Form 8853, Archer MSAs and Long-Term Care Insurance Contracts, is the IRS form for three things: contributions to and distributions from an Archer MSA, distributions from a Medicare Advantage MSA, and taxable payments from long-term care insurance or accelerated death benefits. If you received any Archer MSA or Medicare Advantage MSA distribution in 2025, you must file it with your return even if you'd otherwise have no reason to file.
Most people who search for it have a long-term care policy paying out, not an Archer MSA, and that's the section that holds the useful insight. Everything below comes from the IRS instructions for Form 8853 for 2025, as of October 2026.
Who must file Form 8853
- You or your employer contributed to your Archer MSA for 2025.
- On a joint return, your spouse or their employer contributed to your spouse's Archer MSA.
- You received a distribution from an Archer MSA or a Medicare Advantage MSA.
- You inherited an interest in one of those accounts.
- You received long-term care insurance payments or accelerated death benefits on a per diem or other periodic basis.
Section A: Archer MSAs
Archer MSAs are closed to most new people: since the end of 2007, contributions can only be made for you if you were already an active participant, or became one through a participating employer's high deductible health plan. To be eligible you, or your spouse, must work for a small employer, generally one with an average of 50 or fewer employees, or be self-employed, and have no other health coverage apart from permitted kinds.
| 2025 HDHP limits for an Archer MSA | Self-only | Family |
|---|---|---|
| Minimum annual deductible | $2,850 | $5,700 |
| Maximum annual deductible | $4,300 | $8,550 |
| Maximum out-of-pocket (not premiums) | $5,700 | $10,500 |
The contribution limit is worked out month by month. For each month you're eligible on the first day, you enter 65% of the annual deductible for self-only coverage or 75% for family coverage, then divide the total by 12. Distributions not used for qualified medical expenses are taxable and carry an additional 20% tax, unless they're made after the account holder dies, becomes disabled or turns 65.
Section B: Medicare Advantage MSAs
These work in a similar way for people on Medicare, but the penalty is steeper: distributions included in income may face an additional 50% tax, with exceptions only for death or disability. You complete a separate Section B for each account.
Section C: long-term care payments
Payments from a qualified long-term care insurance contract are generally tax-free. The catch is per diem payments, meaning fixed periodic amounts paid regardless of your actual costs. For those, the tax-free amount is capped at the higher of your actual qualified care costs or the per diem limit, which is $420 a day for 2025.
The IRS's own example shows why most people owe nothing. Alex, chronically ill all year, receives $2,000 a month, $24,000 in total, on a per diem basis. His limit for the year is $420 times 365 days, $153,300, so after his reimbursements are taken into account none of the $24,000 is taxable. Problems tend to start when several family members own policies on the same person, because all the payments are added together.
Two ways to count your long-term care periods
When per diem payments are involved, you work out the taxable amount separately for each LTC period. The instructions describe an equal payment rate method, where a period is the stretch during which the insurer pays at the same rate. In the IRS example, a contract paying $175 a day from March 1 to May 31 and $195 a day from June 1 to December 31 gives 2 periods of 92 and 214 days. Pick the method that matches how your policy pays, and keep the insurer's statements that show each rate change.
Who counts as chronically or terminally ill
- Chronically ill: certified by a licensed health care practitioner within the last 12 months as unable to do at least 2 activities of daily living, such as eating, bathing or dressing, without substantial help for at least 90 days, or needing substantial supervision because of severe cognitive impairment.
- Terminally ill: certified by a physician as having a condition reasonably expected to result in death within 24 months. Accelerated death benefits paid to a terminally ill person are generally fully excludable.
How to complete it
- Gather your Forms 1099-LTC; box 3 shows whether payments were per diem or reimbursement.
- Complete only the sections that apply: A for an Archer MSA, B for a Medicare Advantage MSA, C for long-term care.
- For Section C, decide your LTC period method and do a separate calculation for each period.
- Carry taxable amounts and any additional tax to your Form 1040, 1040-SR or 1040-NR.
If you have a health savings account instead, that's reported on Form 8889, not here. Unreimbursed care costs may also count on Schedule A as medical expenses.
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The verdict
If a long-term care policy is paying out, don't panic about the form: with a $420 daily limit, most per diem payments stay tax-free. File Form 8853 anyway, keep the 1099-LTC and the practitioner's certification, and check carefully if more than one policy covers the same person. If you inherited an Archer MSA, the instructions have their own steps, starting with writing Death of Archer MSA account holder across the top of the form.
Frequently asked questions
What is Form 8853 used for?
It's used for Archer MSA contributions and distributions, Medicare Advantage MSA distributions, and taxable long-term care insurance or accelerated death benefit payments.
What is the 2025 per diem limit for long-term care payments?
The 2025 per diem limit for periodic payments under a qualified LTC insurance contract is $420 a day.
Can I still open an Archer MSA?
Generally not. After 2007, contributions can only be made for people who were already active participants or who join through a participating employer's HDHP.
What is the penalty on a non-medical Archer MSA withdrawal?
Distributions included in income are subject to an additional 20% tax, unless made after the account holder dies, becomes disabled or turns 65.
Must I file Form 8853 if I had an MSA distribution but no other income?
Yes. If you received Archer MSA or Medicare Advantage MSA distributions, you must file Form 8853 with your return even without any other reason to file.
