Penalty for distributions from Medicare Advantage MSA not used for qualified medical expenses if minimum balance not maintained
(A) In general
(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.
(A)(i)#
the amount of such payment or distribution, over
(A)(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.
(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.
(B)(i)#
becomes disabled within the meaning of section 72(m)(7), or
(B)(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.
(C)(i)#
all Medicare Advantage MSAs of the account holder shall be treated as 1 account,
(C)(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
(C)(iii)#
any distribution of property shall be taken into account at its fair market value on the date of the distribution.