[Federal Register Volume 85, Number 229 (Friday, November 27, 2020)]
[Rules and Regulations]
[Pages 75857-75860]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-25585]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 9

RIN 2900-AQ37


Servicemembers' Group Life Insurance--Family Servicemembers' 
Group Life Insurance: Member Married to Member

AGENCY: Department of Veterans Affairs.

ACTION: Final rule.

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SUMMARY: The Department of Veterans Affairs (VA) is amending its 
regulations governing Servicemembers' Group Life Insurance (SGLI) and 
Family Servicemembers' Group Life Insurance (FSGLI) to allow a SGLI-
covered member (member) who marries another SGLI-eligible member 
(member spouse) after January 1, 2013, or a member whose spouse becomes 
a member spouse after January 1, 2013, to receive FSGLI coverage on a 
member spouse at the maximum statutory amount or a lesser amount, or to 
increase existing FSGLI coverage on a member spouse. A member married 
to a member may elect or increase FSGLI coverage for a member spouse, 
without a requirement to show good health, within 240 days of: The 
member's marriage to another member, the member's spouse entering 
service, or the member's spouse separating from service. If a member 
does not elect or increase FSGLI coverage within this 240-day ``no

[[Page 75858]]

health'' period, then the member can still receive or increase FSGLI 
coverage by applying for such coverage and submitting proof of the 
member spouse's good health. The final rulemaking also states that 
FSGLI coverage that is in force at the time a spouse or child enters 
service will continue and the member is not required to elect or 
reapply for such coverage. Additionally, VA is making a technical 
amendment to the amendatory language.

DATES: This rule is effective December 28, 2020.

FOR FURTHER INFORMATION CONTACT: Paul Weaver, Department of Veterans 
Affairs Insurance Service (310/290B), 5000 Wissahickon Avenue, 
Philadelphia, PA 19144, (215) 842-2000, ext. 4263. (This is not a toll-
free number.)

SUPPLEMENTARY INFORMATION: 
    On February 11, 2020, VA published in the Federal Register (85 FR 
7683) a proposed rule to amend its regulations governing the 
application process for FSGLI coverage for member spouses of SGLI-
covered members. Interested persons were invited to submit written 
comments on or before April 13, 2020. VA received one comment 
concerning the submission of proof of good health for former member 
spouses. The commenter recommended that VA revise the rulemaking to 
allow a member to elect FSGLI coverage on a member spouse without 
submitting proof of good health for 120 days following a marriage or a 
former member spouse's separation from service. The commenter suggested 
that this grace period would minimize adverse selection and bring 
parity to FSGLI eligibility requirements for civilian and member 
spouses and is consistent with Congressional intent to avoid creating 
FSGLI debts for members who do not want FSGLI coverage on member 
spouses. Based on internal agency reconsideration of the proposed 
regulation and the comment received, VA is making the following 
revisions.

I. FSGLI Coverage for Member Spouses

    Section 1969(g)(2)(B) of title 38, U.S.C., requires VA to manage 
FSGLI according to sound actuarial principles, and VA explained in the 
proposed rulemaking that this requires limiting the risk of adverse 
selection of FSGLI applicants. VA has determined that removing the 
proposed requirement for members to submit proof of their member 
spouse's good health for 240 days following a member's marriage to 
another member or a member's spouse entering service is consistent with 
sound actuarial principles. If a member does not elect or increase 
coverage on a member spouse within the 240-day period, then the member 
will have the opportunity to receive FSGLI coverage by applying for 
such coverage and submitting proof of their member spouse's good 
health. Although the commenter recommended a 120-day ``no health'' 
period for a member to elect FSGLI without submitting proof of their 
member spouse's good health, VA has determined that a 240-day ``no 
health'' period is more appropriate since it would allow for greater 
participation in FSGLI and would remain consistent with sound actuarial 
principles. This change is reflected in new Sec.  9.24(a).

