WASHINGTON - Sens. Ron Wyden, D-Ore., and Richard Burr, R-N.C., said Wednesday they have introduced bipartisan legislation aimed at ending abuses of a low-income veterans' pension program.
The Veterans Pension Protection Act seeks to combat a growing niche industry that profits by preying on elderly veterans.
So-called "pension poachers" are convincing veterans with substantial assets to hide those assets in trusts and annuity products in an effort to qualify for the maximum allowable needs-based Veterans Administration (VA) pension.
In order to ensure that only applicants in need receive the Aid and Attendance veterans pensions, the bill would establish a three-year "look back" period for individuals applying for benefits.
"Pension poachers are using a low-income veterans' benefit as a lure to prey on veterans and their lifetime savings," Wyden said. "These needed reforms will strengthen the program for veterans who need the benefit, and help protect veterans who do not."
"After all that our veterans and their families have sacrificed, we must do everything we can to protect the VA pension program, which helps ensure that veterans who honorably served our country in a time of war will never live in poverty," Burr said. "By strengthening the pension program and implementing protections to discourage abuse, we can safeguard its benefits so they will be there for those who genuinely need them and help discourage companies from preying on elderly veterans who do not."
Wyden and Burr, ranking member of the Senate Veterans' Affairs Committee, introduced similar legislation last year after working with the Government Accountability Office (GAO) to shed light on the growing industry aimed at convincing veterans to manipulate assets in order to appear for tax-free, needs-based pensions, which can pay more than $20,000 a year. The issue was also the subject of a Senate Special Committee on Aging hearing last June.
During the undercover investigation, GAO identified more than 200 organizations across the country that market financial and estate planning services to help potential pension claimants with excess assets qualify for pension benefits. The full GAO report can be found here.
The GAO investigation also revealed that some of these organizations were overcharging veterans for services — up to $10,000 — or profiting by selling potentially harmful financial products such as trusts or deferred annuities. Trusts can severely limited access to savings and deferred annuities may leave seniors without access to all their funds within their expected lifetime without facing high withdrawal fees. The GAO also recorded two organization representatives who said they helped pension claimants with substantial assets, including millionaires, obtain VA's approval for benefits.
In its findings, GAO recommended establishing a three-year look back period for applicants, and the VA concurred.
The bill is being co-sponsored by Senators Jon Tester, D-Mont., Dean Heller, R-Nev., Richard Blumenthal, D-Conn., and Claire McCaskill, D-Mo.