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Health-Care Reform: Considerations for Seniors

Sunday, May 2nd, 2010

The enactment of the new health-care reform legislation contains some provisions that directly affect our nation’s older population. If you’re a senior, you may be concerned about how these reforms may affect your access to health care and the benefits you are currently receiving.

Medicare spending cutsNot surprisingly, the concerns of retirees and seniors generally center on potential cuts in Medicare benefits. At the outset, the new legislation does not affect Medicare’s guaranteed benefits. However, a goal of the new health-care legislation is to slow the increasing cost of Medicare premiums paid by beneficiaries, and to ensure that Medicare will not run out of funds. To help achieve these goals, cuts in Medicare spending will occur over a ten-year period, beginning in 2011, particularly targeting Medicare Advantage programs––Medicare programs provided through private insurers but subsidized by the federal government. These cuts could reduce or eliminate some of the extra benefits Medicare Advantage plans may offer, such as dental or vision care, and some insurers may choose to increase premiums. But Medicare Advantage plans cannot reduce primary Medicare benefits, nor can they impose deductibles and co-payments that are greater than what is allowed under the traditional Medicare program for comparable benefits. And, some of the federal funds previously earmarked for Medicare will be reallocated to doctors and surgeons as an incentive to treat Medicare patients.

Medicare Part D drug program changesSome Medicare Part D beneficiaries are surprised to find that they have to pay for the entire cost of prescription drugs out-of-pocket after reaching a gap in their annual coverage, referred to as the “donut hole.” Currently, if you’re a Medicare Part D beneficiary, you may pay up to an additional $3,610, out-of-pocket, for medicines after reaching an initial threshold of $2,830 in total prescription drug costs (including Part D payments, beneficiary co-pays, and deductibles). But, beginning in 2010, beneficiaries who fall in the donut hole will receive a $250 rebate, and, in 2011, they will receive a 50% discount on brand-name drugs. By 2020, a combination of federal subsidies and a reduction in co-payments will completely eliminate the donut hole. However, individuals with annual incomes greater than $85,000, and couples with incomes exceeding $170,000, will see their Part D premiums increase as the federal subsidy offsetting some of the cost of Medicare Part D premiums is reduced.

Benefits added to MedicareThe leglislation also improves some traditional Medicare benefits. For example, Medicare beneficiaries will receive free wellness and preventive care beginning in 2011.

Increased access to home-based careOften, people with disabilities or illnesses would rather receive care at home instead of at a hospital or nursing home. The new health-care reform law provides for programs and incentives for greater access to in-home care. The Community Living Assistance Services and Support program (CLASS) will be established sometime after 2011 (depending on when final regulations are published) as a voluntary insurance program, financed through payroll deductions and available to all working adults who choose to participate. This national program allows participants with functional limitations to maintain their personal and financial independence and live in the community by providing a cash benefit of at least $50 per day (after a five-year vesting period) for nonmedical services, such as home-care services, family caregiver support, and adult day-care or residential-care services. In order to qualify, a participant must need help with at least two activities of daily living, such as eating, toileting, transferring, bathing, dressing, or continence.

Also in 2011, the Community First Choice Option will be available to states to add to their Medicaid programs. This option will provide benefits to Medicaid-eligible individuals for community-based care instead of placement in a nursing home. In addition, the State Balancing Incentive Program, to be established in 2011, will provide increased federal funds to qualifying states that offer Medicaid benefits to disabled individuals seeking long-term care services at home, or in the community, instead of in a nursing home. The Independence at Home demonstration program, available in 2012, will be a test program that provides Medicare beneficiaries with chronic conditions the opportunity to receive primary care services at home. That is intended to reduce costs associated with emergency room visits and hospital readmissions, and generally improve the efficiency of care.

Source: Forefield Inc.
© Copyright 2006 – 2010 Forefield Inc. All rights reserved.

Health-Care Reform: How Does It Affect Businesses?

Saturday, May 1st, 2010

In March of 2010, President Obama signed two pieces of legislation into law, implementing the most pervasive health-care reform since Medicare. Many of the reforms that relate to business and employers don’t take effect until 2014. Here are some of the important highlights of health-care reform from the perspective of employers and businesses.

