National Association of County
Veterans Service Officers
David R. McLenachen
Pension and Fiduciary Service
June 11, 2014
Pension and Fiduciary Service Overview
• Pension and Fiduciary (P&F) Service administers VA’s
o Needs-based pension program for wartime Veterans and their
survivors
o Dependency and indemnity compensation (DIC) program for
Veterans who die as a result of service-connected disabilities
o Monetary burial benefits program for Veterans
o Fiduciary program, which appoints and oversees fiduciaries for
beneficiaries who are unable to manage their financial affairs
• Addresses the unique needs of VA’s most vulnerable beneficiaries
o Recipients of needs-based benefits
o Survivors
o Beneficiaries who are unable to manage their VA benefits
2
P&F Service Overview
• Responsibilities include
o Developing policy and procedures, and implementing any changes in
regulations and manuals
o Developing legislative proposals, addressing congressional inquiries,
and providing technical assistance on legislation
o Establishing and maintaining program integrity measures
o Conducting national accuracy reviews
o Developing and facilitating training for field personnel
o Developing and coordinating business requirements related to VA
computer systems and software applications
• Does not include supervision of personnel in VBA’s Pension
Management Centers (PMC) or Fiduciary Hubs
3
P&F Service Overview
• 3 PMCs
• 6 Fiduciary Hubs and the Manila RO fiduciary activity
• In fiscal year (FY) 2013, VA provided
o Pension and DIC benefits totally more than $10.9 billion for over
872,000 Veterans and survivors
o Burial benefits of over $102 million
o Oversight of more than 120,000 fiduciaries that received $2.6 billion
in VA benefits for over 147,000 beneficiaries
4
PMC Jurisdiction
5
Fiduciary Hub Jurisdiction
Alaska
Hawaii
San Juan
Manila
Salt Lake City
Salt Lake City Los Angeles
Albuquerque Oakland
Anchorage
Phoenix
Boise
Portland
Cheyenne
Reno
Denver
San
Diego
Ft. Harrison
Seattle
Lincoln
Milwaukee
Columbia
Louisville
Lincoln
Fargo
Houston
Milwaukee
Chicago
St. Paul
New Orleans
Des Moines
St. Louis
Little Rock
Columbia
Atlanta
St. Petersburg
Winston-Salem
Louisville
Huntington
Jackson
Montgomery
Nashville
Roanoke
San Juan
Muskogee
Sioux Falls
Waco
Indianapolis
Indianapolis
Baltimore
Boston
Buffalo
Cleveland
Detroit
Hartford
Manchester
New York
Newark
Philadelphia
Pittsburgh
Providence
Togus
White River Jct.
Wilmington
6
PENSION
7
Pension
Veterans Pension is a needs-based benefit paid to wartime
Veterans, who meet certain age or non-service-connected
disability requirements
Eligibility
•
•
•
•
Discharged from service under other than dishonorable conditions,
AND
Served 90 days or more of active duty with at least 1 day during a
period of war time,* AND
Meets income and net worth requirement, AND
Is age 65 or older, OR, has a permanent and total non-serviceconnected disability, OR, is a patient in a nursing home, OR,
receives Social Security disability benefits
* Veterans who entered active duty after September 7, 1980, must also serve
at least 24 months of active duty service. If the total length of service is less
than 24 months, the Veteran must have completed his or her entire tour of
active duty
8
Pension
•
Periods of War
World War II
12/07/1941 to
12/31/1946
Korea
Vietnam
Gulf War
06/27/1950 to
01/31/1955
08/05/1964 to
05/07/1975
*Between 02/28/1961
to 08/04/1964 had to
have served in
country Vietnam
08/02/1990 to
present
• Income Threshold Requirement
o VA does not count all forms of income, however it is best to report all
o Certain expenses may reduce countable income
• Net Worth Requirement
o VA considers whether a claimant’s net worth can be reasonably used
for his or her maintenance
9
Pension
Survivors pension is a needs-based benefit paid to surviving
spouses and children of wartime Veterans, who meet certain
age, disability, and marriage requirements.
