oversight hearing on the administration of the veterans benefits 

administration’s pension program

Hearing

before the

Committee on Veterans’ Affairs

House of Representatives

Subcommittee on Disability Assistance

and Memorial Affairs

one hundred ninth congress

Second session

september 27, 2006

Printed for the use of the Committee on Veterans’ Affairs

Serial No. 109-66

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30-384.PDF
Committee on Veterans’ Affairs

Steve Buyer, Indiana, Chairman

Michael Bilirakis, Florida Lane Evans, Illinois, Ranking

Terry Everett, Alabama Bob Filner, California

Cliff Stearns, Florida Luis V. Gutierrez, Illinois

dan burton, Indiana Corrine Brown, Florida

Jerry Moran, Kansas Vic Snyder, Arkansas

richard H. baker, Louisiana Michael H. Michaud, Maine

Henry E. Brown, Jr., South Carolina Stephanie Herseth, South 

Jeff Miller, Florida Dakota

John Boozman, Arkansas Ted Strickland, Ohio

Jeb Bradley, New Hampshire Darlene Hooley, Oregon

Ginny Brown-Waite, Florida Silvestre Reyes, Texas

Michael R. Turner, Ohio ShellEy Berkley, Nevada

John Campbell, California Tom Udall, New Mexico

BRIAN P. BILBRAY, California John T. Salazar, Colorado

JAMES M. LARIVIERE, Staff Director

Subcommittee on Disability Assistance

and Memorial Affairs

Jeff Miller, Florida, Chairman Shelley Berkley, Nevada, 

Jerry Moran, Kansas Ranking

Jeb Bradley, New Hampshire, Vice Chairman Tom Udall, New Mexico

Ginny Brown-Waite, Florida Lane Evans, Illinois

 

PAIGE MCMANUS, Subcommittee Staff Director

(II)
CONTENTS

September 27, 2006

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Oversight Hearing on the Administration of the Veterans Benefits Administration’s Pension Program ................................

OPENING STATEMENTS

Chairman Miller ..........................................................................

Prepared statement of Chairman Miller ...................................

STATEMENT FOR THE RECORD

Hon. Shelley Berkley, Ranking Democratic Member ...............

Witnesses

McCoy, Jack, Associate Deputy Under Secretary for Policy 

and Program Management, Veterans Benefits Administration, U.S. Department of Veterans Affairs ............................

Prepared statement of Mr. McCoy ............................................

POST-HEARING QUESTIONS FOR THE RECORD

Hon. Tom Udall ..........................................................................

(III)
OVERSIGHT HEARING ON THE

ADMINISTRATION OF THE VETERANS BENEFITS

ADMINISTRATION’S PENSION PROGRAM

Wednesday, September 27, 2006

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U.S. House of Representatives,

Subcommittee on Disability Assistance and

Memorial Affairs,

Committee on Veterans’ Affairs,

Washington, D.C.

 The Subcommittee met, pursuant to call, at 10:30 a.m., in Room 

334, Cannon House Office Building, Hon. Jeff Miller presiding.

 Present: Representatives Miller and Udall. Staff Present: Paige 

McManus, Majority Counsel and Mary Ellen McCarthy, Minority 

Counsel.

Mr. Miller. Good morning, everybody. This Subcommittee meeting will come to order. Ms. Berkley is on her way over, but I wanted to 

go ahead and convene this final Subcommittee hearing for the 109th 

Congress, I think Ms. Berkley and the other members of our Subcommittee would agree that we have had an informative and what I feel 

a very productive two years. The majority of our oversight hearings 

in this Congress have intended to lay basically a groundwork or foundation for the Subcommittee members on each of the VBA programs 

that we have jurisdiction over, and today we are going to wrap up by 

looking at VA’s pension program. In the next Congress the full Committee and our Subcommittee, Disability Assistance and Memorial 

Affairs, will delve deeper into the issues facing VBA and the Board of 

Veterans’ Appeals.

VA’s nonservice-connected disability pension program provides 

financial assistance to low income veterans who are totally or permanently disabled as a result of a disability not related to military 

service, or are age 65 or older. VBA also provides pension benefits 

to certain low income surviving spouses and unmarried children of 

deceased veterans with wartime service. There are approximately 

530,000 pensioners, veterans and survivors who receive nearly $3.5 

billion in benefits annually.

