National Association of County Veterans Service Officers

1. National Association of County Veterans Service Officers David R. McLenachen Pension and Fiduciary Service June 11, 2014

2. Pension and Fiduciary Service Overview Pension and Fiduciary (P&F) Service administers VA’s Needs-based pension program for wartime Veterans and their survivors Dependency and indemnity compensation (DIC) program for Veterans who die as a result of service-connected disabilities Monetary burial benefits program for Veterans 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 Recipients of needs-based benefits Survivors Beneficiaries who are unable to manage their VA benefits

3. P&F Service Overview Responsibilities include Developing policy and procedures, and implementing any changes in regulations and manuals Developing legislative proposals, addressing congressional inquiries, and providing technical assistance on legislation Establishing and maintaining program integrity measures Conducting national accuracy reviews Developing and facilitating training for field personnel 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

4. P&F Service Overview 3 PMCs 6 Fiduciary Hubs and the Manila RO fiduciary activity In fiscal year (FY) 2013, VA provided Pension and DIC benefits totally more than $10.9 billion for over 872,000 Veterans and survivors Burial benefits of over $102 million Oversight of more than 120,000 fiduciaries that received $2.6 billion in VA benefits for over 147,000 beneficiaries

5. PMC Jurisdiction

6. Fiduciary Hub Jurisdiction Alaska Hawaii San Juan Manila Milwaukee Louisville Indianapolis Lincoln Columbia Salt Lake City Lincoln Fargo Houston Muskogee Sioux Falls Waco Louisville Huntington Jackson Montgomery Nashville Roanoke San Juan Milwaukee Chicago St. Paul New Orleans Des Moines St. Louis Little Rock Indianapolis Baltimore Boston Buffalo Cleveland Detroit Hartford Manchester Los Angeles Oakland Phoenix Portland Reno San Diego Seattle Salt Lake City Albuquerque Anchorage Boise Cheyenne Denver Ft. Harrison Columbia Atlanta St. Petersburg Winston-Salem New York Newark Philadelphia Pittsburgh Providence Togus White River Jct. Wilmington

7. PENSION

8. 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-service- connected 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

9. Pension Periods of War • Income Threshold Requirement • VA does not count all forms of income, however it is best to report all • Certain expenses may reduce countable income • Net Worth Requirement • VA considers whether a claimant’s net worth can be reasonably used for his or her maintenance

10. 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

11. 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

12. 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

13. 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.

14. Veterans Pension Rate Table NOTE: Medical expenses must exceed 5% of MAPR to be deducted

15. Survivors Pension Rate Table NOTE: Medical expenses must exceed 5% of MAPR to be deducted

16. 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-2011-title38-vol1-sec3-460.pdf.

17. Pension Improved service to pension claimants Since June 2011, VA has reduced Veterans pension inventory by 66%and backlog by 95% Survivors pension inventory by 55%and backlog by 70% Beneficiary Profile Average age of beneficiaries Over 42% of Veterans pension beneficiaries are over age 75 Over 75% of survivors pension beneficiaries are over age 75 Average annual benefits paid Veterans pension = $11,639 Survivors pension = $7,680 More than 50% of the beneficiaries in the fiduciary program receive pension

18. Dependency and indemnity compensation

19. 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 A service-connected injury or disease, or An injury, heart attack, cardiac arrest, or stroke incurred on aggravated in the line of duty while on inactive duty for training

20. 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-service-connected 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

21. DIC Improved service to DIC claimants Since November 2012, VA has Reduced DIC claims inventory by 54%and backlog by 87% Improved DIC timeliness by 55 days and maintained 98% accuracy Beneficiary Profile Average age of beneficiaries Over 42% of DIC beneficiaries are age 55 or older Average annual benefits paid DIC recipient = $16,280

22. Burial benefits

23. Three types of one-time payments: burial and funeral allowance, plot or interment allowance, and transportation allowance Service-Connected Death Up to $2,000 toward burial and funeral expenses Cost of transportation to nearest national cemetery Non Service-Connected Death Up to $300 for burial and funeral expenses plus transportation cost, up to $722 for a plot allowance Death in VA Facility - Up to $722 for burial and funeral expenses plus transportation costs and up to $722 for plot allowance VA pays $722 plot allowance to State cemeteries Burial Benefits

24. Pension, dic, and burialTransformation

25. 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) Address pre-filing asset transfers Bright-line rules that support further automation New forms Step 3 – VBMS for pension Establish pension eFolder Develop data feed for IRS/SSA income information Step 4 – Fully automate pension Legislative proposals and regulation amendments to further simplify the program Rules-based processing in VBMS