Eligibility
•
•
•
•
•
The deceased Veteran was discharged from service under other
than dishonorable conditions, AND
He or she served 90 days or more of active duty with at least 1 day
during a period of war time, AND
The survivor meets income and net worth requirements, AND
Is the Veteran’s unmarried surviving spouse OR
The Veteran’s unmarried child, who is under 18, who became
permanently helpless before 18, or is between 18 and 23 and
pursuing a course of instruction at an approved educational
institution
10
Pension
Special Monthly Pension
• Additional pension for claimants who are housebound or in need of aid and
•
•
•
attendance (A&A)
The Veteran or surviving spouse must meet basic eligibility requirements for
pension
Claimants may not receive both pension at the Housebound and A&A rate
at the same time
Claimant who is not entitled to basic pension due to excessive income may
still be entitled to pension benefits based on the higher income limits for
special monthly pension
11
Pension
A&A Requirements (any of the following)
• Requires assistance of another person to perform activities of daily living
•
•
•
(bathing, feeding, dressing, etc.)
A patient in a nursing home
Bedridden
Blind
Housebound Requirements
•
Claimant is substantially confined to his or her immediate premises due to
disability
Statutory Housebound Requirements (Veterans Only)
•
Single permanent disability rated 100% and a separate disability rated at 60%
or higher
12
Pension
How Much Does VA Pay?
•
VA calculates annual pension by first determining the Maximum
Annual Pension Rate (MAPR), an amount set by Congress. For
example, if a Veteran has no dependents, the MAPR is $12,652.
•
Next, VA determines countable income. VA subtracts income
exclusions provided by law from the Veteran’s total 12-month
income.
•
VA subtracts the Veteran’s countable income from the MAPR; the
difference is the Veteran’s annual pension entitlement. VA divides
this amount by 12 and rounds down to the nearest dollar, this is the
amount of the Veteran’s monthly pension payment.
13
Veterans Pension Rate Table
MAPR Category
Amount
Veteran Only
$12,652
Veteran with One Dependent
(Dependent = Spouse or Child)
$16,569
Housebound without Dependents
$15,462
Housebound with One Dependent
$19,380
A&A without Dependents
$21,107
A&A with One Dependent
$25,022
Two Veterans Married to Each Other
$16,569
NOTE: Medical expenses must exceed 5% of MAPR to be deducted
14
Survivors Pension Rate Table
MAPR Category
Amount
Surviving Spouse
$8,485
Housebound without Dependents
$10,371
Housebound with one Dependent
(Dependent = Child)
$12,988
A&A without Dependents
$14,113
A&A with one Dependent
$16,671
Surviving Child
$2,161
NOTE: Medical expenses must exceed 5% of MAPR to be deducted
15
Pension
Exclusions from Income
•
VA deducts certain expenses that the claimant paid, e.g., unreimbursed
medical expenses, from the claimant’s annual household income,
which will decrease countable income and increase his or her monthly
pension payment.
•
A complete list of these exclusions is provided in 38 C.F.R. § 3.272.
These regulations are available at the Government Printing Office
website:
http://www.gpo.gov/fdsys/pkg/CFR-2011-title38-vol1/pdf/CFR-2011title38-vol1-sec3-460.pdf.