Health insurance not required but encouragedContrary to popular belief, health-care reform does not actually require all employers to offer health insurance to their employees. Instead, the new reforms use financial penalties to encourage employers to offer affordable health insurance coverage. Specifically, beginning in 2014, employers who have at least 50 full-time employees, and do not offer health insurance, may be assessed a fee of $2,000 for each full-time employee (excluding the first 30 employees) if at least 1 employee is receiving a premium credit. (A premium credit can be used by eligible individuals and families who purchase health insurance through state-based exchanges to reduce the premium cost.)

Even employers who do offer coverage may face a fee if at least 1 full-time employee is receiving a premium credit. The fee is either $3,000 per employee receiving the credit or $2,000 for each full-time employee, whichever total is less. Employers with fewer than 50 full-time employees are exempt from these fees. But, employers with 200 or more employees must automatically enroll employees in health insurance plans offered by the employer. The employee may voluntarily opt out of the employer’s plan.

In addition, employers that offer employee health insurance must offer a free choice voucher to employees who elect to enroll in a state-based American Health Benefit Exchange plan. The value of the voucher is equal to the amount the employer would have paid to cover the employee under the employer’s plan. Employees may enroll in an Exchange plan if the employee’s income is less than 400% of the Federal Poverty Level (FPL) and the employee’s cost to participate in the employer’s plan is between 8% and 9.8% of the employee’s income. The voucher can be used to offset the employee’s cost to participate in the Exchange plan.

Employer incentivesAs an incentive for small businesses to offer employee health insurance, from 2010 to 2013, employers with 25 or fewer full-time employees with average annual wages less than $50,000 may be eligible for a tax credit of up to 35% of the employer’s total premium cost. Beginning in 2014, small businesses that buy insurance through state Exchanges for their employees may receive a credit of up to 50%. In either case, the credit decreases as the number of employees and average annual wage increases.

By 2014, in an effort to promote wellness and decrease health insurance costs, employers will be able to offer employees rewards, such as premium discounts and added benefits, for participating in wellness programs and meeting certain health-related standards. The value of the rewards can equal as much as 30% of the cost of coverage and may even reach 50% in some cases.

Employers who provide insurance for retired employees who are over age 55, but not yet eligible for Medicare, may receive reimbursement for 80% of retiree claims between $15,000 and $90,000. This temporary reinsurance program begins in 2010 and is available until 2014. On the other hand, employers who currently receive a tax deduction for Medicare Part D drug subsidy payments will see that deduction eliminated in 2013.

Small businesses with up to 100 employees may be able to purchase health insurance through state-based Small Business Health Options Program (SHOP) Exchanges by 2014. The Exchanges will offer at least four benefit categories of plans based on covering an increasing percentage of benefit costs.

Source: Forefield Inc.
© Copyright 2006 – 2010 Forefield Inc. All rights reserved.

Health-Care Reform: How Does It Affect You?

Friday, April 30th, 2010

Now that comprehensive health-care reform has been signed into law, how will it affect you? While some portions of the law become effective in 2010, other provisions are phased in over time. Nevertheless, it is almost certain that at least some of these reforms will have an effect on you and your family.

If you already have health insuranceFirst, by 2014, most U.S. citizens and legal residents will be required to have qualifying health insurance or face a possible fine. But even if you already have insurance, some reform provisions may affect you. For instance, beginning this year, you generally can keep your adult child on your coverage up to age 26. And, your insurer will no longer be able to rescind your coverage if you get sick, impose lifetime coverage limits, rescind your coverage except for fraud, or impose coverage exclusions for your child due to pre-existing health conditions. In 2014, you can no longer be charged higher rates based on your health status or gender, and insurers cannot extend waiting periods beyond 90 days.

Starting next year, reimbursements from health flexible spending accounts (health FSAs) and health reimbursement accounts (HRAs) for over-the-counter drugs will be restricted, and tax-free reimbursements from health savings accounts (HSAs) and Archer MSAs for over-the-counter drugs will not be allowed, while the tax on HSAs and Archer MSAs increases for distributions not used for qualified medical expenses. In addition, beginning in 2013, contributions to health FSAs will be limited to $2,500 per year. Finally, the income threshold for itemizing medical expense deductions will increase from 7.5% to 10% in 2013.

