Americans’ Top 7 Retirement Priorities for Biden and Congress

President Joseph Biden
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With a new president and Congress sworn in, many Americans are wondering what’s next — and how policies of the new administration will impact them.

When it comes to retirement, Americans have a few priorities they’d like to see policymakers address.

The 20th Annual Transamerica Retirement Survey of Workers asked about retirement financial security issues to determine which issues workers consider their highest priorities for the new president and Congress. These topped the list.

7. Increase access to affordable housing

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Workers who think this should be a priority: 34%

The U.S. is facing a housing affordability crisis, according to a Harvard study sponsored by Habitat for Humanity. The study found that more than 37 million households were “housing cost-burdened” — meaning they spent more than 30% of their income on housing.

More than 17 million were “severely cost-burdened” — spending more than half their income on housing. Finding affordable housing in retirement is an important part of survival.

6. Add financial literacy to school curriculums

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Workers who think this should be a priority: 34%

Workers believe that educating Americans early about personal finance issues could help them make better decisions later in life. In fact, a survey from the National Foundation for Credit Counseling (NFCC) reports that 78% of U.S. adults believe they could benefit from financial advice from a professional.

The National Endowment for Financial Education (NEFE) asserts that financial literacy education can help improve Americans’ financial outcomes, and that might be one way for future generations to improve their retirement prospects.

5. Increase access to workplace retirement plans

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Workers who think this should be a priority: 36%

According to a brief prepared by the Congressional Research Service, 71% of workers have access to a retirement plan, but there’s only 55% participation. Among those who do participate, those with lower incomes get a smaller practical tax benefit than those with higher incomes.

Biden proposes “equalizing” the tax benefits of participation, as well as increasing tax benefits to small businesses that offer retirement plans. On top of that, Biden’s proposals include an “automatic 401(k)” for those without access to workplace retirement plans.

4. Make long-term care more affordable

Nursing Home
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Workers who think this should be a priority: 37%

Depending on the type of long-term care you need, it can cost more than $7,000 per month for a private room in a nursing home, according to the U.S. Department of Health and Human Services. Medicare doesn’t cover long-term care costs, making it difficult for retirees to pay for such care.

As a result, the respondents to the Transamerica survey are interested in having Biden and Congress innovate solutions to make long-term care services more affordable for more people.

3. Address Medicare funding shortfalls

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Workers who think this should be a priority: 42%

Medicare premiums and out-of-pocket costs can stress seniors’ finances big time. However, future costs to retirees could be even greater, as Medicare’s finances continue to deteriorate. According to the Social Security Administration, Medicare faces long-term financing shortfalls. With this in mind, respondents to the Transamerica survey are interested in shoring up Medicare funding.

One of Biden’s proposals, lowering the eligible age for Medicare, faces a tough battle in Congress, according to CNBC. While such a move would expand access to health care for those 60 and older, it might not address the funding shortfall.

2. Make health care more affordable

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Workers who think this should be a priority: 47%

Health care costs continue to rise, with the Centers for Medicare and Medicaid Services reporting that private health insurance spending grew 3.7% in 2019. On top of that, out-of-pocket spending on health care grew 4.6% in 2019. With national health expenditures projected to grow at a healthy clip, it’s not a surprise that the Transamerica respondents are concerned about affordable health care.

So far, Biden has directed the insurance exchanges created by the Affordable Care Act to be open for a special enrollment period for three months (through May 15). The Kaiser Family Foundation estimates that, through the exchanges, as many as 4 million people could get a plan at no cost to them and an additional 4.9 million could get reduced-cost plans. Biden has promised to protect and build on the Affordable Care Act in an effort to reduce Americans’ health care costs.

1. Address Social Security funding shortfalls

Social Security payments
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Workers who think this should be a priority: 49%

The top priority for American workers is addressing the stability of the Social Security system, according to the Transamerica survey. Respondents want Social Security benefits to be available in the future, and concerns about funding issues continue to weigh on the program.

When it comes to addressing a projected shortfall, Biden has proposed raising payroll taxes for those with more than $400,000 in earnings. In 2021, payroll taxes are limited to only a worker’s first $142,800 in earnings. Biden’s proposal would levy new payroll taxes on earnings above $400,000.

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10 Things Taxes Pay For: Where Do Your Federal Tax Dollars Go?

Your taxes pay for a variety of government services, as well as government debt and salaries.

A young Black woman sits at a desktop computer and looks intently at the screen. One hand rests on the keyboard and the other holds a mug of coffee or tea. There is a yellow wall and blackboard behind her and two notebooks stacked on the desk beside her.

The federal government spends a lot of money. In 2019, for example, the government spent a total of around $4.4 trillion. You know that sounds like a lot, but how much is it really? 

For comparison, $4.4 trillion was around a fifth of the total national GDP for that year. GDP, or gross domestic product, is the value of all the goods and services provided or made within the country during that year.

What funds the things the government pays for? Well, $3.5 trillion of that spending was paid for by “federal revenues,” which mostly refers to taxes. The other $984 billion was borrowed. Discover 10 things taxes pay for below to understand just how the federal government is spending those trillions of dollars.

10 Things Taxes Pay For

  1. Government Debt
  2. Social Security
  3. Medicare
  4. Other Health Care
  5. National Defense
  6. Veterans Benefits
  7. Safety Net Programs
  8. Education
  9. Infrastructure
  10. Salaries and Wages

1. Government Debt

If the United States’ government borrowed more than $900 billion in 2019 alone, you can bet the total debt is high. At the end of 2019, it was $22.8 trillion.

According to the Peter G. Peterson Foundation, which keeps a daily national debt clock, as of February 24, 2021, the national debt was as much as $27,932,601,755,468—more than $27.9 trillion. Not sure exactly how much that really is? Consider this—if everyone in the United States covered an equal portion of that debt, each person would need to pony up $84,029.

It’s not surprising that a large chunk of what the federal government spends goes to debt, then. In 2019, around 8% of federal spending covered only the interest on debts!

2. Social Security 

Funding the Social Security program is a big expense for federal taxpayers. Social Security spending is part of an overall government spending category known as mandatory spending. These don’t require appropriation because the spending is mandated by a previous law or appropriation. With mandatory spending, the government funds the programs based on the need—however many people are eligible for and draw from Social Security, for example, determines how much is funded.

Many of the mandatory spending programs started in the middle of the 20th century. As the population has grown, so has the amount needed to fund these programs. In 1962, mandatory spending accounted for 31% of the federal budget. In 2019, it accounted for 61%.

Social Security accounts for the largest amount of mandatory spending. In 2019, the program accounted for 38% of all mandatory federal spending. That was around 23% of the total budget, or about a trillion dollars.

3. Medicare

Medicare also represents a mandatory spending item on the federal budget. It’s typically second to Social Security, and in 2019, it accounted for more than 23% of mandatory spending. This program provides health care benefits for qualified retired individuals as well as some eligible disabled persons. Overall, about $651 billion went to Medicare in 2019.

4. Other Health Care

Medicare isn’t the only health care and wellness program covered by the federal government. Others include Medicaid, which the federal government funds in partnership with the states, the Children’s Health Insurance Program (CHIP), and health care market subsidies. These subsidies are funded under the Affordable Care Act and usually taken as a reduction on how much someone might pay in taxes.

In 2019, all of these other health care programs cost around $450 billion.

5. National Defense

Defense is not included in mandatory spending. It is discretionary spending and it must be included in congressional appropriations bills annually.

Defense tends to be the biggest discretionary spending item on the federal budget. Some, but not all, foreign aid can be classified under defense because that spending is meant to stabilize other nations for the defense of the United States.

In 2019, defense accounted for around 50% of all discretionary spending. However, that was only around 16% of the total budget. 

6. Veterans Benefits

Veterans benefits refers to a wide range of health and wellness programs, financial assistance, and other programs designed to support veterans of the United States military. This type of spending can actually fall under both discretionary and mandatory, as there are VA programs in both categories. In either case, though, it’s a relatively small percentage of total spending.

7. Income Security or Safety Net Programs

Income security refers to federal spending on safety net programs to increase the health and safety of the general population. Programs included under this umbrella term cover, but aren’t limited to, housing assistance, nutrition and food assistance, unemployment compensation, foster care, and certain tax credits.

