Unscrupulous financial advisors continue to exploit the federal Veterans Aid and Attendance program, but due to a tough new consumer protection law recently passed in California, their tactics may be changing.
Aid and Attendance is an enhanced pension benefit available to some low-income elder veterans and their surviving spouses who require assistance paying for in-home care or assisted living. “Pension Poachers,” as they were recently nicknamed by Senator Ron Wyden of Oregon, can be insurance agents, attorneys, independent financial advisors, or volunteer veteran advocates. They target elders through direct mail, the internet, newspaper advertisements, senior center seminars, at assisted living facilities, and on radio and television programs.
Because an elder veteran needs to show less than approximately $80,000 in assets in order to qualify for Aid and Attendance, Pension Poachers have been convincing elders to purchase deferred annuities or place funds into irrevocable trusts in order to make the elders appear to be low income. Recognizing that placing assets into deferred annuities in order to qualify an elder for veterans’ benefits has the potential to cause great financial harm in the form of high fees, surrender charges, and possible disqualification for Medi-Cal down the road, California recently passed SB 1184, which prohibits an insurance broker or agent from “participating in, being associated with, or employing any party that participates in the business of obtaining veterans’ benefits for a senior unless the insurance agent or broker maintains procedural safeguards designed to ensure that the agent or broker has no direct financial incentive to refer the policyholder or prospective policyholder to any government benefits program.” SB 1184 became law on January 1, 2013.
In what may be an attempt to get around this new law, some unethical insurance agents have been advising elders to simply give away their savings to their adult children in order to qualify for the Aid and Attendance benefit through a method called “stacked gifting.” After the transfer of funds to the adult children is complete, the agent may then attempt to convince the adult children, now in possession of the elder’s funds, to place the money into a trust, deferred annuities or other potentially unsuitable financial products.
Another way insurance agents may be attempting to circumvent SB 1184 is by directing elder clients to so-called volunteer advocates or retired veterans services officers to assist the elder with the initial Aid and Attendance paperwork. The volunteer then sends the elder back to the agent for “repositioning of assets” before submitting the final Aid and Attendance application to the Veterans Administration.
Neither of these strategies necessarily shields an agent from the consumer protections contained in SB 1184, since the agent remains in a position to benefit financially from the sale of insurance products related to qualifying an elder for the Aid and Attendance benefit.
Evans Law Firm, Inc. represents victims of financial elder abuse in California, including elder victims of veterans’ pension scams and inappropriate annuities sales. If you believe that you or a loved one has been the victim of elder financial abuse, contact Evans Law Firm, Inc. in California at 415-441-8669 for a free and confidential consultation, or email firstname.lastname@example.org.