With every slip and fall, every bruise and ache, the reality set in: Henry Schaffer, 86, could no longer live on his own. So his daughter, Kristi, began searching for a retirement home — and the money to pay for it.
At Aspen View, a senior citizen living complex in Billings, Mont., a lawyer accredited by the Department of Veterans Affairs delivered what seemed like good news: Schaffer, a World War II veteran, could probably qualify for a generous VA benefit. For a few thousand dollars, the man would help veterans like Schaffer get one.
“My dad kept on asking me, 'Don't you think this is too good to be true?' ” Kristi Schaffer recalled. To assure him, she pointed to the lawyer's VA credentials.
It was only after Schaffer had moved in that they learned the truth: He did not qualify at all. Kristi Schaffer says her father now worries that he will be evicted. He can afford only about half his monthly bill.
The benefit, known as the Veterans Pension program, can be worth more than $20,000 a year to war veterans who are disabled or over 65. But it is open only to those with an annual income of less than $12,465 for a veteran with no dependents — and Schaffer collects more than that in Social Security. More money is available for veterans who are unable to cook or bathe on their own, but Schaffer, while he needs some help, didn't qualify for that, either.
As baby boomers head toward retirement — worrying about not only their financial future but also their parents' — a cottage industry has sprung up around the pension program. Lawyers, financial advisers and insurance brokers have formed a lucrative alliance with retirement communities and assisted-living facilities to extract many billions of taxpayer dollars from the VA, according to interviews with state and federal authorities, as well as a review by the New York Times of hundreds of legal documents and contracts with clients.
Questionable actors are capitalizing on loose oversight to unlock the VA money and enrich themselves, sometimes at veterans' expense. The VA accreditation process is so lax that applicants provide their own background information, including any criminal records.
But the VA has only four full-time employees evaluating the approximately 5,000 applications that it receives annually. Once people get the VA's stamp of approval, they rarely lose it, even if a customer complaint or regulatory actions mount. Last year, the VA revoked its accreditation for two of its more than 20,000 advisers.
Some advisers sell financial products like annuities and trusts that are meant to mask veterans' assets or income — arrangements can tie up family money for years or decades. Others circumvent VA rules and charge hundreds or even thousands of dollars for advice that may — or may not — help veterans qualify. Still others offer to train lawyers and advisers about the workings of the VA.
The development recalls the array of questionable business practices involving senior citizens and Medicaid. Indeed, many firms that zeroed in on those programs in the past have recast themselves as VA specialists. More than 200 firms nationwide now focus on VA retirement benefits, according to the Government Accountability Office.
The VA accreditation allows someone to prepare benefits applications on veterans' behalf. In theory, federal rules ban the advisers from charging for that service. In practice, elder-care lawyers say, many get around the rules, win veterans' trust and then pitch costly products and services.
“The agency needs to take a closer look at who they are accrediting,” said Daniel Bertoni, the director of disability issues at the Government Accountability Office, which issued a critical report on the VA program in August. “It gives the air of a stamp of approval from the agency that has been paying their checks for many years.”
Randal Noller, a VA spokesman, said the agency plans to review advisers' training materials and perform more robust background checks “as necessary.”
“We realize there are some areas in the program that we could improve to ensure that individuals who obtain and maintain VA accreditation are qualified,” Noller said.
And based on the GAO's recommendations, the VA, Noller said, has already begun enacting fixes. Among them, the VA will more robustly verify senior citizens' financial information and change applications to spot veterans who have disguised their assets in order to qualify.
For the advisers and retirement homes, the attractions are clear. The VA says the program paid $5.1 billion to 514,000 veterans or their survivors this year, up from $3.4 billion in 2007. The number of veterans or their spouses receiving the aid and attendant benefits, the stipend for assisted living, has surged by 30 percent — growing to 206,000 in 2012 from 158,000 in 2006.
Holding out the prospect of the VA benefit can mean the difference between a vacancy and a paying customer — an advantage that VA specialists trumpet in advertisements. “Recession proof your law practice,” Academy of VA Pension Planners, of Roswell, Ga., says on its website.
Yet some warn that the VA program, which is meant to help the poorest veterans, will be strained as a growing number of senior citizens are steered toward it.
Without changes, the program is a “magnet for rip-offs and waste,” Sen. Ron Wyden, D-Ore., said during a hearing convened last year by the Senate's Special Committee on Aging.
The goal is often to coax senior citizens like Schaffer into paying for services or investments and, in the process, signing contracts that lock them into long-term living arrangements, according to elder-care lawyers and interviews with more than three dozen veterans. The veterans spoke on the condition that they not be identified because they did not want their financial problems made public.
While many veterans — technically eligible or not — secure the benefit, others do not. And if a benefit fails to materialize, the financial consequences can be catastrophic.
“When I die, I am going to be buried as a pauper,” said Harvey Schneider, 78.
Schneider, a Korean War veteran, said he moved to Windlands South, a senior complex in Nashville, Tenn., after being told that he would qualify for the VA benefit. He did not, and he now owes more than $17,000 to Holiday Retirement, the national chain that operates Windlands South and 300 other complexes around the country, including Aspen View.
Schneider has since moved out of Windlands South. He is living alone in a small apartment.
“They did me wrong,” he said, “after everything I tried to do for my country.”