[The statement of Chairman Miller appears on p. 10]
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 Mr. Miller. Today we have one panel. Testifying for the Veterans Benefits Administration is Mr. Jack McCoy. He is Associate 

Deputy Under Secretary for Policy and Program Management. He 

is accompanied today by Mr. Steve Simmons, Deputy Director of the 

Compensation and Pension Service. At Ms. Berkley’s request we also 

have with us the managers of the three Pension Maintenance Centers. That would be Ms. Filipov from the Philadelphia Regional Office and Insurance Center, Mr. John Limpose from the Milwaukee 

Regional Office, and Mr. Woody Middleton from the St. Paul Regional 

Office. Mr. McCoy is the only witness who will be testifying before us 

today. The others are here to answer any questions that the Subcommittee members may have. We talked about whether or not we 

wanted to put the timer on you today, Mr. McCoy. We will not do that 

since you are the only person. That does not mean that we would 

want you to go for the next two hours, but we will give great latitude 

in your testimony.

 We thank you all for being here. Until Ms. Berkley comes, I will 

let Mr. Udall do a statement if he wants to. Do you want to make a 

statement or wait for Ms. Berkley?

Mr. Udall. I would just put her statement in the record, because 

she may or may not be here, and go ahead and go forward with our 

panel.

Mr. Miller. All right, very good. Without objection her opening 

statement will be entered into the record. And with that, Mr. McCoy, 

you may begin.

[The statement of Hon. Shelley Berkley appears on p. 11]

STATEMENT OF JACK MCCOY, ASSOCIATE DEPUTY UNDER SECRETARY FOR POLICY AND PROGRAM MANAGEMENT, VETERANS BENEFITS ADMINISTRATION; 

ACCOMPANIED BY STEVE SIMMONS, DEPUTY DIRECTOR, COMPENSATION AND PENSION SERVICE; LUCY 

FILIPOV, MANAGER, PENSION MAINTENANCE CENTER, 

PHILADELPHIA, PENNSYLVANIA REGIONAL OFFICE

AND INSURANCE CENTER; JOHN LIMPOSE, MANAGER, 

PENSION MAINTENANCE CENTER, MILWAUKEE, WISCONSIN REGIONAL OFFICE; AND WOODY MIDDLETON, 

MANAGER, PENSION MAINTENANCE CENTER, ST. 

PAUL, MINNESOTA REGIONAL OFFICE.

STATEMENT OF JACK MCCOY.

 Mr. McCoy. Thank you. Mr. Chairman, and members of the Subcommittee, I appreciate the opportunity to appear before you today to 

discuss the VA pension program. The VA pension program provides 
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financial assistance to wartime veterans and surviving spouses and 

children of wartime veterans based on financial need. Pension recipients currently number over 530,000, including 330,000 veterans 

and 200,000 survivors. Annual benefit payments total approximately 

$3.5 billion. The disability pension program assists wartime veterans with low incomes who are permanently and totally disabled due 

to causes not related to military service. Low income veterans aged 

65 and older may be eligible for a service pension. The requirements 

and conditions for which are the same as the disability program, except there is no requirement that the veteran be permanently and 

totally disabled.

Both the disability pension program and the age 65 and older service pension require 90 days or more of active military service during a period of war or 90 days or more of continuous active military 

service beginning or ending during a period of war. The veteran’s 

discharge must have been under conditions other than dishonorable.

 In addition to needy veterans, VA also provides pensions to low income surviving spouses and unmarried children of deceased veterans 

with wartime service. To be eligible, spouses must not have remarried and children must be under age 18 or age 23 if attending school. 

Children who become incapable of self-support because of a disability 

before age 18 may be eligible for death pension as long as the condition exists unless the child marries or the child’s income exceeds the 

applicable limit.

 Under the VA pension programs, payments are made to bring beneficiaries total income, including all earnings as well as retirement 

as social security income, to a level set by Congress. The maximum 

annual pension currently payable to a veteran with no dependents 

and no other income is $10,579. The maximum annual death pension 

payable to a surviving spouse with no dependents is currently $7,094. 

Payments are reduced dollar for dollar by the amount of countable 

income of the veteran, spouse or dependent children.

 The VA pension rolls have declined steadily from a high of almost 

two million beneficiaries in 1978 to current levels of just over 530,000. 