26. 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 Deters program abuse Reduces VA reliance on self-reported data Preserves pension program for Veterans and survivors with genuine need As a result of the IRS-SSA partnership, VBA 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? In some cases, but only for applicant's who under-report income Saves VA resources formerly allocated to benefit adjustments

27. 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 Final rule publication date: June 6, 2014 (79 Fed. Reg. 32,653) Final rule effective date: July 7, 2014 (automation begins) Rules-based processing system Pays the maximum benefit amount authorized by Congress ($2,000 or $300) Discontinues inefficient reimbursement-based process (claimants do not have to submit receipts) Presumes (for burial only) that a Veteran’s death is service-connected if the Veteran died with a total service-connected disability rating 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

28. 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

29. 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 NACVSOhas 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/

30. Initiatives National Training Curriculum for PMC Personnel All PMC claims processors must complete 85 hours of annual training Initiated in 2012, revised annually based on identified training needs Provides a standardized training curriculum by duty position Empowers employees by providing them with the skills and training necessary to successfully and confidently complete their jobs Supports VA goal of 98% quality As of June 2014, accuracy rate for Pension entitlement is 98.9% Pension maintenance is 98.4%

31. Initiatives Improved outreach products YouTube video 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 Fact Sheets 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

32. 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) 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 Fast Letter 14-02 Future Regulations

33. Fiduciary

34. 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

35. 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. • Fiduciary program beneficiaries increased 20% from FY 2011 (122,271) to FY 2013 (147,262) • Beneficiaries in the fiduciary program receive the full range of VA benefits

36. Scope of the Fiduciary Program • Beneficiaries in the fiduciary program include Veterans, surviving spouses, dependent parents, adult children, and minor children. 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.

37. 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 Inferred issue when the Veteran is rated 100% for a psychiatric condition 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.

38. Incompetency Determination VA is alerted to the possibility of incompetency by: Receipt of medical evidence from an interested party (beneficiary, relative, friend, private physician) Medical evidence provided by VA records Court documentation confirming a legal disability Incompetency Proposed: Medical evidence evaluated by VA, proposed decision Letter sent to beneficiary advising of the proposed rating of incompetency for VA purposes The beneficiary has 60 days to respond to the proposed rating of incompetency Final Competency Decision (after expiration of 60-day due process): Notice sent to beneficiary and fiduciary hub Fiduciary hub initiates contact with the beneficiary and determines the most effective, least restrictive method of payment

39. Fiduciary Initial Appointments VA Fiduciary Hub will: Visit the beneficiary and assess: Capacity to manage funds Sources of income Environment Financial Obligations Needs of any dependents Contact the fiduciary and assess: Willingness to serve Relationship, if any Qualifications

40. 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

41. 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

42. Qualifying Fiduciaries • If possible, the fiduciary will: • Be selected based on the beneficiary’s preference • Be a spouse or family member • Serve without a fee • All proposed fiduciaries will receive written and verbal guidance pertaining to: • Duties/responsibilities • Accounting requirement • Protection of VA benefits

43. 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

44. Accountings VA requires annual accountings when: The fiduciary is also the beneficiary’s court-appointed guardian VA has authorized a fee The funds under management by the fiduciary exceed $10,000 Audits of a fiduciary’s annual accounting and supporting financial documentation includes: 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

45. 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: First follow-up one year after the initial field examination Subsequent follow-ups on one to three year intervals based on the beneficiary’s situation VA conducts an unscheduled field exam when A problem is identified A public report of concernis received, OR 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

46. 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: The fiduciary is not an individual, The fiduciary is an individual who serves 10 or more beneficiaries, OR VA is negligent VA is negligent if it fails to: 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

47. Fiduciary Transformation

48. 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) First major update since 1970’s Protects beneficiaries’ rights, specifies fiduciaries’ responsibilities, and strengthens VA oversight Final regulations under development Establish claim processing teams in the fiduciary hubs Final ratings of incompetency, initiate monthly payments to fiduciary, and release retroactive benefits to fiduciaries Eliminates hand-offs between fiduciary hubs and PMC/ROs 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

49. Initiatives Published A Guide for VA Fiduciaries Train/educate volunteer fiduciaries on their obligations 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

50. Initiatives Issued the first National Training Curriculum for VA’s fiduciary program employees All Legal Instrument Examiners and Field Examiners must complete 80 hours of annual training Initiated in 2013, revised annually based on identified training needs 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 Available online at https://homeloans.va.gov/fid_wbt/runtime/index_register.html