As a veteran wounded in Iraq, Chet Bennetts had to be persuaded by a friend to pursue his military disability benefits. But it was as a financial advisor helping an older veteran that he saw first-hand the huge impact those benefits can have.
“Someone else deserves it more,” Bennetts recalls himself thinking about being compensated for an injury he suffered during fighting in Fallujah, where served as a U.S. Marine Corps reservist in 2004. “I carried guys out that probably deserve more than I do,” thought Bennetts, now an assistant professor of financial planning at The American College of Financial Services, where he is also director of the ChFC and CFP certification programs.
“There are a lot of veterans, both from the past and this generation, that don’t feel they’ve deserved to ask for these benefits,” he says. “And in essence, they’re telling themselves ‘no’ on the behalf of the government, and that’s not something that veterans should do.”
Bennetts recalls helping a Vietnam veteran who never pursued disability benefits. Suffering from “classic Agent Orange symptoms” or hearing loss and other service-related ailments, the veteran felt “the guys that actually had holes in their body or shrapnel in their body file, not him,” Bennetts says.
With the help of the vet’s wife, Bennetts persuaded him to file for his long-overdue disability benefits. The application was “quite a process,” he remembers.
“But in his case, it meant that, all of a sudden, all of his medical problems will be covered … for the rest of his life, related to those issues. And because of how severe some of the disabilities were, all of a sudden, he had $1,500 a month of tax-free compensation coming from the VA and IRS. This rough, tough, ‘I’ve seen a lot of action’ — when we sat down after he got his award letter and found out he was getting back pay and everything else, he had tears down his eyes,” says Bennetts. “And that made the difference between success and (a situation) they were dreading and worrying about how they were going to retire.”
Calling in More Troops to Navigate the ‘Quagmire’
Angela Ribuffo, CFP, president of Raion Financial Strategies in Anchorage, Alaska, agrees advisors can make a difference by helping veterans navigate the “quagmire” of the Department of Veterans Affairs disability system. She says she’s seen “the gamut” of unequal treatment, such as one veteran receiving a disability rating for tennis elbow, while another with chronic pain is denied.
“You have to go through the appeals process in order to have that reviewed, and sometimes they just get worn out,” says Ribuffo, a veteran who served as a military nurse in the U.S. Air Force.
For advisors looking to dive into the world of veteran disability benefits, Ribuffo recommends seeking the guidance of veteran advocates and organizations. “I would suggest having a sit-down meeting with someone from the DAV, the disabled veterans’ organization, or a VSO (veteran service officer) so that they can understand how to feed a client into that process, or what other local support is available,” she says.
Bennetts agrees that VSOs, who he notes serve in every county, are an excellent resource because they are experts in the veteran benefits offered by both the federal government and their own state.
“The coordination of resources is such an important role of being a financial planner, to ensure that you’re helping the client maximize all of the available resources they have to accomplish their goals and objectives,” he says of tapping the services of such advocates.
Resources for Advisors Serving Veterans
To effectively serve veterans, advisors need to master a plethora of laws and regulations, and the best way is to get it from the horse’s mouth, says Stacy Miller, CFP, founder and CEO of BayView Financial Planning in Tampa, Fla.
“What they need is the source, not all of the crap that’s been repurposed over and over again, to suit everybody else’s means,” says Miller, whose husband is a veteran. “I’m a big proponent in finding the original source of the information to make sure that I understand it correctly. Because you don’t want to make a mistake when you’re trying to help your client.”
Miller said veteran benefits resources advisors should explore include:
- IRS Armed Forces Tax Guide
- Federal Benefits for Veterans Dependents and Survivors
- TAP Financial Planning Guide
- State veteran benefit resources, such as the Florida Veterans’ Benefits Guide
Bennetts reports that The American College of Financial Services is developing an online resource on veteran benefits.