If you have MedicareMedicare beneficiaries will also see some changes to their coverage. You’ll be covered for most preventive and wellness care expenses without co-payments beginning in 2011. Medicare Part D participants who find themselves paying all of the cost of their prescriptions after reaching a minimum threshold, a situation referred to as the “donut hole,” will gradually see their out-of-pocket expenses decrease, beginning in 2010 with the payment of a $250 rebate, until 2020, when the donut hole is completely filled. If you’re a Medicare Advantage beneficiary, however, beginning in 2011, you may see some of the extra benefits offered by these plans dropped as government payments to these plans are restructured and, in some cases, reduced. And, in 2013, if you’re an individual with annual earnings equal to or greater than $200,000, or a married couple with joint annual earnings of $250,000 or more, your Medicare payroll tax will increase by 0.9%, from 1.45% to 2.35%. Also, for high income taxpayers, a Medicare tax of 3.8% will be applied to some types of investment income, such as rent, capital gains, and annuity payments, but not distributions from qualified retirement plans, such as IRAs and 401(k) accounts.

If you don’t have insuranceIf you don’t have insurance, or if it’s too expensive, the new reforms may make it easier for you to get and keep health insurance. By 2014, insurers will have to accept you regardless of your health history, and premiums can only vary based on tobacco use and age. Prior to that time, if you haven’t been able to get insurance for at least six months due to a pre-existing condition, you will be able to purchase insurance through temporary high-risk pools.

In 2014, Medicaid availability is expanded to those under age 65 with incomes up to 133% of the Federal Poverty Level (FPL). You will also have state-based American Health Benefit Exchanges, available by 2014, through which you can buy health insurance from various plans. In addition, premium and cost-sharing subsidies will be available for individuals and families with incomes at or below 400% of the FPL, which can aid in reducing the cost of insurance purchased through exchanges.

Source: Forefield Inc.
© Copyright 2006 – 2010 Forefield Inc. All rights reserved.

Two Cheers as Dow Edges Past the 11,000 Threshold

Tuesday, April 13th, 2010

For the first time since September 2008, the Dow Jones Industrial Average (an unmanaged index of 30 widely held stocks) closed above 11,000, a number that may offer more psychological comfort than solid evidence of underlying economic strength. Nevertheless, it’s not entirely insignificant. This is, after all, nearly 4,500 points above the 6,547 reached in March last year, an increase of 68.1% and testament to what investors believe is a recovering economy. However, the realization that we’re still more than 3,100 points below the high reached in October 2007 should keep the celebrations muted.

For the record, the Dow finished at 11,005.97. The NASDAQ Composite (an unmanaged index of common stocks listed on the NASDAQ National Stock Market) closed at 2,547.87 and the S&P 500 (an unmanaged index of 500 widely held stocks) stood at 1,196.48.

Behind the more or less steady rise of the market indices since early February – the Dow finished under 10,000 on February 8 – are upbeat signs that the economy is in a slow recovery. There are positive job growth indicators, though still below what is needed to reduce the 9.7% unemployment rate. Investor worries about Greece possibly defaulting on its national debt eased with the announcement that the other 16 countries that use the euro agreed to a $40.5 billion loan.

The uncertainty was even reflected among the members of the National Bureau of Economic Research, who declare recession beginnings and endings. The evidence, some of them said, is too difficult to detect. That is, the end of the recession begun in December 2007 hasn’t created the kind of easily detectable upward turn that has marked the end of previous recessions, therefore allowing the committee to declare them ended.

It’s fine that the markets are headed up instead of in the other direction, but it’s best to stick with fundamentals and your long-term assessment of the value of the holdings in your portfolio rather than get too entranced by the crossing of an arbitrary line.

If you’d like to discuss your portfolio, have a second opinion or explore new investment opportunities, please give us a call.

Wanting too much–How to Avoid Investment Fraud

Wednesday, March 3rd, 2010

Part 1 of 2
By Sandy Hunter
Administrative/Marketing Assistant

As we have begun the uphill climb from the market slump it has created the perfect breeding ground for investment scammers to run rampant. With tensions high and people feeling desperate to make up their losses investors, if not educated and on the defense, are sitting ducks for con men on the hunt for easy prey. Following you will find information on how to protect yourself and your investments from would be thieves.