II. FSGLI Coverage for Former Member Spouses

    VA is also amending our proposed rulemaking to allow a member, upon 
election, to initiate FSGLI coverage at the maximum statutory amount or 
a lesser amount, or to increase existing FSGLI coverage, on a former 
member spouse. A member will only be required to submit proof of good 
health when more than 240 days have passed following the former member 
spouse's separation from service. If a member does not elect FSGLI at 
the maximum statutory amount or a lesser amount, or increase existing 
FSGLI coverage, within 240 days following their former member spouse's 
separation from service, then the member will have the opportunity to 
apply for FSGLI or to increase existing FSGLI coverage by submitting 
proof of their former member spouse's good health. Although the 
commenter recommended a 120-day ``no health'' period for a member to 
elect or increase FSGLI without submitting proof of their former member 
spouse's good health, VA has determined that a 240-day ``no health'' 
period is more appropriate because it would allow for greater 
participation in FSGLI and would remain consistent with sound actuarial 
principles. We also note that the 240-day period is consistent with 38 
CFR 9.2(c), which allows a former member to apply for Veterans' Group 
Life Insurance within 240 days after separating from service without 
submitting proof of good health. This change is reflected in new Sec.  
9.24(c).

III. Technical Amendments to 38 CFR Part 9

    VA is making two technical amendments to the amendatory language in 
this final rule. In the proposed rulemaking, we proposed to create a 
new paragraph (f) in current 38 CFR 9.2 and to create a new 38 CFR 9.3. 
In this final rule, we are creating a new paragraph (g) because 
paragraph (f) was recently added by 85 FR 35562, Extension of Veterans' 
Group Life Insurance (VGLI) Application Period in Response to the 
COVID-19 Public Health Emergency (June 11, 2020) (interim final rule). 
We are clarifying that paragraph (g) applies to member spouses eligible 
for coverage under 38 U.S.C. 1967(a)(1)(A)(ii) as well as (C)(ii). We 
are also clarifying that Sec.  9.2(g)(2) refers to a member-spouse 
covered under 38 U.S.C. 1967(a)(1)(A)(i) and who was also eligible for 
coverage under 38 U.S.C. 1967(a)(1)(A)(ii) or (C)(ii) but who was not 
so insured or was insured at a reduced amount by reason of the member's 
election pursuant to 38 U.S.C. 1967(a)(2)(B) or (a)(3)(B). We are also 
moving proposed Sec.  9.3 to new 38 CFR 9.24 for purposes of minimizing 
disruption to the other regulations in part 9. We are clarifying that 
this section applies to member spouses eligible for coverage under 38 
U.S.C. 1967(a)(1)(A)(ii) as well as (C)(ii). New Sec.  9.2(g) and new 
Sec.  9.24 reflect the changes discussed above.
    For the reasons discussed above, VA is adopting the proposed rule 
as a final rule with the above-noted changes.

Executive Orders 12866, 13563 and 13771

    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. 
The Office of Information and Regulatory Affairs has determined that 
this rule is not 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 website at 
http://www.va.gov/orpm/, by following the link for ``VA Regulations 
Published From FY 2004 Through Fiscal Year to Date.''
    This rule is not an Executive Order 13771 regulatory action because 
this rule is not significant under Executive Order 12866.

[[Page 75859]]

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. There are no small entities involved with processing and/or 
determining eligibility for SGLI and FSGLI. Therefore, pursuant to 5 
U.S.C. 605(b), the initial and final regulatory flexibility analysis 
requirements of 5 U.S.C. 603 and 604 do not apply.

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 the 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.

Congressional Review Act

    Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), 
the Office of Information and Regulatory Affairs designated this rule 
as not a major rule, as defined by 5 U.S.C. 804(2).

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.

List of Subjects in 38 CFR Part 9

    Life insurance, Military personnel, 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. Brooks D. 
Tucker, Assistant Secretary for Congressional and Legislative Affairs, 
Performing the Delegable Duties of the Chief of Staff, Department of 
Veterans Affairs, approved this document on November 16, 2020, for 
publication.

Luvenia Potts,
Regulation Development Coordinator, Office of Regulation Policy & 
Management, Office of the Secretary, Department of Veterans Affairs.

