Too easy for ineligible vets to claim needs-based pension, GAO finds

Even millionaires might think they qualify for a needs-based pension from the Veterans Affairs Department, according to a new Government Accountability Office report that recommends the agency tighten up the rules to keep out ineligible vets and their families.

The Senate committee on Veterans Affairs asked GAO to look into measures the VA pension program takes to ensure only qualified veterans and their survivors receive the benefits. The watchdog said VA’s current protections are “inadequate.”

The audited program provides special benefits to veterans in times of financial need. To be eligible, a veteran must be age 65 or older, or permanently disabled. Beneficiaries may use the assistance for disabilities unrelated to their military services and for spouses and dependents. Claimants, however, must meet certain income and asset requirements: In 2012, a veteran with no dependents can earn no more than $20,447 to qualify for the program.

The special benefits program is vulnerable to misuse, though. Many organizations market financial products and services to veterans to help them claim the benefits, even if their assets exceed the pension program’s eligibility requirements, GAO wrote. The watchdog found some financial services groups that advised “pension claimants with substantial assets, including millionaires” on applying for the needs-based program.

GAO examined more than 200 organizations that market financial and estate planning to pension claimants, and contacted 19 of them by posing as a veteran’s son seeking information on the services. All 19 said a claimant can qualify for pension benefits by transferring assets before applying for the benefits program. This practice may, in fact, be permitted, but “guidance on when assets should be included as part of a claimant’s net worth is unclear,” GAO wrote.

Unlike Medicaid, where administrators conduct reviews to determine whether a claimant has improperly transferred assets, VA does not prohibit individuals from transfers before applying for benefits. “Despite being means tested, the program currently permits VA pension claimants to transfer assets and reduce their net worth prior to applying for benefits,” the watchdog wrote, recommending that Congress establish at VA a system similar to Medicaid’s, where such transfers are prohibited.

Veterans Affairs also does not verify the information it does request, or require documents such as bank statements or tax records. Further, claims processors must use their own discretion when assessing eligibility for benefits, “which can lead to inconsistent decisions,” GAO said.

VA should request more information on asset transfer on its application forms, verify financial information during the initial claims process, strengthen coordination with its fiduciary program and provide clear guidance to claims processors in charge of assessing a claimant’s eligibility, GAO advised.

The department concurred with the recommendations, but had minor concerns that an extensive process of verifying reported financial information could place too much burden on its claimants.