September 2, 2009
Vol 2, Issue 9
Jean Keener
Jean Keener
Happy September and welcome to fall.  The cooler weather the past week has certainly been welcome as the teachers and kids went back to school and the rest of us re-focused on work after summer vacations and activities.
August was another good month in the stock market with the S&P 500 gaining about 3%.  We're up almost 13% now for the year.  It's important to remember that it's easy to feel over-confident and over-estimate our risk tolerance when we've had a string of really good months.  Whether performance is good or bad, we need to stay focused on the long-term and maintaining our desired allocations that are designed to weather good times and bad.
In this newsletter, we have information on retirement plan contribution limits for 2010, health insurance protection for college students, the 30-second financial gut check, and more.  As always, feel free to e-mail me at with requests for newsletter topics you'd like to see covered.  Thank you, and Live Well.
In This Issue
2010 Retirement Plan Limits
College Student Health Insurance Protection
30-Second Financial Gut Check
5 Claims to Watch Out For in Long-Term Care
New Dallas Location!
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Lowered Retirement Plan Contribution Limits?
It's possible the IRS could reduce retirement plan contribution limits for 2010 because of declines in inflation over parts of this year.
How does this affect you? 
If you've been contributing the max to your 401(k), 403(b), or TSP account, you would need to reduce it slightly.  The max is $16,500 for 2009 for those under 50, and $22,000 for those 50+.  If reductions went into effect, it would likely be a cut of $500 for those under 50 and as much as $1,000 for those 50+.
This is certainly not good news, but it's not cause for a lot of worry.  You can still maintain your current retirement contribution levels by saving the additional $500 or $1,000 in a taxable account.  You'll miss out on the tax benefits of a retirement plan, but it's not enough money to make any kind of significant difference in your retirement plans.
You should also be aware that only about 9% of individuals max out their retirement plans.  So, if you are in the group potentially affected by this change, keep up the good work!  Your savings now will enable a more secure and enjoyable retirement.
The IRS has a deadline of October 15 to announce next year's limits, so stay tuned for more information.
Health Insurance Protection for College Students
Michelle Morse was a full-time college student when she was stricken with cancer. Because Michelle faced potentially debilitating treatments, her doctors recommended that she cut back on her college course load. However, doing so would have caused her to lose her health insurance coverage under her family's plan, since she would no longer qualify as a dependent full-time college student. Michelle decided to remain a full-time student while undergoing cancer treatments.

While the disease ultimately took her life, the circumstances requiring her to remain in college in spite of her illness prompted legislative action. Passed in 2008, Michelle's Law provides that full-time college students covered by health insurance as dependents will not lose their dependent status during a medically necessary leave of absence from school due to a serious medical condition. The determination of "medically necessary" is made by the student's treating physician.

Under the law, the coverage must be extended for the earlier of one year from the date of the student's medically necessary leave of absence or the date the coverage otherwise would have ended based on specific policy provisions. The law applies not only to public and private two- and four-year colleges, but also to many occupational education and postsecondary vocational schools.
The law becomes effective for insured and self-insured health plans on the first day of their plan year beginning on or after October 9, 2009. For calendar year plans, this means the effective date is January 1, 2010.
30-Second Financial Gut Check
If you're like many Americans right now, you're worried about your finances.  Even if nothing has particularly changed for you in the past year - perhaps you still have the same job, same mortgage payment, same retirement accounts - you likely now have a gnawing sense of insecurity about what the future holds.  And if something has changed for you - like loss of a job, a pay-cut, increased credit card interest rates, or a looming foreclosure - your worry level may be magnified by a factor 10 or more.  Even though we've had a nice run in the stock market over the past 5 months and there is some encouraging economic data in the news, that sense of confidence that many felt just a year ago is nowhere to be found.
So, is your worry justified? 
To answer that question, I developed 5 quick questions on my blog this month.  It's the 30-second financial gut check.  If the gut check reveals that you have reason to worry, you can take the anxiety and use it to motivate yourself to take action.  On the other hand, if it shows that you're really doing ok, then you can use this gut check to start getting your confidence back. 
To take the 30-second financial gut check, go to
5 Claims to Watch Out For in Long-Term Care
smilingmature  womanLong-term care planning is an important aspect of a financial plan, especially for those 50+.  And insurance is often a component of that plan.   But it's important to know exactly what you're buying, to compare pricing and features with comparable companies, and to buy the insurance for the right reasons.  You don't want to be swayed by unsubstantiated sales pitches. Here are some claims you'll want to be skeptical of.
Claim #1: A long-term care policy is a great tax write-off
Though it's true that premiums paid on a tax-qualified LTCI policy can reduce your tax burden, you must itemize deductions to be eligible. When you're older, perhaps you'll no longer itemize deductions. And even if you do, LTCI premiums fall under the write-off for medical and dental expenses, which is limited to expenses that exceed 7.5 percent of your adjusted gross income. So, for example, if your adjusted gross income is $60,000, you are able to deduct only that portion of your unreimbursed medical and dental expenses (including LTCI premiums) that exceeds $4,500.

