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26 U.S.C. § 138 — Medicare Advantage MSA
Federal law — U.S. Code and appendices · legal_authorities
**(a) Exclusion** 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))—
(1) which is designated as a Medicare Advantage MSA,
(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
(B) a trustee-to-trustee transfer described in subsection (c)(4),
(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
(4) which is established in connection with an MSA plan described in section 1859(b)(3) of the Social Security Act.
**(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
(B) section 220(d)(2)(C) shall not apply.
(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 exc
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Source location: Title 26, Chapter 1, § 138; chapter-001-normal-taxes-and-surtaxes.md
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**(a) Exclusion** 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))—
(1) which is designated as a Medicare Advantage MSA,
(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
(B) a trustee-to-trustee transfer described in subsection (c)(4),
(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
(4) which is established in connection with an MSA plan described in section 1859(b)(3) of the Social Security Act.
**(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
(B) section 220(d)(2)(C) shall not apply.
(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.
Section 220(f)(4) shall not apply to any payment or distribution from a Medicare Advantage MSA.
(B) *Exceptions* — 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 72(m)(7), or
(ii) dies.
(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** — Section 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** — Section 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.
**(e) Reports** In the case of a Medicare Advantage MSA, the report under section 220(h)—
(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) of section 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.
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Federal law — U.S. Code and appendices · legal_authorities
**(a)** For exemption of—
(1) Allowances and expenditures to meet losses sustained by persons serving the United States abroad, due to appreciation of foreign currencies, see [section 5943 of title 5](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title5-section5943&num=0&edition=prelim), United States Code.
(2) Benefits under laws administered by the Department of Veterans Affairs, see [section 5301 of title 38](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title38-section5301&num=0&edition=prelim), United States Code.
(3) Earnings of ship contractors deposited in special reserve funds, see [section 53507 of title 46](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title46-section53507&num=0&edition=prelim), United States Code.
(4) Income derived from Federal Reserve banks, including capital stock and surplus, see section 7 of the Federal Reserve Act ([12 U.S.C. 531](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section531&num=0&edition=prelim)).
(5) Special pensions of persons on Army and Navy medal of honor roll, see [38 U.S.C. 1562(a)](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title38-section1562/a&num=0&edition=prelim)–(c).
**(b)** For extension of military income tax-exemption benefits to commissioned officers of Public Health Service in certain circumstances, see section 212 of the Public Health Service Act ([42 U.S.C. 213](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section213&num=0&edition=prelim)).
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Federal law — U.S. Code and appendices · legal_authorities
This chapter may be cited as the “Social Security Act”.
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Application**
(1) **In general** — Except as provided in paragraph (2), this section shall apply to payment for drugs and biologicals that are described in section 1395u(o)(1)(C) of this title and that are furnished on or after January 1, 2005.
(2) **Election** — This section shall not apply in the case of a physician who elects under subsection (a)(1)(A)(ii) of [section 1395w–3b of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section1395w-3b&num=0&edition=prelim) for that section to apply instead of this section for the payment for drugs and biologicals.
**(b) Payment amount**
(1) **In general** — Subject to paragraph (7) and subsections (d)(3)(C) and (e), the amount of payment determined under this section for the billing and payment code for a drug or biological (based on a minimum dosage unit) is, subject to applicable deductible and coinsurance—
(A) in the case of a multiple source drug (as defined in subsection (c)(6)(C)), 106 percent of the amount determined under paragraph (3) for a multiple source drug furnished before April 1, 2008, or 106 percent of the amount determined under paragraph (6) for a multiple source drug furnished on or after April 1, 2008;
(B) in the case of a single source drug or biological (as defined in subsection (c)(6)(D)), 106 percent of the amount determined under paragraph (4) or in the case of such a drug or biological product that is a selected drug (as referred to in [section 1320f–1(c) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section1320f–1/c&num=0&edition=prelim)), with respect to a price applicability period (as defined in [section 1320f(b)(2) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section1320
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Federal law — U.S. Code and appendices · legal_authorities
**(a) General rule** Gross income shall not include any amount received by an individual as a qualified disaster relief payment.
**(b) Qualified disaster relief payment defined** For purposes of this section, the term “qualified disaster relief payment” means any amount paid to or for the benefit of an individual—
(1) to reimburse or pay reasonable and necessary personal, family, living, or funeral expenses incurred as a result of a qualified disaster,
(2) to reimburse or pay reasonable and necessary expenses incurred for the repair or rehabilitation of a personal residence or repair or replacement of its contents to the extent that the need for such repair, rehabilitation, or replacement is attributable to a qualified disaster,
(3) by a person engaged in the furnishing or sale of transportation as a common carrier by reason of the death or personal physical injuries incurred as a result of a qualified disaster, or
(4) if such amount is paid by a Federal, State, or local government, or agency or instrumentality thereof, in connection with a qualified disaster in order to promote the general welfare,
but only to the extent any expense compensated by such payment is not otherwise compensated for by insurance or otherwise.