There are obvious contributing factors causing the reduction in the 

number of pension recipients. Foremost would be the increasing 

death rate among veterans of World War II and the earlier wartime 

periods, since most veterans who meet the income requirements for 

pension are eligible based on age and the low income limits of the 

programs. The sharp decline in the number of pension recipients has 

also raised concern in VA that our most needy veterans and survivors, among them the homeless and the destitute elderly, may not be 

aware of the pension programs or that they may qualify for monthly 

benefits. As a result of this concern, VBA has been expanding our 

outreach to elderly, low income veterans and surviving spouses.

 In November of 2005 we issued a news article entitled, VA Reaches 
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Out to Veterans and Their Families from Every Generation that has 

been printed in 176 newspapers in 23 states with a readership of 10.5 

million. VBA is also working closely with the Veterans Health Administration and the National Cemetery Administration to reach potentially eligible veterans and surviving spouses. Information about 

pension benefits is now included in the enrollment welcome letters 

sent by VHA to veterans eligible for healthcare under category five. 

Copies of VBA Pamphlet 21-00-1, A Summary of VA Benefits and 

Services, are distributed to VHA facilities for placements and locations where veterans often visit. Better communications have been 

established with the VHA Social Work Service to ensure social workers are aware of the pension programs, and can identify and assist 

veterans who may have entitlement. VA Pamphlet 21-03-1, VA Benefits for Survivors, is now distributed to all national cemeteries and 

training on our benefit programs is provided to cemetery directors.

 There are also other venues through which VBA is seeking to expand outreach to the elderly veteran population. VBA distributes 

copies of VA Pamphlet 21-00-1 to over 1,000 Social Security Administration offices. VBA has also strengthened its working relationship 

with the Department of Health and Human Services Administration 

on the Aging, and we have become more actively involved with area 

agencies on the aging. To help spread the word about our pension 

program, we set up information booths at such events as AARP conferences and funeral director conventions.

 In January of 2002, VBA activated three Pension Maintenance 

Centers, or PMCs, at the Philadelphia, Milwaukee and St. Paul Regional Offices to process all pension award adjustments and account 

maintenance activities. There were two particularly important considerations in the decision to consolidate. First, by moving pension 

maintenance activities out of other Regional Offices, the Regional Offices are able to focus their attention and resources on processing of 

new and reopened disability compensation claims and appeals. The 

second consideration was that by consolidating to three PMCs we 

could increase the efficiency and improve the quality and consistency 

of our pension processing activities.

 National accuracy reviews of pension processing are conducted in 

accordance with VBA’s Systematic Technical Accuracy Review system, STAR. STAR reviews show that the accuracy of claims processed by the PMCs has significantly increased in the past year, from 

80 percent in fiscal year 2005 to 91 percent in fiscal year 2006.

VBA has implemented a number of changes to improve the quality 

and consistency of pension maintenance activities. In March of 2006 

each Pension Maintenance Center designated a quality review coordinator responsible for quality improvement oversight. The individuals monitor all quality issues, such as training, mentoring, monthly 

quality reviews, and local and national STAR findings. Each quality 
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review coordinator also works closely with the other two PMCs quality review coordinators and keeps division management apprised of 

all efforts through regular conference calls and meetings.

 We will continue our efforts to improve our training programs and 

tools and ensure the quality and consistency of pension benefit delivery.

 Mr. Chairman, that concludes my testimony. We will be happy to 

respond to any questions that you or other members of the Committee might have.

[The statement of Mr. McCoy appears on p. 12]

 Mr. Miller. Thank you very much, Mr. McCoy. You talked about 

your outreach programs and that they were successful. How do you 

quantify the success of your outreach or how do you measure it?

Mr. McCoy. I believe the biggest measurement is how much we 

actually do. How many people we can actually talk to and get out 

and meet, and each one of the Pension Maintenance Centers works 

closely with the Regional Offices that are under their jurisdiction. 

And, of course, people from those regional offices meet with County 

Veterans Service Officers, State Directors of Veterans Affairs, and 

groups like that.

Mr. Miller. Can you tell any measurable difference, though, in 

those who make application since you started the outreach? Or expanded the outreach?

Mr. McCoy. Steve?

Mr. Simmons. I do not have that answer.

Mr. Miller. It would be interesting to know. Obviously you are 

doing a lot of work. You are touching a lot of veterans and beneficiaries. But it would be interesting to know if all of the effort is actually 

increasing the amount of applications for pensioners.