And there's another caveat. Even if your LTCI premiums exceed 7.5 percent of your adjusted gross income, you can't include all of the premiums in your deduction for medical and dental expenses. Instead, your premiums are deductible according to a sliding scale that depends on your age. So what might look like a great tax write-off at first glance may not be so great after all.

Claim #2: You should buy a policy now so you can lock in the price forever
With most LTCI policies, your age at the time you purchase the policy is a factor in determining your premiums. However, this doesn't mean that your premiums will stay the same as long as you own the policy. In fact, your premiums can increase if your insurance company establishes a rate increase for everyone in your class, and that increase is approved by the state insurance commissioner.

As a relatively new type of insurance, LTCI may be particularly susceptible to rate increases, because insurance companies lack a sufficient amount of underwriting data to predict the number and size of claims they can expect in the future. And unfortunately for you, if your insurance company does raise your premium, it may not be so simple to take your business elsewhere. Any premium on a new LTCI policy will still be based on your age, which will be higher, and your health, which may be worse. So no matter when you buy your policy, make sure you can afford the premiums both now and in the future.
Claim #3: It doesn't matter how the policy defines "facility"

Currently, there are no national standards on what constitutes a long-term care facility. This means that an "assisted-living facility" or "adult day-care facility" may mean one thing in a particular policy or state and another thing in a different policy or state. This can pose a problem if you buy the policy in one state and then retire to another state-there may be no facilities in your new state that match the definitions in your policy. To protect yourself, make sure you understand exactly what types of facilities the LTCI policy covers before you buy it.

Claim #4: It's not necessary to check the financial rating of the insurance company

A large number of unexpected long-term care claims could potentially devastate an insurance company that isn't financially strong. So before you buy an LTCI policy, it's always a good idea to check the company's financial rating by using a rating service like Standard & Poor's, Moody's, A. M. Best, or Fitch. You can also check with your state's insurance department for more specific financial information on particular companies.

Claim #5: You should get rid of the policy you have now and buy a new one

Although in some cases a new LTCI policy might have an attractive added benefit that your old policy doesn't, red flags should go up if an insurance agent encourages you to ditch your old policy for a new one without providing a clear explanation of the added benefits. For one thing, your premiums are based on your age and your health at the time you purchase the policy, so all other things being equal, your new policy will be more expensive. For another, you run the risk that a pre-existing condition won't be covered under the new policy.

If you're unhappy with your current policy, an alternative may be to upgrade it rather than replace it (though the agent earns a larger commission if you replace it). Unfortunately, there are unethical agents who make misleading comparisons of LTCI policies in an attempt to get you to switch policies for no reason other than their commission. If you're considering switching policies, make sure you understand exactly what the new policy offers, whether this additional coverage is important to you, and what you're giving up.
If you're a woman and thinking about purchasing long-term care insurance, you may also be interested in reading Long-Term Care is a Women's Issue from my blog this month.
Additional Office in Dallas
Keener Financial Planning now has an additional office in Dallas.  My primary location and home-base is still happily in Keller.  To be more accessible to my Dallas clients, I have leased a satellite location in Uptown Dallas.  I will have access to conference room space there on an as-needed basis, and have updated with the days I plan to be in Dallas.  Please give me a call if you'd like to set up a meeting there.
3102 Maple Avenue, 4th floor
Dallas, TX 75201
Ph: 214-432-2817
I hope you found this newsletter informative.  KFP offers a free, no-obligation initial consultation to start the financial planning process for new clients.  To learn more or schedule a time, call 817-993-0401 or e-mail
Jean Keener, CRPC, CFDP
Keener Financial Planning

Keener Financial Planning is a fee-only financial planning and investment advisory firm working with individuals at all financial levels.
All newsletter content Copyright 2009, Keener Financial Planning, LLC.