Spending: How Couples Can Share Long-Term Care Benefits

Q: How does a shared-benefit rider for long-term-care insurance work? Does it cost more than regular coverage?

A: One of the big unknowns with long-term-care insurance is predicting how long you’ll need benefits. Although the average need for care is about three years, you might die before needing any care or you could have a long-lasting condition, such as Alzheimer’s, and receive care for much longer. Getting a shared-benefit rider with your spouse is a way to hedge your bets when choosing your benefit period.

Instead of two separate benefit periods, a couple has a pool of long-term-care benefits to split. For example, rather than having three years for each spouse, you may have a total of six years of coverage that either one of you can use. If your spouse needs care for two years, you’ll still have four years of coverage.

Adding a shared-benefit rider to a LTC policy generally costs more than buying two separate benefit periods, increasing the cost by about 16 percent for a three-year benefit period — six total years of coverage for a couple — and 10 percent for a five-year benefit period, or 10 years total, says Claude Thau, a long-term-care insurance specialist in Overland Park, Kan. But having the shared benefit may make you feel more comfortable with buying a shorter benefit period.

Q: My daughter will be starting college this fall. Can we get a tax break for paying for college?

A: You may get a tax credit for paying her college tuition, depending on your income.

If your modified adjusted gross income is below $180,000 for married couples filing jointly or $90,000 for single filers, then you can claim a full or partial American Opportunity Credit for tuition bills. The credit is worth up to $2,500 per eligible student, based on 100 percent of the first $2,000 of qualified education expenses and 25 percent of the next $2,000.

To qualify, your daughter must be attending school at least half-time for at least one academic period during the year.

Students who are not attending college at least half-time or who are beyond their first four years of college may qualify for the Lifetime Learning Credit instead. This credit is worth 20 percent of the first $10,000 in qualified education expenses, up to a maximum of $2,000 per return. To qualify for a full or partial credit in 2018, your modified adjusted gross income must be less than $134,000 if married filing jointly or $67,000 if single. There is no limit to the number of years that you can claim the Lifetime Learning Credit.

Kimberly Lankford is a contributing editor to Kiplinger’s Personal Finance magazine. Send your questions and comments to moneypower@kiplinger.com. And for more on this and similar money topics, visit Kiplinger.com.

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