 Now, I think the current backlog of claims is just under 17,000 and 

what I would like to know is, does this reflect the new pension claims 

only? Or does it include routine follow-up issues such eligibility verification reports? And also, would consolidating all original pension 

claims to the Pension Maintenance Centers improve processing times 

and consistency of decisions?

Mr. Simmons. The backlog at the PMCs?

Mr. Miller. Yes.

Mr. Simmons. It does not include the original claims at this time.

Mr. McCoy. As Steve said, we have not consolidated the original 

pension claims to the PMCs at this time.

Mr. Miller. Would it improve the processing times and consistency? You know, that is the question.

Mr. McCoy. Yes sir, I believe it will. I mean, from when we first 

started the consolidation of PMCs, I think in the last year, they have 

made tremendous strides. And I believe it would. Admiral Cooper 
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and I have discussed that, and when Admiral Cooper is comfortable 

that the PMCs are at that position then our plan would definitely be 

to finish the consolidation.

Mr. Miller. We have talked a lot about cyber security in this Committee. Obviously there was a lot of angst when the laptop computer 

was missing. There are some proposed changes in VA cyber security 

and the polices that affect VBA’s ability to match the pensioner’s income data with Social Security. Do you see any problems with being 

able to make those matches given some of the changes that are being 

made?

Mr. McCoy. No sir. One thing that we will make sure of is that, 

if there is any security issue, we will have it covered. And we have 

MOUs with everyone that we do any type of match with.

Mr. Miller. But what I am more concerned with is being able to 

get the data to talk back and forth to each other. You do not foresee 

a firewall problem?

Mr. McCoy. No sir.

Mr. Miller. Mr. Udall?

Mr. Udall. Thank you, Mr. Chairman. Mr. McCoy, according to 

the most recent evaluation of VA’s pension program, Congressional 

intent of the program is not being met due to the low level of benefits. Congresswoman Berkley has introduced H.R. 5119 to begin 

to increase benefits for veterans. Does the Administration support 

increasing pension benefits so that our wartime veterans and their 

survivors can afford food, shelter and medical care?

Mr. McCoy. Sir, I cannot speak for the Agency in that regard, if the 

Agency actually supports it. We have had a number of conversations 

about it. I could not answer that at this time.

Mr. Udall. Many Native American communities have high levels 

of poverty and large percentages of wartime veterans. Has the VA

done any special outreach to Native American communities concerning the pension program?

Mr. Middleton. Congressman Udall, I am Woody Middleton from 

the St. Paul Pension Center. We have a number of Native American 

states and, to answer your question, yes. We routinely visit the Dakotas in outreach to their Native American communities. I do not have 

information as to the number of Native Americans on the rolls.

Mr. Udall. We have over ten percent of our population as Native 

American in New Mexico. Are you aware of any figures or numbers 

there? And many of them live in very rural areas. The best means 

of communication is usually by radio, and then asking them to come 

into a Chapter House or something along that line. On the Navajo 

Reservation for sure, and the Pueblos sometimes you use different 

techniques. Are you aware of anything you have done in the southwest or in New Mexico?

Mr. Middleton. Mr. Udall, I am not aware of any means that we 
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are pursuing to reach these folks. We do acknowledge that there is 

an importance to reach all our veterans who need pension benefits. I 

am sure with the Compensation and Pension Service we will pursue 

avenues to reach the Native American veterans.

Mr. Udall. Thank you. Many elderly veterans and survivors are 

spending their life savings on medical care. How can the VA improve 

its outreach to veterans paying for nursing home care or those receiving care at home instead of nursing home care?

Mr. Simmons. Congressman, all of our regional offices conduct outreach to homeless and to the elderly. We work with the AARP and 

a number of other organizations to reach the elderly and other low 

income groups. So our Albuquerque Regional Office would be conducting outreach in many different formats throughout the state of 

New Mexico.

Mr. Udall. Thank you. Mr. Chairman, yield back.

Mr. Miller. Let me ask another question about the consolidation of pension activities to the three offices. How much time do you 

think was freed up at the Regional Offices to focus on other types of 

claims? And how has the quality of eligibility verification reviews 

been impacted?

Mr. Simmons. The quality of the work has increased dramatically 

over the past year, and I think that the consolidation is directly related to that. The consolidation has also freed up our regional offices. 

