Risk Management

Long Term Care Premium Increases — Things to Consider if You Receive a Notice

Sandy Adams Contributed by: Sandra Adams, CFP®

Long Term Care Premium Increases

No one likes to receive a letter stating that their premiums are going up — especially with a Long Term Care insurance policy that already seems relatively expensive. Unfortunately, when you own something other than a “paid up” Long Term Care Insurance Policy, the question is not if but when you might receive such a notice. To review, remember that the law allows insurers to apply to regulators for an increase in premiums.

Increases are allowed only if they apply to all policyholders and the company’s data shows current premiums will not cover current and future claims based on costs, projected interest rates, projected increases in claims or length of claims. (Companies cannot increase premiums for specific individuals based on increases in age, gender, health conditions, or filing of a claim.)

Taking the time to make an educated decision about your options when a premium increase occurs is crucial when it comes to Long Term Care insurance, especially as you get older. The more time passes, the greater the likelihood that you might need this type of insurance.

If you are faced with a premium increase, you typically have a limited number of options: 

  1. Pay the increased premium and keep your current coverage.

  2. Continue to pay your current premium or a reduced premium and accept some combination of reduced benefits (likely in this category, your Long Term Care insurance company will offer you a short list of options from which to choose). *NOTE: We have recently discovered that the list of options provided WITH the premium increase are not the only options. If you wish to consider additional options, you (and/or you advisor) can contact the Long Term Care company to request additional options. For example, a client in their mid-80s may consider an option to discontinue the compound inflation rider going forward and considerably decrease the premium. The added benefit for someone in their mid-80s is negligible at that point.

  3. Take the Contingent Non-Forfeiture Option. If the percentage of premium increase is at a certain level, you may be able to stop paying premiums, and you would be entitled to a long-term care benefit based on the amount of premium dollars you have already paid.

It makes sense to carefully weigh your options when it comes to the Long Term Care insurance decision. Understand that you have full control. The Long Term Care insurance company will provide additional options if you request them — but you have to ask. And work with your financial advisor to review your options and see what makes sense. The only option that likely DOES NOT make sense is NOT writing the check to the Long Term Care insurance company at all!

Sandra Adams, CFP®, CeFT™, is a Partner and CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® She specializes in Elder Care Financial Planning and serves as a trusted source for national publications, including The Wall Street Journal, Research Magazine, and Journal of Financial Planning.

Health Care Costs: The Retirement Planning Wildcard

Kali Hassinger Contributed by: Kali Hassinger, CFP®

Health Care Costs: The Retirement Planning Wildcard

When planning ahead for retirement income needs, we typically think about how much it will cost us to live day-to-day (food, clothing, shelter), and to do those things we want to do, like travel and helping grandkids pay for college. The costs we don’t often think about, those that could potentially wreak havoc on retirement income planning, are health care costs.

According to a recent article from the Employee Benefits Research Institute, the average 65-year-old couple will need $400,000 to have a 90% chance of covering health care expenses over their remaining lifetimes (excluding long-term care).

Longevity is a critical factor driving health care costs. According to the Social Security Administration’s 2020 study, a couple, both 66 years of age, has a 1-in-2 chance that one will live to age 90 and a 1-in-4 chance that one will live to age 95. And considering that Medicare premiums are means-tested, the more income you generate in retirement, the higher your Medicare premiums.

So, what can you do to plan for this potential large cost?

  1. If your goal is to retire early, plan on self-insuring costs from retirement to age 65. Some employers may offer retiree healthcare, or you can purchase insurance on the Health Insurance Exchange through the Affordable Care Act (still out-of-pocket dollars in retirement).

  2. Consider taking advantage of Roth 401(k)s, Roth IRAs (if you qualify), or converting IRA dollars to ROTH IRAs in years that make sense from an income tax perspective. You can use these tax-free dollars for potential retirement health care expenses that won’t increase your income for determining Medicare premiums.