**(c) Qualified disaster defined** For purposes of this section, the term “qualified disaster” means—
(1) a disaster which results from a terroristic or military action (as defined in section 692(c)(2)),
(2) a federally declared disaster (as defined by section 165(i)(5)(A)),
(3) a disaster which results from an accident involving a common carrier, or from any other event, which is determined by the Secretary to be of a catastrophic nature, or
(4) with respect to amounts described in subsection (b)(4), a disaster which is determined by an applic
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Deduction allowed** In the case of an individual who is an eligible individual for any month during the taxable year, there shall be allowed as a deduction for the taxable year an amount equal to the aggregate amount paid in cash during such taxable year by such individual to an Archer MSA of such individual.
**(b) Limitations**
(1) **In general** — The amount allowable as a deduction under subsection (a) to an individual for the taxable year shall not exceed the sum of the monthly limitations for months during such taxable year that the individual is an eligible individual.
(2) **Monthly limitation** — The monthly limitation for any month is the amount equal to 1⁄12 of—
(A) in the case of an individual who has self-only coverage under the high deductible health plan as of the first day of such month, 65 percent of the annual deductible under such coverage, and
(B) in the case of an individual who has family coverage under the high deductible health plan as of the first day of such month, 75 percent of the annual deductible under such coverage.
(3) **Special rule for married individuals** — In the case of individuals who are married to each other, if either spouse has family coverage—
(A) both spouses shall be treated as having only such family coverage (and if such spouses each have family coverage under different plans, as having the family coverage with the lowest annual deductible), and
(B) the limitation under paragraph (1) (after the application of subparagraph (A) of this paragraph) shall be divided equally between them unless they agree on a different division.
(4) **Deduction not to exceed compensation**
(A) *Employees* — The deduction allowed under subsection (a) for contributions as an eligible individual described in subclause (I) o
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Tax imposed** In the case of—
(1) an individual retirement account (within the meaning of section 408(a)),
(2) an Archer MSA (within the meaning of section 220(d)),
(3) an individual retirement annuity (within the meaning of section 408(b)), a custodial account treated as an annuity contract under section 403(b)(7)(A) (relating to custodial accounts for regulated investment company stock),
(4) a Coverdell education savings account (as defined in section 530),
(5) a health savings account (within the meaning of section 223(d)), or
(6) an ABLE account (within the meaning of section 529A),
there is imposed for each taxable year a tax in an amount equal to 6 percent of the amount of the excess contributions to such individual’s accounts or annuities (determined as of the close of the taxable year). The amount of such tax for any taxable year shall not exceed 6 percent of the value of the account or annuity (determined as of the close of the taxable year). In the case of an endowment contract described in section 408(b), the tax imposed by this section does not apply to any amount allocable to life, health, accident, or other insurance under such contract. The tax imposed by this subsection shall be paid by such individual.
**(b) Excess contributions** For purposes of this section, in the case of individual retirement accounts or individual retirement annuities, the term “excess contributions” means the sum of—
(1) the excess (if any) of—
(A) the amount contributed for the taxable year to the accounts or for the annuities (other than a contribution to a Roth IRA or a rollover contribution described in section 402(c), 403(a)(4), 403(b)(8), 408(d)(3), or 457(e)(16)), over
(B) the amount allowable as a deduction under section 219 for such contributions, and
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Federal law — U.S. Code and appendices · legal_authorities
Page 618
TITLE 26—INTERNAL REVENUE CODE
§ 138
Amendment by section 13305(b)(1) of Pub. L. 115–97 ap-
plicable to taxable years beginning after Dec. 31, 2017,
except as provided by transition rule, see section
13305(c) of Pub. L. 115–97, set out as a note under section
74 of this title.
EFFECTIVE AND TERMINATION DATES OF 2010
AMENDMENT
Amendment by Pub. L. 111–148 terminated applicable
to taxable years beginning after Dec. 31, 2011, and sec-
tion is amended to read as if such amendment had
never been enacted, see section 10909(c) of Pub. L.
111–148, set out as a note under section 1 of this title.
Amendment by Pub. L. 111–148 applicable to taxable
years beginning after Dec. 31, 2009, see section 10909(d)
of Pub. L. 111–148, set out as a note under section 1 of
this title.
EFFECTIVE DATE OF 2004 AMENDMENTS
Amendment by Pub. L. 108–357 applicable to taxable
years beginning after Dec. 31, 2004, see section 102(e) of
Pub. L. 108–357, set out as a note under section 56 of
this title.
Amendment by Pub. L. 108–311 effective as if included
in the provisions of the Job Creation and Worker As-
sistance Act of 2002, Pub. L. 107–147, to which such
amendment relates, see section 403(f) of Pub. L. 108–311,
set out as a note under section 56 of this title.
EFFECTIVE DATE OF 2002 AMENDMENT
Amendment by section 411(c)(2) of Pub. L. 107–147 ap-
plicable to taxable years beginning after Dec. 31, 2002,
except that amendment by section 411(c)(2)(B) applica-
ble to taxable years beginning after Dec. 31, 2001, see
section 411(c)(3) of Pub. L. 107–147, set out as a note
under section 23 of this title.
Amendment by section 418(a)(2) of Pub. L. 107–147 ef-
fective as if included in the provisions of the Economic
Growth and Tax Relief Reconciliation Act of 2001, Pub.
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