Reading and Vocabulary Help

I have a soon to be 9 year old who is reading well for his age.  We did a computer phonics program called Funnix.  It states that after finishing the program the child would be at a 3rd grade reading level.  My question is, after this, are there more phonics to teach or that I should teach?  Or do you just have them read and be read to everyday now?  Such as just making them read aloud the Pathway readers to you, if they are even interested in those?

My daughter who is 13, and whom we started homeschooling in 3rd grade, is a poor reader now, she was reading at her level then.  I was new to homeschooling and had no idea what I was doing?  I would give her books to read on her own and read aloud to her but did not ever make her read out loud to me, so I didn’t really know she was struggling with bigger words.  I didn’t use narration because I didn’t know.  She never said anything about not knowing a word and I just assumed all was well.  We now take turns reading history and the bible out loud and there are many words she cannot pronounce.  She is also a slow read aloud reader, with not much flow or inflection but she can tell me what a story is about.  We are now working on this by her reading aloud.

So this is where I question, should there be more phonics instruction beyond grade 2 and 3 if at the time they are reading well for their age.  Then would you just monitor and teach new words by them reading aloud to you?

Also, how do you teach vocabulary?  Do you use a program or is it just through reading?  My daughter was reading, I required between 30 mins. and 1 hour a day, and her vocabulary is also poor, what should I do to increase it.  Memorizing vocabulary words is not CM so how is it learned if they have no drive to look up the meaning of the word they do not know?

Puzzled and discouraged.