  3. Work with your financial planner to determine whether a non-qualified deferred annuity or similar vehicle might make sense for a portion of your investment portfolio. Again, these dollars can be tax-advantaged when determining Medicare premiums.

  4. Most importantly, work with your financial planner to simulate retirement income needs for health care expenses and include this in your retirement plan. Although you will never know your exact need, flexible planning to accommodate these expenses may help provide confidence for your future.

Contact your financial planner to discuss how you can plan to pay for your retirement health care needs.

Kali Hassinger, CFP®, CDFA®, is a CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® She has more than a decade of financial planning and insurance industry experience.

UPDATED from original post on March 11, 2014 by Sandy Adams.

Any opinions are those of Kali Hassinger and not necessarily those of Raymond James. This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Investing involves risk and you may incur a profit or a loss regardless of strategy selected. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Roth IRA owners must be 59½ or older and have held the IRA for five years before tax-free withdrawals are permitted.

Is the Diversified Portfolio Back?

Robert Ingram Contributed by: Robert Ingram

Is the diversified portfolio back?

(Repurpose of the 2014 blog: ‘Why I Didn’t Like My Diversified Portfolio’)

As our team finished 2018 and began reviewing the 2019 investment landscape, I couldn’t help but to think of a Money Centered blog written by our Managing Partner, Tim Wyman. As Tim shared:

“I was reminded of the power of headlines recently as I was reviewing my personal financial planning; reflecting on the progress I have made toward goals such as retirement, estate, tax, life insurance, and investments. And, after reviewing my personal 401k plan, and witnessing single digit growth, my immediate reaction was probably similar to many other investors that utilize a prudent asset allocation strategy (40% fixed income and 60% equities). I’d be less than candid if I didn’t share that my immediate thought was, “I dislike my diversified portfolio”.

The headlines suggest it should have been a better year. However, knowing that the substance is below the headlines, and 140 characters can’t convey the whole story, my diversified portfolio performed just as it is supposed to in 20xx.”

This may have been a familiar thought throughout 2018. Interestingly though, Tim’s blog post was actually from 2015. He was describing 2014.


The financial news about investment markets today still focuses primarily on three major market indices: the DJIA, the S&P 500, and the NASDAQ. All three are measures for large company stocks in the United States; they provide no relevance for other assets in a diversified portfolio, such as international stocks, small and medium size stocks, and bonds of all types. As in 2014, the large U.S. stock indices were at or near all-time highs throughout much of 2018. Also in that year, many other major asset classes gained no ground or were even negative for the year. These included core intermediate bonds, high yield junk bonds, small cap stocks, commodities, international stocks, and emerging markets.

Looking Beyond the Headlines

Here at The Center, our team continues to apply a variety of resources in developing our economic outlook and asset allocation strategies. We take into account research from well-respected firms such as Russell Investments, J.P.Morgan Asset Management, and Raymond James. Review the “Asset Class Returns” graphic below, which shows how a variety of asset classes have performed since 2003.


This chart shows the historical performance of different asset classes through November of 2018, as well as an asset allocation portfolio (35% fixed and 65% diversified equities). The asset allocation portfolio incorporates the various asset classes shown in the chart.

If you “see” a pattern in asset class returns over time, please look again. There is no determinable pattern. Because asset class returns are cyclical, it’s difficult to predict which asset class will outperform in any given year. A portfolio with a mix of asset classes, on average, should smooth the ride by lowering risks that any one asset class presents over a full market and cycle. If there is any pattern to see, it would be that a diversified portfolio should provide a less volatile investment experience than any single asset class. A diversified portfolio is unlikely to be worse than the lowest performing asset class in any given year. And on the flip side, it is unlikely to be better than the best performing asset class. Just what you would expect!


