What is Form 8853: Archer MSAs and Long-Term Care Insurance Contracts
An Archer medical savings account allows tax-sheltered investment growth within a savings account as long as funds are used to cover medical expenses. Form 8853 reports contributions and payments from Archer MSAs and payments from long-term care insurance contracts.
Key Takeaways
- You need to file Form 8853 if you contribute to an Archer MSA, receive distributions, inherit an MSA, or receive taxable payments from long-term care insurance or accelerated death benefits.
- You're often eligible for an Archer MSA if you're self-employed or work for a small employer and have a high-deductible health plan.
- You’re not eligible for an Archer MSA if you’re enrolled in Medicare or claimed as a dependent.
- You can have additional insurance for specific illnesses, accidents, or long-term care without affecting your Archer MSA eligibility.
When to use Form 8853
There are a few situations that require Form 8853:
- if you or your employer made contributions to an Archer MSA within a tax year
- if you received distributions from an Archer MSA or Medicare Advantage MSA
- if you received ownership of, or payout from, an Archer MSA or a Medicare Advantage MSA resulting from the death of the original holder
- if you received taxable payments from a long-term care insurance contract
- if you received taxable accelerated death benefits from a life insurance policy
If your spouse meets any of the situations above and you’re filing jointly, include the form with your joint return, even if you had no such activity.
Archer MSA eligibility
Archer MSAs cover self-employed workers or those who work for a company with an average of 50 or fewer employees over either of the preceding two years. Your health plan must be a high-deductible plan, and you must have no other health coverage, although there are some exceptions to the rule. You can’t be enrolled in Medicare or claimed as a dependent on another tax return for the current year. Eligibility requirements must be met on the first day of each month for which you claim an MSA deduction.
TurboTax Tip:
If your employer contributes to your Archer MSA, you can't claim a deduction for your contributions, and excess payments may be taxed.
Additional eligibility exceptions
Here are a few of the exceptions to the rules:
- If your spouse doesn’t have a high-deductible health plan, you may still have an Archer MSA, as long as you’re not covered under your spouse's plan.
- Additional insurance coverage exceptions include insurance that provides liability benefits, fixed amounts per day for hospitalization, or for a specific illness or disease.
- Coverage for accidents, dental and vision care, short- or long-term disability or long-term care also is permitted without affecting Archer MSA eligibility.
Other considerations
If your employer made contributions to your Archer MSA, you’re not entitled to a deduction for your own contributions, though you’ll still complete Form 8853.
- Amounts paid from Archer MSA's in excess of qualifying medical expenses may be subject to an additional 20 percent tax, unless the amount meets a qualifying exception.
- Amounts paid from Medicare Advantage MSA's in excess of qualifying medical expenses may be subject to an additional 50 percent tax, unless the amount meets a qualifying exception.
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