The adage "if it sounds too good to be true, it is" applies especially when it comes to false promises made to veterans seeking to qualify for Aid and Attendance benefits. Nationwide, unscrupulous financial brokers, insurance agents, and attorneys are poaching hard-earned Aid and Attendance benefits from veterans and their families while promising (falsely) that their services are free and will yield huge financial returns for the veteran.
Aid and Attendance is a benefit paid by the U.S. Department of Veterans Affairs to wartime veterans, or their spouses, who meet low income and asset requirements and also require medical assistance with some of their daily activities.
Aid and Attendance can be used to pay for in-home care for the veteran, even if it is provided by a family member. (However, if the care is provided by a spouse, the benefits will be considered "income for the spouse," which could then disqualify the veteran from receiving the benefits for a twelve-month period.)
Aid and Attendance can also be used to offset the cost of residing in an assisted living facility or nursing home, but will not cover the full cost. Medicaid, however, will pay the full cost of nursing home care, and in some states, assisted living facilities as well. Learn more about Aid and Attendance here.
Many companies that sell annuities and insurance policies are aware that elderly wartime veterans can be eligible for Aid and Attendance and are doing a great deal of marketing towards veterans. These companies claim that all veterans are eligible for Aid and Attendance (not true) and promise that their financial product will guarantee a veteran will meet the asset limits for Aid and Attendance (not true). They use scare tactics to convince veterans that if they don’t buy the proposed annuity or insurance policy they will face financial ruin.
Here are some of the ways a poorly planned annuity or insurance policy can hurt veterans.
No financial planner worth their salt will ever speak to an elderly veteran about how to qualify for Aid and Attendance without also cautioning the veteran on how critical it is to make sure that any financial transfers made will not end up making the vet ineligible financially for Medicaid.
This is where the problems lies. If a veteran has too much money and property to qualify for Aid and Attendance, that property can be transferred in order to help the vet meets the asset limits of the program. As soon as the transfers are complete, the veteran can safely apply for Aid and Attendance. But Medicaid is completely different because Medicaid penalizes people for moving funds around prior to seeking coverage, by denying Medicaid coverage for a period of months or years.
An adviser must understand the Medicaid rules in the veteran's state in order to be able to provide proper advice. (Ideally, a veteran should talk to an elder law attorney about financial planning.) Medicaid regulations are quite complicated and subject to frequent change. Depending on your age and health, you want to make sure that any financial transactions you undertake will not run afoul of the Medicaid rules and thus lead to a period of no coverage for nursing home care. Families face catastrophic medical costs if Medicaid is not available to pay for care in a facility.
Brokers and agents sometimes pressure veterans into buying a financial product that benefits the adviser by providing a big commission and annual fees. One way an adviser can make a commission is by pressuring veterans to buy annuities that provide the veteran with regular income. The adviser will promise the vet the investment will meet the financial criteria for aid and attendance, but sometimes the annuity provides the veteran with so much income that the vet can’t get Aid and Attendance benefits at all. And once it's purchased, it isn’t so easy to get out of annuity. There are normally large penalties to be paid, which would cause a veteran to lose a good chunk of their life savings.
Sometimes veterans aren’t eligible for Aid and Attendance in the first place, so they didn't need asset planning for benefit-eligibility purposes. Veterans in this situation end up stuck with a financial investment they didn’t need and that adversely impacts their quality of life by taking their funds out of their hands. Yes, the investment generates income, but control of the money is taken away from the veteran. A veteran who needs a lump sum of money to care for his or her family, buy property, or enjoy life is on the losing end of this deal. And there is often no easy way out of it without paying a huge penalty. But the advisers are happy with the big fee they’ve made, after promising the services are “free.”
If you believe an adviser is unethically trying to sell you a financial product and is overpromising you eligibility for Aid and Attendance, you have the right to file a complaint. Complaints can be filed with your State Attorney General’s Office and with the Federal Trade Commission.
If you are dealing with a person trying to improperly sell you an annuity or insurance product, complain to your State Insurance Regulator. If you believe an attorney has behaved unethically, complain to your State Bar Association.
Read on to learn about how to spot a scammer or amateur adviser and how to select a qualified, accredited veterans' advocate to help you with financial planning.
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