The Psychology of a Scam

“If it’s too good to be true, it probably is” – which is true but one of the struggles is knowing the difference between good and too good. In this economy it is even harder, which is exactly what investment fraudsters are counting on. Their smoke and mirrors can make any investment seem like a sure fire deal. Scammers look for your Achilles heel by asking seemingly harmless questions. They might ask about your family, health, hobbies, past employers, political views, anything that might seem like just small talk or basic information. They will use their new found personal information as ammunition against you through one of these popular persuasion tactics:

The “Phantom Riches” Tactic-dangling the promise of wealth. Enticing you with something you want but can’t have. “These gas wells are guaranteed to produce $6,800 a month in income.:

The “Source Credibility” Tactic-trying to build credibility by claiming to be with a reputable firm or to have a special credential or experience. “Believe me, as Vice President of XYZ firm, I would never sell an investment that doesn’t produce.”

The “Social Consensus” Tactic-leading you to believe that other savvy investor have already invested. “This is how ____ got his start.“

The “Reciprocity” Tactic- offering to do a small favor for you in return for a big favor. “I’ll give you a break on my commission if you buy now, half off!”

The “Scarcity” Tactic-creating a false sense of urgency by claiming limited supply. “There are only two units left, so I’d sign today if I were you.”

These are all tactics used by genuine companies, which makes it even harder to distinguish the difference. These tips can help you tell the difference.

1. End the conversation. It is not impolite of you to tell them “no thank you I am not interested” and then hang up. It is impolite of them to try to steal your money so you are under no obligation to listen to what they have to say! If you struggle with being direct, tell them you don’t make financial decisions without consulting your _______ first. Let your spouse, lawyers, accountant, financial advisor, whomever be your escape goat. 

2. Take control and ask the questions. One blanket red flag is if they are not licensed and registered. Ask if they and their firm is registered with FINRA? Securities and Exchange Commission? If so, which one(s)? Then do your homework and verify that they are by using: FINRA Broker Check or call 800-289-9999 for Brokers.  Use the SEC’s Investment Adviser Public Disclosure Website which is:   http://www.adviserinfo.sec.gov/IAPD/Content/IapdMain/iapd_SiteMap.aspx

3. Research an investment. Ask if it is registered with the SEC or with your states securities regulator/ Then use the SEC’s EDGAR database of company filings at to confirm it really is: http://www.sec.gov/edgar.shtml

4. Always get a second option. If they tell you to  not tell anyone else be extremely skeptical. Even if they are registered it is a good idea to talk to other people and see what they know before making a decision.

One way to help safeguard yourself is to reduce the amount of telemarketing as much as possible. One easy step is to take your number off telemarketing and junk mail lists.

Telemarketing calls-  www.donotcall.gov or call toll free (888)382-1222

Direct Mail and email offers-  www.dmachoice.com

Credit Card Offers- www.optoutprescreen.com

Online Cookie Collecting- http://www.networkadvertising.org/

Most legitimate firms will honor your request. So if you receive solicitation after taking these steps, be even more skeptical.

If you believe you have been scammed you can file complaint with FINRA at:

FINRA Complaints and Tips
9509 Key West Avenue
Rockville, MD 20850

I also found this great tool to help you decide if an investment is “too good!” Visit this website: http://apps.finra.org/meters/1/scammeter.aspx

Source AD#: C10-01881

Why this is not a “Lost Decade”

Tuesday, February 23rd, 2010

We have lost track in the last year of the number of times we have heard commentators on TV, radio or in print make a statement that if you were in the S&P 500 you lost money in the last 10 years (-0.95%), hence a “lost decade”.  Though the statement is true that the S&P 500 lost money, the danger is to assume that you as the investor did the same, worse or that you will loose the same for the next decade.

The past decade has been one of the most challenging on record for investors.   We experienced two recessions, which hasn’t happened since the 1930s.  The real question is “During this volatile period, how have well run equity mutual fund managers done?”