In 2019, income security accounted for the third-largest mandatory spending category after Social Security and Medicare. Around 16% of mandatory federal spending was in this category. Around 5% of discretionary spending that year was also in this category.

With two COVID relief acts in 2020, you should expect to see percentages in this category go up for that year. The types of spending related to those bills—such as the stimulus payments to qualifying Americans—would be considered income security. 

8. Education

The children are our future—but you might not know it by looking at how federal funds are spent. Education is normally a relatively small discretionary spending item (about 7% of discretionary spending in 2019), and it often includes both K-12 education as well as spending on college, training, and employment services. It’s also worth noting that only around 8% of K-12 public school spending across the country is federal. The rest is covered by state and local funds. 

9. Infrastructure

Infrastructure refers to physical structures and facilities that we depend on to function as a society. This includes buildings, roads, and power supplies. 

As with education, infrastructure expenses are shared among federal, state, and local budgets. According to a report from the House Committee on the Budget, the total infrastructure spending across all these entities in 2017 was only 2.3% of GDP, or around $441 billion.

10. Salaries and Wages

Not including the military and other non-civilian workforces, the federal government employs more than 2 million people. That’s a lot of people to pay, which means a lot of spending on salaries, wages, and benefits. The federal government spends billions of tax dollars to cover these expenses every year.

What If You Don’t Agree with Federal Spending?

As much as we’d sometimes like to pull the plug on our own tax bills because we don’t agree with how the federal government is spending our money, you still need to pay your taxes. Not doing so has legal consequences and could also lead to debt that might derail your financial goals and credit score. 

But you can take some actions if you don’t agree with how the federal government is spending your tax dollars:

  • Contact your legislators. Find your representatives in the House of Representatives and the Senate, then contact them about your concerns. Don’t forget to contact your state representatives as well as your US representatives.
  • Use your vote. Vote for candidates for president, the House of Representatives, or the Senate who align most closely with your policy beliefs and who may be more likely to spend money in a way you agree with.
  • Get involved. Learn more, get involved with grassroots change efforts, or sign or create petitions for change.

But while you’re doing all those things, don’t forget to do your federal taxes.

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Long-Term Care Options and How to Plan for the Costs

Think for a minute about all the things you did when you woke up this morning. You probably got out of bed, walked to the bathroom, cleaned yourself up, brushed your teeth, got dressed, made yourself some breakfast, and headed out the door to go to work. These activities of daily living are so routine, you likely did them without even thinking about it.

Now imagine that you couldn’t do these things on your own. It could be because you’ve had an accident, you’re recovering from an operation, or you have an illness that limits your mobility. Whatever the reason, you now need help from another person to do many or even most of your basic daily activities — and you’ll continue to need it for weeks, months, or even years.

This kind of help is called long-term care, and there’s a good chance you or a close loved one will need it at some point in your life. According to the U.S. Department of Health and Human Services (HHS), a person who turned 65 today has almost a 70% chance of needing some form of long-term care in the future.

Needing long-term care isn’t just a physical burden; it’s a financial one too. According to the 2020 Cost of Care Survey by Genworth Financial, professional long-term care can cost anywhere from $1,603 to $8,821 per month. Most employer-sponsored health insurance plans don’t cover these costs, and even Medicare provides only limited coverage.

If you don’t want to risk being bankrupted by long-term care costs in the future, you need to do some planning now. Even if you don’t think you’ll need long-term care for many years to come — or at all — it’s better to think about it ahead of time than to take a chance on having to deal with both a health crisis and a financial crisis at once.

Options for Long-Term Care

When many people hear “long-term care,” they immediately picture a nursing home. However, it’s possible to receive long-term care in a variety of settings, which differ widely in terms of both comfort and cost.

The main forms of long-term care are:

1. In-Home Care From Relatives

Dealing with a long-term injury or illness can be a lot less stressful in your own home with familiar things and people around you. Thus, one common type of long-term care is to have a relative or friend tend to your needs at home.

While unpaid in-home care is easiest on the person receiving care, it can be difficult for the caregiver, both emotionally and financially. A 2018 Genworth study found that more than half of family caregivers had high levels of stress, and roughly one-third said their careers had suffered on account of their caregiving duties.

2. Home Health Aides

If you want to receive care at home without putting a burden on your relatives, you can hire someone to help you. A home health aide doesn’t provide medical care but can help with such daily tasks as bathing, dressing, and eating. The 2020 Genworth survey found that the median cost of a home health aide in 2020 was $24 per hour, or $4,756 per month.

3. Homemaker Services

Some people don’t need help with bathing or dressing, but they still need someone to handle daily chores they can’t manage on their own, such as cooking, cleaning, and running errands. For this, you can hire a homemaker service, which costs a bit less than a home health aide. Genworth put the median cost of homemaker services for 2020 at $23.50 per hour, or $4,481 per month.

4. Adult Day Care

Some older people can still get up and about, but they can’t be on their own for long periods of time. An adult day care program is a place where adults can go during the day and spend time with others, with a caregiver there to keep an eye on them. Adult day care programs can offer structured activities, meals, transportation, and sometimes health services. They’re cheaper than most long-term care options, at around $74 per day or $1,603 per month, according to Genworth.

5. Assisted Living

Home health aides can help with daily activities, but they can’t provide actual medical care. People who need regular medical supervision are better off moving to an assisted living facility. This is a place where people can live on their own in private apartments and have access to both personal care and medical care on site. The median cost for an assisted living facility was $4,300 per month in 2020, according to Genworth.

6. Nursing Home

Nursing homes provide the highest level of supervision and care. These all-inclusive facilities offer room and board, personal care, supervision, activities, medication, rehabilitation, and full-time nursing care. This level of care comes with a high price tag, however. Genworth found that in 2020, a semi-private room in a nursing home cost $7,756 per month, and a private room cost $8,821 per month.


Government Programs

Most Americans can’t afford to pay for professional long-term care out of their own pockets. A 2020 survey by The Ascent found that over half of Americans have less than $5,000 in savings. Roughly one-third have less than $1,000 — not enough to pay for even a single month of long-term care.

Government programs, including Medicare and Medicaid, can help you meet some of the costs. However, these programs offer only limited aid. Each one has specific rules about who qualifies for benefits, what services it covers, how long you can receive aid, and how much you must pay for on your own. If you need long-term care, it’s certainly a good idea to look at these programs first to see what they cover, but it’s a mistake to rely on them to pick up the whole tab.

Medicare

In most cases, Medicare does not include any long-term care benefits. However, there are several specific exceptions:

  • Skilled Nursing Facility (SNF) Care. If you come out of the hospital after a stay of at least three days, Medicare provides partial coverage for up to 100 days’ worth of medically necessary care while you recover. To receive this coverage, you must enter a Medicare-certified SNF or nursing home within 30 days after you leave the hospital. Medicare covers all of your treatment there for the first 20 days of your stay. Beginning on day 21, you must pay a daily copayment, which is set at $185.50 in 2021. Medicare covers any cost beyond this copayment up through day 100. If you still need care after that, you’re on your own.
  • Rehabilitation. If you have a condition that requires ongoing medical care to help you recover, Medicare provides partial coverage for a stay in an inpatient rehabilitation facility. It covers the cost of treatments such as physical therapy, meals, drugs, nursing services, and a semi-private room. However, you must pay an out-of-pocket cost for this care that depends on the length of your stay. For the first 60 days, you pay a $1,364 deductible. This cost is waived if you’ve already paid for a hospital stay for the same condition. For days 61 through 90, you pay $341 per day. After day 90, you start using up your “lifetime reserve days.” You have only 60 of these days over your lifetime, and each one costs you $682. If you still need care after your 60 days are used up, you must pay the full cost. Also, any extra costs during your stay — such as a private room, private duty nursing, or a phone or television in your room — are your own responsibility.
  • Home Health Services. You can also use Medicare to pay for in-home care for a specific illness or injury. This includes part-time or intermittent skilled nursing care, physical or occupational therapy, and speech-language pathology. To qualify as part-time, your care must cover less than eight hours per day, or less than seven days per week, over a total of three weeks or less. If you are receiving this type of in-home care, Medicare also pays for additional, basic care from a home health aide. Medicare does not cover care from a home health aide if that’s the only care you need, and it does not cover homemaker services under any circumstances.
  • Hospice Care. People who are terminally ill sometimes choose to spend their last days in hospice care. Hospice treatment focuses on relieving the patient’s pain, rather than trying to cure them. Medicare covers hospice care for patients who are terminally ill, are not seeking a cure, and do not expect to live more than six months. Patients can receive this kind of care in their own homes, a hospital, or another inpatient care facility.

