Insurance Companies are Taking Action

PRLog (Press Release) - Sep. 2, 2011 - The American Equity Investment Life Insurance Company, http://www.american-equity.com/, based in Des Moines, Iowa, recently made an announcement regarding its acceptance of annuity new business in relation to Veterans Administration Benefits planning.

With more insurance agents and financial advisors expanding their practices to include Veterans Aid & Attendance benefits planning, I have seen countless self-dubbed "VA Planning Specialists" offering their services to elder law attorneys.  The "Specialist" will usually promote the availability of the Aid & Attendance benefits by having the claimant make direct gifts to their children.  The children are then advised to purchase annuity products, many with inappropriate features - no liquidity and high surrender charges, earning the "Specialist" high commissions.  The "Specialist's" plan works very well, assuming the claimant does not need Medicaid benefits for at least 60 months.  With Medicaid having a 60-month look-back on all gifts - penalizing such transfers, the claimant who needs to prematurely transfer into a Medicaid planning situation will be ineligible for Medicaid benefits, and is not likely to have the ability to privately pay the nursing home.

In light of the above, the recent American Equity memo states that "effective immediately, American Equity will no longer accept business that uses Veterans Administration Benefits as a prospecting strategy or that is attempting to qualify individuals for VA benefits."

Furthermore, the memo continues to outline that the use of VA Benefits as a prospecting tool may be viewed as an unauthorized practice of law, and any advice given should only be provided by qualified advisors.  American Equity ended the memo and drove the point home with the following statement:

"There is potential for these programs to not provide adequate disclosure to prospects.  Without proper advice, there is the possibility of adverse tax consequences and situations that could affect future Medicaid eligibility or qualification for other benefits."

I have always stressed the importance of seeking insurance products used in Aid & Attendance benefits planning from a source that understands both programs.  It is outstanding that insurance companies are now enforcing the same.

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Krause Financial Services specializes in helping families qualify for Medicaid benefits through the use of Medicaid Compliant Annuities, and Veterans Aid & Attendance benefits through the use of various life and annuity insurance products.