[Federal Register Volume 65, Number 140 (Thursday, July 20, 2000)]
[Proposed Rules]
[Pages 44999-45002]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-18327]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 9

RIN 2900-AJ80


Accelerated Benefits Option for Servicemembers' Group Life 
Insurance and Veterans' Group Life Insurance

AGENCY: Department of Veterans Affairs.

ACTION: Proposed rule.

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SUMMARY: The Veterans Programs Enhancement Act of 1998 authorizes the 
payment of accelerated benefits to terminally ill persons in the 
Servicemembers' Group Life Insurance (SGLI) and Veterans' Group Life 
Insurance (VGLI) programs. This document proposes to amend the 
Department of Veterans Affairs (VA) regulations to establish a 
mechanism for implementing these statutory provisions.

DATES: Comments must be received on or before September 18, 2000.

ADDRESSES: Mail or hand-deliver written comments to: Director, Office 
of Regulations Management (02D), Department of Veterans Affairs, 810 
Vermont Ave., NW., Room 1154, Washington, DC 20420; or fax comments to 
(202) 273-9289; or e-mail comments to ``[email protected]''. 
Comments should indicate that they are submitted in response to ``RIN 
2900-AJ80.'' All comments received will be available for public 
inspection in the Office of Regulations Management, Room 1158, between 
the hours of 8 a.m. and 4:30 p.m., Monday through Friday (except 
holidays).

FOR FURTHER INFORMATION CONTACT: Greg Hosmer, Senior Attorney/Insurance 
Specialist, Insurance Program Administration and Oversight, Department 
of Veterans Affairs Regional Office and Insurance Center, P.O. Box 
8079, Philadelphia, Pennsylvania 19101, (215) 842-2000, ext. 4280 (this 
is not a toll-free number).

SUPPLEMENTARY INFORMATION: This document proposes to amend VA 
regulations for the Servicemembers' Group Life Insurance (SGLI) and 
Veterans' Group Life Insurance (VGLI) programs to add accelerated death 
benefit (Accelerated Benefit) provisions that permit terminally ill 
policyholders access to the death benefits of their policies before 
they die. Traditionally, an individual purchases life insurance in 
order to safeguard his or her dependents against major financial loss 
due to his or her death. Life insurance serves to replace the lost 
income of an insured and to provide for his or her

[[Page 45000]]