For more details about what Medicare covers, see the Medicare website.

Medicaid

Unlike Medicare, Medicaid covers all types of long-term care. This includes both in-home care — such as a visiting nurse or a home health aide — and care in facilities such as nursing homes. You can get home health aide services from Medicaid even if you don’t need skilled care as well, and you can get care in a facility even if you aren’t recovering from a hospital visit.

However, Medicaid has strict limits on eligibility. You can’t receive Medicaid benefits if your income is above a certain level, which varies from state to state. Also, in some states, you cannot qualify unless you have dependent children. You can find the limits for your state through your state’s Medicaid website.

Veterans’ Benefits

The Department of Veterans Affairs (VA) covers the full cost of long-term care for veterans who have disabilities resulting from their military service. It also covers costs for veterans who can’t afford to pay for their own care. Other veterans receive some coverage, but they must pay a copayment. According to the VA site, the current copayments for long-term care are:

  • $97 per day for inpatient care, such as nursing home care
  • $15 per day for outpatient care, such as home health care or adult day care
  • $5 per day for domiciliary care in a special facility for homeless veterans

The VA site has more information about the health benefits available to veterans and how to qualify for them.

OAA Programs

Some states have their own separate programs to help provide care for adults over age 60. These programs get funding from the federal government under the OIder Americans Act (OAA). The OAA supports a wide network of state, local, and tribal agencies called the Aging Network. It works with tens of thousands of service providers and volunteers to deliver various types of care, including:

  • Meal delivery
  • Transportation
  • Home health services
  • Home health aide and homemaker services
  • Adult day care
  • “Respite care,” which gives family caregivers some time off from taking care of an older relative
  • Help using other government benefits

You can find programs in your area through Eldercare.gov.


Products to Help You Pay for Long-Term Care

Government programs don’t cover everybody, and the coverage they offer isn’t always enough to pay for the full cost of long-term care. To make up the difference, some people carry long-term care insurance, which provides coverage for this specific type of care. Others rely on other financial products designed for senior citizens, such as annuities and reverse mortgages, to cover their costs.

Long-Term Care Insurance

Long-term care insurance, or LTC insurance, works like other types of insurance. You pay a premium each month to the insurer, and if you ever need long-term care, it covers the cost. However, one big difference between this and most other types of insurance is that you have to qualify to buy a policy. If you’re already in poor health, there’s a chance you won’t be able to get a policy — and if you do, you’ll have to pay a steep price for it.

There are several ways to buy a long-term care insurance policy. The most common sources for policies are:

  • Insurance Specialists. You can buy LTC insurance through financial professionals such as insurance agents, brokers, and financial planners. To find insurance companies that offer LTC insurance, visit your state insurance department or do an Internet search for “long-term care insurance” plus the name of your state.
  • Employers. Although standard employer-sponsored health care plans don’t cover long-term care, many employers — including the federal government, many state governments, and some private companies — offer LTC insurance as an add-on that employees can purchase separately. To find out whether your employer offers this coverage, check with your pensions or benefits office.
  • Organizations. Some labor unions and other professional or trade organizations, such as the National Education Association, offer LTC insurance as a benefit to their workers. Membership organizations such as alumni associations or service clubs like the Lions and Elks can also take part in group plans.
  • State Partnerships. In some states, you can purchase LTC coverage through a State Partnership Program. These programs provide benefits partly through private long-term care insurers and partly through Medicaid. You can learn more details about these programs from the Department of Health and Human Services (HHS).

Although long-term care coverage can protect you from devastating long-term care costs, most Americans don’t carry it because of its high cost. According to the American Association for Long-Term Care Insurance (AALTCI), the typical annual premium for an LTC policy ranges from $1,400 to $3,100. This annual cost varies based on factors such as age, health, gender, location, and amount of coverage.

Financial planner David Demming, speaking with Policygenius, says LTC insurance is most likely to be a good deal for people aged 50 to 55 with a net worth between $1 million and $3 million. That’s enough money to afford the premiums, but not enough to cover the full cost of long-term care. To get a clearer idea of what LTC policy pricing could be for you, check out online calculators like this one from Genworth.

Annuities

Some people choose to fund their long-term care through an annuity, a financial product that pays out a fixed sum every year over a specific period. There are three kinds of annuities you can use for this purpose:

  • Immediate Annuities. With an immediate annuity, you pay a one-time premium, and in exchange the company pays you a fixed monthly benefit. This benefit can last for a specific period of time or the rest of your life. One advantage of an immediate annuity is that anyone can buy one, regardless of health status. This makes it a good option for people who no longer qualify for LTC insurance due to poor health. However, the fixed monthly sum you get might not be enough to meet your long-term care costs, and inflation can eat into its value.
  • Deferred Annuities. You can buy a deferred annuity with either a one-time payment, like an immediate annuity, or a series of regular payments. The money you pay into the annuity earns interest and grows tax-free. It doesn’t start paying out a monthly benefit until a specific date, such as your 65th birthday.
  • Long-Term Care Annuities. A long-term care annuity is a deferred annuity with a long-term care rider. This type of annuity doesn’t pay out until you need the money for long-term care costs. To collect the monthly payment, you must be diagnosed with a medical condition that requires long-term care, such as Alzheimer’s disease. According to HHS, this type of annuity is usually available only to people age 85 or younger who meet certain health requirements. However, according to SmartAsset, it’s sometimes easier to get approved for a long-term care annuity than for LTC insurance.

Depending on your situation, an annuity can be a cheaper way to cover long-term care costs than LTC insurance. However, it typically requires a large up-front payment, which is even higher if you already have health issues. Also, annuities can have a complicated effect on your taxes — HHS recommends consulting a tax professional before you buy one.

Reverse Mortgages

Another way to pay for long-term care services is with a reverse mortgage through LendingTree. This is a special type of home equity loan available only to homeowners age 62 and up, which allows you to get cash out of your home without giving up your title to it.

The house remains your property until you die. At that time, it goes to the bank unless your heirs choose to pay off the amount you’ve borrowed and keep the house. Otherwise, the bank sells the house and keeps the amount you owed at the time of your death. Any cash beyond that balance goes to your heirs.

There are several ways to get cash from a reverse mortgage. You can get one large lump-sum payment, a regular monthly payment, or a line of credit you can draw on as needed. The second two options are most useful for paying long-term care expenses. As long as you spend the payments in the same month you receive them, the money is not taxable income and doesn’t affect any government benefits, such as Social Security, Medicare, or Medicaid.


Long-Term Care Planning

Dealing with long-term care can be an emotional and financial burden, both for you and for your family. The best way to lighten that load is to plan ahead. By making your plans early, you’ll have plenty of time to do research, make decisions, and buy traditional long-term care insurance or any other products you need to cover the costs.

1. Research Your Options

Start by looking into the options for advanced care in your area. Check the phone book or do an online search to find out what choices you’re likely to have for assisted living and nursing homes, as well as home health aide and homemaking services. The Genworth Cost of Care Survey tool can help you estimate what these services cost now and what they’re likely to cost in the future. You can also check the costs for services in other areas to figure out whether relocating would save you money.

