These benefits are available to low-income  wartime veterans who are 65 and older, or who are under age 65 but are  permanently and totally disabled due to conditions unrelated to their  military service. Surviving spouses and dependent children may also  qualify for these benefits. These income limits are also the maximum annual pension payment that a beneficiary may  receive and may vary based on whether claimants are veterans or  survivors, their family composition, as well as whether they need enhanced  benefits, such as aid and attendance or housebound benefits.example, to qualify for pension benefits in 2012 a veteran with no  dependents and who is in need of aid and attendance benefits cannot have  income that exceeds $20,447. Organizations Help Veterans Transfer Assets to Qualify for Pension Benefits

We identified over 200 organizations located throughout the country that  market their services to help veterans and their surviving spouses qualify  for VA pension benefits by transferring or preserving excess assets. These organizations consist primarily of financial planners and attorneys  offering products and services such as annuities and the establishment of  trusts, to enable potential VA pension claimants with excess assets to  meet financial eligibility criteria for VA pension benefits. In contrast, for  Medicaid—another means tested program—federal law explicitly restricts  eligibility for coverage for long term care for certain individuals who  transfer assets for less than fair market value prior to applying., As a  result, when an individual applies for Medicaid coverage for long-term  care, states conduct a look-back—a review to determine if the applicant  transferred assets for less than fair market value prior to applying. During our investigative calls, all 19 organizations correctly noted that  pension claimants can legally transfer assets prior to applying. Some Products and Services May Adversely Affect Claimants

Some products may not be suitable for elderly veterans because they  may lose access to funds they may need for future expenses, such as  medical care. To help elderly clients become financially eligible for VA  pension benefits, some organizations may sell deferred annuities which  would make the client unable to access the funds in the annuity during  their expected lifetime without facing high withdrawal fees, according to  some attorneys we spoke with. Claimants may not understand that this accreditation only means that the  individual is proficient in VA’s policies and procedures to assist in preparing  and submitting VA benefits claims and does not ensure the products and  services these individuals are selling are in claimants’ best interests. Among the 19 organizations our investigative  staff contacted for this review, about one-third said they did not charge for  their services to help qualify claimants for VA pension benefits. Among organizations that did charge for  services, fees ranged from a few hundred dollars for benefits counseling  up to $10,000 for the establishment of a trust. In addition,  concerns have been raised that fees charged may be excessive for the  services provided. Accordingly, we asked 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.
Why GAO Did This Study

This testinony discusses the Department of Veterans Affairs (VA) pension program, which provides economic benefits to wartime veterans age 65 and older or who have disabilities that are unrelated to their military service, as well as to their surviving spouses and dependent children. To qualify for VA pension benefits, a claimant must have limited income and assets. Recently, concerns have been raised that some organizations are marketing financial products and other services to help individuals whose assets exceed the programs financial eligibility thresholds qualify for these benefits. These organizations may charge substantial fees for products and services that may not always be in claimants best long-term interests.
In our report released today on VAs pension program, we identified vulnerabilities in VAs procedures for assessing financial eligibility. We also found that there is no prohibition on claimants transferring assets prior to applying for benefits, and some claimants do so. Other means-tested programs, such as Medicaid, conduct a look-back review to determine if an individual has transferred assets for less than fair market value, and if so, may deny eligibility for benefits for a period of time. This control helps ensure that only those in financial need receive benefits.
This testimony is based on our report and focuses on what is known about organizations that are marketing financial products and services to veterans and survivors to enable them to qualify for VA pension benefits.

What GAO Found

In summary, we identified over 200 organizations that market financial and estate planning services to help pension claimants with excess assets qualify for pension benefits. These organizations consist primarily of financial planners and attorneys who offer products such as annuities and trusts. All 19 organizations our investigative staff contacted said a claimant can qualify for pension benefits by transferring assets before applying, which is permitted under the program. Two organization representatives said they helped pension claimants with substantial assets, including millionaires, obtain VAs approval for benefits. Some products and services provided, such as deferred annuities, may not be suitable for the elderly because they may not have access to their funds within their expected lifetime without facing high withdrawal fees. Also, such asset transfers may result in ineligibility for Medicaid coverage for long-term care for a period of time. The majority of the 19 organizations contacted charged fees, ranging from a few hundred dollars for benefits counseling to $10,000 for establishment of a trust. In our report we asked Congress to consider establishing a look-back and penalty period for pension claimants who transfer assets prior to applying for pension benefits, similar to other federally supported means-tested programs, such as Medicaid. We also recommended that VA obtain timely information on asset transfers, strengthen income and asset verification processes, and provide clearer guidance to claims processors. VA concurred with our recommendations and agreed that a look back and penalty period for asset transfers was needed.