final expenses. In recent years, the insurance industry has recognized 
the financial needs of terminally ill policyholders and has begun 
offering policies with accelerated benefit provisions. A recent 
statutory amendment (section 302 of the Veterans Programs Enhancement 
Act of 1998, Pub. L. 105-368, 112 Stat. 3315, 3332-3333) added section 
1980 to title 38, United States Code, which extends an accelerated 
benefit option to terminally ill persons insured in the SGLI and VGLI 
programs.
    Proposed paragraph (a) is informative in that it explains that an 
Accelerated Benefit is a payment to the insured of a portion of a SGLI 
or VGLI insurance benefit before the insured dies.
    Proposed paragraph (b), among other things, states that a person 
insured under SGLI or VGLI is eligible to receive an Accelerated 
Benefit if the person has a written medical prognosis from a physician 
of nine months or less to live. These provisions are proposed pursuant 
to 38 U.S.C. 1980(a) which states that a person is considered to be 
terminally ill and eligible for an Accelerated Benefit if, based on a 
medical prognosis, ``the life expectancy of the person is less than a 
period prescribed by the Secretary * * * not [to] exceed 12 months.'' 
We believe that a written medical prognosis from a physician is 
consistent with the statutory intent. Further, we propose that the time 
period of life expectancy for allowing the payment of an Accelerated 
Benefit should be nine months or less. The nine-month maximum is the 
same period that is provided for civilian Federal employees who are 
insured by the Federal Employees Group Life Insurance (FEGLI) program, 
as authorized by the ``FEGLI Living Benefits Act,'' Public Law 103-409. 
We believe that it is reasonable to have the same time period for 
individuals regardless of whether the program concerns military or 
civilian service.
    Proposed paragraph (c) states that only the insured member can 
apply for an Accelerated Benefit. We believe this is necessary so that 
the insured is responsible for the determination to obtain an 
Accelerated Benefit.
    Under the provisions of proposed paragraph (d) an insured may 
request as an Accelerated Benefit an amount up to a maximum of 50% of 
the face value of coverage and the request must be $5,000 or a multiple 
of $5,000. Under paragraph (e) the insured may receive such an amount 
requested, minus an interest reduction determined based on actuarial 
principles to be lost because of early payment. We believe this is the 
maximum amount that we can pay an insured under our statutory authority 
in 38 U.S.C. 1980 in accordance with our mandate to prescribe a maximum 
amount that we find to be ``administratively practicable and 
actuarially sound.''
    Proposed paragraph (f) provides that application for an Accelerated 
Benefit must be made on a form entitled ``Claim for Accelerated 
Benefits,'' a form which must be completed by the terminally ill 
applicant, his or her physician, and, if on active duty, the personnel 
office of the servicemember's unit. This is necessary to ensure that 
sufficient information is submitted for determinations under this 
section.
    Under proposed paragraph (g) and other provisions of this proposed 
rule, the Office of Servicemembers' Group Life Insurance (OSGLI) would 
administer the Accelerated Benefits program. This includes making the 
necessary determinations regarding the payment of Accelerated Benefits. 
This is authorized under 38 U.S.C. 1966 and 1980.
    Proposed paragraph (h) states that an Accelerated Benefit will be 
paid in a lump sum. This reflects statutory provisions at 38 U.S.C. 
1980(b) and (c).
    According to 38 U.S.C. 1980(f)(1), an election to receive 
Accelerated Benefits is irrevocable. We proposed to define the term 
``election'' for purposes of section 1980(f)(1) in paragraph (i) of the 
proposed rule as the time when an insured member cashes or deposits an 
accelerated benefit. After that election, the request for an 
accelerated benefit could not be cancelled. However, until that time, 
the insured member may cancel the request by informing OSGLI in writing 
and by returning the check if one was received. An insured member could 
later reapply by requesting the same or a different amount of benefits. 
Also, if an insured member died before cashing or depositing an 
accelerated benefit payment, the check must be returned to VA. These 
provisions are consistent with the provisions of 38 U.S.C. 1980.
    Proposed paragraph (j) states that an insured member is not 
eligible for additional accelerated benefits once he or she cashes or 
deposits an accelerated benefit payment. This is mandated by the 
provisions of 38 U.S.C. 1980 which state that an individual may not 
make more than one election for accelerated benefits.