2. Talk to Your Family

Once you have some idea of available options, talk to your family members and get their input. Set aside a time when you can talk everything over in person without having to rush. Here are some points to discuss:

  • Your Lifestyle. Discuss the way you live now and how you expect to live in the future. For instance, if it’s important to you to stay at home and live independently, let your family know that. Tell them about your priorities, and find out what’s important to them, as well.
  • Your Care Options. Show your family the research you’ve done on care options in your area. Tell them how you’d prefer to receive care and whether you have a specific provider in mind. Also, find out how much of your care your loved ones are able and willing to take on themselves. If you have several relatives who could help you, talk about which specific responsibilities each of them could handle.
  • Your Finances. Once you’ve considered what kind of care you want, talk about what it’s likely to cost. Let your family know how much money you can set aside now toward your future care needs, and find out if any of them are willing to contribute.
  • Medical Care. Make sure your family knows your health history in detail so they can supply it to a doctor if they need to. Also, make sure they know how to contact all of your current medical providers.
  • Legal Issues. Decide who should be responsible for making medical decisions for you if you can’t make them yourself. Use this information to set up a durable power of attorney for the future. Also, talk to your loved ones about your wishes for end-of-life care. If you already have a living will, tell them what it says and where to find it; if you don’t have one, make plans to set one up.

3. Calculate the Cost

Now that you have some idea who will provide care for you when you need it, the next step is to figure out how much it will cost. Even if your family has offered to provide unpaid care for you when you need it, there could still be some cost involved. For instance, you could choose to hire a house cleaning service so your loved ones won’t be responsible for all the housekeeping chores in addition to your care.

If you’re planning to pay for professional long-term care services, think about how long you’re likely to need them. According to the HHS, people who require long-term care use it for an average of three years. This includes an average of two years of in-home care and one year in a long-term care facility. About one in five people need care for more than five years.

To figure out the total amount you’ll need for long-term care costs, multiply the cost by the expected length of care. For instance, suppose a home health aide costs $60,000 per year and assisted living costs $90,000 per year. If you expect to need two years of home health care and one year in assisted living, you must save up a total of $250,000.

If the total cost looks like more than you can possibly afford, look for ways to save on long-term care. This could include relying on family care, negotiating prices, getting help from government programs, or relocating to a cheaper area.

4. Make a Plan to Cover the Costs

Once you have an idea of how much money you’ll need for long-term care, you can start figuring out how to pay for it. If your income and assets are low enough, you can look to Medicaid for help when you need care. State government programs could also provide some help.

By contrast, if you have a lot of liquid assets — that is, cash, retirement savings, and other assets you can easily convert to cash — you might be able to pay for your care out of pocket. Financial planners interviewed by Policygenius say this is most practical for people with a net worth of at least $3 million.

If you’re somewhere in between those two extremes, you’ll need some other way to meet the costs of long-term care. That could mean buying long-term care insurance, investing in an annuity, or taking out a reverse mortgage. A financial planner can help you compare these options and decide which one is best for you.

5. Put Your Plan in Writing

After you’ve come up with a plan to meet your long-term care needs, the final step is to put it in writing. Having a written plan gives your family something to consult if there’s ever any confusion or uncertainty about your wishes.

If you’ve decided to make a living will or set up a durable power of attorney, these documents should be part of your written care plan. Consult a lawyer to help you set these up. Give a copy of the entire plan, including the legal documents, to any relatives it could affect.

Putting your plan in writing doesn’t mean it’s set in stone. If your health or financial situation changes in the future, your long-term plans might need to change too. Update your plan as needed, and make sure your relatives always have the latest version.


Final Word

If you’re young and healthy, you may feel like it’s too soon to start thinking about long-term care. Since you probably won’t need it for many years, you figure you can just wait and deal with it when the time comes.

However, there are several good reasons why now is exactly the right time to think about it. First of all, the future is unpredictable. Even young people can suffer injuries or develop illnesses that keep them off their feet for months.

Also, LTC insurance gets more expensive and harder to obtain as you age. If you decide to wait until you’re 65 before buying a policy, it could already be too late to qualify. And even if you can get one, you’ll pay a much steeper rate for it than you would if you’d bought it 10 years earlier. So it makes sense to start thinking about this type of insurance and decide whether it’s for you before you hit age 55.

Finally, if you put off thinking about long-term care until you actually need it, you’ll have to make a whole lot of important decisions in a hurry. You could end up making choices that aren’t best for you because you don’t have time to weigh the options. By avoiding procrastination and thinking it through now, you can ensure that when — or if — you finally need long-term care, it will be as easy as possible for you and your family.

Source: moneycrashers.com

Important welfare statistics for 2021 – Lexington Law

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

Millions of Americans face the financial hardships of losing a job, not being able to work due to a disability or supporting a family on a small salary each year. The struggle to put food on the table, pay bills and support a family can be incredibly harsh, which is why the United States has a series of welfare programs to help those in need.

Federal welfare programs first started in 1935 during the great depression. With widespread poverty, starvation and unemployment, a series of programs were created to help Americans place food on the table and help those unable to support themselves and their families.

Today, the means-tested welfare system consists of government programs that offer cash, food, social services, education, training and housing for low-income Americans. As welfare programs are funded through local, state and federal taxes, programs are often a topic of political debate.

With some misconception surrounding the Americans receiving welfare and effectiveness of the program, we’ve compiled important welfare statistics you should know in 2021. Explore the costs, effects and various demographic statistics in our study of the welfare programs in America.

Cost of welfare programs

The total cost of poverty assistance programs in America can add up to a shocking $1 trillion a year when combining both federal and state level program budgets. Because of the large total price tag on helping the poor, welfare programs are often an area of policy and budgetary debate.

  • In 2020, a total of $9.88 trillion was spent on welfare programs in America.  [Source: US Government Spending]
  • In 2021, $8.30 trillion is projected to be spent on welfare programs in America. [Source: US Government Spending]
  • $4.83 trillion of that total is budgeted for Federal spending specifically in 2021. [Source: US Government Spending]

statistic on projected welfare spending

  • $2.09 trillion of the total is estimated to be budgeted for state spending specifically in 2021.  [Source: US Government Spending]
  • $2.18 trillion of the total is estimated to be budgeted for local spending specifically in 2021.  [Source: US Government Spending]
  • 8 percent of total government spending in 2019—$361 billion—went towards welfare programs in 2019 (excluding Social Security benefits.) [Source: CBPP]
  • The average SNAP recipient in 2020 earned $136.36 a month in assistance. [Source: USDA]
  • Around 38,066,477 million people participated in SNAP in 2020. [Source: USDA]
  • Total U.S. spending on SNAP in 2020 amounted to $36,335,896,388 billion. [Source: USDA]

2021 federal welfare budget

breakdown of estimated welfare spending in 2021

Poverty statistics

  • In 2020 the poverty threshold for a couple with two children was $17,240. [Source: ASPE]
  • Mississippi has the highest number of people living in poverty in 2020—20.6 of the state’s residents. [Source: World Population Review]
  • In 2019, 10.5 percent of Americans lived in poverty. [Source: US Census Bureau]
  • The poverty rate of Americans decreased by 1.3 percent in 2019. [Source: US Census Bureau]
  • In 2020, 9.2 percent of Americans lived in poverty. [Source: Urban Institute]

Top 10 states with the highest poverty rates in 2021

State Poverty Rate
Puerto Rico 49.31 percent
Mississippi 20.6 percent
New Mexico 19.57 percent
Louisiana 18.91 percent 
West Virginia 17.74 percent
Kentucky 17.2 percent Alabama 16.90 percent Arkansas 16.79 percent Oklahoma 15.37 percent Washington D.C 15.19 percent

[Source: World Population Review]

Welfare program results

Following the Welfare Reform Act of 1996, government spending on welfare programs decreased as additional requirements and restrictions were put in place. Despite having less budget to pull from and more restrictions, the welfare programs in America have successfully lowered poverty rates over the past decade. Some issues with the current welfare program are its performance during years of economic downturn and recession.

  • For every 100 families in poverty in 2019, only 23 were provided cash assistance by Temporary Assistance for Needy Families (TANF.) [Source: CBPP]
  • The Supplemental Poverty Measure (SPM) in 2019 was 11.7 percent, 1 percentage lower than it was in 2018. [Source: US Census Bureau]
  • Between 2018 and 2019, all major age categories saw a decline in SPM rates: children under age 18, adults aged 18 to 64 and adults aged 65 and older. [Source: US Census Bureau]
  • Since its first publication in 2009, the SPM rate of 11.7 in 2019 is the lowest it’s ever been. [Source: US Census Bureau]
    Social Security benefits lifted 26.5 million people out of poverty in 2019. [Source: US Census Bureau]

Average spending of welfare recipients

Compared to the average American household, welfare recipients spend far less money on all food consumption, including dining out, in a year. As families with welfare assistance spend half as much on average in one year than families without it do, there are some large differences in budgeting. Families receiving welfare assistance spent half the amount of families not receiving welfare assistance in 2018.

