Beware of Pension Poachers: A Warning to Veterans About Aid and Attendance

Beware of Pension Poachers:  A Warning to Veterans About Aid and Attendance

The FTC has issued a warning about “Pension Poachers” who use deceptive sales techniques (i.e. “lies”) on veterans to cheat them out of money with false promises.  Specifically about the VA Pension (Aid and Attendance) which can provide a substantial amount of money to veterans and widows.

While the warning leaves out some important details, it does make excellent points that you need to be aware of before spending any money related to Aid and Attendance benefits.

The FTC says:

Specifically, these unscrupulous brokers try to convince veterans to transfer their assets to a trust ­ or to invest in insurance products ­ so they can qualify for Aid and Attendance benefits. What they don’t reveal is that these transactions could mean that the veteran loses eligibility for Medicaid services or loses the use of their money for a long time. Adding insult to injury, the advisers are charging fees that range from hundreds to thousands of dollars for their services.

Let’s look at this.

There is nothing inherently wrong with transferring assets to a trust or purchasing an annuity.

However, if done improperly, the consequences can be disastrous

Where the problem comes in is when the transfer of assets is done improperly or the annuity is not suitable for the veteran.

The problem also comes about when Alabama Medicaid is not considered.

Only certain types of trusts are recognized by the VA so that assets transferred into the trust are not considered the assets of the veteran any longer.

And you have to be careful transferring assets into even a proper trust.

The reason is that it only works if you have given up complete control of the assets.

No strings attached.

You can’t change your mind later and have the power to undo the transfer.

If you have that power (those “strings”) then the VA will say you never gave up ownership.  Thus you won’t qualify for Aid and Attendance.

But even the right trust . . . used in the wrong circumstance . . . or used in the wrong way . . . can be a nightmare.

Be very careful.

Get good advice.

Be prepared to pay for good advice from a licensed lawyer in your state and a VA accredited lawyer.

Annuities are allowable.

The basic idea of using an annuity is that you are converting assets into income which may allow the veteran to qualify for the aid and attendance benefits.

Annuities can also be used to cover any period of “penalty” that might come from asset transfers in case the veteran needs to go into a nursing home.

But again, annuities can be used in the wrong way and can destroy a family financially so make sure you know what you are doing before buying an annuity.

This leads to the final thing I’ll say about this quote from the FTC.

It is very true that so many of the people and companies that are “pitching” to veterans don’t know Alabama Medicaid and how it interacts with VA Aid and Attendance planning.

The non lawyers certainly can’t give advice on Medicaid.

Well, they do but this is the unauthorized practice of law and they don’t know the right answers which makes it even worse.

It is wrong to only look to Aid and Attendance without looking to Medicaid.

Sometimes when both are examined there are tough choices to make.

We make the best decisions among sometimes imperfect choices, but that is life, isn’t it?

The critical thing is you must be properly advised on your options and the consequences of each action so that you can make the right decision for your family.

The next quote from the FTC is:

The qualifications for A&A are specific and strict: You must be over 65; be eligible for a military pension; fall under an income threshold; and need help with daily living tasks (bathing, feeding, dressing, and toileting), be incapacitated physically or mentally, have severely limited eyesight, or be confined to bed or in a nursing home. A&A is never granted automatically either to veterans of a certain age or those with particular disabilities.

These are the qualifications (along with an asset limitation) — the benefit of a competent and ethical VA accredited lawyer is in learning your options for the income and asset requirements.

Many of the qualifications are either met or not met — there is nothing that can be done.

For example, either you are 65 or older.

Either you are a war time veteran with 90 days of active duty (1 during a time of war) with an honorable discharge or you are not.

By the way, this is what the FTC means by “eligible for a military pension.”

“Military pension” does NOT mean that you must be eligible to receive retirement benefits.

This is a common myth based upon the unfortunate name of the program “Special Pension” which is normally called “Aid and Attendance.”

Your doctor will need to fill out paperwork to document whether in your “daily living tasks” (also called “activities of daily living”) you need the “aid and attendance” of someone to help you.

And the FTC is absolutely right that “A&A is never granted automatically either to veterans of a certain age or those with particular disabilities.”

Anyone who tells you differently is lying to you.

It may be that the VA should award benefits.

However, only the VA can decide.

If they decide wrongly, you can appeal it.

But, let’s talk about assets and income.

This is where the planning comes in.