Paperwork Reduction Act

    Under the Paperwork Reduction Act of 1995, as amended (44 U.S.C. 
3501-3520), this proposed rule includes information collection 
provisions in 38 CFR 9.14(e). In accordance with section 3507(d) of the 
Act and 5 CFR 1320.11, VA has submitted a copy of this rulemaking 
action to OMB for its review of the collections of information.
    OMB assigns a control number for each collection of information it 
approves. VA may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a 
currently valid OMB control number.
    Comments on the proposed collections of information should be 
submitted to the Office of Management and Budget, Attention: Desk 
Officer for the Department of Veterans Affairs, Office of Information 
and Regulatory Affairs, Washington, DC 20503, with copies mailed or 
hand-delivered to: Director, Office of Regulations Management (02D), 
Department of Veterans Affairs, 810 Vermont Ave., NW., Room 1154, 
Washington, DC 20420. Comments should indicate that they are submitted 
in response to ``RIN 2900-AJ80.''
    Title: Application by Insured Terminally Ill Person for Accelerated 
Benefit.
    Summary of collection of information: In proposed 38 CFR 9.14(e), 
VA would require that a terminally ill person insured under 
Servicemembers' Group Life Insurance (SGLI) or Veterans' Group Life 
Insurance (VGLI) who wants to receive a lump-sum payment to the insured 
prior to the insured's death of a portion of the insurance must submit 
to Prudential Life Insurance's Office of Servicemembers' Group Life 
Insurance a completed application for an Accelerated Benefit. The 
application must be on a form set forth in Sec. 9.14(e) which includes 
a medical prognosis by a physician stating the life expectancy of the 
insured person and a statement by the insured of what portion of the 
insurance he or she requests.
    Description of need for information and proposed use of 
information: The information is needed to comply with the statutory 
provisions permitting an insured person who is terminally ill to 
request payment of a portion of the face value of the insured person's 
SGLI or VGLI insurance as an Accelerated Benefit.
    Description of likely respondents: Terminally ill persons insured 
under SGLI or VGLI and their physicians.
    Estimated number of respondents: 200 annually.
    Estimated frequency of responses: Once.
    Estimated total annual reporting and recordkeeping burden: 2,400 
minutes.
    Estimated average burden per collection: 12 minutes.

[[Page 45001]]

    The Department considers comments by the public on proposed 
collections of information in--
     Evaluating whether the proposed collections of information 
are necessary for the proper performance of the functions of the 
Department, including whether the information will have practical 
utility;
     Evaluating the accuracy of the Department's estimate of 
the burden of the proposed collections of information, including the 
validity of the methodology and assumptions used;
     Enhancing the quality, usefulness, and clarity of the 
information to be collected; and
     Minimizing the burden of the collections of information on 
those who are to respond, including responses through the use of 
appropriate automated, electronic, mechanical, or other technological 
collection techniques or other forms of information technology, e.g., 
permitting electronic submission of responses.
    OMB is required to make a decision concerning the collections of 
information contained in this proposed rule between 30 and 60 days 
after publication of this document in the Federal Register. Therefore, 
a comment to OMB is best assured of having its full effect if OMB 
receives it within 30 days of publication. This does not affect the 
deadline for the public to comment on the proposed rule.

Executive Order 12866

    The Office of Management and Budget has reviewed this proposed rule 
under Executive Order 12866.

Regulatory Flexibility Act

    The Secretary hereby certifies that this proposed rule will not 
have a significant economic impact on a substantial number of small 
entities as they are defined in the Regulatory Flexibility Act, 5 
U.S.C. 601-612. This proposed rule would affect only individuals. 
Accordingly, pursuant to 5 U.S.C. 605(b), this proposed rule is exempt 
from the initial and final regulatory flexibility analysis requirements 
of sections 603 and 604.

Unfunded Mandates

    The Unfunded Mandates Reform Act requires (in section 202) that 
agencies prepare an assessment of anticipated costs and benefits before 
developing any rule that may result in an expenditure by State, local, 
or tribal governments, in the aggregate, or by the private sector of 
$100 million or more in any given year. This rule would have no 
consequential effect on State, local, or tribal governments.

Catalog of Federal Domestic Assistance Program Numbers

    The Catalog of Federal Domestic Assistance program number for this 
rule is 64.103.

List of Subjects in 38 CFR Part 9

    Life insurance, Military personnel, Veterans.

    Approved: February 22, 2000.
Togo D. West, Jr.,
Secretary of Veterans Affairs.
    For the reasons set out in the preamble, 38 CFR part 9 is proposed 
to be amended as set forth below:

PART 9--SERVICEMEMBERS' GROUP LIFE INSURANCE AND VETERANS' GROUP 
LIFE INSURANCE

    1. The authority citation for part 9 is revised to read as follows:

    Authority: 38 U.S.C. 501, 1965-1980, unless otherwise noted.
    2. Section 9.14 is added to read as follows:


Sec. 9.14  Accelerated Benefits.

