Instructions For Form 8853 - 2016 (Page 8 of 8) in pdf

persons who received per diem payments

each also own a qualified LTC insurance

is the insured, the per diem limitation is

under a qualified LTC insurance contract or as

contract under which Mrs. Smith is the insured.

allocated first to her to the extent of the per

accelerated death benefits because the insured

Neither Sam nor Deborah incurred any costs for

diem payments she received during the second

was chronically ill. Each person must use the

qualified LTC services for Mrs. Smith in 2016.

LTC period ($12,000). The remaining per diem

same LTC period. If all the recipients of

From July 1, 2016, through December 31,

limitation of $36,760 is allocated between Sam

payments don't agree on which LTC period to

2016, Sam received per diem payments of

and Deborah.

use, the contract period method must be used.

$4,000 per month ($24,000 total) and Deborah

Allocation ratio to Sam: 57% of the

received per diem payments of $3,000 per

After completing the statement, determine

remaining limitation ($20,953) is allocated to

month ($18,000 total). Mrs. Smith, Sam, and

your share of the per diem limitation and any

Sam because the $24,000 he received during

Deborah agree to use the equal payment rate

taxable payments. The per diem limitation is

the second LTC period is 57% of the $42,000

method to determine their LTC periods.

allocated first to the insured to the extent of the

received by both Sam and Deborah during the

total payments the insured received. If the

second LTC period.

There are two LTC periods. The first is 182

insured files a joint return and the insured's

days (from January 1 through June 30) during

Allocation ratio to Deborah: 43% of the

spouse is one of the policyholders, the per diem

which the per diem payments were $2,000 per

remaining limitation ($15,807) is allocated to

limitation is allocated first to them to the extent

month. The second is 184 days (from July 1

Deborah because the $18,000 she received

of the payments they both received. Any

through December 31) during which the

during the second LTC period is 43% of the

remaining limitation is allocated among the

aggregate per diem payments were $9,000 per

$42,000 received by both Sam and Deborah

other policyholders pro rata based on the

month ($2,000 under Mrs. Smith's contract +

during the second LTC period.

payments they received in 2016. The statement

$4,000 under Sam's contract + $3,000 under

showing the aggregate computation must be

Step 4. Mrs. Smith, Sam, and Deborah each

Deborah's contract).

attached to the Form 8853 for each person who

complete Form 8853 as follows.

received a payment.

An aggregate statement must be completed

Mrs. Smith's Form 8853:

for the second LTC period and attached to Mrs.

Enter your share of the per diem limitation

Smith's, Sam's, and Deborah's forms.

1st LTC

2nd LTC

and the taxable payments on lines 25 and 26 of

Line

Period

Form 8853

your individual Form 8853. Leave lines 21

Step 1. They complete a statement for Mrs.

through 24 blank.

$12,000

$24,000

Smith for the first LTC period as follows.

Example 1

$48,230

$12,000

$60,230

Line

Amount

$ -0-

Mrs. Smith was chronically ill throughout 2016

and received 12 monthly payments on a per

$12,000 ($2,000 x 6 mos.)

diem basis from a qualified LTC insurance

$61,880 ($340 x 182 days)

Sam's Form 8853:

contract. She was paid $2,000 per month

$27,300 ($150 x 182 days)

1st LTC

2nd LTC

($24,000 total). Mrs. Smith incurred expenses

$61,880

Line

Period

Form 8853

for qualified LTC services of $150 per day

$13,650 ($75 x 182 days)

($54,900) and was reimbursed for one-half of

$ -0-

$24,000

$48,230

those expenses ($27,450). She uses the equal

$ -0-

$20,953

payment rate method and therefore has a single

$ -0-

$ 3,047

benefit period for 2016 (January 1–December

31). Mrs. Smith completes Form 8853, lines 20

Step 2. They complete the aggregate

through 26, as follows.

Deborah’s Form 8853

statement for the second LTC period as follows.

1st LTC

2nd LTC

Line

Amount

Line

Period

Form 8853

Line

Amount

$24,000 ($2,000 x 12 mos.)

$ -0-

$18,000

$54,000 ($9,000 x 6 mos.)

$124,440 ($340 x 366 days)

$ -0-

$15,807

$62,560 ($340 x 184 days)

$54,900 ($150 x 366 days)

$ -0-

$ 2,193

$27,600 ($150 x 184 days)

$124,440

$62,560

$27,450 ($75 x 366 days)

$13,800 ($75 x 184 days)

$96,990

$48,760

$ -0-

$5,240

Example 2

Step 3. They allocate the aggregate per diem

The facts are the same as in Example 1, except

limitation of $48,760 on line 25 among Mrs.

Mrs. Smith's son, Sam, and daughter, Deborah,

Smith, Sam, and Deborah. Because Mrs. Smith

Instructions for Form 8853 (2016)

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Instructions For Form 8853 - 2016 Page 8

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