Welfare fraud statistics

Welfare fraud is the act of improperly stating or withholding information in order to receive higher payments. Most welfare programs’ eligibility is handled on a local level and detecting fraud is the responsibility of the state. The United States Government Accountability Office estimates that around 1 out of 10 welfare payments are fraudulent or improperly filed.

  • Fraudulent and improper welfare payments were around 10.6 percent of total federal welfare payments made in 2019. [Source: Federal Safety Net]
  • A total of $99.1 billion in payments were found to be improperly filed or fraudulent in 2019. [Source: Federal Safety Net]
  • An estimated 6.8 percent of SNAP payments were made fraudulently or in error in 2019. [Source: Federal Safety Net]
  • An estimated 10.5 percent of Child Nutrition payments were made improperly in 2019. [Source: Federal Safety Net]
  • The $99.1 billion of improperly filed or fraudulent payments in 2019 amounts to more than the budgets of TANF, Child Nutrition, Head Start, Job Training, WIC, Child Care, Low Income Home Energy Assistance Program and the Lifeline programs combined. [Source: Federal Safety Net]

statistic on fraudulent welfare charges

Welfare participation

  • For SNAP households receiving SNAP benefits in 2019, around 41.2 percent had at least one member over the age of 60, and 29.9 percent had a child aged 18 or younger. [Source: United States Census Bureau]
  • 47.5 percent of households receiving SNAP benefits in 2019 included a married couple. [Source: United States Census Bureau] 
    68,826,573 people were enrolled in Medicaid in 2020. [Source: Medicaid]
  • 11.3 percent of all American households received SNAP benefits in 2018. [Source: United States Census Bureau]
  • Households receiving SNAP benefits received an average of $251 per month in 2018. [Source: United States Census Bureau]
  • The states with the highest rates of SNAP participation in 2018 included New Mexico at 17.3 percent and West Virginia at 16.6 percent. [Source: United States Census Bureau]
  • Wyoming had the lowest SNAP participation rate in 2018 at 5 percent. [Source: United States Census Bureau]

Welfare demographics

Welfare in the workforce

Although welfare programs are commonly argued to support the lazy, data does not show this to be true. In the current state, welfare programs predominantly help Americans who receive low wages. The U.S. Government Accountability Office discovered that the top employers of Americans enrolled in welfare programs were Walmart and McDonalds—companies who have historically paid their workers low wages.

Although the $1 trillion a year budget may seem large at first glance, the current welfare program supporting the 9.2 percent of Americans in poverty for 2020 puts the large problem of poverty into perspective. Without any government safety nets, those living in poverty would not have the proper help to survive or tools to get back on their feet. With a rise in credit card debt across America it is still important to find a solution to pull the citizens living paycheck to paycheck out of poverty.


If your credit has been damaged and you’re looking to improve your situation, contact Lexington Law. We can work with you to remove the negative items on your credit report that could be holding you back.

You can also carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.

Source: lexingtonlaw.com

Important welfare statistics for 2021

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

Millions of Americans face the financial hardships of losing a job, not being able to work due to a disability or supporting a family on a small salary each year. The struggle to put food on the table, pay bills and support a family can be incredibly harsh, which is why the United States has a series of welfare programs to help those in need.

Federal welfare programs first started in 1935 during the great depression. With widespread poverty, starvation and unemployment, a series of programs were created to help Americans place food on the table and help those unable to support themselves and their families.

Today, the means-tested welfare system consists of government programs that offer cash, food, social services, education, training and housing for low-income Americans. As welfare programs are funded through local, state and federal taxes, programs are often a topic of political debate.

With some misconception surrounding the Americans receiving welfare and effectiveness of the program, we’ve compiled important welfare statistics you should know in 2021. Explore the costs, effects and various demographic statistics in our study of the welfare programs in America.

Cost of welfare programs

The total cost of poverty assistance programs in America can add up to a shocking $1 trillion a year when combining both federal and state level program budgets. Because of the large total price tag on helping the poor, welfare programs are often an area of policy and budgetary debate.

  • In 2020, a total of $9.88 trillion was spent on welfare programs in America.  [Source: US Government Spending]
  • In 2021, $8.30 trillion is projected to be spent on welfare programs in America. [Source: US Government Spending]
  • $4.83 trillion of that total is budgeted for Federal spending specifically in 2021. [Source: US Government Spending]

statistic on projected welfare spending

  • $2.09 trillion of the total is estimated to be budgeted for state spending specifically in 2021.  [Source: US Government Spending]
  • $2.18 trillion of the total is estimated to be budgeted for local spending specifically in 2021.  [Source: US Government Spending]
  • 8 percent of total government spending in 2019—$361 billion—went towards welfare programs in 2019 (excluding Social Security benefits.) [Source: CBPP]
  • The average SNAP recipient in 2020 earned $136.36 a month in assistance. [Source: USDA]
  • Around 38,066,477 million people participated in SNAP in 2020. [Source: USDA]
  • Total U.S. spending on SNAP in 2020 amounted to $36,335,896,388 billion. [Source: USDA]

2021 federal welfare budget

breakdown of estimated welfare spending in 2021

Poverty statistics

  • In 2020 the poverty threshold for a couple with two children was $17,240. [Source: ASPE]
  • Mississippi has the highest number of people living in poverty in 2020—20.6 of the state’s residents. [Source: World Population Review]
  • In 2019, 10.5 percent of Americans lived in poverty. [Source: US Census Bureau]
  • The poverty rate of Americans decreased by 1.3 percent in 2019. [Source: US Census Bureau]
  • In 2020, 9.2 percent of Americans lived in poverty. [Source: Urban Institute]

Top 10 states with the highest poverty rates in 2021

State Poverty Rate
Puerto Rico 49.31 percent
Mississippi 20.6 percent
New Mexico 19.57 percent
Louisiana 18.91 percent 
West Virginia 17.74 percent
Kentucky 17.2 percent Alabama 16.90 percent Arkansas 16.79 percent Oklahoma 15.37 percent Washington D.C 15.19 percent

[Source: World Population Review]

Welfare program results

Following the Welfare Reform Act of 1996, government spending on welfare programs decreased as additional requirements and restrictions were put in place. Despite having less budget to pull from and more restrictions, the welfare programs in America have successfully lowered poverty rates over the past decade. Some issues with the current welfare program are its performance during years of economic downturn and recession.

  • For every 100 families in poverty in 2019, only 23 were provided cash assistance by Temporary Assistance for Needy Families (TANF.) [Source: CBPP]
  • The Supplemental Poverty Measure (SPM) in 2019 was 11.7 percent, 1 percentage lower than it was in 2018. [Source: US Census Bureau]
  • Between 2018 and 2019, all major age categories saw a decline in SPM rates: children under age 18, adults aged 18 to 64 and adults aged 65 and older. [Source: US Census Bureau]
  • Since its first publication in 2009, the SPM rate of 11.7 in 2019 is the lowest it’s ever been. [Source: US Census Bureau]
    Social Security benefits lifted 26.5 million people out of poverty in 2019. [Source: US Census Bureau]

Average spending of welfare recipients

Compared to the average American household, welfare recipients spend far less money on all food consumption, including dining out, in a year. As families with welfare assistance spend half as much on average in one year than families without it do, there are some large differences in budgeting. Families receiving welfare assistance spent half the amount of families not receiving welfare assistance in 2018.

Welfare fraud statistics

Welfare fraud is the act of improperly stating or withholding information in order to receive higher payments. Most welfare programs’ eligibility is handled on a local level and detecting fraud is the responsibility of the state. The United States Government Accountability Office estimates that around 1 out of 10 welfare payments are fraudulent or improperly filed.

