By hiding hundreds of thousands of dollars in assets, some veterans are able to exploit a program meant to help low-income wartime vets with cash assistance. And hundreds of companies, some of whom may have predatory practices, are charging hefty fees to steer veterans through this loophole.

These are the findings of a year-long investigation by the U.S. Government Accountability Office of a needs-based pension administered by the Department of Veterans Affairs.

The GAO noted multiple instances of attorneys and financial planners helping veterans move assets into trusts controlled by family members or annuities. One veteran qualified for benefits just three weeks after transferring more than $1 million elsewhere.

The program pays between $8,219 and $24,239 annually, tax-free.

The amount is based on number of dependents and medical need.

Veterans at the Dayton VFW on Wilmington Pike interviewed Thursday were troubled that people who wouldn’t otherwise be eligible find loopholes to get into the program, especially as benefits for veterans face increasing budget pressures in Washington.

“That’s a shame, because that’s not what the program is for,” said Bob Dawes, 62, a 24-year Army veteran who lives in Huber Heights. “The bottom line is, they’re stealing from veterans.”

“Anybody that’s got all that money doesn’t deserve a pension,” agreed Carl Hunt, an 85-year-old World War II veteran.

As part of the investigation, undercover GAO investigators posed as sons or daughters of an elderly veteran looking for advice on how to get around pension eligibility requirements.

“I will just tell you this,” one financial planner told an investigator, according to a report released this week, “the VA allows you to qualify, regardless of what your assets are. And I’ve had people with over a million dollars qualify for the benefit.”

William Wood, a Washington Twp. financial planner who advises veterans on their estates, said these pensions are lesser-known benefits that are becoming increasingly popular. He said that financial planners described in the report are largely just looking out for their clients’ interests, and that the VA should do a better job at policing its program.

“What’s being done is not illegal and not unethical — it’s simply using tools at the attorneys’ disposal to create the opportunity for the veterans to take advantage of this benefit,” Wood said. “Is it taking advantage of this loophole? Probably so.”

‘Look-back’ policy

This financial strategy is not illegal, but it is inconsistent with other federal programs. For example, Medicaid disqualifies people seeking benefits for up to 36 months if they transfer any assets for less than fair market value for five years prior to applying.

The GAO recommends Congress establish a “look-back” policy to review tax and other financial information to see if applying veterans made financial moves to reduce assets just before applying for benefits. This is done in other need-based programs, such as Medicaid.

“Ultimately in this era of constrained financial resources, VA has a responsibility to manage limited funds wisely, and help ensure continued public support for this important program,” the report states.

U.S. Rep. Mike Turner, R-Dayton, said the government needs to take steps to reduce waste, fraud and abuse.

“Our veterans have served our country honorably, and we must ensure that support goes to those who are qualified and the most in need. I support efforts for greater screening and accountability, especially when we look to how taxpayers’ hard-earned dollars are spent,” Turner said.

U.S. Rep. Steve Austria, R-Beavercreek, agreed.

“Reports show that as much as $400 billion of taxpayer dollars are lost each year because of waste, fraud and abuse in federal programs, and it is time for Washington to get serious about cracking down on those intentionally committing fraud and abuse,” Austria said.

Advice harms some vets

GAO investigators found that companies charge fees ranging from a few hundred dollars for benefits counseling to $10,000 for establishment of a trust. The agency expressed concerns that some financial planners were advising clients to make changes that aren’t in their best interest, such as transferring money into a deferred annuity in which the veterans may not have access to money needed to pay for medical bills before they die.

Veterans should contact their local county veterans service office to determine their eligibility before talking to a financial planner, advises Herbert Davis, executive director of the Montgomery County Veterans Service Commission. There might be another program they qualify for, regardless of assets, he said.

“What we see is people have gone to financial planners, things go south and then they come here,” he said. “The financial planner has a vested interest to sell a product.”

In fiscal 2011, the VA provided about $4.3 billion in overall pension benefits for about 517,000 recipients. In Ohio, just fewer than 16,000 got about $170 million in pension benefits, according to the Ohio Department of Veterans Services.

To qualify, applicants must be over 65 or be disabled, must have served during wartime and must fall under an income threshold. The income cutoff to qualify for the maximum benefit is $20,447 for a veteran with no dependants or $13,138 for a surviving spouse.

Applicants generally cannot have assets of more than $80,000, not including their home or car. The VA’s policy manual specifically states that the pension program is not intended to protect substantial assets or preserve an estate for a beneficiary’s heirs.

Pension underused

Ted Gudorf of the Dayton-based firm Gudorf Law Group helps veterans with benefits and estate planning. He said the pension program is underused because many eligible people are unaware of it.

He said his business operates within the rules and for the benefits of clients: “Within the legal community, we call that veterans benefit planning.”

“In a free society, the government adopts the rules and regulations and individuals are free to arrange their financial affairs to, one, pay the least amount of taxes and, two, obtain the maximum government benefits as long as they follow the rules and regulations,” Gudorf said.

He said the effect of the proposed change would be forcing people to plan their benefits a few years in advance or forcing them to deplete their finances before getting help they need. He suggests veterans begin their estate planning early, in light of such potential rule changes.

“What does this country owe a veteran? Does he have to become impoverished before we help him with his long-term care needs?” Gudorf said.