[Federal Register Volume 89, Number 234 (Thursday, December 5, 2024)]
[Proposed Rules]
[Pages 96627-96631]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-28138]
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DEPARTMENT OF VETERANS AFFAIRS
38 CFR Part 9
RIN 2900-AR67
Servicemembers' Group Life Insurance and Veterans' Group Life
Insurance--Accelerated Benefit Option Regulation Update
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 Servicemembers' Group Life Insurance (SGLI),
Family SGLI (FSGLI), and Veterans' Group Life Insurance (VGLI) to allow
an alternate applicant to apply for an Accelerated Benefit when a
member is terminally ill and mentally incapacitated or when a member's
insured spouse is terminally ill and the member is mentally
incapacitated. VA also proposes to define key terms to assist in
adjudicating FSGLI dependent child and Accelerated Benefit claims, and
to remove addresses, telephone numbers, and the reproduction of the
Accelerated Benefit application form from the text of the regulations.
DATES: Comments must be received on or before February 3, 2025.
ADDRESSES: Comments must be submitted through www.regulations.gov.
Except as provided below, comments received before the close of the
comment period will be available at www.regulations.gov for public
viewing, inspection, or copying, including any personally identifiable
or confidential business information that is included in a comment. We
post the comments received before the close of the comment period on
www.regulations.gov as soon as possible after they have been received.
VA will not post on Regulations.gov public comments that make threats
to individuals or institutions or suggest that the commenter will take
actions to harm an individual. VA encourages individuals not to submit
duplicative comments; however, we will post comments from multiple
unique commenters even if the content is identical or nearly identical
to other comments. Any public comment received after the comment
period's closing date is considered late and will not be considered in
the final rulemaking. In accordance with the Providing Accountability
Through Transparency Act of 2023, a Plain-Language Summary (not more
than 100 words in length) of this proposed rule is available at
Regulations.gov, under RIN 2900-AR67.
FOR FURTHER INFORMATION CONTACT: Samantha Yerdon, Management and
Program Analyst, Department of Veterans Affairs, Insurance Service
(310/290B); 5000 Wissahickon Avenue, Philadelphia, PA 19144; (215) 842-
2000, ext. 5494 (this is not a toll-free number).
SUPPLEMENTARY INFORMATION: Section 1980 of title 38, United States
Code, authorizes the payment of accelerated death benefits to
terminally ill members in the SGLI, FSGLI, and VGLI programs.
Consistent with the statute, current 38 CFR 9.14 allows terminally ill
members to receive up to 50 percent of the face value of their
insurance coverage before they die if they have 9 months or less to
live.
Current Sec. 9.14(c) only allows the terminally ill member to
apply for an Accelerated Benefit, which is often used to pay his or her
medical bills or make other financial arrangements before death. During
Policy Years 2020 through 2023 (July 1, 2019, through June 30, 2023),
223 terminally ill members applied for and received such benefits.
Considering that terminally ill members often have severe medical
conditions that render them unable to apply for the Accelerated
Benefit, VA proposes to amend Sec. 9.14(c) to allow an alternate
[[Page 96628]]
applicant to apply for an Accelerated Benefit if certain conditions are
met.
VA proposes to set forth in proposed Sec. 9.14(c)(2) the following
conditions for an alternate applicant to apply for an Accelerated
Benefit on behalf of a terminally ill member (i.e., the insured
servicemember or veteran): (1) the member's physician must certify that
the member is terminally ill and that the member is medically
incapacitated, i.e., physically or mentally incapable of applying for
an Accelerated Benefit; (2) the alternate applicant must have power of
attorney, guardianship, or conservatorship over the member, or be the
member's VA-appointed fiduciary under 38 U.S.C. chapters 55 and 61 or
military trustee under 37 U.S.C. 602; and (3) the alternate applicant
must sign the application for an Accelerated Benefit; identify that he
or she holds the member's power of attorney to act on the member's
behalf or is the member's court-appointed guardian or conservator, VA-
appointed fiduciary, or military trustee; and attach the form to a true
and correct copy of the power of attorney, court order establishing the
guardianship or conservatorship, or documentation designating the
alternate applicant as the member's VA-appointed fiduciary or military
trustee.
