26 U.S. Code § 138 - Medicare Advantage MSA
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Gross income shall not include any payment to the Medicare Advantage MSA of an individual by the Secretary of Health and Human Services under part C of title XVIII of the Social Security Act.
(b) Medicare Advantage MSA
For purposes of this section, the term “Medicare Advantage MSA” means an Archer MSA (as defined in section 220 (d))—
(2) with respect to which no contribution may be made other than—
(A) a contribution made by the Secretary of Health and Human Services pursuant to part C of title XVIII of the Social Security Act, or
(3) the governing instrument of which provides that trustee-to-trustee transfers described in subsection (c)(4) may be made to and from such account, and
(c) Special rules for distributions
(1) Distributions for qualified medical expenses
In applying section 220 to a Medicare Advantage MSA—
(A) qualified medical expenses shall not include amounts paid for medical care for any individual other than the account holder, and
(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—
(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.
Subparagraph (A) shall not apply if the payment or distribution is made on or after the date the account holder—
(C) Special rules
For purposes of subparagraph (A)—
(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
(3) Withdrawal of erroneous contributions
(d) Special rules for treatment of account after death of account holder
(1) shall include the fair market value of the assets in such Medicare Advantage MSA as of the close of each calendar year, and
(f) Coordination with limitation on number of taxpayers having Archer MSAs
Source(Added Pub. L. 105–33, title IV, § 4006(a),Aug. 5, 1997, 111 Stat. 332; amended Pub. L. 106–554, § 1(a)(7) [title II, § 202(a)(3), (b)(6), (10)], Dec. 21, 2000, 114 Stat. 2763, 2763A–628, 2763A–629; Pub. L. 108–311, title IV, § 408(a)(5)(A)–(F), Oct. 4, 2004, 118 Stat. 1191.)
References in Text
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.
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 220 and 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.”