  • Fraudulent and improper welfare payments were around 10.6 percent of total federal welfare payments made in 2019. [Source: Federal Safety Net]
  • A total of $99.1 billion in payments were found to be improperly filed or fraudulent in 2019. [Source: Federal Safety Net]
  • An estimated 6.8 percent of SNAP payments were made fraudulently or in error in 2019. [Source: Federal Safety Net]
  • An estimated 10.5 percent of Child Nutrition payments were made improperly in 2019. [Source: Federal Safety Net]
  • The $99.1 billion of improperly filed or fraudulent payments in 2019 amounts to more than the budgets of TANF, Child Nutrition, Head Start, Job Training, WIC, Child Care, Low Income Home Energy Assistance Program and the Lifeline programs combined. [Source: Federal Safety Net]

statistic on fraudulent welfare charges

Welfare participation

  • For SNAP households receiving SNAP benefits in 2019, around 41.2 percent had at least one member over the age of 60, and 29.9 percent had a child aged 18 or younger. [Source: United States Census Bureau]
  • 47.5 percent of households receiving SNAP benefits in 2019 included a married couple. [Source: United States Census Bureau] 
    68,826,573 people were enrolled in Medicaid in 2020. [Source: Medicaid]
  • 11.3 percent of all American households received SNAP benefits in 2018. [Source: United States Census Bureau]
  • Households receiving SNAP benefits received an average of $251 per month in 2018. [Source: United States Census Bureau]
  • The states with the highest rates of SNAP participation in 2018 included New Mexico at 17.3 percent and West Virginia at 16.6 percent. [Source: United States Census Bureau]
  • Wyoming had the lowest SNAP participation rate in 2018 at 5 percent. [Source: United States Census Bureau]

Welfare demographics

Welfare in the workforce

Although welfare programs are commonly argued to support the lazy, data does not show this to be true. In the current state, welfare programs predominantly help Americans who receive low wages. The U.S. Government Accountability Office discovered that the top employers of Americans enrolled in welfare programs were Walmart and McDonalds—companies who have historically paid their workers low wages.

Although the $1 trillion a year budget may seem large at first glance, the current welfare program supporting the 9.2 percent of Americans in poverty for 2020 puts the large problem of poverty into perspective. Without any government safety nets, those living in poverty would not have the proper help to survive or tools to get back on their feet. With a rise in credit card debt across America it is still important to find a solution to pull the citizens living paycheck to paycheck out of poverty.


If your credit has been damaged and you’re looking to improve your situation, contact Lexington Law. We can work with you to remove the negative items on your credit report that could be holding you back.

You can also carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.

Source: lexingtonlaw.com

What Is Medicaid Estate Recovery?

What Is Medicaid Estate Recovery? – SmartAsset

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Medicaid is a government program that can help eligible seniors pay for nursing home care. If you’re helping an aging parent navigate Medicaid because they don’t have long-term care insurance or you think you’ll need it yourself someday, it’s important to understand how the program works. For instance, you should be aware that the Medicaid Estate Recovery Program (MERP) may be used to recoup costs paid toward long-term care. Medicaid estate recovery is intended to help make the program affordable for the government, but it can financially impact the beneficiaries of Medicaid recipients. Make sure you’re handling this kind of situation in the wisest possible way by consulting a financial advisor.

Medicaid Estate Recovery, Explained

Medicare is designed to help pay for healthcare costs for seniors once they turn 65. While it covers a number of healthcare expenses, it doesn’t apply to costs associated with long-term care in a nursing home.

That’s where Medicaid can help fill the gap. Medicaid can help with paying the costs of long-term care for aging seniors. It can be used in situations where someone lacks long-term care insurance coverage or they don’t have sufficient assets to pay for long-term care out of pocket. You may also use Medicaid to pay for nursing home care if you’ve taken steps to protect assets using a trust or other estate planning tools.

But the benefits you or an aging parent receives from Medicaid aren’t necessarily free. The Medicaid Estate Recovery Program allows Medicaid to recoup money spent on behalf of an aging senior to cover long-term care costs. The Omnibus Budget Reconciliation Act of 1993 requires states to attempt to seek reimbursement from a Medicaid beneficiary’s estate when they pass away.

How Medicaid Estate Recovery Works

The Medicaid Estate Recovery Program allows Medicaid to seek recompense for a variety of costs, including:

  • Expenses related to nursing home or other long-term care facility stays
  • Home- and community-based services
  • Medical services received through a hospital (when the recipient is a long-term care patient)
  • Prescription drug services for long-term care recipients

If you or an aging parent passes away after receiving long-term care or other benefits through Medicaid, the recovery program allows Medicaid to pursue any eligible assets held by your estate. What that includes can depend on where you live, but generally, it means any assets that would be subject to the probate process after you pass away.

So that may include:

  • Bank accounts owned by you
  • Your home or other real estate
  • Vehicles or other real property

Some states also allow Medicaid estate recovery to include assets that aren’t subject to probate. That can include jointly owned bank accounts between spouses, Payable on death bank accounts, real estate that’s owned in joint tenancy with right of survivorship, living trusts and any other assets that a Medicaid recipient has a legal interest in. It’s important to understand the laws in your state regarding what can and cannot be used to recover Medicaid benefits when you or an aging parent passes away.

It’s also worth noting that while Medicaid can’t take someone’s home or assets before they pass away, it is possible for a lien to be placed upon the property. For example, if your mother has to move into a nursing home then Medicaid could place a lien on the property. If your mother passes away and you inherit the home, you wouldn’t be able to sell it without first satisfying the lien.

What Medicaid Estate Recovery Means for Heirs

The most significant impact of Medicaid estate recovery for heirs of Medicaid recipients is the possibility of inheriting a reduced estate. Medicaid eligibility assumes that recipients are low-income or have few assets to pay for long-term care. But if your parents are able to leave some assets behind when they pass away, the recovery program could shrink the estate that passes on to you.

It’s also important to note that while Medicaid estate recovery rules disavow you personally from paying for your parents’ long-term care costs, filial responsibility laws do not. These laws, though rarely enforced, allow healthcare providers to sue the children of long-term care recipients to recover nursing care costs.

So even if Medicaid doesn’t take anything away from your parents’ estate after they pass away, a nursing home could still sue you personally to recover money paid toward the cost of their care. The care facility has to be able to prove that you have the means to pay but this could add a wrinkle to your financial picture if you’re responsible for wrapping up a deceased parent’s estate.

How to Avoid Medicaid Estate Recovery

Strategic planning can help you or your loved ones avoid financial impacts from Medicaid estate recovery.

For example, you may consider purchasing long-term care insurance for yourself for encouraging your parents to do so. A long-term care insurance policy can pay for the costs of nursing home care so you can avoid the need for Medicaid altogether.

If you’re interested in long-term care insurance for yourself or an aging parent, compare the cost for premiums against the benefits the policy pays out. If you’re unsure whether you or a parent may need long-term care at all, you might consider a hybrid policy that includes both long-term care coverage and a life insurance death benefit.

Another option for avoiding Medicaid estate recovery is removing as many assets as possible from the probate process. Married couples, for example, can accomplish that by making sure all assets are jointly owned with right of survivorship or using assets to purchase an annuity that transfers benefits to the surviving spouse when the other spouse passes away.

It’s important to understand which assets are and are not subject to probate in your state and whether your state allows for an expanded definition of recoverable assets for Medicaid. Talking to an estate planning attorney or an elder law expert can help you to shape a plan for protecting assets.

The Bottom Line

Medicaid estate recovery may not be something you have to worry about if your aging parents leave little or no assets behind. But it’s something you should still be aware of if you expect to inherit anything from your parents when they pass away. If you’re targeted for estate recovery, you may be able to avoid it if you can prove that it would cause you an undue financial hardship. Again, this is where talking to an estate planning professional can help you avoid any unexpected surprises.