    For the reasons stated in the preamble, VA proposes to amend 38 CFR 
part 9 as set forth below:

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.

0
2. Section 9.2 is amended by adding paragraph (g) to read as follows:


Sec.  9.2  Effective date; applications.

* * * * *
    (g) Except as provided in Sec.  9.24, the effective date of 
enrollment, re-enrollment, or an increase in coverage under 38 U.S.C. 
1967(a)(1) shall be the date the uniformed service receives an 
application and proof of the insurable spouse's good health:
    (1) For an insurable spouse who was eligible for coverage under 38 
U.S.C. 1967(a)(1)(A)(ii) or (C)(ii) but was not so insured or was 
insured at a reduced rate and who became a member; and
    (2) For a member-spouse covered under 38 U.S.C. 1967(a)(1)(A)(i) 
and who was also eligible for coverage under 38 U.S.C. 
1967(a)(1)(A)(ii) or (C)(ii) but who was not so insured or was insured 
at a reduced amount by reason of an election made by a member.
0
3. Add Sec.  9.24 to read as follows:


Sec.  9.24  Insurable dependents who become eligible members, and 
eligible members who marry eligible members.

    (a) A Servicemembers' Group Life Insurance-covered member (member) 
who marries another Servicemembers' Group Life Insurance eligible 
member (member spouse) after January 1, 2013, or is married to a person 
who becomes a Servicemembers' Group Life Insurance eligible member 
after January 1, 2013, shall receive Family Servicemembers' Group Life 
Insurance spousal coverage at the statutory maximum amount or a lesser 
amount, or receive increased existing spousal coverage on their member 
spouse, upon an election of such coverage if made within 240 days 
following the member's marriage to another member, or the member's 
spouse entering service, without having to provide proof of the member 
spouse's good health. If a member does not elect coverage for a member 
spouse within 240 days following the member's marriage to another 
member, or the member's spouse entering service, then the member may 
still receive spousal coverage at the statutory maximum amount or a 
lesser amount, or increase existing spousal coverage, by applying and 
submitting proof of the member spouse's good health.
    (b) A spouse shall remain eligible to be covered by any existing 
Family Servicemembers' Group Life Insurance spousal coverage without 
the member electing such coverage or applying for such coverage with 
proof of the member spouse's good health in a case where the spouse is 
enrolled in coverage under 38 U.S.C. 1967(a)(1)(A)(ii) or (C)(ii) prior 
to becoming a member married to another member.
    (c) A member's spouse who was insured under the member's Family 
Servicemembers' Group Life Insurance at the time the spouse separates 
from service will continue to be covered under the spousal Family 
Servicemembers' Group Life Insurance carried while in service, and the 
member will not need to elect such coverage. If a member seeks to 
enroll a former member spouse who did not have such spousal insurance 
coverage when the former member spouse separates from service, or seeks 
to increase existing spousal coverage on their former member spouse, 
the member shall receive such spousal coverage on their former member 
spouse, upon an election of such coverage if made within 240 days 
following the former member spouse's separation from service, without 
having to provide proof of the former member spouse's good health. If a 
member does not elect coverage for a former member spouse within 240 
days following the former member spouse's separation from service, then 
the member may still receive spousal coverage at the statutory maximum 
amount or a lesser amount, or increase existing spousal coverage, by 
applying and submitting proof of the former member spouse's good 
health.
    (d) After January 1, 2013, an insurable child who is a member at 
the time a parent's Servicemembers' Group Life Insurance coverage 
commences is not eligible for automatic dependent coverage under 38 
U.S.C. 1967(a)(1)(A)(ii) or (C)(ii). Dependent coverage in effect for 
an insurable child prior to becoming a member shall remain in effect so 
long as the child remains an insurable dependent. If an insurable child 
was not covered prior to becoming a member, the child cannot be covered 
under 38 U.S.C.

[[Page 75860]]

1967(a)(1)(A)(ii) or (C)(ii) after the child becomes a member.

[FR Doc. 2020-25585 Filed 11-25-20; 8:45 am]
BILLING CODE 8320-01-P