Rather than trying to train our Veterans Claims Representatives to 

handle both the income related issues and the disability compensation, and both areas are complicated, we have been able to specialize 

in the regional offices on the compensation. In the PMCs, focusing on 

the complex activities associated with the pension adjustments.

Mr. Miller. Mr. McCoy, you spent a couple days at the St. Paul 

PMC.

Mr. McCoy. Yes sir.

Mr. Miller. Talk to us a little bit about what you found there.

Mr. McCoy. I found an awful lot of employees very dedicated to 

being part of the PMCs. One of the questions that I had was, you 

know, in St. Paul they are still working compensation claims in the 

Veterans Service Center. So one of the questions was how often do we 

pull people from the Pension Maintenance Center to help in compensation. And I was assured that that does not happen, which made me 

feel really good because that was one of the things that we wanted 

to make sure did not happen. We wanted to know that the Pension 

Maintenance Center only did Pension Maintenance work. That is 

what they are trained to do and that is what I saw.

Mr. Miller. How many people are employed there?

Mr. McCoy. In St. Paul in the Pension Maintenance Center?

Mr. Miller. Yes.

Mr. Middleton. Mr. Chairman, we have 137 employees.
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Mr. Miller. Mr. Udall, do you have another question?

Mr. Udall. Yes, I would like to direct a couple of questions to the 

Pension Service Center managers, Mr. Chairman. What functions 

are currently performed at VA Regional Offices and what functions 

are performed at the Pension Management Centers? And is there a 

liaison at the Regional Office for cases involving both offices?

Ms. Filipov. I can answer that. Right now the home Regional Offices handle service connected disability claims and also determination on the original pension claims. In other words, the first award 

on whether to put someone on the pension rolls. The Pension Maintenance Centers handle maintenance actions once someone is receiving 

pension. And I believe the second part of your question was, I am 

sorry, can you repeat the second?

Mr. Udall. Is there a liaison at Regional Offices for cases involving both offices?

Ms. Filipov. There are liaisons, people that we work with when we 

need information from each other and we normally communicate by 

email and telephone contact.

Mr. Udall. What do you believe is the biggest improvement in 

processing of pension claims by having Pension Management Centers?

Ms. Filipov. I believe the increase in our quality coming from 80 

percent in fiscal year 2005 and being closer to 91 percent now.

Mr. Udall. What is the most difficult aspect of your job?

Ms. Filipov. The cyclical nature of the workload in the Pension 

Maintenance Center. We probably receive 65 percent of our workload 

in a very short time frame, from January through March, and we 

spend a lot of time working that inventory off.

Mr. Udall. Do any of the other pension managers have any comments on the questions I just asked?

Mr. Middleton. I would like to echo Ms. Filipov’s remarks about 

the cyclical nature of the pension workload. We all experience tremendous backlogs at the beginning of the calendar year, January, 

February, March time frame. And it is an enormous workload, but 

collaborative efforts with C & P Service, training, and consistency in 

the procedures, we have managed that work.

Mr. Udall. Is there some way that you can address the cyclical 

nature of the demands that are occurring there?

Mr. Limpose. Yes sir. In late December of every calendar year, 

anybody that is on the VA rolls for pension will receive an Income 

Verification report and will also be sent an unreimbursed Medical 

Expenses form to file for retro payments. Each PMC will have approximately 80,000 to 100,000 of those types of requests go out, and 

then they come back to us, usually, as Lucy said, within the first 

three months of every calendar year.

Mr. Udall. Thank you very much. Yield back, Mr. Chairman.
9

Mr. Miller. Thank you very much. We appreciate it. It has been 

an informative hearing, although it may appear short to some. We 

know that the pension program, as illustrated by the testimony, provides low income veterans and survivors valuable financial resources 

on behalf of a very grateful nation. And I want to thank VBA for 

their testimony, and for working with us throughout the 109th Congress. You have all helped educate the Subcommittee on the many 

programs that VBA administers, and I look forward to working with 

you next Congress to address concerns and make improvements in 

these programs. Mr. Udall, it has certainly been a pleasure to work 

with you and Ms. Berkley and I look forward to our next Congress 

together.

Without objection, members will have five legislative days to submit materials for the record as well as post hearing questions to the 

witnesses. And with nothing further, this hearing is adjourned.