Tips for Estate Planning

  • Consider talking to a financial advisor about Medicaid and how to plan for long-term care costs. If you don’t have a financial advisor yet, finding one doesn’t have to be difficult. SmartAsset’s financial advisor matching tool makes it easy to connect with professional advisors online. It takes just a few minutes to get personalized recommendations for financial advisors in your local area. If you’re ready, get started now.
  • Consider a living trust. It will let you transfer assets to the control of a trustee, who will manage them according to your wishes on behalf of your beneficiaries. Trust assets aren’t necessarily exempt from Medicaid recovery, but this could still be a useful estate planning tool for minimizing taxes and ensuring a smooth transition of assets to your beneficiaries.

Photo credit: ©iStock.com/FatCamera, ©iStock.com/FatCamera, ©iStock.com/Dennis Gross

Rebecca Lake Rebecca Lake is a retirement, investing and estate planning expert who has been writing about personal finance for a decade. Her expertise in the finance niche also extends to home buying, credit cards, banking and small business. She’s worked directly with several major financial and insurance brands, including Citibank, Discover and AIG and her writing has appeared online at U.S. News and World Report, CreditCards.com and Investopedia. Rebecca is a graduate of the University of South Carolina and she also attended Charleston Southern University as a graduate student. Originally from central Virginia, she now lives on the North Carolina coast along with her two children.
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Source: smartasset.com

What to Do If You Don’t Receive Important Tax Documents

It’s getting to be that time of year again—tax time. And although it’s (probably) no one’s favorite holiday to celebrate, Tax Day, like any other annual event, does require some preparation.

But what happens if you don’t have all your tax information ready to go for April? While keeping track of everything can be a headache, the good news, most of your tax information is probably recoverable, even if it doesn’t show up on time. Here’s what to do.

What Paperwork Do You Need to Keep for Taxes?

There are many different types of IRS forms that contain the information necessary to file a tax return. Which specific forms you’ll need will vary depending on your personal financial and demographic circumstances.

Employment and Income

For example, if you’re an employee working to earn wages at a company, your employer will need to supply a W-2 form , which shows both your income and the amount of money that has already been withheld for taxes. If, on the other hand, you’re an independent contractor, you’ll receive a different form—the 1099 , which reports self-employment income as well other types of income like interest and dividends earned on investments. Which, yes, means you might get a 1099 even if you’re an employee if you also have an investment account. There’s also such a thing as an SA-1099 , which shows how much has been received in Social Security benefits over the course of the year.

Deductions and Healthcare

Other common forms include the 1098 , which actually occurs in seven different variations and lists certain types of expenses that may be tax deductible, such as mortgage interest or student loan payments, and the 1095, which also occurs several variations and includes information pertaining to healthcare coverage. You may get a 1095-A if you have a healthcare plan off the Marketplace, a 1095-B if you have minimal essential coverage (i.e. Medicare or Medicaid), or 1095-C if you receive employer-provided health insurance.

What Do You Do if You Don’t Get Your Tax Forms?

Form 4852 , which serves as a substitute to form W-2, if the W-2 can’t be located.

What if You Don’t Get Your 1099?

Again, if you’re due to receive a 1099 from an “employer” for independent contracting wages, the first step is to reach out to the individual or entity directly. If you aren’t sure where the 1099 reporting your investment income is, try logging onto your online brokerage account and clicking around. Digital forms are often offered directly to account-holders online.

The good news is, you aren’t technically required to attach your 1099s to your tax return unless taxes were withheld from the payments reported on them. So if you have another record of that income—such as year-end account statements, in the case of investments—you may be able to file your taxes with that information. (That said, it may be worth double-checking your paperwork with a tax professional.)

What if You Don’t Get Your 1095?

If you don’t have your 1095, you can reach out to the source it should have come from to figure out where it is. For the 1095-A, log into your Health Insurance Marketplace account and look for the digital version of the form there; if you are expecting a 1095-B or 1095-C, you can reach out to your Medicare/Medicaid office or employer.

That said, this is another form that you might not have to include on your tax return at all. According to the IRS, you should only wait to file if you’re missing form 1095-A; the other two types, 1095-B and 1095-C, are not required.

What if You Don’t Get Your 1098?

This is another tax document that’s not formally required by the IRS—but it does contain information you probably want to include on your return, since it could translate to a tax deduction.

If you haven’t received your 1098 in the mail, one first step is to log into the account you have with the bank or lender that issued the mortgage or student loan. Again, digital tax documents are often offered directly to borrowers through the online portal. If you can’t find the documents yourself, call the lender’s customer service line. You might also be able to find the necessary numbers on your year-end statement.

If You Just Don’t Have Your Stuff Together On Time

file for an extension with the IRS, which involves—of course—a form: Form 4868 , to be exact. While filing the form gives you until October 15 to get your paperwork in order, keep in mind that it doesn’t give you an extended timeline on actually paying your taxes. Any money you owe to the government is still due on Tax Day.

Finally, if you use a tax preparer service, whether a human accountant or smart software product, keep in mind that they likely still have last year’s information on file, which may help fill in some gaps. Your professional tax preparer can also answer questions you have about properly filing this year’s return.

Organizing Your Finances The Easy Way

Tax time can be stressful even for the most organized among us, but if your money landscape is already a bit of a mess, finding the right financial products can make a big difference. For example, SoFi Money®, a cash management account, can help keep things nice and neat by offering you a bird’s-eye view of your spending habits. Plus, the Vaults feature can help you save for personalized goals, whether that’s an upcoming home repair or your next big vacation.
Learn more about how SoFi Money could help you Get Your Money Right®.


SoFi Money®
SoFi Money is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member FINRA / SIPC .
Neither SoFi nor its affiliates is a bank.
SoFi has partnered with Allpoint to provide consumers with ATM access at any of the 55,000+ ATMs within the Allpoint network. Consumers will not be charged a fee when using an in-network ATM, however, third party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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Source: sofi.com

Shopping for a Medicare Plan? Check Out the Star Ratings

Comparing Medicare Advantage Plans and Medicare Part D drug plans means taking a look at prescription drug coverage, copays and coinsurance costs, the plan’s network of doctors and service area. But there’s another metric you should consider when making your decision: the plan’s star rating.

What is the Medicare star rating system?

As with most rating systems, the Medicare star rating helps rank plans from best (five stars) to worst (one star). The ratings are generated by the Centers for Medicare & Medicaid Services, or CMS, and they’re based on the plan’s quality of care and measurements of customer satisfaction. You can find a plan’s rating with the Medicare Plan Finder.

This metric has the potential to change each year, as CMS reviews and updates ratings based on plan changes. Ratings are released in October, unless plans are new to the marketplace (in which case, they won’t have ratings yet).

Medicare Advantage Plans

  • Member experience: How do members rate things like ease of seeing specialists and getting appointments quickly?

  • Plan performance: What is the complaint history of the plan, and has its performance gotten better or worse over time? Are members leaving the plan?

  • Customer service: How well does the plan respond to member requests and appeals?

  • Staying healthy: Do members have access to checkups, vaccinations and screening tests that help them stay in good health?

  • Chronic conditions: Do members with chronic conditions get the kinds of tests and treatments that would typically be recommended to them?

Medicare Part D prescription drug plans

  • Member experience: How do members rate the plan?

  • Plan performance: What is the complaint history of the plan, and has its performance gotten better or worse over time? Are members leaving the plan?

  • Customer service: How well does the plan respond to member requests and appeals?

  • Drug safety and pricing: How accurate is the plan’s pricing information? Are members with specific medical conditions prescribed drugs appropriately and safely?

Enrolling in a five-star plan

You can enroll in a five-star Medicare Advantage or Part D plan during the following enrollment periods:

  • Initial Enrollment period (when you’re new to Medicare).

  • Open Enrollment period (Oct. 15 to Dec. 7 each year).

  • Medicare Advantage Open Enrollment period (Jan. 1 to March 31 each year, if you already have an MA plan).

  • Special Enrollment period, as described below.

No matter what your current plan is rated, if you want to enroll in a five-star Medicare Advantage or Part D plan, you can switch to one during a Special Enrollment period — which exists for just this purpose — from Dec. 8 to Nov. 30 of the following year. You may do this only once during this time, and it’s possible only if a five-star plan is available in your area. (Not all areas have five-star plans available.)

If you’re enrolled in a plan that’s been rated less than three stars for three years in a row, you’re allowed a one-time chance at any time to enroll in a better plan.

