[Federal Register Volume 87, Number 230 (Thursday, December 1, 2022)]
[Rules and Regulations]
[Pages 73652-73654]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-25426]
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DEPARTMENT OF VETERANS AFFAIRS
38 CFR Part 8
RIN 2900-AR53
National Service Life Insurance--Veterans Affairs Life Insurance
(VALife) Program
AGENCY: Department of Veterans Affairs.
ACTION: Final rule.
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SUMMARY: The Department of Veterans Affairs (VA) is amending its
regulations that govern National Service Life Insurance (NSLI), among
other things, to accomplish the following: implement provisions
contained in legislation that authorized a new program of insurance;
clarify which individuals are eligible to take actions on an insurance
policy; explain various provisions regarding coverage and benefits
under the new insurance program; and state which individuals are
ineligible to benefit from the unlawful and wrongful killing of a
veteran policyholder.
DATES: This final rule is effective January 3, 2023.
FOR FURTHER INFORMATION CONTACT: Paul Weaver, Insurance Specialist,
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 July 14, 2022, VA published a proposed
rulemaking in the Federal Register pertaining to the implementation of
a new program of life insurance that will begin issuing policies on
January 1, 2023. (87 FR 42118). VA provided the public with a 60-day
comment period which closed on September 12, 2022. VA did not receive
any comments from the public. Based on the rationale set forth in the
Federal Register, VA adopts the proposed rule, without change, as a
final rule.
Executive Orders 12866 and 13563
Executive Orders (E.O.) 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). E.O. 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
final rule is not a significant regulatory action under E.O. 12866. The
Regulatory Impact Analysis associated with this rulemaking can be found
as a supporting document at www.regulations.gov.
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 would generally be small business neutral as it
implements statutory provisions that only allow the United States to
issue life insurance coverage to veterans with service-connected
disabilities. 38 U.S.C. 1922B(a)(1) (``[T]he Secretary shall carry out
a service-disabled veterans insurance program under which a veteran is
granted insurance by the United States against the death of such
individual occurring while such insurance is in force.''). Although
there are statutes in 38 U.S.C. 1901-1988 that allow VA to purchase a
large group life insurance policy from a private commercial insurer,
those statutory authorities only apply to the Servicemembers' Group
Life Insurance Program, which provides life insurance coverage to
Service members and their dependents and former Service members, and
they do not provide VA with the authority to purchase a group life
insurance policy from a private insurer for purposes of providing
VALife coverage. As such, the overall impact of this final rule would
be of no benefit or detriment to small businesses, because these
insurance policies would only be issued by the United States to
veterans with service-connected disabilities. 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 would have no such effect
on State, local, and tribal governments, or on the private sector.
Paperwork Reduction Act
This final rule includes provisions constituting new collections of
information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-
3521) that require approval by the Office of Management and Budget
(OMB). Accordingly, under 44 U.S.C. 3507(d), VA has submitted a copy of
this rulemaking action to OMB for review and approval. OMB has reviewed
and approved the new collections of information and assigned OMB
Control Numbers 2900-0906 and 2900-0918.
[[Page 73653]]
When VA published the notice of proposed rulemaking in the Federal
Register, we identified a third form that we proposed to utilize to
collect information from the public to permit an individual to confirm
their surrender of any current SDVI coverage at the time they apply for
VALife. However, we have incorporated this collection of information
into the form that will also be used by VA to reinstate a VALife policy
or to complete a insured's request to surrender coverage under VALife
and is assigned OMB Control Number 2900-0918.
Assistance Listing
The Assistance Listing number and title for the program affected by
this document is 64.103, Life Insurance for Veterans.
Congressional Review Act
Pursuant to 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).
List of Subjects in 38 CFR Part 8
Life insurance, Veterans.
Signing Authority
Denis McDonough, Secretary of Veterans Affairs, approved this
document on November 16, 2022, 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.
Jeffrey M. Martin,
Assistant Director, Office of Regulation Policy & Management, Office of
General Counsel, Department of Veterans Affairs.
For the reasons stated in the preamble, the Department of Veterans
Affairs amends 38 CFR part 8 as set forth below:
PART 8--NATIONAL SERVICE LIFE INSURANCE
0
1. The authority citation for part 8 continues to read as follows:
Authority: 38 U.S.C. 501, 1901-1929, 1981-1988.
0
2. Amend Sec. 8.0 by:
0
a. Revising paragraph (e); and
0
b. Adding paragraphs (f), (g), and (h).
The revision and additions read as follows:
Sec. 8.0 Definitions of terms used in connection with title 38 CFR,
part 8, National Service Life Insurance.
* * * * *
(e) What does the term ``guardian'' mean? The term guardian means
any state-appointed guardian or conservator, attorney-in-fact, or VA-
appointed fiduciary, as defined in Sec. 13.20, who is responsible for
receiving VA benefits in a fiduciary capacity on behalf of the insured
or the beneficiary, or to take the actions listed in Sec. 8.32.
