Introduction

This publication explains Medical Savings Accounts (MSAs) and Medicare+Choice Medical Savings Accounts (M+C MSAs). MSAs were created to help self-employed individuals and employees of certain small employers meet the medical care costs of the account holder, the account holder's spouse, or his/her dependent(s). M+C MSAs were created to be used solely to pay the qualified medical expenses of the account holder who is eligible for Medicare.

MSAs and M+C MSAs are "pilot projects." The pilot project for MSAs is scheduled to end December 31, 2000. The pilot project for M+C MSAs is scheduled to end December 31, 2002.

You do not need IRS approval to start your MSA or M+C MSA. Complete Form 8853, Medical Savings Accounts and Long-Term Care Insurance Contracts, and attach it to your Form 1040 each year you (or your spouse if you file jointly):

• Have an MSA, or
• Receive a distribution from an M+C MSA.

You will have to file Form 1040, not Form 1040A or Form 1040EZ.

This publication will explain what MSAs and M+C MSAs are, including setting up either type of account, making contributions, and treating distributions from them. MSAs and M+C MSAs are discussed separately.

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