Check “Yes” on line 1a if you or your employer made contributions to your Archer MSA for 2003, including contributions for 2003 made from January 1, 2004, through April 15, 2004. Otherwise, check the “No” box on line 1a.

Check “Yes” on line 2a if you are filing a joint return and your spouse (or your spouse's employer) made contributions to your spouse's Archer MSA for 2003, including contributions for 2003 made from January 1, 2004, through April 15, 2004. Otherwise, check the “No” box on line 2a.

Check “Yes” on line 1b or 2b only if the account holder is considered previously uninsured.

An account holder is considered previously uninsured if (a) the HDHP coverage began after June 30, 1996, and (b) the account holder has:

In determining whether an account holder is previously uninsured, disregard any health insurance that is permitted in addition to the HDHP. See Other Health Insurance on page 1.

If covered by a self-only HDHP and a family HDHP, indicate which plan was in effect longer during the year.

The amount you may deduct for Archer MSA contributions is limited by:

Any employer contributions made to your Archer MSA prevent you from making deductible contributions. See Employer Contributions to an Archer MSA below. Also, if you or your spouse made contributions in addition to any employer contributions, you may have to pay an additional tax. See Excess Contributions You Make on page 4.

You cannot deduct any contributions you made after you became eligible for Medicare benefits. Also, you cannot deduct contributions if you can be claimed as a dependent on someone else's 2003 tax return.

Complete lines 3a through 7 as instructed on the form unless 1 or 2 below applies.

Do not include amounts rolled over from another Archer MSA. See Rollovers on page 4.

Go through the chart at the top of the Line 5 Limitation Chart and Worksheet on this page for each month of 2003. Enter the result on the worksheet next to the corresponding month.

If eligibility and coverage of both you and your spouse did not change from one month to the next, enter the same number you entered for the previous month. If eligibility and coverage did not change during the entire year, figure the number for January only, and enter this amount on line 5 of Form 8853.

More than one HDHP.   If you and your spouse had more than one HDHP on the first of the month and one of the plans provides family coverage, use the Family coverage rules on the chart and disregard any plans with self-only coverage. If you and your spouse both have HDHPs with family coverage on the first of the month, you both are treated as having only the family coverage plan with the lowest annual deductible.

line 5 limitation chart and line 5 limitation worksheet

If you (or your employer) contributed more to your Archer MSA than is allowable, you may have to pay a tax on the excess contributions. Figure the excess contributions using the instructions on page 4. See Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts, to figure the additional tax.

Enter the total distributions you and your spouse received in 2003 from all Archer MSAs. These amounts should be shown in box 1 of Form 1099-MSA.

Include on line 8b any distributions you received in 2003 that were rolled over. See Rollovers below. Also include any excess contributions (and the earnings on those excess contributions) included on line 8a that were withdrawn by the due date, including extensions, of your return. See the instructions for line 7 beginning on page 3.

In general, include on line 9 distributions from all Archer MSAs in 2003 that were used for the qualified medical expenses (see page 1) of the account holder and his or her spouse or dependents. However, if a contribution was made to an Archer MSA in 2003 (by you or your employer), do not include on line 9 withdrawals from an Archer MSA if the individual for whom the expenses were incurred was not covered by an HDHP or was covered by a plan that was not an HDHP (other than the exceptions listed on page 1) at the time the expenses were incurred.

Example. In 2003, you were covered by an HDHP with self-only coverage and your spouse was covered by a health plan that was not an HDHP. You made contributions to an Archer MSA for 2003. You may not include on line 9 withdrawals made from the Archer MSA to pay your spouse's medical expenses incurred in 2003 because your spouse was covered by a plan that was not an HDHP.

Example 1. You turned age 66 during the year and had no Archer MSA during the year. Your spouse turned age 63 during the year and received a distribution from an Archer MSA that is included in income. You do not check the box on line 11a because your spouse (the account holder) did not meet the age exception for the distribution. You enter 15% of the amount from line 10 on line 11b.

Example 2. Both you and your spouse received distributions from your Archer MSAs in 2003 that are included in income. You were age 65 at the time you received the distributions and your spouse was age 63 when he or she received the distributions. You check the box on line 11a because the additional 15% tax does not apply to the distributions you received (because you met the age exception). However, the additional 15% tax does apply to your spouse's distributions. You enter on line 11b only 15% of the amount of your spouse's distributions included in line 10.

Example 3. You turned age 65 during the year. You received distributions that are included in income both before and after you turned age 65. You check the box on line 11a because the additional 15% tax does not apply to the distributions you received after you turned age 65. However, the additional 15% tax does apply to the distributions you received before you turned age 65. You enter on line 11b, 15% of the amount of these distributions included in line 10.

Enter the total distributions you received in 2003 from all Medicare+Choice MSAs. These amounts should be shown in box 1 of Form 1099-MSA. This amount should not include any erroneous contributions made by Medicare (or any earnings on the erroneous contributions) or any amounts from a trustee-to-trustee transfer from one Medicare+Choice MSA to another Medicare+Choice MSA of the same account holder.

