Jan 7, 2014

Veterans applying for aid and attendance need more protection from scams

One bright light in a generally dismal Washington landscape where political parties rarely work together: Republican Senator Marco Rubio of Florida and Democratic Senator Elizabeth Warren of Massachusetts have introduced legislation to better protect veterans from predatory financial practices. The Veterans Care Financial Protection Act would amend the National Defense Authorization Act and would take aim, among other things, at unscrupulous "financial advisors" who often use V.A. Aid and Attendance benefits to get their hands on a veteran's finances.

Veterans Aid and Attendance benefits help veterans and their surviving spouses with the high cost of long-term care, whether at home, in a nursing home, or in an assisted living facility. It is NOT a service-connected benefit, meaning that a veteran does not need to have been injured during military service in order to qualify. Among the eligibility requirements: the applicant must be 65 or older and served during a wartime period; net income may not exceed a given level once unreimbursed medical expenses are deducted; and assets must also fall below a certain maximum (currrently $80,000).  

There are several common veterans scams. Watch out for them:

Almost all financial predators start their pitch by offering to complete the veteran's application for Aid and Attendance benefits. But under federal law, it is ILLEGAL for anyone to charge for this. 

Senator Warren also notes instances in which frail veterans have been enticed into moving to a nursing home because unscrupulous staff all but guarantee that the individual will qualify for Aid and Attendance benefits. If the individual does not qualify after moving in, often because the value of his/her assets is too great, the nursing home then demands payment and ends up draining the veteran's assets.

One scam I have seen often and up close and personal, involves annuities. If an applicant has assets exceed the maximum allowable level, a financial advisor recommends that the veteran put excess funds into a "veterans annuity" in order to qualify for benefits. Annuities are rarely a good idea for an older person, who loses control over the asset and, if he/she ever needs the money, will face outrageous penalties for withdrawing it. In a recent meeting, Senator Warren took note of one incident in which a veteran who had been talked into buying an annuity would not get any payout until he was well into his 90s! Moreover, here in Florida, if you have purchased an annuity and then apply for Medicaid benefits for long-term care, you will be required to name the state as a beneficiary.

Be careful that you or your loved one don't fall for these schemes. There are more than 40,000 agencies nationwide that purport to provide financial advice to veterans. Some are reputable, but, as Senator Warren put it, many are like "sharks swimming in the water." 

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