The below chart illustrates how a balanced portfolio brought back a 59.9% cumulative return in 10 years compared to 9.1% for the S&P 500.  While past returns are not predictive of future results, they powerfully illustrate how “good money managers” and a well diversified portfolio help investors achieve their long-term goals.   We continue to belief the key elements to successful investing include:  1) Diversifying in the appropriate mix of stocks and bonds based upon your risk tolerance  2) Optimizing your portfolio with an appropriate mix of different asset classes.  3) Hiring quality managers that have consistently beat their benchmarks  4) Regularly monitoring and rebalancing your portfolio when appropriate.

Source:  Russell, MSCI Inc., Dow Jones, Standard and Poor’s Barclays Capital, NCREIF, J.P. Morgan Asset Management.  The “balanced” portfolio assumes the following weights: 25% in the S&P 500, 10% in the Russell 2000, 15% in the MSCI EAFE, 5% in the MSCI EMI, 30% in the Barclays Capital Aggregate, 5% in the CS/Tremont Equity Market Neutral Index, 5% in the DJ UBS Commodity Index, and 5% in the NAREIT Equity REIT Index.  Balanced portfolio assumes annual rebalancing.  All data except commodities represent total return for stated period.  Past performance is not indicative of future returns.  Data are as of 12/31/09, except for the CS/Tremont Equity Market Neutral Index, which reflects data through 11/30/09.  “10 Year” returns represent cumulative total return and are not annualized.  Index Definition: S&P500 (500 large-cap common stocks actively traded in the United States), Russell 2000 (small cap index), MSCI EAFE (Europe, Australia, Farr East index), Barclays Capital Aggregate (investment grade bonds index), CS/Tremont Equity Market Neutral (hedge fund index), DJ UBS Commodity Index (commodities index) , NAREIT Equity REIT Index (real estate investment trust index).  You cannot invest directly in any index.  Individual results will vary.

Source AD #C10-03249.  An excerpt from our 4th Quarter 2009 newsletter.  Written by Marvin T. Ellis, Jr, Financial Consultant.

Estate Tax Remains in Flux

Tuesday, February 16th, 2010

Content Prepared by Forefield Inc.
© Copyright 2006 – 2010 Forefield Inc. All rights reserved.


This information, developed by an independent third party, has been obtained from sources considered to be reliable, but Raymond James Financial Services, Inc. does not guarantee that the foregoing material is accurate or complete. This information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. This information is not intended as a solicitation or an offer to buy or sell any security referred to herein. Investments mentioned may not be suitable for all investors. The material is general in nature. Past performance may not be indicative of future results. Raymond James Financial Services, Inc. does not provide advice on tax, legal or mortgage issues. These matters should be discussed with the appropriate professional.

COBRA Premium Subsidy Program Extended

Thursday, December 31st, 2009

On December 19, 2009, President Obama signed into law the Department of Defense Appropriations Act, 2010 (DOD) which extends the 65% COBRA premium subsidy to February 28, 2010.

The American Recovery and Reinvestment Act of 2009 provided a government subsidy of 65% of the cost of COBRA coverage for employees (and their eligible family members) who lost their health insurance coverage due to involuntary termination of employment in 2009. The subsidy was to last for up to 9 months. The DOD extends the subsidy to 15 months and includes eligible employees (and their eligible family members) who lose their jobs in January or February of 2010.

Content Prepared by Forefield Inc.
© Copyright 2006 – 2009 Forefield Inc. All rights reserved.

November Markets Show Positive Gains Despite Periodic Shocks

Thursday, December 10th, 2009

Any lingering doubts about whether financial markets are now truly global should have been dispelled by the Dubai World shock in late November. The developer – responsible for all those palm-shaped islands and the world’s tallest skyscraper in Dubai’s quest to become the Middle East’s most cosmopolitan tourist destination – requested six months’ delay in paying back an estimated $60 billion in debt. Fears that international banks could suffer major losses arose at once. Financial markets from Shanghai to London to New York went into sharp declines as investors seemed to immediately opt for safety and liquidity. However, this panicked reaction was fairly short-lived. As November ended, international economic recovery seemed to be back on track.

