Instructions For Form 8853 - Archer Msas And Long-Term Care Insurance Contracts - 2002 Page 7
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8period. To do this, complete lines 20
You may choose this method even if
agree on which LTC period to use, the
through 28 on separate sections C for
you have more than one qualified LTC
contract period method must be used.
each LTC period. Enter the total on line
insurance contract covering the same
After completing the attachment,
28 from each separate Section C on the
period. For example, you have one
determine your share of the per diem
Form 8853 that you attach to your tax
insurance contract that pays $100 per day
limitation and any taxable payments. The
return. See the instructions for line 23 on
from March 1, 2002, through December
per diem limitation is allocated first to the
this page for the LTC period.
31, 2002, and you have a second
insured to the extent of the total payments
insurance contract that pays $1,500 per
Line 21
the insured received. If the insured files a
month from March 1, 2002, through
joint return and the insured’s spouse is
Enter the total accelerated death benefits
December 31, 2002. You have one LTC
one of the policyholders, the per diem
you received with respect to the insured
period because each payment rate does
limitation is allocated first to them to the
listed on line 16a. These amounts
not vary during the LTC period of March 1
extent of the payments they both
generally are shown in box 2 of Form
through December 31. However, you
received. Any remaining limitation is
1099-LTC. Include only amounts you
have two LTC periods if the facts are the
allocated among the other policyholders
received while the insured was a
same except that the second insurance
pro rata based on the payments they
chronically ill individual. Do not include
contract did not begin making payments
received in 2002.
amounts you received while the insured
until May 1, 2002. The first LTC period is
was a terminally ill individual. If the
61 days (from March 1 through April 30)
Enter your share of the per diem
insured was redesignated from
and the second LTC period is 245 days
limitation and the taxable payments on
chronically ill to terminally ill in 2002, only
(from May 1 through December 31).
lines 27 and 28. Leave lines 23 through
include on line 21 payments received
26 blank.
Line 24
before the insured was certified as
terminally ill.
Example 1
Qualified LTC services are necessary
diagnostic, preventive, therapeutic,
Line 23
Mrs. Smith was chronically ill throughout
curing, treating, mitigating, and
2002 and received 12 monthly payments
The number of days in your LTC period
rehabilitative services, and maintenance
on a per diem basis from a qualified LTC
depends on which method you choose to
or personal care services required to treat
insurance contract. She was paid $2,000
define the LTC period. Generally, you
a chronically ill individual under a plan of
per month ($24,000 total). Mrs. Smith
may choose either the Contract Period
care prescribed by a licensed health care
incurred expenses for qualified LTC
method or the Equal Payment Rate
practitioner.
services of $100 per day ($36,500) and
method. However, special rules apply if
was reimbursed for one-half of those
other persons also received per diem
Line 26
expenses ($18,250). She uses the equal
payments in 2002 under a qualified LTC
Enter the reimbursements you received or
payment rate method and therefore has a
insurance contract or as accelerated
expect to receive through insurance or
single benefit period for 2002 (January
death benefits with respect to the insured
otherwise for qualified LTC services
1 – December 31). Mrs. Smith completes
listed on line 16a. See Multiple Payees
provided for the insured for LTC periods
lines 22 through 28 of Form 8853 as
on this page for details.
in 2002. Box 3 of Form 1099-LTC should
follows.
Method 1 — Contract Period
indicate whether the payments were
made on a reimbursement basis.
Under this method your LTC period is the
Line
Amount
same period as that used by the
Generally, do not include on line
insurance company under the contract to
22
$24,000 ($2,000 x 12 mos.)
!
26 any reimbursements for
compute the benefits it pays you. For
qualified LTC services you
23
$76,650 ($210 x 365 days)
CAUTION
example, if the insurance company
received under a contract issued before
computes your benefits on a daily basis,
24
$36,500 ($100 x 365 days)
August 1, 1996. However, you must
your LTC period is 1 day.
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$76,650
include reimbursements if the contract
If you choose this method for
was exchanged or modified after July 31,
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$18,250 ($50 x 365 days)
!
defining the LTC period(s) and
1996, to increase per diem payments or
27
$58,400
different LTC insurance contracts
reimbursements.
CAUTION
for the same insured use different
28
$-0-
Multiple Payees
contract periods, then all such LTC
contracts must be treated as computing
If you checked “Yes” on lines 17 and 18
Example 2
benefits on a daily basis.
and the only payments you received
The facts are the same as in Example 1,
were accelerated death benefits that were
Method 2 — Equal Payment Rate
except Mrs. Smith’s son, Sam, and
paid because the insured was terminally
Under this method, your LTC period is the
daughter, Deborah, each also own a
ill, skip lines 19 through 27 and enter zero
period during which the insurance
qualified LTC insurance contract under
on line 28.
company uses the same payment rate to
which Mrs. Smith is the insured. Neither
compute your benefits. For example, you
In all other cases in which you
Sam nor Deborah incurred any costs for
have two LTC periods if the insurance
checked “Yes” on line 17, attach a
qualified LTC services for Mrs. Smith in
contract computes payments at a rate of
statement duplicating lines 20 through 28
2002. From July 1, 2002, through
$175 per day from March 1, 2002,
of the form. This attachment should show
December 31, 2002, Sam received per
through May 31, 2002, and then at a rate
the aggregate computation for all
diem payments of $2,700 per month
of $195 per day from June 1, 2002,
persons who received per diem payments
($16,200 total) and Deborah received per
through December 31, 2002. The first
under a qualified LTC insurance contract
diem payments of $1,800 per month
LTC period is 92 days (from March 1
or as accelerated death benefits because
($10,800 total). Mrs. Smith, Sam, and
through May 31) and the second LTC
the insured was chronically ill. Each
Deborah agree to use the equal payment
period is 214 days (from June 1 through
person must use the same LTC period. If
rate method to determine their LTC
December 31).
all the recipients of payments do not
periods.
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