As during other times when we have experienced strong U.S. stock markets and periods of accelerated market volatility, some folks may be willing to abandon discipline because of increased greed or increased fear. As important as it is to not panic out of an asset class after a large decline, it remains equally important to not panic into an asset class. In the case of the S&P 500’s outperformance of many other asset classes, for example, many have wondered why they should invest in anything else. That’s an understandable question. If you find yourself in that position, you might consider the following:

  • As in the five years leading up to 2015, the S&P 500 Index (even with the recent pullback in stock prices) has had tremendous performance over the last five years. However, it’s difficult to predict which asset class will outperform from year to year. A portfolio with a mix of asset classes, on average, should smooth the ride by lowering risk over a full market cycle.

  • Fundamentally, prices of U.S. companies relative to their expected earnings are hovering around the long-term average. International equities, particularly the emerging markets, are still well below their normal estimates and may have con­siderable room for improvement. This point was particularly relevant in 2018 and continues to be as we begin 2019.

  • Through 2018, U.S. large caps, as defined by the S&P 500 Index, have outperformed international equities (MSCI EAFE) in six of the last eight years. The last time the S&P outperformed for a significant time, 1996-2001, the MSCI outperformed in the subsequent six years.

  • What’s the potential impact on a portfolio concentrated in a particular asset class, if that asset class experiences a period of loss? Remember, an investment that experienced a loss requires an even greater percentage return to get back to its original value. For example, an investment worth $100,000 that loses 50% (down to $50,000) would actually require a 100% return from $50,000 to get back to $100,000.


Benjamin Graham, known as the “father of value investing,” dedicated much of his book, The Intelligent Investor, to risk. In one of his many timeless quotes, he says, “The essence of investment management is the management of risks, not the management of returns.” This statement may seem counterintuitive to many investors. Rather than raising an alarm, risk may provide a healthy dose of reality in all investment environments. That’s important in how we meet financial goals. Diversification is about avoiding the big setbacks along the way. It doesn’t protect against losses – it helps manage risk.

Often, during times of more volatile financial markets like those we have experienced during the last couple of months, the benefits of diversification become apparent. If you have felt the way Tim did back in 2015 about your portfolio, we hope that after review and reflection, you might also change your perspective from “I dislike my diversified portfolio” to “My diversified portfolio – just what I would expect.”

As always, if you’d like to schedule some time to review anything contained in this writing, or your personal circumstances, please let me know. Lastly, our investment committee has been hard at work for several weeks and will be sharing 2019 comments in the near future. Make it a great 2019!

Robert Ingram is a CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.®

Any opinions are those of Bob Ingram, CFP® and not necessarily those of Raymond James. This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation. The Dow Jones Industrial Average (DJIA), commonly known as “The Dow” is an index representing 30 stock of companies maintained and reviewed by the editors of the Wall Street Journal. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. The MSCI is an index of stocks compiled by Morgan Stanley Capital International. The index consists of more than 1,000 companies in 22 developed markets. Investments can not be made directly in an index.

The One Mistake You DON’T Want to Make with Your Long Term Care Insurance

Sandy Adams Contributed by: Sandra Adams, CFP®

If you’re reading this, you are likely among the few people who have planned ahead and purchased Long Term Care insurance. By doing this, you intend to protect yourself and your family, and hedge your assets against the possible threat of a long-term care event (need for care in your home, assisted living or nursing home).


Given that only about 15% of Americans own Long Term Care insurance (Fidelity 2016) and 70% of Americans over the age of 65 will need some form of long-term care services for cognitive or physical impairment (HealthView Insights 2014), you will likely need the insurance you’ve purchased. The question is, will you use your Long Term Care insurance when the time comes?

I have had several client experiences that looked like this:

  • The client was at or near a point of qualifying for benefits under their Long Term Care insurance for either physical or cognitive reasons;

  • The client and/or the family made the decision to not begin the claim process. Why? They wanted to wait a while longer, continue to try to care for the client on their own, save the Long Term Care insurance benefits for later, when they really needed them.

