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Financial Services Newsletter 3rd Quarter 2019

| July 17, 2019
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Quiz: Social Security Survivor Benefits

Did you know that Social Security may pay benefits to your eligible family members when you die, helping to make their financial life easier? Take this quiz to learn more.
Questions
1. What percentage of Social Security beneficiaries receive survivor benefits?
a. 5%
b. 10%
c. 15%

2. Your child may be able to receive survivor benefits based on your Social Security earnings record if he or she is:
a. Unmarried and under age 18 (19 if still in high school)
b. Married and in college
c. Both a and b

3. Which person may be able to receive survivor benefits based on your Social Security earnings record?
a. Your spouse
b. Your former spouse
c. Both a and b

4. Your parent may be able to receive survivor benefits based on your Social Security earnings record.
a. True
b. False

5. How much is the Social Security lump-sum death benefit?
a. $155
b. $255
c. $355

Answers
1. b. About 10% of the approximately 62 million Social Security beneficiaries in December 2017 were receiving survivor benefits.1
2. a. A dependent child may be able to receive survivor benefits based on your earnings record if he or she is unmarried and under age 18 (19 if still in high school) or over age 18 if disabled before age 22.
3. c. Both your current and former spouse may be able to receive survivor benefits based on your earnings record if certain conditions are met. Regardless of age, both may be able to receive a benefit if they're unmarried and caring for your child who is under age 16 or disabled before age 22 and entitled to receive benefits on your record. At age 60 or older (50 or older if disabled), both may be able to receive a survivor benefit even if not caring for a child (a length of marriage requirement applies).
4. a. That's true. To be eligible, your parent must be age 62 or older and receiving at least half of his or her financial support from you at the time of your death. In addition, your parent cannot be entitled to his or her own higher Social Security benefit and must not have married after your death.
5. b. The Social Security Administration (SSA) may pay a one-time, $255 lump-sum death benefit to an eligible surviving spouse. If there is no surviving spouse, the payment may be made to an eligible dependent child. The death benefit has never increased since it was capped at its current amount in a 1954 amendment to the Social Security Act.2

This is just an overview. For more information on survivor benefits and eligibility rules, visit the SSA website, ssa.gov.

1 Fast Facts & Figures About Social Security, 2018
2 Research Notes & Special Studies by the Historian's Office, Social Security Administration

Medicaid or Veterans Pension?

It's a fact: People are living longer today than they used to generations ago. Although that's good news, the odds of requiring some sort of health care increase as you get older. And as the costs of home care, nursing home care, and assisted living escalate, you probably wonder how you're ever going to be able to pay for that care for yourself or your loved ones.

Medicaid and a Veterans Pension such as Aid and Attendance (A&A) are among the government programs available to help pay for some of these costs. While it's possible to qualify for both Medicaid and a VA Pension, very rarely does one receive assistance from both programs at the same time. However, that doesn't mean you should disregard either program when determining how to pay for the costs associated with long-term care.

What's the difference?
Medicaid and the Veterans Pension programs have similarities and many important differences. Very briefly, Medicaid is a joint federal-state program that provides medical assistance to aged, disabled, or blind individuals (or to needy, dependent children) who cannot otherwise afford necessary medical care. Each state administers its own Medicaid program based on broad federal guidelines and regulations. Medicaid is the primary payer across the nation for long-term care services.

The Department of Veterans Affairs administers programs for veterans (or their surviving spouses) with limited incomes who are eligible for a VA pension. The Basic Pension/Improved Income program pays a monthly benefit to healthy veterans over the age of 65 with low incomes. A&A is for veterans over age 65 who require assistance with activities of daily living, such as eating, bathing, and dressing. The Veterans Housebound Pension is similar to A&A, but is available for persons whose disability significantly limits their ability to leave their homes.

Veterans Pension benefits are paid monthly. The recipient is able to use the money as desired. Medicaid is an insurance program that pays for costs of care. While the Medicaid benefit amount is often much more than any Veterans Pension benefit, Medicaid generally pays the service provider directly.

Do you qualify?
There are several factors to consider when determining the program best suited for the type of care needed. First and foremost, will you qualify for either program? Both programs have asset and income limits that are similar, but not identical.

Also, both programs have look-back periods that can disqualify an applicant from receiving benefits if assets are transferred for less than fair market value, such as by gifting to family members. It is possible to qualify for A&A but not for Medicaid, or vice versa. Pension benefits are generally counted as income for Medicaid eligibility purposes and could cause the recipient to exceed Medicaid's income limits. Consult with an elder law attorney or advisor who specializes in this type of planning.

