[Federal Register Volume 77, Number 122 (Monday, June 25, 2012)]
[Proposed Rules]
[Pages 37839-37841]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-15420]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 9

RIN 2900-AO24


Veterans' Group Life Insurance (VGLI) No-Health Period Extension

AGENCY: Department of Veterans Affairs.

ACTION: Proposed rule.

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SUMMARY: The Department of Veterans Affairs (VA) proposes to amend its 
regulations governing eligibility for Veterans' Group Life Insurance 
(VGLI) to extend to 240 days the current 120-day ``no-health'' period 
during which veterans can apply for VGLI without proving that they are 
in good health for insurance purposes. The purpose of this proposed 
rule is to increase the opportunities for disabled veterans to enroll 
in VGLI, some of who would not qualify for VGLI coverage under existing 
provisions.

DATES: Comments must be received by VA on or before July 25, 2012.

ADDRESSES: Written comments may be submitted through http://www.Regulations.gov; by mail or hand delivery to Director, Regulations 
Management (02REG), Department of Veterans Affairs, 810 Vermont Ave. 
NW., Room 1068, Washington, DC 20420; or by fax to (202) 273-9026. 
Comments should indicate that they are submitted in response to ``RIN 
2900-AO24--Veterans' Group Life Insurance (VGLI) No-Health Period 
Extension.'' Copies of comments received will be available for public 
inspection in the Office of Regulation Policy and Management, Room 
1063B, between the hours of 8 a.m. and 4:30 p.m., Monday through Friday 
(except holidays). Please call (202) 461-4902 for an appointment. (This 
is not a toll-free number.) In addition, during the comment period, 
comments may be viewed online through the Federal Docket Management 
System (FDMS) at http://www.Regulations.gov.

FOR FURTHER INFORMATION CONTACT: Monica Keitt, Attorney/Advisor, 
Department of Veterans Affairs Regional Office and Insurance Center 
(310/290B), 5000 Wissahickon Avenue, P.O. Box

[[Page 37840]]

8079, Philadelphia, PA 19101, (215) 842-2000, ext. 2905. (This is not a 
toll-free number.)

SUPPLEMENTARY INFORMATION: The Secretary of Veterans Affairs has 
authority to prescribe regulations that are necessary or appropriate to 
carry out the laws administered by VA and that are consistent with 
those laws. 38 U.S.C. 501(a). Section 1977 of title 38, United States 
Code, authorizes the Veterans' Group Life Insurance (VGLI) program, 
which provides servicemembers separating from service with the option 
of converting existing Servicemembers' Group Life Insurance (SGLI) 
coverage into renewable, 5-year term group life insurance coverage. 38 
U.S.C. 1968(b)(1)(A); see 38 U.S.C. 1977(b). Furthermore, section 
1977(b)(5) authorizes VA to impose reasonable and practicable terms and 
conditions on the provision of VGLI. VA has exercised that authority by 
providing, in 38 CFR 9.2(b), effective dates of VGLI coverage, provided 
that the administrative office has received an application and the 
initial premium within certain specified periods, usually within 120 
days following termination of duty.
    Section 9.2(c) provides an exception to the imposition of those 
limitation periods. If either an application or the initial premium has 
not been received by the administrative office within the applicable 
period specified in Sec.  9.2(b), VGLI coverage may still be granted if 
the administrative office receives an application, the initial premium, 
and ``evidence of insurability'' within 1 year and 120 days following 
termination of duty. Thus, evidence of insurability is not required if 
a veteran submits to the administrative office an application and the 
initial premium within the period required by Sec.  9.2(b), but 
evidence of insurability is required if a veteran utilizes the 1-year 
grace period provided by Sec.  9.2(c). This proposed rule would extend 
the period during which no evidence of insurability is needed from 120 
days to 240 days.
    VA proposes to amend Sec.  9.2(c) to extend the ``no-health'' 
period during which veterans can apply for VGLI without the need to 
provide ``evidence of insurability'' demonstrating good health that is 
normally necessary to obtain life insurance. Under Sec.  9.2(c), a 
veteran has an eligibility period of ``1 year and 120 days following 
termination of duty'' to apply for VGLI. Currently, during the initial 
120 days following termination of duty, veterans can qualify for VGLI 
without the need to prove that they are ``insurable.'' This proposed 
rule would extend the VGLI ``no-health'' period from 120 days to 240 
days; it would make no change to the 1 year and 120-day VGLI 
eligibility period following termination of duty except to extend the 
period during which no evidence of insurability is needed.
    VA is proposing to extend the 120-day ``no-health'' period to 240 
days to increase the opportunity for disabled veterans to apply for 
VGLI. VA has found that during the initial 120-day adjustment period 
following termination of duty, many veterans have not had time to 
assess their life insurance needs. An expanded ``no-health'' period 
would also provide VA Insurance outreach services with an increased 
opportunity to discuss insurance coverage with these veterans while 
they are still in the ``no-health'' period. By amending Sec.  9.2(c), 
VA would ensure that veterans with service-connected disabilities have 
ample opportunity to provide life insurance protection for their 
families and loved ones.
    In addition to changes made to the length of the ``no-health'' 
period, this amendment of Sec.  9.2(c) would also include removal of 
the words ``Servicemembers' Group Life Insurance or,'' which refers to 
Retired Reservist SGLI, which was discontinued by Public Law 104-275 as 
an independent program on October 9, 1996, because the program was 
merged into the VGLI program and extended VGLI to members of the Ready 
Reserves. As a result, reference to SGLI in Sec.  9.2(c) is no longer 
applicable.
    Finally, VA is proposing to amend Sec.  9.2 by revising the 
authority citation that follows Sec.  9.2(b)(4) to read ``(Authority: 
38 U.S.C. 1977)'' instead of ``(Authority: 38 U.S.C. 1977(e)).'' This 
amendment will reflect the proper legal authority under which VGLI 
provisions apply, as it relates to this regulation, instead of just 
paragraph (e), which is not broad enough to provide the proper 
authority for VGLI provisions provided under Sec.  9.2.
    VA estimates that there would be no additional costs to the 
Government as a result of this proposed rule. We anticipate that the 
final rule will be effective in early fall 2012, and apply to veterans 
released from service on or after the effective date.