[Whereupon, at 10:55 a.m., the Subcommittee was adjourned.]
APPENDIX

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Questions for the Record

Congressman Tom Udall

House Committee on Veterans’ Affairs

Subcommittee on Disability Assistance and Memorial Affairs

September 27, 2006

Oversight Hearing on the Department of Veterans’ Affairs 

Pension Program 

Question 1: Has the Veterans Benefits Administration considered 

any policies which could reduce the impact of the cyclical work of the 

Pension Maintenance Centers such as having some of the income 

verification matches performed on a semiannual basis? 

Response: The Department of Veterans Affairs (VA) analyzes the 

various components of the pension maintenance process to distribute 

the workflow as consistently and predictably as possible over the 

course of the year. For example, VA is in the process of having 

the income verification match (IVM) work released to the Pension 

Maintenance Centers (PMCs) each June to reduce the possibility of 

having to process IVM work during the busy eligibility verification 

report (EVR) season. EVR processing must be concentrated at the 

beginning of the year, from January to May, to avoid unnecessary 

overpayments or underpayments to pension recipients. 

Question 2: Please provide information (including the date by 

which staffing at the Hines Benefits Delivery Network will be 

increased) concerning the staffing needed to assure that income 

verification matches with the Internal Revenue Service (IRS) and 

beneficiary notifications can be accomplished in a timely manner in 

full compliance with IRS requirements. 

Response: The Hines Information Technology Center (ITC) 

currently accomplishes the income verification matches (IVMs) 

with the Internal Revenue Service (IRS) in a timely manner, in 

full compliance with IRS requirements. No additional staffing is 

needed in this area. The IVMs represent only about 1 percent of the 

annual printing and mailing volume accomplished at the ITC. 

Question 3: Many VA publications fail to identify service pension 

based on age separately from the disability pension program. Has 

VA taken any action to update consumer publications, such as the 
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Federal Veterans Benefits for Veterans and Dependents publication to 

clearly indicate that a pension based on age may be paid to wartime 

veterans? 

Response: The Federal Benefits for Veterans and Dependents 

booklet section on Pension opens with the following statement: 

Veterans with low incomes who are permanently 

and totally disabled, or are age 65 and older, may 

be eligible for monetary support if they have 90 

days or more of active military service, at least one 

day of which was during a period of war. 

The pension program provides the same benefits to low-income 

wartime veterans regardless of whether their eligibility is based 

on disability or age. Consequently, we do not believe it necessary to 

duplicate this information for each category of eligibility. Repeating 

the information in separate sections could be confusing to veterans 

by giving the impression that there are differences in the pension 

benefits for the disabled “and the elderly. 

Question 4: Is VA aware of organizations that are charging 

veterans for preparing pension applications? Are these activities 

in compliance with current law governing representation of 

veterans? 

Response: VA is aware that certain organizations charge veterans 

or their private care providers for preparing pension applications. 

In our view, these activities may unnecessarily delay the delivery 

of benefits and are generally not in compliance with current law 

governing representation of veterans. However, our ability to 

prevent these activities is limited by the scope of our authority to 

recognize organizations and accredit individuals for purposes of 

representation. 

The activities described in the questions raise two issues: whether 

the representation is lawful and whether charging fees for the 

representation is lawful. Under chapter 59 of title 38, United 

States Code, VA has authority to recognize organizations and 

accredit individuals for the purpose of “preparing, presenting, and 

prosecuting” claims before the Department. Under this authority, as 

interpreted by VA in part 14 of title 38, Code of Federal Regulations, 
23

VA considers all aspects of the preparation, presentation, and 

prosecution of claims as “representation” before the Department. 

Although representation includes claims preparation, those 

activities occur before the start of the VA adjudication process; 

consequently, VA’s accreditation program, under which VA grants or 

cancels accreditation and prevents individuals without the requisite 

accreditation from providing representation at a VA regional office or 

the Board of Veterans’ Appeals, cannot effectively address the issue 

of unauthorized claims preparation. 

Regarding the matter of fees, the general rule is that accredited 

attorneys and agents may charge fees for representational services 

provided after the Board of Veterans’ Appeals makes a final 

decision in a case. See 38 U.S.C. §§ 5902, 5904,and 5905. VA’s 

regulations provide a narrow exception to the general rule whereby 

a “disinterested” third-party may pay an accredited attorney or 

agent for services provided before a final Board decision, and such 

representation may include the preparation of claims. Section 5905 

is the only punitive statute in chapter 59 of title 38, United States 

Code. It provides that the direct or indirect solicitation, charging, or 

receipt of fees for representation by any person contrary to section 

5904 is punishable as a misdemeanor. However, section 5905 does 

not criminalize the preparation of claims without VA recognition. 

