[Federal Register Volume 79, Number 147 (Thursday, July 31, 2014)]
[Rules and Regulations]
[Pages 44297-44299]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-17900]



[[Page 44297]]

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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 9

RIN 2900-AO74


Servicemembers' Group Life Insurance--Veterans' Group Life 
Insurance Regulation Update--ABO, VGLI Application, SGLI 2-Year 
Disability Extension

AGENCY: Department of Veterans Affairs.

ACTION: Final rule.

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SUMMARY: This document amends the Department of Veterans Affairs (VA) 
insurance regulations concerning Servicemembers' Group Life Insurance 
(SGLI) to reflect the statutory provisions of the Veterans' Benefits 
Act of 2010, which became law on October 13, 2010, and resulted in the 
need for amendments to change the SGLI Disability Extension period from 
1 year to 2 years in duration; provide SGLI Traumatic Injury Protection 
(TSGLI) retroactive coverage effective from October 7, 2001, for all 
qualifying injuries regardless of the geographic location and military 
operation in which the injuries were incurred; and remove the SGLI and 
Veterans' Group Life Insurance (VGLI) Accelerated Benefits Option (ABO) 
discount rate. This rule also clarifies that ``initial premium'' refers 
to ``initial Veterans' Group Life Insurance premium,'' updates the 
current address of the Office of Servicemembers' Group Life Insurance 
(OSGLI), managed by Prudential Insurance Company of America, to reflect 
where the ABO application is mailed for processing, and corrects the 
OSGLI phone number. Finally, this rule removes the ABO application form 
from the regulation, and it corrects and clarifies language concerning 
the VGLI application period that was inadvertently incorrectly modified 
in a prior amendment of the regulations.

DATES: Effective Date: This rule is effective July 31, 2014.
    Applicability Dates: In accordance with the statutory provisions, 
the applicability dates for the amendments in this final rule are as 
follows: Under Public Law 111-275, the amendments to 38 CFR 9.2 and 9.5 
regarding the SGLI 2-year disability extension are applicable for 
servicemembers discharged on or after June 15, 2005; amendments to 38 
CFR 9.14 regarding the ABO discount are applicable for payments made on 
or after October 13, 2010; and the amendments to 38 CFR 9.20 regarding 
retroactive TSGLI benefits are applicable for claims submitted on or 
after October 1, 2011.

FOR FURTHER INFORMATION CONTACT: Gregory C. Hosmer, Senior Attorney-
Advisor, Department of Veterans Affairs Regional Office and Insurance 
Center (310/290B), P.O. Box 8079, Philadelphia, Pennsylvania 19101, 
(215) 842-2000, ext 4280. (This is not a toll free number.)

SUPPLEMENTARY INFORMATION: Title IV of the Veterans' Benefits Act of 
2010, Public Law 111-275, 124 Stat. 2864, 2879 (the Act), enacted on 
October 13, 2010, contains several provisions that directly affect the 
payment of and eligibility for certain SGLI related benefits. 
Therefore, VA is amending its regulations to reflect those statutory 
changes. VA is also making technical amendments to clarify, in current 
Sec.  9.2(b)(2), that ``initial premium'' refers to ``initial Veterans' 
Group Life Insurance premium,'' to correct and clarify language 
concerning the VGLI application period, to update an address and phone 
number, and to remove a VA form.

38 CFR 9.2 and 9.5

    Section 402 of the Act amended 38 U.S.C. 1968(a) by extending the 
duration of the SGLI disability extension period to 2 years from the 
date of an insured servicemember's separation or release from duty. 
Prior to enactment of the Act, the 2-year disability extension period 
was set to expire on September 30, 2011, thereafter reducing the length 
of the SGLI disability extension to 18 months for servicemembers 
discharged from duty on or after October 1, 2011. This final rule 
amends the first sentence of 38 CFR 9.2(b)(2) by deleting the term ``1-
year period'' and replacing it with the term ``2-year period'' to 
reflect current law. This rule also amends the last sentence of 38 CFR 
9.2(b)(2) to clarify that a servicemember insured under the SGLI 
disability extension has 1 year following ``termination of SGLI 
coverage'' to apply for VGLI coverage and not 1 year from the 
``termination of duty'' as the last sentence of Sec.  9.2(b)(2) 
currently reads. Under Sec.  9.2(b)(2), for any servicemembers who are 
unemployable due to being totally disabled at the time of their 
discharge from service or release from assignment with eligibility for 
the SGLI disability extension, their VGLI coverage eligibility period 
begins the day following the end of the SGLI 2-year disability 
extension period or the day following the end of the total disability, 
whichever is earlier. The current language came about as a result of a 
prior regulatory submission that incorrectly substituted the word 
``duty'' for the phrase ``SGLI coverage'' at the end of the last 
sentence of Sec.  9.2(b)(2). In addition, in the last sentence of Sec.  
9.2(b)(2), we clarify that the ``initial premium'' referred to is the 
initial VGLI premium.
    This rule also amends 38 CFR 9.5(d) to change the language that 
states ``1 year'' following termination of duty to ``2 years'' 
following termination of duty to reflect the fact that the SGLI 
disability extension period referenced in this paragraph is now 2 years 
in duration.