  • The results in nearly all of these cases? The clients either never filed a claim or filed far too late, ended up in a long-term care facility, and ultimately passed away without ever receiving the policy benefits for which they had made years – even decades – of payments.

In my experience as a financial advisor, I have never had a client run out of a Long Term Care benefit pool. I am not here to tell you that it does not happen – it certainly can. But I am here to tell you that I do not believe it happens often. I have searched far and wide for statistics that would show how often it happens and cannot find a number!

Although your Long Term Care insurance company would prefer that you wait to put in your claim, I recommend that you do so as soon as you are eligible. You can always stop the benefits if you no longer need them, then restart later. And if you max out your benefits, you have the satisfaction of knowing that you received 100% of your benefits and protected your assets to the greatest possible degree. Don’t lose out (or let your parents lose out) on the Long Term Care insurance benefits they have purchased!

If you have questions or need additional guidance on this or related issues, please do not hesitate to reach out. We are always happy to help! Sandy.Adams@centerfinplan.com

Sandra Adams, CFP® is a Partner and Financial Planner at Center for Financial Planning, Inc.® Sandy specializes in Elder Care Financial Planning and is a frequent speaker on related topics. In addition to her frequent contributions to Money Centered, she is regularly quoted in national media publications such as The Wall Street Journal, Research Magazine and Journal of Financial Planning.

Any opinions are those of Sandra D. Adams, CFP® and not necessarily those of RJFS or Raymond James. 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. Guarantees are based on the claims paying ability of the issuing company. Long Term Care Insurance or Asset Based Long Term Care Insurance Products may not be suitable for all investors. Surrender charges may apply for early withdrawals and, if made prior to age 59 1⁄2, may be subject to a 10% federal tax penalty in addition to any gains being taxed as ordinary income. Please consult with a licensed financial professional when considering your insurance options. These policies have exclusions and/or limitations. The cost and availability of Long Term Care insurance depend on factors such as age, health, and the type and amount of insurance purchased. As with most financial decisions, there are expenses associated with the purchase of Long Term Care insurance. Guarantees are based on the claims paying ability of the insurance company.

Webinar in Review: 2019 Medicare Open Enrollment: Selecting the coverage that works for you

Kali Hassinger Contributed by: Kali Hassinger, CFP®

A significant part of the retirement planning process includes making the transition from an individual or group health insurance plan to Medicare. The choices are numerous and are driven by many factors – from your personal health, your choice of doctors, financial considerations and even your zip code. Join us for an upcoming webinar with James Edge of Health Plan One, a Raymond James partner and Medicare consultant, to learn the basics of how Medicare coverage works and what you need to consider before selecting coverage.

See the time stamps below to listen to the topics you’re most interested in:

  • 1:30: Understanding what HPOne is

  • 2:00: Medicare Coverage Options

  • 11:45: Medicare Part A— Hospital Insurance

  • 11:50: Medicare Part B— High Income Premium Surcharge

  • 14:15: Medicare Part D— Prescription Drug Coverage

  • 16:30: Medicare Part D—The Donut Hole

  • 21:15: Original Medicare—Coverage Gaps

  • 22:15: Medigap—Standardized Benefits but Varying Costs

  • 27:30: Closing the Coverage Gaps—Medicare Advantage

  • 28:00: Part C— Medicare Advantage

  • 30:15: Enrollment Periods

  • 36:00: Enrollment Penalties

  • 40:20: Core Capabilities of HP One

Kali Hassinger, CFP® is an Associate Financial Planner at Center for Financial Planning, Inc.®

Employee Benefits Open Enrollment: 2018 Game Plan

Robert Ingram Contributed by: Robert Ingram


Now that the Fall season is upon us and the holidays are right around the corner, it is also the annual benefits open enrollment season for many employers.  I know it can be tempting to quickly flip through the booklet checking the boxes on the forms without too much consideration, especially if things haven’t changed too much in your situation.  You’re certainly not alone.  However, setting aside some extra time to review your options is important for not only understanding the benefits you have and what might be changing, but also for identifying potential gaps in your coverages or underutilized opportunities.