Thus, some organizations that do not qualify for VA recognition and 

know that the prohibition against unauthorized claims preparation 

may be unenforceable under chapter 59, structure their business 

to receive payment for their services from claimants’ private care 

providers in an effort to avoid violation of section 5905. 

The VA Office of the General Counsel (OGC) has been aggressive 

in advising representatives of unrecognized organizations that 

their preparation of claims violates Federal law. In cases where 

correspondence is not enough to convince the organization to 

discontinue its claims preparation business, OGC refers the matter 

to the VA Office of the Inspector General in the hope that that office 

may convince State or Federal prosecutors to take any action they 

deem appropriate. 

In cases where accredited individuals unlawfully charge fees, OGC 

refers the matter for a formal inquiry by the VA Regional Counsel 

of jurisdiction under 38 C.F.R. § 14.633 to determine whether the 
24

allegations justify further action, and if so, whether accreditation 

should be cancelled. Cancellation of accreditation is effective in 

preventing these individuals from presenting and prosecuting claims 

but it may not prevent them from establishing an unlawful claims 

preparation business. 

Question 5: According to the most recent evaluation of VA’s pension 

program, congressional intent of the programs is not being met due to 

the low level of benefits. Does the Administration support increasing 

pension benefits so that our wartime veterans and their survivors 

can afford food, shelter, and medical care? 

Response: VA’s improved pension is an income maintenance 

program designed to assure a level of income to wartime veterans 

and their survivors. To be eligible, a claimant may not have income 

countable for VA purposes that exceeds the yearly income limit 

(maximum annual pension rate). The maximum pension rate is 

higher for veterans than for survivors. 

The claimant’s countable income determines the amount of VA

benefits paid. There is a dollar-for-dollar reduction from the maximum 

rate for all income received by a claimant (excluding other needsbased program payments such as Social Security income (SSI) or 

welfare). Medical expenses that exceed five percent of the maximum 

annual pension rate and for which the claimant is not reimbursed 

are deducted from the claimant’s countable income. 

VA is aware of concern about the program’s ability to meet its 

objective of income maintenance. In December 2004 VA released 

a program outcomes assessment of the nonservice-connected 

disability and survivor pension programs. That study found that:

• Veterans receiving pension were better off than 

similarly situated low income elderly Americans. 

• Survivors receiving pension were worse off than 

similarly situated low income female and elderly 

Americans. 

• Many VA pension recipients struggle to pay for basic 

necessities. 

• Most VA pensioners believe their VA benefit provides 

either moderate or little financial security. 
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Another study, the Hay Group Evaluation of Pension and Parents' 

Dependency and Indemnity Compensation (DIC) Programs, drew 

similar conclusions. The Hay Group's Final Report (December 

2004) concluded that survivors receiving pension are worse off, on 

average, than similarly situated low-income female and elderly 

Americans. On the other hand, veterans receiving pension were 

found to be generally better off than their peers. According to the 

report, this situation exists because veterans are eligible to enroll 

in VA healthcare, whereas survivors are not. Consequently, very 

few veterans in receipt of pension are also receiving Medicaid or SSI

benefits. A much larger number of survivors, more than 40 percent, 

receive SSI and Medicaid. 

It is possible that raising the rate for survivors, especially those not 

entitled to Medicare, could jeopardize their continued eligibility for 

Medicaid. An increase in the death pension rate could potentially 

worsen some pension beneficiaries' overall financial position due to 

the loss of healthcare coverage. 

Additionally, we believe that an appropriate distinction in the 

maximum amount of benefits payable to veterans under the disability 

pension program and the maximum amount payable to survivors 

under the death pension program should be maintained. Raising the 

maximum amount payable under the death pension program without 

a comparable increase in the disability pension program for veterans 

could significantly minimize this distinction. 

It is also important to maintain the distinction in the amount 

of Dependency and Indemnity Compensation (DIC) payable to 

survivors of those who die in service or as a result of a serviceconnected disability and the amount of death pension payable 

to survivors of veterans who die of nonservice-related causes. A

significant increase in the death pension income limit could result 

in some pension recipients receiving greater benefits than some 

DIC recipients.