    (a) What is an Accelerated Benefit? An Accelerated Benefit is a 
payment of a portion of your Servicemembers' Group Life Insurance or 
Veterans' Group Life Insurance to you before you die.
    (b) Who is eligible to receive an Accelerated Benefit? You are 
eligible to receive an Accelerated Benefit if you have a valid written 
medical prognosis from a physician of 9 months or less to live, and 
otherwise comply with the provisions of this section.
    (c) Who can apply for an Accelerated Benefit? Only you, the insured 
member, can apply for an Accelerated Benefit. No one can apply on your 
behalf.
    (d) How much can you request as an Accelerated Benefit?
    (1) You can request as an Accelerated Benefit an amount up to a 
maximum of 50% of the face value of your insurance coverage.
    (2) Your request for an Accelerated Benefit must be $5,000 or a 
multiple of $5000 (for example, $10,000, $15,000).
    (e) How much can you receive as an Accelerated Benefit? You can 
receive as an Accelerated Benefit the amount you request up to a 
maximum of 50% of the face value of your insurance coverage, minus the 
interest reduction. The interest reduction is the amount the Office of 
Servicemembers' Group Life Insurance actuarially determines to be the 
amount of interest that would be lost because of the early payment of 
part of your insurance coverage. This means that if you have $100,000 
in coverage and you request the maximum amount that you are eligible to 
request as an Accelerated Benefit, you will be paid $50,000 minus the 
interest reduction.
    (f) How do you apply for an Accelerated Benefit? (1) You can obtain 
an application form entitled ``Claim for Accelerated Benefits'' by 
writing the Office of Servicemembers'' Group Life Insurance, 213 
Washington Street, Newark, New Jersey 07102-2999; calling the Office of 
Servicemembers' Group Life Insurance toll-free at 1-800-219-1473; or 
downloading the form from the internet at www. va. insurance.gov. You 
must submit the completed application form to the Office of 
Servicemembers' Group Life Insurance, 213 Washington Street, Newark, 
New Jersey 07102-2999.
    (2) As stated on the application form, you will be required to 
complete part of the application form and your physician will be 
required to complete part of the application form. If you are an active 
duty servicemember, your branch of service will also be required to 
complete part of the form.

To Be Completed by Insured

Claim for Accelerated Benefits

Your name:-------------------------------------------------------------
Social Security Number:------------------------------------------------
Your home address:-----------------------------------------------------
Date of birth:---------------------------------------------------------
Branch of Service (if covered under SGLI):-----------------------------
Your mailing address (if different from above):------------------------
Amount of SGLI coverage: $---------------------------------------------
Amount of claim (can be no more than one-half of coverage in increments 
of $5,000):------------------------------------------------------------
Type of coverage (check one):
    {time}  SGLI   (circle one of the following):   Active Duty   
Ready Reserve   Army or Air National Guard   Separated or Discharged
    {time}  VGLI

    Note: If you checked SGLI, you must also have your military unit 
complete the attached form.

    I acknowledge that I have read all of the attached information 
about the accelerated benefit. I understand that I can get this 
benefit only once during my lifetime and that I can use it for any 
purpose I choose. I further understand that the face amount of my 
coverage will reduce by the amount of accelerated benefit I choose 
to receive now.

Your signature:--------------------------------------------------------
Date:------------------------------------------------------------------

Authorization To Release Medical Records

To all physicians, hospitals, medical service providers, 
pharmacists, employers, other insurance companies, and all other 
agencies and organizations:

You are authorized to release a copy of all my medical records, 
including examinations, treatments, history, and prescriptions, to 
the Office of Servicemembers' Group Life Insurance (OSGLI) or its 
representatives.

Printed name:----------------------------------------------------------
Signature:-------------------------------------------------------------
Date:------------------------------------------------------------------


[[Page 45002]]

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    A photocopy of this authorization will be considered as 
effective and valid as the original.
    Valid for one year from date signed.