Below are some benefits that, if offered by your employer, you should keep top of mind as you are making your elections.

Retirement plan contributions (401(k)/403(b) )

  • Are you contributing up to the maximum employer match? (Take advantage of free money!)

  • Are you maximizing the account?  ($18,500 or $24,500 for age 50 and over in 2018)

  • Traditional 401(k) vs. Roth 401(k) options? 

Click here for a summary of 2018 retirement plan contribution limits and adjustments

Health insurance plans

  • Review and compare your available plan offerings (e.g. PPO vs HMO). Want to explore some of the differences between plan types in more detail? Click here.

  • Focus on more than just the premium cost. Think about the deductibles, copays, and the annual out-of-pocket maximums

  • Consider your health history and the amount of services you use. For example, are you likely to hit the deductible or maximum out-of-pocket costs each year? The benefit of lower premiums for a high deductible plan may be outweighed by higher overall costs out-of-pocket.  Are you less likely to hit the deductible but you have excess cash saving just in case?  A lower premium, high deductible plan could make sense.

Health Care Flexible Spending Accounts vs. Health Savings Accounts

Flexible Spending Accounts and Health Savings Accounts both allow you to contribute pre-tax funds to an account that you can then withdraw tax-free to pay for qualified out-of-pocket medical expenses.  There are, however, some key differences to remember.

Flexible Spending Account for health care (FSA)

  • Maximum employee contribution in 2018 is $2,650

  • Generally must spend the balance on eligible expenses by the end of each plan year or forfeit unspent amounts (use-or-lose provision).

  • Employers MAY offer more time to use the funds through either a grace period option (you have an extra 2 ½ months to spend the funds) or a carryover option (you can carry over up to $500 of the balance into the following year)

For more information on the FSA click here.

Health Savings Account (HSA)

  • Can only be used with a high deductible health insurance plan

  • Maximum contribution in 2018 for an individual $ 3,450  ($4,450 for age 55 and over)

  • Maximum contribution in 2018 for an family plan $6,900  ($7,900 for age 55 and over)

  • All HSA balances carryover (no use-or-lose limitations apply)

Click here for more information about the basics of using an HSA

Dependent Care Flexible Spending Account

  • Pre-tax contributions to an account that can be withdrawn tax-free for qualified dependent care expenses within the plan year

  • Maximum contribution in 2018 is $5,000 ($2,500 if married filing separately)

  • Use-or-lose provision applies 

Life and Disability Insurance

  • Employers often provide a basic amount of life insurance coverage at no cost to you (typically 1 x salary). 

  • You may have the option to purchase additional group coverage up to certain limits at a low cost.

  • Many employers also provide a group disability insurance benefit. This can include a short-term benefit (typically covering up to 90 or 180 days) and/or a long-term benefit (covering a specified number of years or up through a certain age such as 65).

  • Disability benefits often cover a base percentage of income such as 50% or 60% of salary at no cost with some plans offering supplemental coverage for an additional premium charge.

  • Life and disability insurance benefits can vary widely from employer to employer and in many cases only provide a portion of an employee’s needs.It is important to consult with your advisor on the appropriate amount of coverage for your own situation.

Like most things related to financial planning, your benefit selections are specific for your family’s own unique circumstances; and your choices probably would not make sense for your co-worker or neighbor.  We encourage all clients to have conversations with us as they are reviewing their benefit options during open enrollment, so don’t hesitate to pass along any questions you might have. If we can be a resource for you, please let us know.

Robert Ingram is a CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.®

This information 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. Raymond James Financial Services, Inc. does not provide advice on tax, legal or mortgage issues. These matters should be discussed with the appropriate professional. Life insurance Guarantees are based on the claims paying ability of the insurance company.