Enter the total distributions from all Medicare+Choice MSAs in 2003 that were used for your qualified medical expenses (see page 1).

You may not take a deduction on Schedule A (Form 1040) for any amount you include on line 13.

Special rules apply in determining the taxable payments if other individuals received per diem payments under a qualified LTC insurance contract or as accelerated death benefits with respect to the insured listed on line 16a. See Multiple Payees on this page for details.

If you have more than one LTC period, you must separately calculate the taxable amount of the payments received during each LTC period. To do this, complete lines 20 through 28 on separate sections C for each LTC period. Enter the total on line 28 from each separate Section C on the Form 8853 that you attach to your tax return. See the instructions for line 23 on this page for the LTC period.

Enter the total accelerated death benefits you received with respect to the insured listed on line 16a. These amounts generally are shown in box 2 of Form 1099-LTC. Include only amounts you received while the insured was a chronically ill individual. Do not include amounts you received while the insured was a terminally ill individual. If the insured was redesignated from chronically ill to terminally ill in 2003, only include on line 21 payments received before the insured was certified as terminally ill.

The number of days in your LTC period depends on which method you choose to define the LTC period. Generally, you may choose either the Contract Period method or the Equal Payment Rate method. However, special rules apply if other persons also received per diem payments in 2003 under a qualified LTC insurance contract or as accelerated death benefits with respect to the insured listed on line 16a. See Multiple Payees on this page for details.

Method 1—Contract Period

Under this method your LTC period is the same period as that used by the insurance company under the contract to compute the benefits it pays you. For example, if the insurance company computes your benefits on a daily basis, your LTC period is 1 day.

If you choose this method for defining the LTC period(s) and different LTC insurance contracts for the same insured use different contract periods, then all such LTC contracts must be treated as computing benefits on a daily basis.

Qualified LTC services are necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, and rehabilitative services, and maintenance or personal care services required to treat a chronically ill individual under a plan of care prescribed by a licensed health care practitioner.

Enter the reimbursements you received or expect to receive through insurance or otherwise for qualified LTC services provided for the insured for LTC periods in 2003. Box 3 of Form 1099-LTC should indicate whether the payments were made on a reimbursement basis.

Generally, do not include on line 26 any reimbursements for qualified LTC services you received under a contract issued before August 1, 1996. However, you must include reimbursements if the contract was exchanged or modified after July 31, 1996, to increase per diem payments or reimbursements.

If you checked “Yes” on lines 17 and 18 and the only payments you received were accelerated death benefits that were paid because the insured was terminally ill, skip lines 19 through 27 and enter zero on line 28.

In all other cases in which you checked “Yes” on line 17, attach a statement duplicating lines 20 through 28 of the form. This attachment should show the aggregate computation for all persons who received per diem payments under a qualified LTC insurance contract or as accelerated death benefits because the insured was chronically ill. Each person must use the same LTC period. If all the recipients of payments do not agree on which LTC period to use, the contract period method must be used.

After completing the attachment, determine your share of the per diem limitation and any taxable payments. The per diem limitation is allocated first to the insured to the extent of the total payments the insured received. If the insured files a joint return and the insured's spouse is one of the policyholders, the per diem limitation is allocated first to them to the extent of the payments they both received. Any remaining limitation is allocated among the other policyholders pro rata based on the payments they received in 2003.

Enter your share of the per diem limitation and the taxable payments on lines 27 and 28. Leave lines 23 through 26 blank.

Mrs. Smith was chronically ill throughout 2003 and received 12 monthly payments on a per diem basis from a qualified LTC insurance contract. She was paid $2,000 per month ($24,000 total). Mrs. Smith incurred expenses for qualified LTC services of $100 per day ($36,500) and was reimbursed for one-half of those expenses ($18,250). She uses the equal payment rate method and therefore has a single benefit period for 2003 (January 1–December 31). Mrs. Smith completes lines 22 through 28 of Form 8853 as follows.

The facts are the same as in Example 1, except Mrs. Smith's son, Sam, and daughter, Deborah, each also own a qualified LTC insurance contract under which Mrs. Smith is the insured. Neither Sam nor Deborah incurred any costs for qualified LTC services for Mrs. Smith in 2003. From July 1, 2003, through December 31, 2003, Sam received per diem payments of $2,700 per month ($16,200 total) and Deborah received per diem payments of $1,800 per month ($10,800 total). Mrs. Smith, Sam, and Deborah agree to use the equal payment rate method to determine their LTC periods.

There are two LTC periods. The first is 181 days (from January 1 through June 30) during which the per diem payments were $2,000 per month. The second is 184 days (from July 1 through December 31) during which the aggregate per diem payments were $6,500 per month ($2,000 under Mrs. Smith's contract + $2,700 under Sam's contract + $1,800 under Deborah's contract).

An aggregate statement must be completed for the second LTC period and attached to Mrs. Smith's, Sam's, and Deborah's forms.