As I sit here writing this I am looking at a file I have collected over the years on scams and abuses directed at the frail elderly. It is 3 inches thick. I have shown it to dozens of people including State Legislators. No one cares. There is too much money in scams. One more has crossed my desk today. I choose not to just put it in the file but instead to talk about it.

Let’s start with veterans. They are generally good people and have served us all with honor. I love vets. Yet right now one of the largest scams in the Country is aimed at vets. It is a benefit called Aid and Attendance. It is a real VA benefit designed to provide US veterans and their spouses with help paying for long term care at home or in assisted living. It can be over $2,000 per month, tax-free. Great benefit.

Here is the scam.

Assisted Living Facilities (ALF’s) need residents. They answer to corporate owners. It is called “heads in beds”, and here is how it works. Someone forms a placement agency (PA) to help families find a facility for their loved one. Finding a good ALF on your own is difficult. The PA says they will help you for free. Some of them are even disguised as non-profits. Some of them appear to have a religious affiliation. Wow, what a great service. What no one has told you is that the ALF is paying the PA 1-2 months’ rent up front as a commission. If the ALF costs $5000 per month that is a lot of commission. Well you say, I don’t care I didn’t pay it. Oh, but you did, because it raised the price of the ALF so they could make up for the lost revenue. So the family is the one who really paid the PA.

Here is the good part, the PA also tells the family that because dad is a vet, they can get him some free money to help pay the ALF! In fact the PA may actually do seminars in the ALF for the residents and their families (for which a kickback may be paid to the ALF). So do you begin to see the circle here? In addition, the PA probably has an insurance license and will tell the family that they need to buy an annuity (I recently saw one for $300,000 at an 8% commission which was pocketed by the PA. The annuity was on a 75-year-old person and had a 12-year surrender penalty in order to get the benefit. Then, the PA tells the family that there is an attorney they need to see who for a small fee is going to protect everything for a mere $15,000. The attorney cannot split fees but does meetings with the PA inside the ALF and then refers clients to the PA for placement and the circle is complete.

This is happening hundreds of times a day in California. Almost none of it was necessary. The family could have gone to the local Veteran’s Service Office, or the VFW or American Legion and received help with the benefit for free.

Please, be on guard. Ask every step of the way who is paying whom? How do they make money and from what source.  If someone wants to sell an annuity get at least two other opinions. Be vigilant. Remember, “free” is not always free.

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