[Congressional Record Volume 144, Number 66 (Thursday, May 21, 1998)]
[Senate]
[Pages S5324-S5325]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SPECTER (by request):
  S. 2108. A bill to amend chapter 19, of title 38, United States Code, 
to provide that Service-members' Group Life Insurance and Veterans' 
Group Life Insurance under such chapter may, upon application, be paid 
to an insured person who is terminally ill; to the Committee on 
Veterans' Affairs.


  servicemembers and veterans' group life insurance accelerated death 
                              benefits act

Mr. SPECTER. Mr. President, as Chairman of the Committee on 
Veterans' Affairs, I have today introduced, at the request of the 
Secretary of Veterans Affairs, S. 2108, the proposed ``Servicemembers' 
and Veterans' Group Life Insurance Accelerated Death Benefits Act.'' 
The Secretary of Veterans Affairs submitted this legislation to the 
President of the Senate by letter dated February 10, 1998.
  My introduction of this measure is in keeping with the policy which I 
have adopted of generally introducing--so that there will be specific 
bills to which my colleagues and others may direct their attention and 
comments--all Administration-proposed draft legislation referred to the 
Committee on Veterans' Affairs. Thus, I reserve the right to support or 
oppose the provisions of, as well as any amendment to, this 
legislation.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record, together with the transmittal letter.
  There being no objection, the items were ordered to be printed in the 
Record, as follows:

                                S. 2108

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This act may be cited as the ``Servicemembers' and 
     Veterans' Group Life Insurance Accelerated Death Benefits 
     Act''.

     SEC. 2. OPTION TO RECEIVE ACCELERATED DEATH BENEFITS.

       (a) In General.--Chapter 19 of title 38, United States 
     Code, is amended by adding at the end of subchapter III the 
     following new section:

     ``Sec. 1980. Option to receive accelerated death benefits

       ``(a) For the purpose of this section, a person shall be 
     considered to be `terminally ill' if such person has a 
     medical prognosis that such person's life expectancy is less 
     than a period prescribed by regulation by the Secretary of 
     Veterans Affairs. The maximum time period prescribed in 
     regulation shall not exceed 12 months.
       ``(b) The Department of Veterans Affairs shall prescribe 
     regulations under which any terminally ill person insured 
     under Servicemenbers' Group Life Insurance or Veterans' Group 
     Life Insurance may elect to receive in a lump-sum payment a 
     portion of the face value of the insurance as an accelerated 
     death benefit reduced by an amount necessary to assure that 
     there is no increase in the actuarial value of the benefit 
     paid, as determined in regulations issued by the Secretary. 
     The Secretary may prescribe by regulation the maximum amount 
     of the accelerated death benefit available under this section 
     that the Secretary finds to be administratively practicable 
     and actuarially sound, but in no instance shall the benefit 
     exceed 50 percent of the face value of the person's insurance 
     in force on the date the election is approved. The insured 
     may elect to receive an amount that is less than the maximum 
     prescribed by the Secretary. The Secretary shall prescribe in 
     regulation increments in which the partial benefit can be 
     elected.
       ``(c) The portion of the face amount of the insurance which 
     was not paid in a lump sum as accelerated death benefits 
     shall remain payable in accordance with the provisions of 
     this chapter.
       ``(d) Deductions under section 1969 and premiums under 
     section 1977(c) shall be reduced, in a manner consistent with 
     the percentage reduction in the face amount of the insurance 
     as a result of payment of accelerated death benefits, 
     effective with respect to any amounts which would otherwise 
     become due on or after the date of payment under this 
     subsection.
       ``(e) The regulations shall include provisions regarding 
     the form and manner in which an application under this 
     subsection shall be made and the procedures in accordance 
     with which any such application shall be considered.
       ``(f) An election to receive benefits under this section 
     shall be irrevocable, and not more than one such election may 
     be made by any individual, even if the individual elects to 
     receive less than the maximum amount of accelerated benefits 
     prescribed by regulation.
       ``(g) If a person insured under Servicemembers' Group Life 
     Insurance elects to receive accelerated death benefits under 
     this section, and the insured's Servicemembers' Group Life 
     Insurance is thereafter converted to Veterans' Group Life 
     Insurance as provided in section 1968(b) of this title, the 
     amount of accelerated benefits paid under this section shall 
     reduce the amount of Veterans' Group Life Insurance available 
     to the insured under section 1977(a) of this title.''.
       (b) Section 1970(g) of title 38, United States Code, is 
     amended by--
       (1) striking ``of benefits'' in the first sentence and 
     inserting ``Any'' at the beginning of that sentence;
       (2) adding ``an insured or'' following ``or on account 
     of,''; and
       (3) adding the following at the end of the subsection: 
     ``Neither the amount of any payments made under this 
     subchapter nor the name and address of the recipient of such 
     payments shall be reported under subpart B of chapter 61 of 
     the Internal Revenue Code of 1986.''.
       (c) Clerical Amendment.--The table of sections at the 
     beginning of chapter 19, title 38, United States Code, is 
     amended by adding the following new item after the item 
     relating to section 1979:

``1980. Option to receive accelerated death benefits.''.

