Consumer Notice to Veterans: Beware of Annuity Schemes for VA Benefits

By Robert C. Anderson, CELA, CAP  and Christopher Berry, CELA

This is to warn veterans of annuity sales schemes for VA Aid and Attendance benefits.

In a typical sales pitch, insurance agents who are not accredited by the U.S. Department of Veterans Affairs tell veterans buy annuities so they can meet the VA's asset limit for aid and attendance benefits, which can pay a married veteran up to $2,019 per month or a single veteran up to $1,700 per month to help with home care or assisted living costs. These non-service connected  benefits require wartime service and other eligibility rules. The surviving spouses of deceased wartime veterans may also receive up to $1,094 per month under the VA rules.

The most common scheme is for a veteran to cash in his or her investments into immediate annuities which pay monthly income. Other veterans are persuaded by unaccredited insurance agents to transfer their life's savings to a child who, at the agent's urging, will buy a deferred annuity in the child's name. In either case, the annuity will tie up the veteran's funds for years, depriving the veteran of access to his/her funds when the funds may be needed.

The insurance agents neglect to mention that such an annuity purchase may result in violation of the VA's income test under the aid and attendance rules. Moreover, the annuity may later result in Medicaid disqualification if the veteran needs nursing home care.

Common tactics by these insurance agents are to conduct veteran benefits speeches at senior citizens centers or assisted living facilities or offer free lunch or dinner seminars at motels or restaurants. The insurance agents then follow-up with annuity pitches at the veteran's home.

These annuity sales may violate the rules of federal and state agencies. For example, under VA rules, only accredited attorneys and service officers may help veterans apply for VA benefits, at no cost. Insurance agents violate this rule when they provide advice on VA Aid and Attendance in connection with filing a claim. Such annuities sales may violate the Federal Trade Commission's prohibition against unfair trade practices. If the annuity is a variable one, the consumer protection rules of the FINRA may be in play. Such annuities may violate the suitability rules of state insurance commissioners. Also, when the annuity advice by these agents involves legal advice, the advice may constitute an impermissible unauthorized practice of law.

About the Authors
Robert C. Anderson, CELA, CAP, is a Certified Elder Law Attorney and a member of the National Academy of Elder Law Attorneys (NAELA) Board of Directors. He is also a member of NAELA’s Council of Advanced Practitioners. Christopher Berry, CELA, is a Certified Elder Law Attorney and a member of the National Academy of Elder Law Attorneys.

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