16
Pension
Improved service to pension claimants
•
Since June 2011, VA has reduced
o Veterans pension inventory by 66% and backlog by 95%
o Survivors pension inventory by 55% and backlog by 70%
Beneficiary Profile
•
Average age of beneficiaries
o Over 42% of Veterans pension beneficiaries are over age 75
o Over 75% of survivors pension beneficiaries are over age 75
•
Average annual benefits paid
o Veterans pension = $11,639
o Survivors pension = $7,680
•
More than 50% of the beneficiaries in the fiduciary program
receive pension
17
DEPENDENCY AND
INDEMNITY COMPENSATION
18
DIC Eligibility
DIC is a monthly benefit paid to eligible survivors of a
•
•
Military service member who died while on active duty, active duty for
training, or inactive duty for training, or
A Veteran whose death resulted from
o A service-connected injury or disease, or
o An injury, heart attack, cardiac arrest, or stroke incurred on aggravated in the
line of duty while on inactive duty for training
19
Section 1318 DIC
DIC under 38 U.S.C. § 1318 is a monthly benefit paid to eligible
survivors of a Veteran whose death resulted from a non-serviceconnected injury or disease, and who was receiving, or was entitled to
receive, VA compensation for a total disability for at least:
•
•
•
10 years immediately before death, OR
5 years from the date of discharge from military service, OR
1 year immediately preceding death if the veteran was a former prisoner of
war
20
DIC
Improved service to DIC claimants
•
Since November 2012, VA has
o Reduced DIC claims inventory by 54% and backlog by 87%
o Improved DIC timeliness by 55 days and maintained 98% accuracy
Beneficiary Profile
•
Average age of beneficiaries
o Over 42% of DIC beneficiaries are age 55 or older
•
Average annual benefits paid
o DIC recipient = $16,280
21
BURIAL BENEFITS
22
Burial Benefits
• Three types of one-time payments: burial and funeral
allowance, plot or interment allowance, and transportation
allowance
• Service-Connected Death
o Up to $2,000 toward burial and funeral expenses
o Cost of transportation to nearest national cemetery
• Non Service-Connected Death
o Up to $300 for burial and funeral expenses plus transportation
cost, up to $722 for a plot allowance
o Death in VA Facility - Up to $722 for burial and funeral expenses
plus transportation costs and up to $722 for plot allowance
o VA pays $722 plot allowance to State cemeteries
23
PENSION, DIC, AND BURIAL
TRANSFORMATION
24
Initiatives
Pension Program Reform
•
•
•
January 2012 – P&F Service developed a long-term plan for pension
program reform
Step 1 - Upfront verification of pension applicant’s income and asset
transfers using IRS and SSA records (ongoing)
Step 2 - Proposed pension regulations (on going)
o Address pre-filing asset transfers
o Bright-line rules that support further automation
o New forms
•
Step 3 – VBMS for pension
o Establish pension eFolder
o Develop data feed for IRS/SSA income information
•
Step 4 – Fully automate pension
o Legislative proposals and regulation amendments to further simplify the
program
o Rules-based processing in VBMS
25
Initiatives
Up-Front Income Verification
•
•
VBA has partnered with IRS and SSA to expand data sharing to improve
efficiencies and reduce improper payments
Allows VA to verify an applicant's income at the start of the process
o Deters program abuse
o Reduces VA reliance on self-reported data
o Preserves pension program for Veterans and survivors with genuine need
•
As a result of the IRS-SSA partnership, VBA
o
o
o
o
•
Eliminated the annual eligibility verification report requirement for pension
Redirected (seasonally) up to 100 FTE to address other claims
Eliminated IVM and transitioned to smarter post-award audit system
From “pay and chase” to “verify and pay”
Will it take longer to decide pension claims?
