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contract covering the same period. For

Enter your share of the per diem limitation

Step 2. They complete the aggregate

example, you have one insurance contract that

and the taxable payments on lines 25 and 26 of

statement for the second LTC period as follows.

pays $100 per day from March 1, 2017, through

your individual Form 8853. Leave lines 21

December 31, 2017, and you have a second

through 24 blank.

Line

Amount

insurance contract that pays $1,500 per month

Example 1

from March 1, 2017, through December 31,

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

2017. You have one LTC period because each

Ann was chronically ill throughout 2017 and

$66,240 ($360 x 184 days)

payment rate doesn't vary during the LTC

received 12 monthly payments on a per diem

$27,600 ($150 x 184 days)

period of March 1 through December 31.

basis from a qualified LTC insurance contract.

However, you have two LTC periods if the facts

She was paid $2,000 per month ($24,000 total).

$66,240

are the same except that the second insurance

Ann incurred expenses for qualified LTC

$13,800 ($75 x 184 days)

contract didn't begin making payments until

services of $150 per day ($54,750) and was

May 1, 2017. The first LTC period is 61 days

reimbursed for one-half of those expenses

$52,440

(from March 1 through April 30) and the second

($27,375). She uses the equal payment rate

$1,560

LTC period is 245 days (from May 1 through

method and therefore has a single benefit

December 31).

period for 2017 (January 1–December 31). Ann

completes Form 8853, lines 20 through 26, as

Line 22

Step 3. They allocate the aggregate per diem

follows.

limitation of $52,440 on line 25 among Ann,

Qualified LTC services are necessary

Line

Amount

Sam, and Joy. Because Ann is the insured, the

diagnostic, preventive, therapeutic, curing,

per diem limitation is allocated first to her to the

treating, mitigating, and rehabilitative services,

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

extent of the per diem payments she received

and maintenance or personal care services

$131,400 ($360* x 365 days)

during the second LTC period ($12,000). The

required to treat a chronically ill individual under

remaining per diem limitation of $40,440 is

a plan of care prescribed by a licensed health

$54,750 ($150 x 365 days)

allocated between Sam and Joy.

care practitioner.

$131,400

Line 24

Allocation ratio to Sam: 57% of the

$27,375 ($75 x 365 days)

remaining limitation ($23,051) is allocated to

Enter the reimbursements you received or

$104,025

Sam because the $24,000 he received during

expect to receive through insurance or

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

$ -0-

otherwise for qualified LTC services provided

received by both Sam and Joy during the

for the insured for LTC periods in 2017. Box 3 of

*$360 is the 2017 per diem limit for periodic

second LTC period.

Form 1099-LTC should indicate whether the

payments received under a qualified LTC insurance

contract. See Rev. Proc. 2016-55, sec. 3.55.

payments were made on a reimbursement

Allocation ratio to Joy: 43% of the

basis.

remaining limitation ($17,389) is allocated to

Joy because the $18,000 she received during

Generally, don't include on line 24 any

Example 2

the second LTC period is 43% of the $42,000

reimbursements for qualified LTC

received by both Sam and Joy during the

services you received under a contract

The facts are the same as in Example 1, except

second LTC period.

CAUTION

issued before August 1, 1996. However, you

Ann's son, Sam, and daughter, Joy, each also

must include reimbursements if the contract

Step 4. Ann, Sam, and Joy each complete

own a qualified LTC insurance contract under

was exchanged or modified after July 31, 1996,

Form 8853 as follows.

which Ann is the insured. Neither Sam nor Joy

to increase per diem payments or

incurred any costs for qualified LTC services for

Ann's Form 8853:

reimbursements.

Ann in 2017. From July 1, 2017, through

December 31, 2017, Sam received per diem

1st LTC

2nd LTC

Multiple Payees

Line

Period

Form 8853

payments of $4,000 per month ($24,000 total)

and Joy received per diem payments of $3,000

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

$12,000

$24,000

per month ($18,000 total). Ann, Sam, and Joy

only payments you received were accelerated

agree to use the equal payment rate method to

$51,585

$12,000

$63,585

death benefits that were paid because the

determine their LTC periods.

insured was terminally ill, skip lines 17 through

$ -0-

25 and enter -0- on line 26.

There are two LTC periods. The first is 181

days (January 1–June 30) during which the per

In all other cases in which you checked

diem payments were $2,000 per month. The

Sam's Form 8853:

“Yes” on line 15, attach a statement duplicating

second is 184 days (July 1–December 31)

lines 18 through 26 of the form. This statement

during which the aggregate per diem payments

1st LTC

2nd LTC

should show the aggregate computation for all

Line

Period

Form 8853

were $9,000 per month ($2,000 under Ann's

persons who received per diem payments

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

under a qualified LTC insurance contract or as

$ -0-

$24,000

$3,000 under Joy's contract).

accelerated death benefits because the insured

$ -0-

$23,051

An aggregate statement must be completed

was chronically ill. Each person must use the

for the second LTC period and attached to

$ -0-

$ 949

same LTC period. If all the recipients of

Ann’s, Sam's, and Joy's forms.

payments don't agree on which LTC period to

use, the contract period method must be used.

Step 1. They complete a statement for Ann for

the first LTC period as follows.

Joy’s Form 8853

After completing the statement, determine

your share of the per diem limitation and any

1st LTC

2nd LTC

taxable payments. The per diem limitation is

Line

Amount

Line

Period

Form 8853

allocated first to the insured to the extent of the

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

$ -0-

$18,000

total payments the insured received. If the

insured files a joint return and the insured's

$65,160 ($360 x 181 days)

$ -0-

$17,389

spouse is one of the policyholders, the per diem

$27,150 ($150 x 181 days)

$ -0-

$ 611

limitation is allocated first to them to the extent

of the payments they both received. Any

$65,160

remaining limitation is allocated among the

$13,575 ($75 x 181 days)

other policyholders pro rata based on the

$51,585

payments they received in 2017. The statement

showing the aggregate computation must be

$ -0-

attached to the Form 8853 for each person who

received a payment.

Instructions for Form 8853 (2017)

-7-

Instructions For Form 8853 - Archer Msas And Long-Term Care Insurance Contracts - 2017 Page 7

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