       (d) Effective Date.--The amendments made by section 2 shall 
     take effect 90 days after the date of the enactment of this 
     Act.
       (e) All regulations necessary to implement these amendments 
     shall be promulgated through notice and comment rulemaking in 
     accordance with 5 U.S.C. Sec. 553.
                                  ____



                               Department of Veterans Affairs,

                                Washington, DC, February 10, 1998.
     Hon. Albert Gore, Jr.,
     President of the U.S. Senate,
     Washington, DC.
       Dear Mr. President: There is transmitted herewith a draft 
     bill entitled the ``Servicemembers' and Veterans Group Life 
     Insurance Accelerated Death Benefits Act.'' I request that 
     this bill be referred to the appropriate committee for prompt 
     consideration and enactment.
       This draft bill would amend title 38, United States Code, 
     by adding a new section which would provide that group life 
     insurance benefits may, upon application, be paid to a 
     terminally ill person insured under Servicemembers' Group 
     Life Insurance (SGLI) or Veterans' Group Life Insurance 
     (VGLI). Traditionally, individuals have purchased life 
     insurance in order to protect their dependents against 
     financial loss due to their death. The proceeds have served 
     to replace the lost income of the insureds and to cover their 
     final expense. However, commercial life insurance companies 
     have more recently included accelerated-benefit provisions in 
     policies, which permit policyholders to receive payment of 
     all or part of their life insurance policy's face amount 
     prior to their death to provide for their needs during their

[[Page S5325]]

     final days. This draft bill would allow terminally ill SGLI 
     and VGLI insureds to have access to a portion of the death 
     benefits of the insurance proceeds provided under SGLI or 
     VGLI coverage before they die in order to meet the financial 
     burdens of medical and living expenses, but also would 
     preserve a portion of the benefits for their dependents.
       Section 2 of this draft bill would provide that benefits 
     would be payable to insured persons with a medical prognosis 
     of a life expectancy of less than a period prescribed by the 
     Secretary of Veterans Affairs, but the maximum period 
     prescribed by the Secretary would not exceed 12 months. The 
     Secretary would be authorized to promulgate regulations 
     prescribing the maximum amount of the accelerated death 
     benefit available under section 2, but in no event would the 
     maximum amount exceed 50 percent of the face value of the 
     person's insurance in force on the date the election is 
     approved. The insured would be able to choose to receive less 
     than the maximum amount prescribed by the Secretary, as 
     prescribed by regulation. Payment of benefits under this bill 
     would be reduced by an amount necessary to assure that there 
     is no increase in the actuarial value of the benefits paid. 
     The benefits would be exempt from taxation, see also 26 
     U.S.C.A. Sec. 101(g)(1)(A), and creditors' claims, and would 
     not be subject to attachment, levy, or seizure before or 
     after receipt by the insured. In return for this election, 
     the insured would sever all rights that any beneficiary might 
     have had in the portion of the proceeds which are paid as 
     accelerated death benefits. The accelerated death benefits 
     election would be irrevocable and monthly deductions for SGLI 
     and premiums for VGLI would be reduced in accordance with the 
     percentage reduction in the face amount of the insured's 
     policy as a result of the election. If a SGLI insured elects 
     to receive accelerated death benefits under section 2 of this 
     proposed legislation and the SGLI policy is then converted to 
     VGLI as provided in 38 U.S.C. Sec. 1968(b), the amount of the 
     accelerated benefits paid would be subtracted from the amount 
     of the VGLI available under 38 U.S.C. Sec. 1977(a). The 
     Department of Veterans Affairs would be required to issue 
     regulations regarding the form and manner in which an 
     application for accelerated death benefits must be made.
       This legislative proposal would reduce receipts annually by 
     a negligible amount; therefore, it is subject to the pay-as-
     you-go (paygo) requirement of the Omnibus Budget 
     Reconciliation Act of 1990 (OBRA). This proposal should be 
     considered in conjunction with other proposals in the 
     President's FY 1999 Budget that together meet the paygo 
     requirement.
       The Office of Management and Budget advises that there is 
     no objection to the submission of this report from the 
     standpoint of the Administration's program.
           Sincerely,
                                                Togo D. West, Jr.,
                                         Acting Secretary.
                                 ______