38 CFR 9.14

    Title 38, United States Code, section 1980, provides for the 
payment of an ABO under the SGLI and VGLI programs. ABO is a provision 
of the SGLI and VGLI programs that allows payment to a terminally ill 
insured, in the amount requested by the insured, up to 50 percent of 
his or her insurance coverage. Formerly, 38 U.S.C. 1980(b)(1) required 
that all ABO payments be reduced by an interest deduction, which is the 
amount that has been actuarially determined to be the amount of 
interest lost due to the early payment of the insurance proceeds. 
Section 405 of the Act eliminated the interest reduction for ABO 
payments. VA is amending the implementing regulation, 38 CFR 9.14(e), 
to reflect that change. The phrase ``minus the interest reduction'' and 
all references to the ABO interest rate reduction are being deleted 
wherever they appear in 38 CFR 9.14(e).
    We are also amending 38 CFR 9.14 by deleting the reproduction of 
the ABO claim form from the text of 38 CFR 9.14(f)(2). As a matter of 
policy, VA no longer includes forms in its regulations. This is because 
routine minor changes are often made to forms independent of the 
rulemaking process. Requiring the use of the rulemaking process to make 
minor, non-substantive changes to widely distributed forms is costly in 
money, time, and the delivery of benefits and serves no useful purpose. 
Furthermore, the most recent version of any required insurance form can 
be found on the VA Insurance Web site (www.insurance.va.gov). The words 
``entitled `Claim for Accelerated Benefits''' are being removed from 
Sec.  9.14(f) as the current ABO claim form title is different and may 
be subject to change in the future.
    Finally, 38 CFR 9.14(f) is being amended to show that the current 
address for the Office of Servicemembers' Group Life Insurance is 80 
Livingston Avenue, Roseland, New Jersey 07068-1733, and the correct 
phone number for the office is 1-800-419-1473.

[[Page 44298]]

38 CFR 9.20

    In 2005, Congress extended traumatic injury protection under 38 
U.S.C. 1980A to any member who experienced a traumatic injury, as 
defined in section 1980A(b)(1), between October 7, 2001, and December 
1, 2005, ``if the qualifying loss was a direct result of injuries 
incurred in Operation Enduring Freedom or Operation Iraqi Freedom.'' 
Emergency Supplemental Appropriations Act for Defense, the Global War 
on Terror, and Tsunami Relief, 2005, Sec. 1032, Public Law 109-13, 119 
Stat. 259-260 (2005).
    In 2006, Congress provided a retroactive period of eligibility for 
traumatic injury protection for a member of the uniformed services who 
sustained a traumatic injury during the period beginning on October 7, 
2001, and ending at the close of November 30, 2005, ``if, as determined 
by the Secretary concerned, that loss was a direct result of a 
traumatic injury incurred in the theater of operations for Operation 
Enduring Freedom or Operation Iraqi Freedom.'' Veterans' Housing 
Opportunity and Benefits Improvement Act of 2006, Sec. 501(b), Public 
Law 109-233, 120 Stat. 411 (2006).
    In 2010, Congress amended section 1980A note to delete the phrase 
``if, as determined by the Secretary concerned, that loss was a direct 
result of a traumatic injury incurred in the theater of operations for 
Operation Enduring Freedom or Operation Iraqi Freedom.'' Sec. 408, 
Public Law 111-275. Section 408 of the Act, therefore, expanded the 
class of individuals who are eligible for retroactive TSGLI benefits to 
include all servicemembers of the uniformed services who have incurred 
a qualifying injury on or after October 7, 2001. Prior to Public Law 
111-275, retroactive TSGLI benefits were payable for traumatic injury 
incurred between October 7, 2001 through November 30, 2005, only if the 
traumatic injury occurred in certain theaters of operation or while 
serving under orders in support of certain military operations, namely 
Operation Enduring Freedom and/or Operation Iraqi Freedom, which is no 
longer applicable. VA is amending 38 CFR 9.20(b)(1)-(3) and (d)(1) to 
accurately reflect the statutory language.