Comment Period

    Although under the rulemaking guidelines in Executive Order 12866, 
VA ordinarily provides a 60-day comment period, the Secretary has 
determined that there is good cause to limit the public comment period 
on this proposed rule to 30 days. VA does not expect to receive a large 
number of comments on this proposed rule, particularly comments that 
are negative or that oppose this rule, because this rule would increase 
the opportunity for veterans to obtain valuable insurance coverage that 
is needed to help ensure financial security for their families, while 
placing no additional burdens on veterans or their families. Lastly, VA 
believes that implementation of this regulation is particularly urgent 
because by extending the VGLI ``no-health'' eligibility period, it will 
enable some of the most disabled veterans to obtain insurance coverage 
when eligibility for commercial insurance is not possible due to their 
disabilities. The 30-day review and comment period will not result in 
any additional cost or cause any negative impacts on the program, but 
will make the extended ``no-health'' period available to disabled 
veterans sooner. Accordingly, the Secretary has determined that it is 
unnecessary, impracticable, and contrary to the public interest to 
provide for a longer comment period, and VA has provided that comments 
must be received within 30 days of publication in the Federal Register.

Unfunded Mandates

    The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 
1532, that agencies prepare an assessment of anticipated costs and 
benefits before issuing any rule that may result in an expenditure by 
State, local, and tribal governments, in the aggregate, or by the 
private sector, of $100 million or more (adjusted annually for 
inflation) in any year. This proposed rule would have no such effect on 
State, local, and tribal governments or on the private sector.

Paperwork Reduction Act

    This proposed rule contains no provisions constituting a collection 
of information under the Paperwork Reduction Act (44 U.S.C. 3501-3521).

Executive Orders 12866 and 13563

    Executive Orders 12866 and 13563 direct agencies to assess the 
costs and benefits of available regulatory alternatives and, when 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, and other advantages; distributive impacts; 
and equity). Executive Order 13563 (Improving Regulation and Regulatory 
Review) emphasizes the importance of quantifying both costs and 
benefits, reducing costs, harmonizing rules, and promoting flexibility. 
Executive Order 12866 (Regulatory Planning and Review) defines a 
``significant

[[Page 37841]]

regulatory action,'' which requires review by the Office of Management 
and Budget (OMB), as ``any regulatory action that is likely to result 
in a rule that may: (1) Have an annual effect on the economy of $100 
million or more or adversely affect in a material way the economy, a 
sector of the economy, productivity, competition, jobs, the 
environment, public health or safety, or State, local, or tribal 
governments or communities; (2) Create a serious inconsistency or 
otherwise interfere with an action taken or planned by another agency; 
(3) Materially alter the budgetary impact of entitlements, grants, user 
fees, or loan programs or the rights and obligations of recipients 
thereof; or (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
this Executive Order.''
    The economic, interagency, budgetary, legal, and policy 
implications of this regulatory action have been examined and it has 
been determined not to be a significant regulatory action under 
Executive Order 12866.

Regulatory Flexibility Act

    The Secretary of Veterans Affairs hereby certifies that this 
proposed rule would 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 
directly affect only individuals and will not directly affect any small 
entities. Therefore, 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.

Catalog of Federal Domestic Assistance Number and Title

    The Catalog of Federal Domestic Assistance number and title for the 
program affected by this document is 64.103, Life Insurance for 
Veterans.

Signing Authority

    The Secretary of Veterans Affairs, or designee, approved this 
document and authorized the undersigned to sign and submit the document 
to the Office of the Federal Register for publication electronically as 
an official document of the Department of Veterans Affairs. John R. 
Gingrich, Chief of Staff, Department of Veterans Affairs, approved this 
document on June 20, 2012, for publication.

List of Subjects in 38 CFR Part 9

    Life insurance, Military personnel, Veterans.

    Dated: June 20, 2012.
Robert C. McFetridge,
Director, Office of Regulation Policy and Management, Office of the 
General Counsel, Department of Veterans Affairs.

    For the reasons stated in the preamble, the Department of Veterans 
Affairs proposes to amend 38 CFR part 9 as follows:

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

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

    Authority:  38 U.S.C. 501, 1965-1980A, unless otherwise noted.

    2. Amend Sec.  9.2 by:
    a. Revising the authority citation at the end of paragraph (b).
    b. Revising paragraph (c).
    c. Adding an authority citation at the end of the section.
    The revisions and addition read as follows:


Sec.  9.2  Effective date; applications.

* * * * *
    (b) * * *

(Authority: 38 U.S.C. 1977)


    (c) If either an application or the initial premium has not been 
received by the administrative office within the time limits set forth 
above, Veterans' Group Life Insurance coverage may still be granted if 
an application, the initial premium, and evidence of insurability are 
received by the administrative office within 1 year and 120 days 
following termination of duty, except that evidence of insurability is 
not required during the initial 240 days following termination of duty.
* * * * *

(Authority: 38 U.S.C. 501, 1967, 1968, 1977)


[FR Doc. 2012-15420 Filed 6-22-12; 8:45 am]
BILLING CODE 8320-01-P