If your assets are too high, it is perfectly legal and allowable to transfer those assets according to the VA rules.

Or purchase annuities or to take similar steps in order to qualify for the asset test.

On the income side, the VA does not publicize this, and the FTC report strangely left this out, but the VA looks at “IVAP which is income for VA purposes.

This is the household gross income MINUS the household unreimbursed medical expenses.

If the veteran (or surviving spouse) needs the aid and attendance for two of the activities of daily living, then a family member (non spouse) can provide that and be paid a market rate of pay for the help.

This can count as unreimbursed medical expenses.

Here’s the bottom line:

If the proper documentation and systems are in place, then a family member providing care to the veteran or surviving spouse may cause the IVAP to be at a level where Aid and Attendance benefits will be paid.

But you won’t know this by calling the VA.

Again, this must be coordinated with Alabama Medicaid as the rules are not always the same.

Get good advice to make sure that you are making the right decisions for your family.

Let’s look at this part of the FTC warning which is vitally important:

Also, A&A benefits may not be enough to fund your long-term care expenses, and you may need to apply for Medicaid, the government’s program for people who cannot afford medical care. But Medicaid has a 60-month look-back period: If you’ve moved substantial assets at less than market value during the previous five years, you may be ineligible for Medicaid services.

Alabama Medicaid must be considered as you plan for Aid and Attendance benefits.

If you don’t, you can make a mistake costing you hundreds of thousands of dollars.

Alabama Medicaid is used to pay for nursing home care which can exceed $7,000.

Per month.

Alabama Medicaid has a look back provision for 60 months.

This means from the date you apply and are otherwise eligible (there are income and asset requirements that are completely different than the VA requirements), the question is did you improperly transfer any assets for less than fair market value in the last 60 months?

There are numerous exceptions that we won’t cover here but keep this in mind:  If you did violate the rules (i.e. you don’t fit the numerous exceptions) then for every $5,800 (approximately) that you transferred, you will be penalized one month.

This means that you have to privately pay one month of nursing home benefits before Medicaid will pay.

So if you improperly transferred $200,000, this means that after you otherwise qualify for Medicaid, you will have to privately pay for about 34 or 35 months.

So the wrong decision on transferring assets can, as the FTC warns, result in a penalty that could cost you hundreds of thousands of dollars.

When the annuity salesman tells you what Alabama Medicaid allows or disallows, I would suggest running unless he is a licensed attorney and knows about elder law.

No one can charge you to fill out the forms.

Not a lawyer, an insurance company, or anyone else — if they do then run the other way!

The FTC correctly states:

It is free to apply for veterans’ benefits. If you’re completing the application yourself, don’t pay for forms. If someone is helping you, know that the people who are accredited through the VA are not allowed to charge you to help you complete and submit VA paperwork.

We have heard of Tennessee lawyers, or folks from a Tennessee lawyer’s office, that are coming into Alabama.

They come in and solicit Alabama veterans in assisted living facilities.

And charging for helping veterans apply.

Here are the problems with this:

  • Lawyers can only practice in the states where they are licensed.
  • Lawyers cannot charge to fill out the paperwork to apply for the VA benefits.
  • An assembly line process from a state away by an unlicensed lawyer illegally charging is hardly a solution — it is a recipe for disaster.

So when anyone wants to charge you to fill out the paperwork to submit to the VA, run away.

Here’s the bottom line.

Make sure you know who you are dealing with.

In addition, make sure you fully understand the process.

Be sure you feel comfortable asking your advisor questions before you make any decisions.

This area of the law reminds me of foreclosure law.

There are a lot of scam places out there promising the moon to people who are hurting.

But they don’t deliver.

Instead they steal money and leave people in a worse position.

But there are legitimate attorneys who live in Alabama and who can help folks.

They give good legal advice.

No outrageous promises or high pressure sales tactics.

With the VA Aid and Attendance, you need to be very careful.  Make sure you can ask questions and you get straight answers.

Don’t let the fact that there are bogus companies out there cause you to lose benefits you have earned.

If you qualify then you should receive your benefits.

(Actually, Alabama Medicaid makes you apply for these benefits because Medicaid is a last resort payer.)

Be cautious.

Be careful.

In addition, be wise.

But do learn your rights and take action.

Contact Us.

If you have any questions, give us a call us at 205-879-2447.

Or, you can contact us through our website.  

We will be glad to help you figure out your best course of action.

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