Instructions For Form 8853 (2015) (Page 7 of 8) in pdf

You can choose this method even if you

taxable payments. The per diem limitation is

through December 31) during which the

have more than one qualified LTC insurance

allocated first to the insured to the extent of the

aggregate per diem payments were $8,000 per

contract covering the same period. For

total payments the insured received. If the

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

example, you have one insurance contract that

insured files a joint return and the insured's

$3,500 under Sam's contract + $2,500 under

pays $100 per day from March 1, 2015, through

spouse is one of the policyholders, the per diem

Deborah's contract).

December 31, 2015, and you have a second

limitation is allocated first to them to the extent

An aggregate statement must be completed

insurance contract that pays $1,500 per month

of the payments they both received. Any

for the second LTC period and attached to Mrs.

from March 1, 2015, through December 31,

remaining limitation is allocated among the

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

2015. You have one LTC period because each

other policyholders pro rata based on the

payment rate does not vary during the LTC

payments they received in 2015. The statement

Step 1. They complete a statement for Mrs.

period of March 1 through December 31.

showing the aggregate computation must be

Smith for the first LTC period as follows.

However, you have two LTC periods if the facts

attached to the Form 8853 for each person who

are the same except that the second insurance

received a payment.

Line

Amount

contract did not begin making payments until

Enter your share of the per diem limitation

May 1, 2015. The first LTC period is 61 days

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

and the taxable payments on lines 25 and 26 of

(from March 1 through April 30) and the second

your individual Form 8853. Leave lines 21

$59,730 ($330 x 181 days)

LTC period is 245 days (from May 1 through

through 24 blank.

December 31).

$27,150 ($150 x 181 days)

Example 1

Line 22

$59,730

Mrs. Smith was chronically ill throughout 2015

Qualified LTC services are necessary

$13,575 ($75 x 181 days)

and received 12 monthly payments on a per

diagnostic, preventive, therapeutic, curing,

$46,155

diem basis from a qualified LTC insurance

treating, mitigating, and rehabilitative services,

contract. She was paid $2,000 per month

$ -0-

and maintenance or personal care services

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

required to treat a chronically ill individual under

for qualified LTC services of $150 per day

a plan of care prescribed by a licensed health

($54,750) and was reimbursed for one-half of

care practitioner.

Step 2. They complete the aggregate

those expenses ($27,375). She uses the equal

statement for the second LTC period as follows.

Line 24

payment rate method and therefore has a single

benefit period for 2015 (January 1–December

Enter the reimbursements you received or

Line

Amount

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

expect to receive through insurance or

through 26, as follows.

$48,000 ($8,000 x 6 mos.)

otherwise for qualified LTC services provided

for the insured for LTC periods in 2015. Box 3 of

$60,720 ($330 x 184 days)

Form 1099-LTC should indicate whether the

Line

Amount

$27,600 ($150 x 184 days)

payments were made on a reimbursement

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

basis.

$60,720

$120,450 ($330 x 365 days)

$13,800 ($75 x 184 days)

Generally, do not include on line 24

any reimbursements for qualified LTC

$54,750 ($150 x 365 days)

$46,920

services you received under a contract

$120,450

$1,080

CAUTION

issued before August 1, 1996. However, you

$27,375 ($75 x 365 days)

must include reimbursements if the contract

was exchanged or modified after July 31, 1996,

$93,075

Step 3. They allocate the aggregate per diem

to increase per diem payments or

$ -0-

limitation of $46,920 on line 25 among Mrs.

reimbursements.

Smith, Sam, and Deborah. Because Mrs. Smith

Multiple Payees

is the insured, the per diem limitation is

Example 2

allocated first to her to the extent of the per

If you checked “Yes” on lines 15 and 16 and the

diem payments she received during the second

only payments you received were accelerated

The facts are the same as in Example 1, except

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

death benefits that were paid because the

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

limitation of $34,920 is allocated between Sam

insured was terminally ill, skip lines 17 through

each also own a qualified LTC insurance

and Deborah.

25 and enter -0- on line 26.

contract under which Mrs. Smith is the insured.

Neither Sam nor Deborah incurred any costs for

Allocation ratio to Sam: 58% of the

In all other cases in which you checked

qualified LTC services for Mrs. Smith in 2015.

remaining limitation ($20,254) is allocated to

“Yes” on line 15, attach a statement duplicating

From July 1, 2015, through December 31,

Sam because the $21,000 he received during

lines 18 through 26 of the form. This statement

2015, Sam received per diem payments of

the second LTC period is 58% of the $36,000

should show the aggregate computation for all

$3,500 per month ($21,000 total) and Deborah

received by both Sam and Deborah during the

persons who received per diem payments

received per diem payments of $2,500 per

second LTC period.

under a qualified LTC insurance contract or as

month ($15,000 total). Mrs. Smith, Sam, and

accelerated death benefits because the insured

Allocation ratio to Deborah: 42% of the

Deborah agree to use the equal payment rate

was chronically ill. Each person must use the

remaining limitation ($14,666) is allocated to

method to determine their LTC periods.

same LTC period. If all the recipients of

Deborah because the $15,000 she received

payments do not agree on which LTC period to

during the second LTC period is 42% of the

There are two LTC periods. The first is 181

use, the contract period method must be used.

$36,000 received by both Sam and Deborah

days (from January 1 through June 30) during

After completing the statement, determine

during the second LTC period.

which the per diem payments were $2,000 per

your share of the per diem limitation and any

month. The second is 184 days (from July 1

Instructions for Form 8853 (2015)

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Instructions For Form 8853 (2015) Page 7

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