While it may be a soon-forgotten blip in the global financial recovery, the Dubai World incident indicates how susceptible investors and the major financial markets have become to bad news. Apart from that, however, international and U.S. markets have been moving along the slow recovery track projected by many economists.

At the close of November, the Dow Jones Industrial Average (an unmanaged index of 30 widely held stocks) stood at 10,344.84, up 6.5% for the month and up 17.9% for the year to date. The NASDAQ Composite (an unmanaged index of common stocks listed on the NASDAQ National Stock Market) finished November at 2,144.60, up 4.9% for the month and 36% for the year, and the S&P 500 (an unmanaged index of 500 widely held stocks) stood at 1,095.63, up 5.7% for the month and 21.3% for the year.

Modestly optimistic reports during the month encouraged the view that the recovery is proceeding. Consumer spending in October rose 0.7%, which may not seem like much until you compare it to the 0.6% decrease in September. New home sales rose 6.2% in October, higher than had been forecast, and orders for basic manufacturing materials – electrical equipment, commercial airplanes and parts, and steel, as well as fabricated metals, rose, too.

Interestingly enough, the savings rate dipped from 4.6% in September to 4.4% in October, indicating Americans are drifting back into a spending mode. It was no surprise to learn that the November Consumer Confidence Index moved up to 49.5 from its 48.7 reading in October – a good sign, but still a long way from the 90 that historically shows the economy is on a strong footing.

Many questions remain as this remarkable year nears its end, but the slow, sometimes unsteady, recovery seems to be holding.

Source AD: #M10-0467
Past Performance is not indicative of future results.  Investors cannot invest directly in an index.

College Board Releases New College Cost Numbers

Thursday, October 29th, 2009

by Forefield

College Cost Trends

Every October, the College Board releases its Trends in College Pricing report that highlights college cost increases and trends. While costs can vary significantly by region and individual college, the College Board publishes average cost figures, which are based on its survey of 3,500 colleges across the country.

Here are highlights from its latest report:

At four-year public colleges for in-state students, tuition, fees, and room and board increased by 5.9% from last year, with the total cost for 2009/2010 averaging $19,388
At four-year public colleges for out-of-state students, tuition, fees, and room and board increased by 6.0% from last year, with the total cost for 2009/2010 averaging $30,196
At four-year private colleges, tuition, fees, and room and board increased by 4.3% from last year, with the total cost for 2009/2010 averaging $39,028
“Total average cost” includes tuition and fees, room and board, books and supplies, transportation, and a small amount for miscellaneous expenses.

To read the Trends in College Pricing report, visit www.trends-collegeboard.com.

Student aid trends

The College Board is quick to point out that the average “sticker price” cost figure is not necessarily representative of what most students pay. That’s because almost two-thirds of undergraduate students receive grants that reduce the actual price of college. The largest provider of grant aid is individual colleges, followed by the federal government, private sources and employers, and state governments.

For the 2009/2010 year, the College Board estimates that students at public colleges will receive an average of $5,400 in grant aid from all sources and federal tax benefits, and students at private colleges will receive an average of $14,400 in grant aid from all sources and federal tax benefits. Federal tax benefits include the American Opportunity tax credit (formerly called the Hope credit), the Lifetime Learning tax credit, and the deduction for qualified higher education expenses.

Every year, the College Board also releases a sister report to Trends in College Pricing, called Trends in Student Aid, that examines student financial aid in more detail. To read this report, visit www.trends-collegeboard.com.


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Raymond James financial advisors may only conduct business with residents of the states and/or jurisdictions for which they are properly registered. Therefore, a response to a request for information may be delayed. Please note that not all of the investments and services mentioned are available in every state. Investors outside of the United States are subject to securities and tax regulations within their applicable jurisdictions that are not addressed on this site. Contact your local Raymond James office for information and availability.

The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Any opinions are those of Ellis Financial Group, Inc. and not necessarily those of RJFS or Raymond James. Expressions of opinion are as of this date and are subject to change without notice. This information is not intended as a solicitation or an offer to buy or sell any security referred to herein. Investments mentioned may not be suitable for all investors. Past performance may not be indicative of future results. You should discuss any tax or legal matters with the appropriate professional.