VA also proposes, in Sec. 9.14, to remove current paragraphs (e),
(f), and (j), redesignate current paragraph (d) as (f), and add new
paragraphs (d) and (e). Current paragraph (e) states that a member may
only be advanced up to 50% of the face value of their insurance
coverage, which is already covered in current paragraph (d) and would
be covered in redesignated paragraph (f). New paragraph (d)(1) would
clarify who can apply for an Accelerated Benefit in cases where a
member's insured spouse (i.e., member's spouse) is terminally ill. (VA
notes that this paragraph would apply only to FSGLI members, as
veterans' spouses are not eligible for VGLI coverage.) Under current
policy, if a member's spouse is terminally ill, only the member can
apply for an Accelerated Benefit (i.e., the member's spouse cannot
apply for the Accelerated Benefit himself or herself; the member must
complete the Accelerated Benefit application, submit it to the spouse's
physician to certify that the spouse is terminally ill, and submit it
to his or her uniformed service to complete the application and submit
it to the Office of Servicemembers' Group Life Insurance). This is
because FSGLI is a servicemember's benefit, and the servicemember is
the sole beneficiary of the FSGLI spousal coverage. This policy would
remain in place under new paragraph (d)(1).
VA also proposes, in new paragraph (d)(2), to allow a member's
representative, as opposed to a member's spouse's representative, to
apply for the Accelerated Benefit because FSGLI is the member's
benefit, and the member is the sole beneficiary of the FSGLI spousal
coverage. This would address the scenario where the member's spouse is
terminally ill and the member is medically incapacitated. In such a
case, VA would allow an alternate applicant acting on behalf of the
member to apply for the Accelerated Benefit subject to the following
proposed conditions: (1) the member's spouse's physician must certify
that the member's spouse is terminally ill, i.e., the member's spouse
has nine months or less to live; (2) the member's physician must
certify that the member is medically incapacitated, i.e., the member is
physically or mentally incapable of applying for an Accelerated
Benefit; (3) the alternate applicant must have power of attorney,
guardianship, or conservatorship over the member, or be the member's
VA-appointed fiduciary under 38 U.S.C. chapters 55 and 61 or military
trustee under 37 U.S.C. 602; and (4) the alternate applicant must sign
the application form for the Accelerated Benefit; identify that he or
she holds the member's power of attorney to act on the member's behalf
or is the member's court-appointed guardian or conservator, VA-
appointed fiduciary, or military trustee; and attach the form to a true
and correct copy of the power of attorney, court order establishing the
guardianship or conservatorship, or documentation designating the
alternate applicant as the member's VA-appointed fiduciary or military
trustee.
For the purpose of determining whether a person is incapable of
applying for an Accelerated Benefit, VA proposes to define the term
``medically incapacitated'' in new paragraph (e) to mean that a person
has been determined by a medical professional to be physically or
mentally impaired by physical disability, mental illness, mental
deficiency, advanced age, chronic use of drugs or alcohol, or other
causes that prevent sufficient understanding or capacity to manage his
or her own affairs competently. This is consistent with the definition
of medically incapacitated used in the SGLI Traumatic Injury Protection
program regulations. See 38 CFR 9.20(e)(6)(vii).
These proposed amendments to 38 CFR 9.14 reflect prevailing
insurance industry practices that allow alternate applicants to apply
for accelerated death benefits on behalf of an insured. The proposed
amendments are also consistent with the longstanding practice of other
VA benefits programs permitting alternate applicants to initiate an
application for VA benefits, such as for compensation and pension, see
38 CFR 3.155(a), and are also consistent with amendments made in 2010
to Federal Employees' Group Life Insurance to allow alternate
applicants to apply for accelerated death benefits on behalf of
insureds under that insurance program, see 5 CFR 870.1103(b)(2).
As noted above, VA also proposes to remove current 38 CFR 9.14(f)
and (j). Current paragraph (f)(2) explains who is required to complete
an Accelerated Benefits application form, which would now be contained
in paragraph (c) and new paragraph (d). Current paragraph (f)(2) also
contains a reproduction of the Accelerated Benefit application form,
which was intended to be removed in a final rule published on July 31,
2014, but was inadvertently retained by the amendatory instructions for
paragraph (f)(2). See Servicemembers' Group Life Insurance--Veterans'
Group Life Insurance Regulation Update--ABO, VGLI Application, SGLI 2-
Year Disability Extension, 79 FR 44297, 44299 (July 31, 2014). VA plans
to revise the existing form and create a new form to address the
proposed amendments in this rulemaking, but, 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 not an efficient
use of resources and serves no useful purpose. The most recent version
of any required insurance form can be found on the VA Insurance website
(www.benefits.va.gov/insurance). Therefore, VA proposes removing
current paragraph (f)(2).