Note 1 to paragraph (e): If a VA-appointed fiduciary and either a
state-appointed guardian/conservator or attorney-in-fact are not the
same individual and both attempt to take conflicting actions on an
incompetent insured's policy, the VA-appointed fiduciary shall have the
exclusive authority to take actions on the policy.
(f) What does the term ``Veterans' Affairs Life Insurance
(VALife)'' mean? The term Veterans' Affairs Life Insurance, or VALife
in its abbreviated form, means a policy of insurance that is issued
under section 1922B of title 38 U.S.C.
(g) What does the term ``application for VALife'' mean? The term
application for VALife means a properly completed application form
submitted online or through another medium prescribed by the Secretary.
(h) What does the term ``beneficiary'' mean? The term
``beneficiary'' means a principal or contingent beneficiary designated
by the insured.
0
3. Amend Sec. 8.1 by:
0
a. Revising the section heading and paragraph (a);
0
b. In paragraph (b), adding Note 3;
0
c. In paragraph (c) introductory text, removing the word ``Yes,'' and
adding in its place ``For insurance other than VALife,''.
The revision and addition read as follows:
Sec. 8.1 Effective date for an insurance policy issued under section
1922(a) or 1922B of title 38 U.S.C.
(a) What is the effective date of the policy? The effective date is
the date policy coverage begins. Benefits due under a policy issued
under section 1922(a) are payable any time after the effective date.
Benefits due under a policy issued under section 1922B are payable any
time two years after the effective date.
(b) * * *
Note 3 to paragraph (b):If you apply for insurance coverage through
an electronic medium, the date of delivery of the premium payment will
be the date you authorize payment of the initial premium. In cases
where the authorization does not result in the required premium payment
because there were insufficient funds to cover the full initial
premium, the delivery date of the premium payment will be the date your
full initial premium is received by VA.
* * * * *
0
4. Amend Sec. 8.2 by adding paragraph (e) to read as follows:
Sec. 8.2 Payment of premiums.
* * * * *
(e) What happens if a policyholder enrolled in VALife dies,
surrenders or cancels coverage during the two-year enrollment period?
If a policyholder enrolls in VALife for an amount less than the
statutory maximum and elects to apply for additional coverage at a
later date and dies before completing the two-year waiting period for
the additional VALife coverage amount, the beneficiary shall be
refunded premiums that were paid for the additional VALife coverage,
plus interest, in accordance with 38 U.S.C. 1922B(c)(3)(A). If a
policyholder surrenders or cancels a VALife policy during the two-year
waiting period imposed by 38 U.S.C. 1922B(c)(2) before coverage is in
force, the United States shall not return to the policyholder the
premiums that were paid to purchase the coverage.
0
5. Revise Sec. 8.6 to read as follows:
Sec. 8.6 Calculation of Time Period; Veteran's Age.
(a) If the last day of a time period specified in Sec. 8.2 or
Sec. 8.3, or the last day allowed for filing an application for
National Service Life Insurance or for applying for reinstatement
thereof, or paying premiums due thereon, falls on a Saturday, Sunday,
or legal holiday, the time period will be extended to include the
following workday.
(b) For VALife, the premium will be determined using the age of the
veteran at his or her nearest birthday on the effective date of the
policy.
(c) For purposes of determining a veteran's eligibility for VALife
under 38 U.S.C. 1922B(a)(3)(A), the age of the veteran at his or her
last birthday prior to the date of application will be used.
(d) For purposes of determining a veteran's eligibility for VALife
under 38 U.S.C. 1922B(a)(3)(B), with respect to a veteran who has
attained 81 years of age, an initial grant of service connection for a
new or secondary condition for which the veteran applied for disability
compensation before attaining 81 years of age will satisfy the
eligibility criteria; however, VA will not grant insurance to such a
veteran based on an increase in an existing disability rating, a grant
of individual unemployability under 38 CFR 4.18, or a finding of
incompetency under 38 CFR 3.353. VA will not issue a VALife policy to a
veteran over age 95.
0
6. Amend Sec. 8.7 by:
[[Page 73654]]
0
a. Revising the section heading;
0
b. In paragraph (a), in the first sentence, removing the phrase ``Any
policy'' and adding, in its place, the phrase ``Subject to paragraph
(e), any policy''; and
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c. Adding paragraph (e).
The revision and addition read as follows:
Sec. 8.7 Reinstatement.
* * * * *
(e) Coverage issued under VALife that lapses for non-payment of
premiums may only be reinstated if the former policyholder submits all
premiums in arrears from their respective due dates, plus interest, to
reinstate the coverage within two years of the date of the lapse and
has not yet reached age 81.
(The Office of Management and Budget has approved the
information collection provisions in this section under control
number 2900-0918.)
0
7. Amend Sec. 8.10 by revising paragraph (a)(3) to read as follows:
Sec. 8.10 How paid.
(a) * * *
(3) Issued under sections 1904(c), 1922(a), and 1922B of title 38
U.S.C.
