(2) Penalty for distributions from Medicare Advantage MSA not used for qualified medical expenses if minimum balance not maintained
(A) In general
The tax imposed by this chapter for any taxable year in which there is a payment or distribution from a Medicare Advantage MSA which is not used exclusively to pay the qualified medical expenses of the account holder shall be increased by 50 percent of the excess (if any) of—
(i)the amount of such payment or distribution, over
(ii)the excess (if any) of—
(I)the fair market value of the assets in such MSA as of the close of the calendar year preceding the calendar year in which the taxable year begins, over
(II)an amount equal to 60 percent of the deductible under the Medicare Advantage MSA plan covering the account holder as of January 1 of the calendar year in which the taxable year begins.
220(f)(4) shall not apply to any payment or distribution from a Medicare Advantage MSA.
Subparagraph (A) shall not apply if the payment or distribution is made on or after the date the account holder—
(i)becomes disabled within the meaning of section
(C) Special rules
For purposes of subparagraph (A)—
(i)all Medicare Advantage MSAs of the account holder shall be treated as 1 account,
(ii)all payments and distributions not used exclusively to pay the qualified medical expenses of the account holder during any taxable year shall be treated as 1 distribution, and
(iii)any distribution of property shall be taken into account at its fair market value on the date of the distribution.
(3) Withdrawal of erroneous contributions
220(f)(2) and paragraph (2) of this subsection shall not apply to any payment or distribution from a Medicare Advantage MSA to the Secretary of Health and Human Services of an erroneous contribution to such MSA and of the net income attributable to such contribution.
(4) Trustee-to-trustee transfers
220(f)(2) and paragraph (2) of this subsection shall not apply to any trustee-to-trustee transfer from a Medicare Advantage MSA of an account holder to another Medicare Advantage MSA of such account holder.
(d) Special rules for treatment of account after death of account holder
In applying section
220(f)(8)(A) to an account which was a Medicare Advantage MSA of a decedent, the rules of section
220(f) shall apply in lieu of the rules of subsection (c) of this section with respect to the spouse as the account holder of such Medicare Advantage MSA.
In the case of a Medicare Advantage MSA, the report under section
(1)shall include the fair market value of the assets in such Medicare Advantage MSA as of the close of each calendar year, and
(2)shall be furnished to the account holder—
(A)not later than January 31 of the calendar year following the calendar year to which such reports relate, and
(B)in such manner as the Secretary prescribes in such regulations.
(f) Coordination with limitation on number of taxpayers having Archer MSAs
Subsection (i) ofsection
220 shall not apply to an individual with respect to a Medicare Advantage MSA, and Medicare Advantage MSAs shall not be taken into account in determining whether the numerical limitations under section
220(j) are exceeded.
The Social Security Act, referred to in subsecs. (a) and (b)(2)(A), is act Aug. 14, 1935, ch. 531, 49 Stat. 620, as amended. Part C of title XVIII of the Act is classified generally to part C (§ 1395w–21 et seq.) of subchapter
XVIII of chapter
7 of Title
42, The Public Health and Welfare. Section 1859 of the Act is classified to section
1395w–28 of Title
42. For complete classification of this Act to the Code, see section
1305 of Title
42 and Tables.
A prior section
138 was renumbered section
140 of this title.
2004—Pub. L. 108–311, § 408(a)(5)(A)–(D), substituted “Medicare Advantage” for “Medicare Choice” wherever appearing in section catchline, headings, and text.
Subsec. (c)(2)(C)(i). Pub. L. 108–311, § 408(a)(5)(E), substituted “Medicare Advantage MSAs” for “Medicare Choice MSAs”.
Subsec. (f). Pub. L. 108–311, § 408(a)(5)(F), substituted “Medicare Advantage MSAs” for “Medicare Choice MSA’s”.
2000—Subsec. (b). Pub. L. 106–554, § 1(a)(7) [title II, § 202(b)(10)], substituted “an Archer MSA” for “a Archer MSA” in introductory provisions.
Pub. L. 106–554, § 1(a)(7) [title II, § 202(a)(3)], substituted “Archer MSA” for “medical savings account” in introductory provisions.
Subsec. (f). Pub. L. 106–554, § 1(a)(7) [title II, § 202(b)(6)], substituted “Archer MSAs” for “medical savings accounts” in heading.
Pub. L. 105–33, title IV, § 4006(c),Aug. 5, 1997, 111 Stat. 334, provided that: “The amendments made by this section [enacting this section, amending sections
4973 of this title, and renumbering former section
138 of this title as section
139 of this title] shall apply to taxable years beginning after December 31, 1998.”
The table below lists the classification updates, since Jan. 3, 2012, for this section. Updates to a broader range of sections may be found at the update page for containing chapter, title, etc.
The most recent Classification Table update that we have noticed was Tuesday, August 13, 2013
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Description of Change
Statutes at Large
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