The Federal Trade Commission (FTC) warns veterans about “dishonest advisers who are claiming to offer free help with paperwork for pension claims...[and try to] persuade veterans over 65 to make decisions about their pensions without giving them the whole truth about the long-term consequences.”
Specifically, these brokers—often an attorney, financial planner or insurance agent—try to convince veterans (or their surviving spouses) to transfer their assets to a trust or to invest in insurance products so they can qualify for pension benefits. While this is perfectly legal, what they don’t reveal is that these transactions could mean that the veteran loses eligibility for Medicaid services or commits to inappropriate or unwise investments.
Transferring assets. Under current rules, it is not illegal to shift your assets to family members or to a trust to make you appear needy and qualify for Aid & Attendance benefits [A&A benefits]. But transferring assets can have serious consequences: it can disqualify you for A&A benefits rather than qualify you. If disqualified, you would be required to return any A&A benefits already paid to you. 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.
Annuities. If you buy an annuity, you pay a premium and then you get regular payments over time from an insurance company. People often use annuities to provide a steady stream of income. But depending on the annuity, if you need money early and have to withdraw it, you may have to pay very high fees and again, if you apply for Medicaid, the annuity they sold you won’t qualify. Medicaid accepts only 1 type of annuity, written with very strict guidelines. This type of annuity is only purchased when Medicaid benefits are needed and applied for. Without these stipulations written into the annuity, Medicaid won’t accept it and you will be facing penalties and denials from Medicaid benefits. Annuities aren’t right for everyone: their suitability depends on your age, needs, and particular situation.
However, there are many knowledgeable and trustworthy advisers to guide you in asset preservation and transfer strategies. Because the issue of veterans’ pensions is confusing and fraught with possibly serious mistakes, the best advice is to seek out the guidance of a professional who not only works with the Department of Veterans Affairs (VA) programs but also is knowledgeable regarding Medicaid regulations in your state. In fact, as of 2008, a federal rule requires that anyone who assists a veteran or family member with the preparation, presentation and prosecution of a claim for benefits, needs to be accredited by and through the Department of Veterans Affairs (VA) before they can legally provide assistance.
Be cautious of who you meet with to assist you with your VA benefits, be sure they have your best interest at heart and will discuss what circumstances may be in your future that you'll need to plan for along with your VA benefits .
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