VA also proposes to amend 38 CFR 9.1(b), remove current Sec.
9.14(f)(1), and amend current Sec. 9.14(i)(2) to remove all addresses
and telephone numbers from the text of the regulations, as such contact
information is subject to periodic change, and it is not practicable to
use the rulemaking process each time an address or telephone number is
updated. Up-to-date contact information for all VA life insurance
programs can be found on the VA Insurance website (https://www.benefits.va.gov/INSURANCE/resources-contact.asp).
Additionally, because payment via electronic funds transfer was not
available as a payment option when 38 CFR 9.14 was promulgated in 2000,
[[Page 96629]]
current paragraph (i)(1) only references returning checks to cancel the
request for Accelerated Benefits. To address cancellation of an
application for Accelerated Benefits when payment is requested via
electronic funds transfer, VA would clarify in proposed paragraph
(i)(1) that, to cancel a request, the Office of Servicemembers' Group
Life Insurance must be informed of the cancellation in writing and the
Accelerated Benefit must be returned as already stated, if issued by
check, or stopped before deposit in the member's account, if issued by
electronic funds transfer.
VA also proposes to remove current paragraph (j) as it is
essentially a restatement of 38 U.S.C. 1980(f)(2). Its deletion would
have no practical effect.
VA would also make non-substantive, clarifying revisions to Sec.
9.14(a) through (c), proposed redesignated paragraph (f), and
paragraphs (g) through (i), such as removing the references to ``you''
and ``your'' and also revising the heading of these paragraphs to
remove the subheading questions.
Lastly, VA proposes to make clarifying revisions to 38 CFR 9.1 that
would codify certain definitions that are contained in other parts of
title 38 to bring parity to the FSGLI program criteria for determining
if an individual meets the definition of the term ``insurable
dependent'' for FSGLI purposes. Specifically, VA proposes to define the
phrase ``pursuing a course of instruction at an approved educational
institution'' in Sec. 9.1(m) and ``a stepchild who is a member of a
veteran's household'' in Sec. 9.1(n). Section 1965(10)(B) of title 38,
U.S.C., defines an ``insurable dependent'' for SGLI purposes as
including a member's child, as defined in the first sentence of 38
U.S.C. 101(4)(A). This sentence defines a ``child'' as including ``a
legitimate child, a legally adopted child, a stepchild who is a member
of a veteran's household or was a member at the time of the veteran's
death, or an illegitimate child'' who is unmarried and ``who, after
attaining the age of eighteen years and until completion of education
or training (but not after attaining the age of twenty-three years) is
pursuing a course of instruction at an approved educational
institution.'' 38 U.S.C. 101(4)(A)(iii). VA proposes to define, in
Sec. 9.1(m), the term ``pursuing a course of instruction at an
approved educational institution'' as an individual who is pursuing a
``program of education,'' as that term is defined in 38 U.S.C. 3002(3),
at an approved ``educational institution,'' as that term is defined in
38 U.S.C. 3452(c). VA is also clarifying that both students pursuing a
program of education on a more than half-time basis and students
pursuing a program of education on a half-time basis or less are
included within this definition. Because section 101(4)(A)(iii) refers
to a student who is ``pursuing a course of instruction'' without
specifying any rate of pursuit, the statute seems to contemplate
including, as an insurable dependent for SGLI purposes, a student who
is pursuing a program of education on a more than half-time basis as
well as a student who is pursuing a program of education on a half-time
basis or less. The proposed clarifying amendment is intended to align
prerequisites for determining entitlement based on dependent status
with other government regulations pertaining to establishing dependent
status as well as to comport with best practices observed by many
private insurers offering dependent coverage to their policyholders.
Additionally, VA proposes to add a new Sec. 9.1(n) to explain that
a ``stepchild who is a member of the Veteran's household,'' as that
phrase is referenced in 38 U.S.C. 101(4)(A), is only considered to be a
member of the insured's household for FSGLI dependent child coverage
purposes if the stepchild has lived in the insured's house for at least
one year prior to the application for the benefit. Given that
stepchildren are generally not entitled to the same legal rights as a
natural or adopted child, see Black's Law Dictionary (12th ed. 2024)
(defining ``stepchild''), VA believes this proposed amendment strikes
an appropriate balance between aligning procedures for paying
dependents with prerequisites for other large, government programs
while still affording a servicemember the opportunity to insure a
stepchild for FSGLI purposes if the stepchild has lived in the
servicemember's house for at least a year.