“Any advisor I know has somewhere in their office a laminated sheet with this year’s tax numbers on it. This is something similar for advisors to have available for their veteran clients,” Bennetts says of the online resource, which is designed to assist advisors “whether it’s the first time they’re learning about disability benefits or the 15th time, and they just want to make sure they’ve got it to be able to refresh that knowledge.” The site will also include American College research on military/veteran financial wellbeing, he says.
The project doesn’t have a firm start date yet, but the goal is to roll it out near Veterans Day, according to Bennetts.
An Added Benefit of Disability Benefits: No Taxation
Understanding veteran benefits is key to serving veterans’ best interests, Ribuffo agrees. For example, the fact that disability payments are not taxed has important ramifications, she says.
“Sometimes they don’t know that,” Ribuffo says of vets. “And if they go to get their taxes done, and if someone doesn’t understand that, they’re going to include those disability payments in their taxable income,” which can have long-term effects. “If it’s counted as income, it also affects the Medicare premiums, (which are) based on taxable income.”
Miller cites another key point: Sometimes a veteran’s pension is reduced by the amount of a payment for certain disability ratings. But since pension payments are taxed and disability payments are not, it’s a win for the veteran.
Vets With a Disability Rating Can Work, But …
All three advisors note that if a veteran has a disability rating (expressed as a percentage up to 100%), that doesn’t mean they are unable to work or prohibited from working — in most cases. “Even with a 100% disability rating, you can still work; that doesn’t mean that you’re too disabled to work,” Miller says.
Ribuff notes that a veteran with a serious condition that prevents work can also receive an individual unemployability benefit. “Regardless of what their (disability) rating is — they may only have a 60% rating — the 60% rating stands, but the amount of money they receive changes,” she says. But if a veteran is classified as unemployable and receives an unemployability benefit on top of the disability benefit, they forfeit the unemployability benefit if they return to work.
The Most Important Form
Donald (Don) Mosby Rembert, CFP, founder of Rembert Pendleton Jackson (RPJ), a fee-only RIA firm in Falls Church, Va., says a key ingredient for success in tapping Department of Veteran Affairs services and benefits is DD Form 214. That’s the veteran’s military service record, including military discharge status; duty stations and assignments; medals and decorations; and qualifications, licenses and certificates, according to the VA.
“That document is the basis for making any kind of claims or anything else, but have to get it; you have to organize it and you put it with your major documents … and then your wife, or your spouse, whoever it is, has to be made familiar with it,” says Rembert, who served in the U.S. Army in Germany in the early 1960s. “You simply have got to have that form. And without it, you’re stuck.”
For anyone trying to navigate the VA system, Rembert counsels persistence and patience. “And you can’t get angry. You just have to lean on it to get help.”
Protecting Veterans from Unneeded Services and Products
Advisors have another important role to play with veterans: Protecting them from financial products and services that are not in their best interest.
“Military service members are focused on serving our country and doing some really wonderful work,” Miller says. “They are not necessarily focused on their financial life. … Unfortunately, veterans, like seniors and some others, are targeted by those in the industry that are not necessarily the most, let’s say fiduciary-minded, and so there’s a lot of misinformation and a lot of people in organizations that are doing a disservice to veterans, in my opinion.”
“And so having fiduciaries that can walk military service members and veterans and their families through these complicated tax and financial decision decisions is really important and vital,” says Miller.
Bennetts says new veterans are especially vulnerable after they’ve been rated and receive a lot of back pay. “There’s a lot of services out there that are more than happy to, air quote, ‘help’ a veteran file their claim and follow up on it, when the reality is those services for the most part can be accomplished for free with the county service officer,” he says.
Veterans are also targeted for life insurance sales pitches, Miller says. “It’s a redundancy and a product for young service members especially that is not what they need and not necessarily in their best interest. But sounds really terrific,” she says.
In a four-decade career in journalism, Ed Prince has served as an editor with many of New Jersey’s leading newspapers, including the Star-Ledger, Asbury Park Press and Home News Tribune.