Administrative Procedure Act

    Changes made by this final rule merely reflect current statutory 
provisions and miscellaneous technical amendments. Therefore, in 
accordance with 5 U.S.C. 553(b)(B) and (d)(3), the Secretary of 
Veterans Affairs concludes that there is good cause to dispense with 
public notice and opportunity to comment on this rule and good cause to 
publish this rule with an immediate effective date. The regulatory 
changes made by this rule pursuant to the Act reflect changes in 
statute that VA is adopting, without change, into VA's regulations. The 
regulatory changes do not involve interpretation of any statutory 
provision. The remaining changes are technical and non-substantive. 
Consequently, opportunity for public comment is unnecessary. Due to the 
above considerations, VA is issuing this rule as a final rule, 
effective immediately upon publication.

Executive Orders 12866 and 13563

    Executive Orders 12866 and 13563 direct agencies to assess all 
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 regulatory action'' requiring review by the Office of 
Management and Budget (OMB), unless OMB waives such review, 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. VA's impact analysis can be found as a 
supporting document at http://www.regulations.gov, usually within 48 
hours after the rulemaking document is published. Additionally, a copy 
of the rulemaking and its impact analysis are available on VA's Web 
site at http://www1.va.gov/orpm/, by following the link for ``VA 
Regulations Published.''

Regulatory Flexibility Act

    The Secretary hereby certifies that this final 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 final rule will directly affect only individuals and will not 
directly affect small entities. Therefore, pursuant to 5 U.S.C. 605(b), 
this final rule is exempt from the final regulatory flexibility 
analysis requirements of section 604.

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 one year. This final rule will have no such effect on 
State, local, and tribal governments or on the private sector.

Paperwork Reduction Act

    This final rule contains no provisions constituting a collection of 
information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-
3521).

Catalog of Federal Domestic Assistance

    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 Acting 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. Jose D. Riojas, Chief of Staff, approved this document on July 
24, 2014 for publication.

List of Subjects in 38 CFR Part 9

    Life insurance, Military personnel, Veterans.


[[Page 44299]]


    Dated: July 25, 2014.
Janet J. Coleman,
Chief, Regulations Development, Tracking, and Control, Office of the 
General Counsel, Department of Veterans Affairs.
    For the reasons set forth in the preamble, the Department of 
Veterans Affairs amends 38 CFR part 9 as follows:

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

0
1. The authority citation for part 9 continues to read as follows:

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


Sec.  9.2  [Amended]

0
2. Amend Sec.  9.2(b)(2) by:
0
a. Removing ``1-year period'' and adding in its place ``2-year 
period'';
0
b. In the last sentence removing ``initial premium'' and adding in its 
place ``initial Veterans' Group Life Insurance premium''; and
0
c. In the last sentence removing ``termination of duty.'' and adding in 
its place ``termination of SGLI coverage.''.


Sec.  9.5  [Amended]

0
3. Amend Sec.  9.5(d) by removing ``1 year'' and adding in its place 
``2 years''.

0
4. Amend Sec.  9.14 by revising paragraphs (e) and (f) to read as 
follows:


Sec.  9.14  Accelerated Benefits.

* * * * *
    (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.
    (f) How do you apply for an Accelerated Benefit? (1) You can obtain 
an application form by writing the Office of Servicemembers' Group Life 
Insurance, 80 Livingston Avenue, Roseland, New Jersey 07068-1733; 
calling the Office of Servicemembers' Group Life Insurance toll-free at 
1-800-419-1473; or downloading the form from the Internet at 
www.insurance.va.gov. You must submit the completed application form to 
the Office of Servicemembers' Group Life Insurance, 80 Livingston 
Avenue, Roseland, New Jersey 07068-1733.
    (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.
* * * * *


Sec.  9.20  [Amended]

0
5. Amend Sec.  9.20 by:
0
a. In paragraph (b)(1) introductory text, removing ``occurring--'', and 
adding in its place ``occurring on or after October 7, 2001.''.
0
b. Removing paragraphs (b)(1)(i), (b)(1)(ii), (b)(2)(i), and 
(b)(2)(ii).
0
c. Redesignating paragraph (b)(3) as paragraph (b)(2).
0
d. In paragraph (d)(1), removing ``December 1, 2005, and your scheduled 
loss was a direct result of injuries incurred in Operation Enduring 
Freedom and Operation Iraqi Freedom.'' and adding in its place 
``November 30, 2005.''.

[FR Doc. 2014-17900 Filed 7-30-14; 8:45 am]
BILLING CODE 8320-01-P