What type of care is needed?
Another important consideration relates to the type of care required. Generally, if home care or assisted living is the type of care needed, Veterans Housebound or A&A benefits may be more advantageous. If nursing home care is needed, Medicaid is usually the better option. The amount of pension income is rarely enough to make up the difference between the cost of nursing home care and the recipient's income. Conversely, Medicaid will cover this difference in most cases. Equally important, the pension benefit is reduced to $90 per month for a single person (veteran or surviving spouse) who is in a Medicaid-approved nursing facility and is covered by a Medicaid plan for services furnished by the nursing facility.

However, there may be limited circumstances when a pension is appropriate for a beneficiary in a nursing home. For instance, if the beneficiary has to "spend down" assets before qualifying for Medicaid, the pension would continue to be paid while the recipient is paying for nursing home costs "out-of-pocket."

There's another situation in which a married couple may be dually eligible for Medicaid and a Veterans Pension; for example, the veteran spouse is at home or in an assisted-living facility (community spouse), and the non-veteran spouse is in a nursing home. If both spouses are able to meet the respective income and asset qualifications for each program, the veteran community spouse may receive a Veterans Pension and the spouse in the nursing home may qualify for Medicaid.

What's the verdict?
As you can see, coordinating Medicaid with a Veterans Pension can be a complicated process. Often, dovetailing a pension with Medicaid does not work well. It is always a good idea to consult with a professional who is proficient in planning for both Veterans Pension benefits and Medicaid to help you decide the best way to proceed.

For information on Medicaid, see medicaid.gov.
For information on Veterans Pension benefits, see benefits.va.gov.

How Loneliness Can Affect Your Financial Condition

According to a Pew Research Center survey, one in 10 Americans reports feeling lonely or isolated from others all or most of the time. While this number may not sound significant, it is alarming, considering that loneliness can also take a toll on your financial situation.

A link between loneliness and dissatisfaction
The Pew survey found that frequent loneliness is linked to dissatisfaction with one's family, social, and community life. People who say they are somewhat or very dissatisfied with their personal financial situations are significantly more likely to feel frequent loneliness than those who are satisfied with their finances (17% vs. 5%). And 14% of people who say they don't have enough income to lead the kind of life they want report feeling lonely or isolated often, compared with just 5% of individuals who have enough income to lead their ideal lives.1

A relationship to finances
Although the Pew survey did not draw any specific conclusions, it indicated a link between loneliness and satisfaction with one's financial situation, suggesting how frequent loneliness can lead to financial problems.

Specifically, loneliness can cause a lack of awareness about major financial issues, as well as an increased vulnerability to fraud. Lonely people have fewer opportunities to discuss finances with others face-to-face. This makes it easier for scam artists to take advantage of them by faking emotional support while stealing money.

Research has also linked loneliness and worsening chronic conditions. One study found that social isolation is associated with an estimated $6.7 billion in additional federal Medicare spending annually. As social isolation increases, chronic illnesses can grow more severe and result in higher medical bills and stress levels. This can have a harsher impact on those trying to cope alone.2

A little less lonely
Fortunately, there are ways to fight against loneliness and its effect on your financial condition. Start by expanding your social circle. Seek volunteer opportunities that will introduce you to new people as well as help you give back to your community. Establish routines that will keep you busy and develop healthy habits that don't cost money, such as spending time outdoors, joining a weekly group, reading, and meditating. Consider seeking guidance from a medical professional who may be able to connect you with local resources to integrate more social engagement into your life.

1 Pew Research Center, December 3, 2018
2 AARP, "Medicare Spends More on Socially Isolated Older Adults," November 2017

How can military veterans benefit from the new VET TEC program?

If you're a military veteran, you may be eligible for a new five-year pilot program from the Department of Veterans Affairs (VA) that covers the cost of technology classes and training to help you start or advance a career in information technology (IT).

Launched in April, the Veteran Employment Through Technology Education Courses (VET TEC) program covers the cost of tuition for tech-related programs offered through approved providers. Veterans may also be eligible for a housing stipend during their training.

Classes must be taken in one of the following five areas:
• Information science
• Computer programming
• Data processing
• Media applications
• Computer software

VET TEC is designed to help veterans quickly gain high-tech skills that are in demand by employers, without having to use their GI Bill entitlement. Programs such as coding boot camps may take just months or weeks to complete.

If you have at least one day of unexpired GI Bill entitlement, you may be eligible for the VET TEC program. You can apply by submitting an online application through the VA website. Once your eligibility for VET TEC has been determined, you need to apply for (and enroll in) a training program through a VA-approved Training Provider. The Training Provider will also provide job placement services to help you secure employment once you have completed your program.

For more information on this new opportunity, visit va.gov.

IMPORTANT DISCLOSURES Securities and advisory services offered through Cetera Financial Specialists LLC (doing insurance business in CA as CFGFS Insurance Agency), member FINRA/SIPC. Advisory services offered through Cetera Investment Advisers LLC. Cetera is under separate ownership from any other named entity.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2019

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