Watch Out for VA Pension Benefit Scams
Learn how to spot common pension benefit scams and protect your pension from shady professionals who claim they are “helping” you.
War-time veterans and their survivors who are in financial need may qualify for Veterans’ Affairs pension benefits. While these funds are intended for those who have sacrificed for our country, sadly, there are scammers who see a pot of money and devise ways to “help” that in reality will cost you more money.
These offers may sound like a good deal but they rarely are. Their pitches are often based on half-truths, so they sound realistic – but they don’t tell you the whole story and they don’t warn you about long-term consequences.
The Federal Trade Commission warns veterans that many of these scammers are attorneys or insurance agents who hold seminars that appear legitimate. Sometimes these seminars are held in assisted living facilities, or advertised in the newspaper.
They will make claims like:
“We’ll show you – for free – how to qualify for your benefits and stay in your home.”
“We guarantee you’ll get your Aid and Attendance pension.”
Their guarantees can sound reassuring, but if they’re charging you money, there’s something in it for them. Be sure to know what you’re qualified for, and you shouldn’t have to give up any of your money to apply and receive a pension that you’ve earned with your service.
Know what you’re eligible for
The first step is to know what you’re eligible for. Veterans over 65 who have low income may qualify for pension benefits, for themselves or their survivors. Additional benefits may be paid for vets or surviving spouses who require daily assistance, or who are housebound. Veterans’ who have a service-connected disability may qualify for veterans’ disability benefits.
You can apply for pension benefits online with the VA’s online benefits portal or contact your VA Regional Office. There is no application fee and no charge for the forms. To learn more about veterans’ disability benefits, see our other articles on this website. All of these resources are free.
There is no fee to apply for your benefits, and in fact there is a law prohibiting any agent or attorney from charging you to file an application for benefits. There are two important distinctions: First, an attorney can charge a fee to advise you about which benefits you’re eligible for, but once you decide to file, they can’t bill you any further during the initial filing process. Second, an attorney can charge fees to help you appeal if your claim has been denied.
Any professional who helps you with your claim must be accredited by the VA. You can look online at the VA website to see if someone is accredited. The VA accredits three types of professionals to help you complete and file pension claims, so be sure you’re talking to one of these:
- Representatives from VA-recognized Veterans Service Organizations
- Independent claims agents
- Private attorneys
Beware of offers to “help” you qualify for benefits by moving around your assets. While anyone would want to maximize their chances to qualify, within legal limits, these offers can contain several traps. First, you may not actually qualify and may later be required to repay the benefits paid. Second, in shifting assets around to qualify for veterans’ pension you might then be ineligible for Medicaid benefits.
These scammers often try to convince you they can “help” you qualify for supplemental Aid and Attendance benefits by transferring your assets to a trust. All of these “deals” contain the same unintended adverse effects for you; meanwhile the scammers gouge you with fees. Experts advise that you be fully informed of the long-term consequences of any offer and consult a trusted VA accredited financial adviser before agreeing to anything,
After you qualify for benefits
Once you qualify to receive benefit payments, the Consumer Financial Protection Bureau (CFPB) also warns veterans to be weary of any professional who tries to market financial products around your pension benefits, like trusts or annuities. Annuities for older veterans can create problems, such as tying up your funds and leaving you without access if you need without having to pay a high penalty.
Another scam is to offer you a lump sum payment now in exchange for your future monthly disability or pension benefits. Assigning your benefits is prohibited by law, but scammers find ways to structure the swap to make it look legal. Even if they come up with a legal scheme, a swap will generally not be a good deal. The CFPB offers this scenario to consider: Say you receive $2744 in monthly benefits, and a company offers you a $73,000 lump sum payment now in in exchange for your future benefits for 10 years. At the end of 10 years, those benefits added up to a staggering $256,293, which is a 45% interest rate.
Typically these schemes are sold on a promise to benefit you, but in all cases, you will probably end up with less than you would have. The CFPB recommends that if you need emergency funds talk to a trusted financial expert who can give you objective advice.