By: Benjamin A. Schock, Attorney at Law. Macomb County, Michigan.
About 200 organizations are marketing financial and estate planning services to help pension claimants with excess assets qualify for the VA’s Aid and Attendance and other pension benefits, the U.S. Government Accountability Office (GAO) concludes after a year-long investigation.
Citing abuses among these firms, the agency recommends that Congress consider establishing a look-back and penalty period for pension claimants who transfer assets for less than fair market value prior to applying for pension benefits, similar to Medicaid. The GAO says the VA agrees that look-back and penalty periods for asset transfers are needed, and the New York Times reports that a bipartisan group of senators plans to introduce legislation giving the VA look-back authority. The Times also notes that a senior official at the VA says the department is drafting new regulations that would clarify the types of asset transfers that might disqualify a pension applicant.
The GAO unveiled its findings in testimony at a June 6, 2012, Senate hearing, where lawmakers also heard from a VA official, veterans advocates and a woman whose father was victimized by one of the unscrupulous “pension poachers,” as Senate aging committee chair Sen. Herb Kohl (D-WI) dubbed them.
“While these organizations may be legally entitled to operate,” said witness Lori Perkio of the American Legion, “it is unclear as to whether or not they are truly serving the best interests of the veterans and their families.” In Florida, for example, Perkio claimed that “American Legion service officers have run across a growing number of lawyers specializing in elder law who contact veterans directly through assisted living facilities (ALFs) with promises of how to divert income and assets to qualify for VA pension. Many of these attorneys do not provide follow up assistance with the ultimate pension claims process.”
Posing as the children of an 86-year-old veteran with $300,000 in countable assets who was trying to qualify for a pension, GAO investigators contacted 19 firms and were told they could qualify as long as they put their money in trusts or annuities, for which the firms would charge fees. Two organization representatives said they helped pension claimants with substantial assets, including millionaires, obtain VA’s approval for benefits
The GAO found that some organizations were providing products and services such as annuities that were potentially unsuitable for the elderly because the funds would be unavailable during their expected lifetimes without high withdrawal fees.
The investigation also raised questions about whether veterans and their families are being informed of the Medicaid implications of asset transfers. “According to several attorneys we spoke with,” the report states, “some organization representatives are unaware or are indifferent to the adverse effects on Medicaid eligibility of the products and services they market to qualify for the VA pension.”
In addition, the GAO heard concerns about misleading marketing strategies used by some of the companies. Again, “several attorneys” told GAO investigators that some organization representatives are leading potential pension claimants and their family members to believe they are veterans’ advocates working for a nonprofit organization, or are endorsed by VA.
Investigators spoke with “an elder law attorney” who said that many attendees at assisted living facility presentations may have Alzheimer’s disease or dementia and are not in a position to make decisions about their finances.
Apparently as a strategy to prevent such abuses, the GAO concludes by asking Congress “to consider establishing a look-back and penalty period for pension claimants who transfer assets at less than fair market value prior to applying for pension benefits, similar to other federally supported means-tested programs.”
“If things continue as they are, and people see this program as a magnet for rip-offs and waste, I believe that in this financial climate support for the program will fall apart,” said Sen. Ron Wyden (D-Or), who the Times said plans to introduce legislation along with Sen. Richard Burr (R-N.C.). “I want to preserve this for people who need it.”