To Be Completed by Physician

Attending Physician's Certification

Patient's name:--------------------------------------------------------
Patient's Social Security Number:--------------------------------------
Diagnosis:-------------------------------------------------------------
ICD-9-CM Disease Code *:-----------------------------------------------
Description of present medical condition (please attach results of x-
rays, E.K.G. or other tests):------------------------------------------
Is the patient capable of handling his/her own affairs?----------------
{time}  Yes__ {time}  No __
The patient applied for an accelerated benefit under his/her government 
life insurance coverage. To qualify, the patient must have a life 
expectancy of nine (9) months or less. Does your patient meet this 
requirement?-----------------------------------------------------------
{time}  Yes__ {time}  No
Attending Physician's name (please print):-----------------------------
State in which you are licensed to practice:--------------------------
Specialty:-------------------------------------------------------------
Mailing address:-------------------------------------------------------
Telephone number:------------------------------------------------------
Fax Number:------------------------------------------------------------
Signature:-------------------------------------------------------------
Date:------------------------------------------------------------------

* ICD-9-CM is an acronym for International Classification of 
Diseases, 9th revision, Clinical Modification.

To Be Completed by Personnel Office of Servicemember's Unit

(Complete this form only if the applicant for Accelerated Benefits is 
covered under SGLI.)

Branch of Service Statement

Servicemember's name:--------------------------------------------------
Social Security Number:------------------------------------------------
Branch of Service:-----------------------------------------------------
Amount of SGLI coverage: $---------------------------------------------
Monthly premium amount: $----------------------------------------------
Name of person completing this form:-----------------------------------
Telephone Number:------------------------------------------------------
Fax Number:------------------------------------------------------------
Title of person completing this form:----------------------------------
Duty Station and address:----------------------------------------------
Signature of person completing this form:------------------------------
----------------------------------------------------------------------
Date:------------------------------------------------------------------

    Notice: It is fraudulent to complete these forms with 
information you know to be false or to omit important facts. 
Criminal and/or civil penalties can result from such acts.

    (g) Who decides whether or not an Accelerated Benefit will be paid 
to you? The Office of Servicemembers' Group Life Insurance will review 
your application and determine whether you meet the requirements of 
this section for receiving an Accelerated Benefit.
    (1) They will approve your application if the requirements of this 
section are met and may deny your application if the requirements of 
this section are not met.
    (2) If the Office of Servicemembers' Group Life Insurance 
determines that your application form does not fully and legibly 
provide the information requested by the application form, they will 
contact you and request that you or your physician submit the missing 
information to them. They will not take action on your application 
until the information is provided.
    (h) How will an Accelerated Benefit be paid to you? An Accelerated 
Benefit will be paid to you in a lump sum.
    (i) What happens if you change your mind about an application you 
filed for Accelerated Benefits? (1) An election to receive the 
Accelerated Benefit is made at the time you have cashed or deposited 
the Accelerated Benefit. After that time, you cannot cancel your 
request for an Accelerated Benefit. Until that time, you may cancel 
your request for benefits by informing the Office of Servicemembers' 
Group Life Insurance in writing that you are canceling your request and 
by returning the check if you have received one. If you want to change 
the amount of benefits you requested or decide to reapply after 
canceling a request, you may file another application in which you 
request either the same or a different amount of benefits.
    (2) If you die before cashing or depositing an Accelerated Benefit 
payment, the payment must be returned to the Office of Servicemembers' 
Group Life Insurance. Their mailing address is 213 Washington Street, 
Newark, New Jersey 07102-2999.
    (j) If you have cashed or deposited an Accelerated Benefit, are you 
eligible for additional Accelerated Benefits? No.

(Authority: 38 U.S.C. 1966, 1980)

[FR Doc. 00-18327 Filed 7-19-00; 8:45 am]
BILLING CODE 8320-01-P