurance contracts at the

Additional 50% Tax

time when and in the state where the contract

Special rules apply in determining the taxable

Medicare Advantage MSA distributions

was issued and hasn't been changed

payments if other individuals received per diem

included in income (line 12) may be subject to

materially.

payments under a qualified LTC insurance

an additional 50% tax unless one of the

contract or as accelerated death benefits with

following exceptions applies.

respect to the insured listed on line 14a. See

In general, amounts paid under a qualified

Multiple

Payees, later, for details.

LTC insurance contract are excluded from your

income. However, if you receive

Per Diem

Payments

(defined next), the amount you can

exclude is limited.

Instructions for Form 8853 (2017)

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Instructions For Form 8853 - Archer Msas And Long-Term Care Insurance Contracts - 2017 Page 5

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