‘Pension Poachers’ are “helping” veterans hide assets to ensure they qualify for Aid and Attendance, typically by charging high fees to set up annuities and trusts (up to $10,000).
The Department of Veterans Affairs (VA) has an outrageous backlog of disability claims, reported to amass more than 600,000 claims in all. Both compensation benefit and Aid and Attendance (Pension) benefit applicants are suffering an 8 to 18 month waiting time for benefits to be approved.
The New York Times reports that the VA indicates that there is a specific reason why Aid and Attendance claims are being held up: ‘pension poachers.’
Aid and Attendance or Improved Pension is a benefit available to disabled or aging wartime veterans, in addition to surviving spouses of a veteran who now require assistance covering the cost of care. This benefit helps supplement income being used to pay for medical expenses, including caregivers at home, or adult day care, or care in a facility personal care or skilled nursing. When compared to Medicaid eligibility, it is a simple application. However, there is an asset limit which is where the so-called ‘pension poachers’ apply.
In an effort to prevent lawyers from making the process adversarial, the VA has a prohibition against paying for expert help. Dating back to Civil War times, this prohibition, in modern times, has the opposite effect as intended. A predominant number of families learn about the Aid and Attendance benefit from experts who are also financial planners. These planners often specialize in helping families apply for benefits from the VA but frequently use financial products like annuities and trusts to reduce the assets to within reasonable limits.
This variety of planning is not in violation of VA rules since the VA does not currently have a “look back” for transfers when applying for Medicaid. With that said, deferred annuities can be both devastating and expensive for an elderly person, and an irrevocable trust can result in the person’s disqualification from Medicaid if he or she needs to enter a nursing home within the next five years.
The system is being clogged by pension poachers who are preying on veterans, who are submitting thousands of applications for people for whom this benefit was not intended. Senator Wyden, Democrat of Oregon, and Senator Richard Burr, Republican of North Carolina have introduced a bill to cap “bogus claims.” In part, they are relying on the Federal Trade Commission reports and the findings of an undercover operation by the Government Accountability Office that determined that financial and estate planning professionals are “helping” veterans hide assets to ensure they qualify for Aid and Attendance, typically by charging high fees to set up annuities and trusts (up to $10,000). Senator Wyden believes by reducing the abuses, they will reduce the backlog. They added that the benefit was not intended to help veterans save money for their heirs.
Christopher J. Berry is a Michigan elder law attorney Dedicated to helping seniors, veterans and their families navigate the long-term care maze. To learn more visit http://www.michiganelderlawattorney.com/ or call 248.481.4000