* * * * *
0
8. Amend Sec. 8.11 by:
0
a. Revising the section heading;
0
b. In paragraph (a), adding a sentence at the end of the paragraph:
0
c. In paragraph (b), removing ``Upon'' and adding, in its place, ``For
insurance other than VALife, upon''; and
0
d. Adding paragraphs (j) and (k).
The revision and additions read as follows:
Sec. 8.11 Cash value.
(a) * * * This paragraph shall not apply to VALife.
* * * * *
(j) Cash values that accrue for VALife will be developed using a
multiple of the 1941 Commissioners Standard Ordinary Mortality Table
and an interest rate of 3.5 percent per annum. Cash values will not
accrue and will not be payable until the completion of the two-year
waiting period imposed by 38 U.S.C. 1922B(c)(2). If a VALife policy
lapses or is surrendered before completion of the two-year waiting
period, then any amounts that VA has collected, such as premium
payments, shall be returned to the credit of the VALife revolving fund
that is established under 38 U.S.C. 1922B(a)(5)(A)(i). If a veteran
enrolls in VALife for an amount less than the statutory maximum and
elects to apply for additional coverage at a later date, the cash value
on the additional amount of coverage would not begin accruing until the
end of the two-year waiting period for the additional coverage.
(k) The United States will pay the cash value, in full or in part,
of any VALife policy, subject to the limitations in Sec. 8.11(j), to
insureds upon request through electronic medium or other method
prescribed by the Secretary. Unless otherwise requested by the insured,
a surrender will be deemed effective as of the end of the premium month
in which the application for cash surrender is delivered to the
Department of Veterans Affairs, or as of the date of payment for the
cash value, whichever is later.
(The Office of Management and Budget has approved the
information collection provisions in this section under control
number 2900-0918.)
* * * * *
0
9. Amend Sec. 8.13 by adding paragraph (e) to read as follows:
Sec. 8.13 Policy loans.
* * * * *
(e) For VALife, the United States shall only issue policy loans if
the Secretary determines that offering loans is administratively and
actuarially sound.
0
10. Amend Sec. 8.14 by adding paragraph (d) to read as follows:
Sec. 8.14 Provision for extended term insurance--other than 5-year
level premium term or limited convertible 5-year level premium term
policies.
* * * * *
(d) VALife shall not be extended automatically as term insurance
until the insured has paid the required premiums during the two-year
waiting period that is imposed by 38 U.S.C. 1922B(c)(2) before VALife
coverage is in force.
0
11. Amend Sec. 8.15 by designating the text as paragraph (a) and
adding paragraph (b) to read as follows:
Sec. 8.15 Provision for paid-up insurance; other than 5-year level
premium term or limited convertible 5-year level premium term policies.
* * * * *
(b) The United States shall not issue paid-up insurance under
VALife until the insured has paid premiums during the two-year waiting
period imposed by 38 U.S.C. 1922B(c)(2) before VALife coverage is in
force.
0
12. Amend Sec. 8.19 by designating the text as paragraph (a) and
adding paragraph (b) to read as follows:
Sec. 8.19 Beneficiary and optional settlement changes.
* * * * *
(b) If a beneficiary has been determined to have intentionally and
wrongfully killed the insured, the provisions found in 38 CFR 9.5(e)
shall be followed.
0
13. Add Sec. 8.35 to read as follows:
Sec. 8.35 Eligibility for those insured under 38 U.S.C. 1922(a) to
purchase insurance under 38 U.S.C. 1922B after December 31, 2025.
An insured under a Legacy Service Disabled Veterans' Insurance
policy shall be eligible to purchase VALife coverage after December 31,
2025, upon cancellation of his or her Legacy Service Disabled Veterans'
Insurance policy and surrender of any cash value that his or her
coverage has accrued in accordance with 38 CFR 8.11. The policyholder
must also submit a statement in a form that is prescribed by the
Secretary, which clearly indicates that the policyholder desires to
terminate his or her existing life insurance coverage in order to apply
for VALife and initiate the two-year waiting period imposed by 38
U.S.C. 1922B(c)(2) before such VALife coverage is in force.
(Authority: 38 U.S.C. 501, 1901-1929, 1981-1988)
(The Office of Management and Budget has approved the
information collection provisions in this section under control
number 2900-0906.)
0
14. Add Sec. 8.36 to read as follows:
Sec. 8.36 Issuance of coverage under section 1922B of title 38 U.S.C.
following additional elections.
An insured who elects less than the maximum amount of VALife
coverage under 38 U.S.C. 1922B(a)(4)(A) shall remain eligible to
purchase additional VALife coverage up to the VALife statutory maximum.
Any insured who elects to apply for additional VALife coverage shall be
subject to the two-year waiting period imposed by 38 U.S.C. 1922B(c)(2)
before such additional VALife coverage is in force.
(Authority: 38 U.S.C. 501, 1901-1929, 1981-1988)
(The Office of Management and Budget has approved the
information collection provisions in this section under control
number 2900-0906.)
[FR Doc. 2022-25426 Filed 11-30-22; 8:45 am]
BILLING CODE 8320-01-P