For questions about Medicare plans and other Medicare issues, contact Medicare at 1-800-MEDICARE (1-800-633-4227) or visit Medicare.gov.

Source: nerdwallet.com

Does Medicare Cover Hearing Aids?

Original Medicare doesn’t cover hearing aids, fittings or routine hearing exams, but many Medicare Advantage plans do offer coverage.

If you’re an older adult who could benefit from hearing aids — or might need them in the future — such coverage could be useful. Disabling hearing loss is experienced by almost a quarter of people ages 65 to 74 and half of those who are over 75, according to the National Institute on Deafness and Other Communication Disorders.

How does Original Medicare cover hearing aids?

In short, Original Medicare doesn’t cover hearing aids. Neither do most Medigap plans. You’ll likely have to pay out-of-pocket for hearing aids, fittings for the devices and routine hearing exams with this coverage. (The Centers for Medicare & Medicaid Services defines a routine hearing exam as an exam for the purpose of prescribing, fitting or changing hearing aids.)

While routine hearing exams aren’t covered, Original Medicare may cover more comprehensive exams when certain requirements are met. Medicare Part B provides 80% coverage for a diagnostic hearing and balance exam that your doctor or health care provider orders to see if you need medical treatment — for example, to determine appropriate surgical treatment of a hearing deficit.

If you are eligible for coverage, you’ll be responsible for 20% of the Medicare-approved cost of the exam, plus your deductible if you haven’t already met it. Additionally, if your hearing exam is done at a hospital, your hospital copay also applies. If you have a Medigap plan, it might cover these coinsurance costs.

What about Medicare Advantage?

By law, Medicare Advantage (Medicare Part C) must provide at least as much coverage as Original Medicare — though it can come with additional costs and network restrictions. However, since Medicare Advantage is private insurance contracted through the federal government, the benefits of each individual policy are unique.

The good news is that many Medicare Advantage plans do cover hearing aids, although they may limit the maximum amount they’ll pay and a deductible may also apply. Your initial hearing exam may even be free if you use an in-network doctor.

Copays for hearing aids vary dramatically among insurers, ranging anywhere from $0 to a few thousand dollars. For this reason, it’s important to examine and compare all available plans carefully before making your choice.

If you have Original Medicare and want to switch to Medicare Advantage, you can make the move during the annual Medicare Open Enrollment period from Oct. 15 to Dec. 7. During the Medicare Advantage Open Enrollment period from Jan. 1 to March 31, you can switch from one Medicare Advantage plan to another.

What do hearing aids cost?

The price for a pair of hearing aids typically ranges from around $1,000 for low-end models to as much as $8,000 for premium devices. This price tag may also include a consultation, hearing test, fitting and follow-up adjustments. Some sellers even include periodic cleanings, battery replacements and a warranty that provides future cleanings, fittings and protection against damage or loss.

Lowering your hearing aids costs can sometimes be as simple as speaking up. When purchasing hearing aids, ask what discounts are available. Veterans, union members and people with company retirement plans may have access to additional price breaks.

Those with mild hearing loss who are unable to afford hearing aids have the option of using personal sound amplification products instead, which usually cost under $500 for a set. These don’t require a fitting or prescription, can sync with smartphones and are wearable right out of the box. These devices aren’t a replacement for a doctor’s care, though, and don’t address all aspects of hearing loss.

How do I know if I need hearing aids?

Hearing loss can be gradual and subtle, so sometimes it’s hard to determine if it’s really gotten that bad. The best way to know if you’d benefit from hearing aids is by having a hearing exam. Here are a few signs that it’s time to think about scheduling one.

  • Everyone keeps telling you you’ve got the TV or the radio turned up too loud.

  • It’s hard to understand what people are saying when you can’t see their faces.

  • It often sounds like others are mumbling.

  • You’re struggling to hear conversations in group settings like dinner gatherings or parties.

  • You’re missing some of what the actors say in movies or at plays.

  • You often have to ask others to repeat themselves.

  • It can be hard to hear on the phone.

  • It’s become difficult to hear higher-pitched voices or sounds.

  • You don’t always hear the phone or doorbell ring.

To set up a hearing exam, contact your primary doctor or health care provider for more information or a referral, if necessary.

Source: nerdwallet.com

First in the Family to Invest: How I Saved Almost $700K

This article provides information and education for investors. NerdWallet does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks or securities.

Growing up in rural Missouri, money was tight for Anthony Hammond.

“I joke, I come from the type of family where they don’t read a will at the funeral, they pass the hat — sometimes we’ve had to do that,” says Hammond, a 47-year-old manager of a used car dealership.

“I come from hardscrabble folks, both my parents worked in factories their entire lives,” says Hammond, who now lives in Independence, Missouri. “My dad was never a believer in investing.”

But watching generations of his family retire poor, dependent on Medicaid and Social Security to get by, “I just knew I didn’t want that type of life,” Hammond says. Now, he and his husband have amassed nearly $700,000 in retirement savings. Here’s how they did it.

Frugality, goal-setting pay big dividends

Although his parents didn’t invest, they passed along two essential traits to Hammond that have been vital in building his investment nest egg. “Dad was all about saving money, Mom was all about paying bills on time,” he says.

So when Hammond graduated from college, he worked to pay off his student loans quickly. “That’s a poor kid’s mentality with money — what happens if it goes away?” Hammond says. “You don’t have the safety net to go to Mom and Dad when you get in trouble.”

Aside from his full-time job, Hammond did odd jobs to pay down his debts and followed a rigid budget. “You can’t go out to eat, you can’t go out and buy new shoes. For the first few years, it’s pretty crappy, to be honest,” he says.

“But it’s also the period where you’re trying to catch up with the people who had a head start, whose parents paid for their college, and you’ve got student loans,” Hammond says. “I didn’t want my student loans going on for 20 years, so I paid them off as fast as I could.”

Setting and realizing short-term financial targets help pave the road for long-term financial success, financial specialists say.

“Hitting short-term goals can be so powerful in terms of getting yourself on board with the whole [savings and investment] program,” says Christine Benz, the director of personal finance for investment research firm Morningstar. “From a personal empowerment perspective, it gives you a strong sense of control over your finances.”

Leaning on funds rather than stocks

Hammond began investing the way many investors do: through an employer-sponsored retirement plan. “I started a SIMPLE IRA with my employer in 1996, just doing the basics — if they offered a 3% match, I would do 3%,” he recalls.

In the late 1990s, as dot-com and tech stocks were all the rage, he opened his first brokerage account. “I invested in some individual stocks and did pretty well,” he says.

He continued stock picking with individual companies until the Great Recession, and in 2008 he lost $30,000.

“I got in over my head and lost quite a bit of money, and since then I haven’t gotten into a single stock position again,” he says.

Instead, he and his spouse invested primarily in index funds, a type of mutual fund that invests widely in companies on a particular index, such as the S&P 500. While index funds may increase and decrease in value over time, the risk of losing your total investment is greatly reduced.

Agreeing on savings goals with your spouse

Hammond invests 20% of his income each month, on top of the 10% of his husband’s income that goes to fund his pension.

“It’s the biggest payment I make each month, by far,” he says. “I have SIMPLE IRA, traditional IRA and Roth IRA — the full hand.”

After the recession, Hammond and his husband paid down all their debts, including their home mortgage.

“Since 2014, we’ve been debt-free, and have since ramped up our retirement savings,” he says.

While they can now afford more luxuries, frugality is a hard habit to break.

“I still drive a 15-year-old car, and my wardrobe — maybe it will come back in style some day if I wait long enough,” he says. “Any purchase over $300 or $400 is a pretty big discussion for us … what can I say, we’re cheap.”

Looking ahead, Hammond’s goal is to have more than $1 million saved by retirement.

“We’d like to travel more, that’s something we don’t do enough of and enjoy doing,” he says.

Hammond’s advice for other would-be investors? Make a budget, and start small.

“No one wants to make a budget, especially when you’re broke. But that’s exactly the time when you need a budget,” he says. “If you can put away $25 a week, and then next year put away $30 a week, every little bit helps. You have to treat savings like you don’t have a choice.”

Source: nerdwallet.com