o In some cases, but only for applicant's who under-report income
o Saves VA resources formerly allocated to benefit adjustments
26
Initiatives
Automate processing of burial claims
•
Final rule amending burial regulations to simplify the program, facilitate
automation of certain burial claims and payments, and improve overall
efficiency and service delivery
o Final rule publication date: June 6, 2014 (79 Fed. Reg. 32,653)
o Final rule effective date: July 7, 2014 (automation begins)
•
Rules-based processing system
o Pays the maximum benefit amount authorized by Congress ($2,000 or $300)
o Discontinues inefficient reimbursement-based process (claimants do not have to
submit receipts)
o Presumes (for burial only) that a Veteran’s death is service-connected if the
Veteran died with a total service-connected disability rating
o Use month of death system to pay surviving spouses
•
•
Automate approximately 62,000 of 140,000 burial claims received annually
No application for eligible spouses
27
Initiatives
Automate processing of DIC Payments
•
Rules-based processing system
•
Limited to 1318 DIC beneficiaries - Surviving spouses of Veterans
who were rated 100% disabled for a specific time prior to death
•
No application for eligible spouses - Uses information in VA
systems on the date of the Veteran’s death
•
Use month of death system to initiate payment to the surviving
spouse
•
Go-live date: July 7, 2014
28
Initiatives
The Fully Developed Claims (FDC) program offers Veterans and
survivors faster decisions on benefit claims
•
•
•
•
•
Veterans and survivors simply submit all relevant records in their
possession and those records which are easily obtainable, such as
private medical records, at the time they file their claim
The claimant then certifies that he or she has no further evidence to
submit
By providing all the evidence upfront, VA can issue a decision
faster
NACVSO has the highest percentage of FDC submissions (37.7%)
of any National Veterans Service Organization (claims with
NACVSO as POA)
Additional information is available online at:
http://www.benefits.va.gov/fdc/
29
Initiatives
National Training Curriculum for PMC Personnel
•
All PMC claims processors must complete 85 hours of annual
training
o Initiated in 2012, revised annually based on identified training needs
o Provides a standardized training curriculum by duty position
o Empowers employees by providing them with the skills and training
necessary to successfully and confidently complete their jobs
o Supports VA goal of 98% quality
•
As of June 2014, accuracy rate for
o Pension entitlement is 98.9%
o Pension maintenance is 98.4%
30
Initiatives
Improved outreach products
•
YouTube video
•
•
•
Fact Sheets
•
•
•
Provides a general overview of the pension program, information on
special monthly pension, and “pension poachers”
Available online at https://www.youtube.com/watch?v=3_U_Ki-QwB0
Provides specific information on VA benefit programs
Available online at http://www.benefits.va.gov/benefits/factsheets.asp
“Pension Poacher” postcard
•
•
•
Outreach material for Veterans Service Organizations
Provides information on organizations that offer assistances to
Veterans and survivors with claims for pension benefits
Available online at
http://benefits.va.gov/PENSION/PensionPoachingPostcard.pdf
31
Public Law 112-154
On August 6, 2012, the President signed the “Honoring
America’s Veterans and Caring for Camp Lejeune Families Act
of 2012” (Public Law 112-154)
•
Section 501 establishes a waiver of agency of original jurisdiction
(AOJ) review for evidence submitted by the appellant or the
appellant’s representative with or after a substantive appeal (VA
Form 9)
o
o
o
o
o
•
Enhances efficiency in the appeals process
Avoids time-consuming remand process
“One review on appeal” no longer required
Appellants may request initial AOJ review in writing
Effective February 2, 2013
Implementation
o Fast Letter 14-02
o Future Regulations
32
FIDUCIARY
33
Fiduciary Program Oversight
VA’s Role: To conduct oversight of beneficiaries to ensure their
well-being, and appoint and conduct oversight of fiduciaries who
manage their benefits
Oversight includes:
•
•
•
•
•
Audits of a fiduciary’s annual accounting and supporting financial
documentation
Visits with the beneficiary and fiduciary
Onsite reviews
Verification of surety bonds
Investigation of misuse allegations
34
Scope of the Fiduciary Program
In FY 2013, VA protected more than 147,000 beneficiaries, who
received more than $2.6 billion in VA benefits.
Total payments of
$2.6 billion made
in FY 2013
Survivors
Pension
$397
Veterans
Pension
$598
Note: Chart
excludes Education
and Insurance
• Fiduciary program
beneficiaries increased 20%
from FY 2011 (122,271) to
FY 2013 (147,262)
Disability
Compensation
$1,501
• Beneficiaries in the fiduciary
program receive the full
range of VA benefits
DIC
$138
35
Scope of the Fiduciary Program
Beneficiaries by Beneficiary Type
Veteran
Surviving Spouse
Adult Disable Child
Minor Child
Dependent Parent
Insurance
Total Beneficiaries
Beneficiaries by Fiduciary Type
Legal Custodian
Spouse Payee
Court Appointed Fiduciary
Institutional Award
Other
Total Beneficiaries with Fiduciaries
Supervised Direct Payment
Number
84,627
45,725
14,132
955
85
1,738
147,262
Number
114,455
18,764
7,981
1,801
60
143,061
4,201
Percent
of Total
57.5%
31.1%
9.6%
0.6%
0.1%
1.2%
100%
Beneficiaries in the fiduciary
program include Veterans,
surviving spouses,
dependent parents, adult
children, and minor children.
Percent
of Total
80.0%
13.1%
5.6%
1.3%
0.0%
100.0%
In appointing a fiduciary,
every effort is made to
ensure appointment that
would best serve the interest
of the beneficiary in the least
restrictive manner.
36
Incompetency Determination
• VA must consider a beneficiary’s competency whenever evidence
is submitted that raises a question as to the beneficiary’s mental
capacity to manage his or her financial affairs
o Inferred issue when the Veteran is rated 100% for a psychiatric
condition
o Reasonable doubt is resolved in favor of the beneficiary
• Incompetency for VA purposes:
38 C.F.R. § 3.353 defines incompetence as it pertains to payment
of VA benefits. A person who, because of injury or disease, lacks
the mental capacity to manage his or her own affairs including
disbursement of funds.
37
Incompetency Determination
• VA is alerted to the possibility of incompetency by:
o Receipt of medical evidence from an interested party (beneficiary,
relative, friend, private physician)
o Medical evidence provided by VA records
o Court documentation confirming a legal disability
• Incompetency Proposed:
o Medical evidence evaluated by VA, proposed decision
o Letter sent to beneficiary advising of the proposed rating of
incompetency for VA purposes
o The beneficiary has 60 days to respond to the proposed rating of
incompetency
• Final Competency Decision (after expiration of 60-day due process):
o Notice sent to beneficiary and fiduciary hub
o Fiduciary hub initiates contact with the beneficiary and determines the
most effective, least restrictive method of payment
38
Fiduciary Initial Appointments
VA Fiduciary Hub will:
•
Visit the beneficiary and assess:
o Capacity to manage funds
o Sources of income
o Environment
o Financial Obligations
o Needs of any dependents
•
Contact the fiduciary and assess:
o Willingness to serve
o Relationship, if any
o Qualifications
39
Selection of Fiduciaries
VA will select a fiduciary in this priority:
•
Beneficiary’s preference
•
Spouse
•
Beneficiary’s relative
•
Close friend or caregiver
•
Chief officer of the institution where the beneficiary receives care
•
Individual or entity who has been appointed by the court
•
Individual or entity that requires payment to perform these services
•
A temporary fiduciary, if necessary
40
Qualifying Fiduciaries
• Evidence that the person appointed is in the best interest of
the beneficiary
• VA will complete an investigation of the proposed fiduciary,
which includes:
• Face-to-face interview with the proposed fiduciary
• Credit report
• Criminal background check
• A bond, if necessary
41
Qualifying Fiduciaries
• If possible, the fiduciary will:
o Be selected based on the beneficiary’s preference
o Be a spouse or family member
o Serve without a fee
• All proposed fiduciaries will receive written and verbal
guidance pertaining to:
o
Duties/responsibilities
o
Accounting requirement
o
Protection of VA benefits
42
Beneficiaries Rights
The rights of beneficiaries in the fiduciary program include but are not
limited to:
•
Direct payment of monthly benefits until VA appoints a fiduciary
•
Notice regarding VA’s appointment of a fiduciary or any other decision on
a fiduciary matter
•
The right to appeal VA’s fiduciary appointment
•
The right to request a new fiduciary
•
A copy of the fiduciary’s annual accountings
•
VA-appointed fiduciary’s name, telephone number, mailing address, and
email address
43
Accountings
• VA requires annual accountings when:
o The fiduciary is also the beneficiary’s court-appointed guardian
o VA has authorized a fee
o The funds under management by the fiduciary exceed $10,000
• Audits of a fiduciary’s annual accounting and supporting financial
documentation includes:
o
o
o
o
o
o
Verification of income and expenditures
Examination of fees
Review of investments
Assessment of protection of VA funds
Verification of funds balance
Investigation of allegations of misuse
44
Follow-Up Field Examinations
• During the follow-up field examination, VA interviews the
beneficiary, contacts the fiduciary, and either recommends
continuing the appointment or replacing the fiduciary
• Schedule:
o First follow-up one year after the initial field examination
o Subsequent follow-ups on one to three year intervals based on the
beneficiary’s situation
• VA conducts an unscheduled field exam when
o A problem is identified
o A public report of concern is received, OR
o The fiduciary fails to respond or inappropriately responds to VA a
telephone or correspondence inquiry
• VA performs field examinations through face-to-face contact,
telephone call or letter
45
Misuse and Negligence
• Fiduciaries may misuse benefits if VA does not properly perform
oversight
• 38 U.S.C. § 6107 requires VA to reissue any benefits misused by a
fiduciary if:
o The fiduciary is not an individual,
o The fiduciary is an individual who serves 10 or more beneficiaries, OR
o VA is negligent
• VA is negligent if it fails to:
o
o
o
o
Properly qualify a fiduciary prior to appointment,
Timely review an accounting, or
Timely appoint a successor fiduciary, and
The misuse was the result of VA’s negligence
46
FIDUCIARY
TRANSFORMATION
47
Initiatives
To further strengthen oversight, P&F Service has taken the following
steps to modernize the program
•
Published proposed fiduciary regulations on January 3, 2014 (complete
rewrite) (79 Fed. Reg. 429)
o First major update since 1970’s
o Protects beneficiaries’ rights, specifies fiduciaries’ responsibilities, and
strengthens VA oversight
o Final regulations under development
•
Establish claim processing teams in the fiduciary hubs
o Final ratings of incompetency, initiate monthly payments to fiduciary, and
release retroactive benefits to fiduciaries
o Eliminates hand-offs between fiduciary hubs and PMC/ROs
o Ensure more timely release of benefits to beneficiaries
•
Deploy a new information technology system, the Beneficiary Fiduciary
Field System (BFFS), to enhance service to beneficiaries and improve
workload management
48
Initiatives
•
Published A Guide for VA Fiduciaries
o Train/educate volunteer fiduciaries on their obligations
o Available online at http://www.benefits.va.gov/FIDUCIARY/Fid_Guide.pdf
• Conduct a work measurement study of all fiduciary work tasks
• Deploy an automated accounting preparation tool to assist
fiduciaries with annual accountings
• Release revised Fiduciary Program Manual (formerly M21-1MR,
Part XI)
• Release new misuse policy and procedures and provide misuse
training for all fiduciary program personnel
49
Initiatives
• Issued the first National Training Curriculum for VA’s fiduciary
program employees
o All Legal Instrument Examiners and Field Examiners must complete
80 hours of annual training
o Initiated in 2013, revised annually based on identified training needs
o Provides a standardized training curriculum by duty position
• Developed and provided an 80-hour training course to all Field
Examiners with less than 12 months experience
• Deployed computer-based training for fiduciaries
o Available online at
https://homeloans.va.gov/fid_wbt/runtime/index_register.html
50
VBA MILESTONES
51
VBA is Working to Improve Service to Veterans, their
Families and Survivors
• Reduced claims backlog from peak of 611,000 in March 2013 to
284,000 in June 2014 – a 54% reduction in 15 months
• Reduced inventory from its peak of 884,000 in July 2012 to
566,000 in June 2014 – a 36% reduction
• Completed 169,000 more claims FYTD than same time in 2013
• Completed a RECORD-BREAKING 1.17 million claims in 2013
• On track to complete 1.32 million in 2014
• Improvements were made without sacrificing quality: Claim-level
accuracy rose from 83% in June 2011 to 91% in June 2014
52
VBA is Working to Improve Service to Veterans, their
Families and Survivors
• Reduced Veterans pension inventory by 66% and backlog by
95%; Survivors pension inventory by 55% and backlog by 70%
• Reduced DIC claims inventory by 54% and backlog by 87%
• Today Veterans with pending claims have been waiting, on
average, 83 fewer days for a decision on their claim compared to
a year ago
53