Executive Orders 12866, 13563 and 14094
Executive Order 12866 (Regulatory Planning and Review) directs
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 14094 (Executive Order on
Modernizing Regulatory Review) supplements and reaffirms the
principles, structures, and definitions governing contemporary
regulatory review established in Executive Order 12866 of September 30,
1993 (Regulatory Planning and Review), and Executive Order 13563 of
January 18, 2011 (Improving Regulation and Regulatory Review). The
Office of Information and Regulatory Affairs has determined that this
rulemaking is not a significant regulatory action under Executive Order
12866, as amended by Executive Order 14094. 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 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 would not directly affect any small entities.
Therefore, pursuant to 5 U.S.C. 605(b), the initial and final
regulatory flexibility analysis requirements of sections 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 proposed rule would have no such
effect on State, local, and tribal governments, or on the private
sector.
Paperwork Reduction Act
Although this proposed rule contains collection of information
under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C.
3501-3521), there are no provisions associated with this rulemaking
constituting any new collection of information or any revisions to the
existing collection of information. The collection of information for
38 CFR 9.14 is currently approved by the Office of Management and
Budget (OMB) and has been assigned OMB control number 2900-0618.
List of Subjects in Part 9
Life insurance, Military personnel, Veterans.
[[Page 96630]]
Signing Authority
Denis McDonough, Secretary of Veterans Affairs, approved and signed
this document on November 25, 2024, 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 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. Amend Sec. 9.1 by revising paragraph (b) and adding paragraphs (m)
and (n) to read as follows:
Sec. 9.1 Definitions.
* * * * *
(b) The term administrative office means the Office of
Servicemembers' Group Life Insurance.
* * * * *
(m) The term pursuing a course of instruction at an approved
educational institution, as used in 38 U.S.C. 101(4)(A)(iii), means,
for purposes of this part, pursuing a ``program of education,'' as that
term is defined in 38 U.S.C. 3002(3), at an approved ``educational
institution,'' as that term is defined in 38 U.S.C. 3452(c), as an
enrolled student on either a more than half-time basis or on a half-
time basis or less.
(n) The term a stepchild who is a member of a veteran's household,
as used in 38 U.S.C. 101(4)(A), for purposes of this part, means a
stepchild who has been living in the insured's household for at least
one year.
0
3. Revise Sec. 9.14 to read as follows:
Sec. 9.14 Accelerated Benefits.
(a) Accelerated Benefit: An Accelerated Benefit is a payment of a
portion of Servicemembers' Group Life Insurance or Veterans' Group Life
Insurance to a terminally ill member (i.e., an insured servicemember or
veteran), or a payment of a portion of Family Servicemembers' Group
Life Insurance to a member on behalf of a terminally ill covered
person, before death.
(b) Eligibility to receive an Accelerated Benefit: A member is
eligible to receive an Accelerated Benefit if the member has a valid
written medical prognosis from a physician of 9 months or less to live,
and otherwise complies with the provisions of this section.
(c) Applying for an Accelerated Benefit--SGLI Member or VGLI
Member: (1) A terminally ill member can apply for an Accelerated
Benefit by completing the SGLV 8284 application form. The member's
physician is required to complete part of the form by certifying that
the member is terminally ill (i.e., has a life expectancy of nine
months or less). If the member is covered under Servicemembers' Group
Life Insurance, the member's uniformed service must also complete part
of the form and submit it to the Office of Servicemembers' Group Life
Insurance. If the member is covered under Veterans' Group Life
Insurance, the member must submit the completed application form to the
Office of Servicemembers' Group Life Insurance.
(2) An alternate applicant can apply for an Accelerated Benefit on
behalf of a terminally ill member if the member is medically
incapacitated, as defined in paragraph (e) of this section. The
alternate applicant can apply by completing the SGLV 8284 application
form if all of the following conditions are met:
(A) The member's physician must certify that the member is
terminally ill and medically incapacitated;
(B) The alternate applicant must have power of attorney,
guardianship, or conservatorship over the member, or be the member's
VA-appointed fiduciary under 38 U.S.C. chapters 55 and 61 or military
trustee under 37 U.S.C. 602; and
(C) The alternate applicant must sign the SGLV 8284 application
form; identify that he or she holds the member's power of attorney to
act on the member's behalf or is the member's court-appointed guardian
or conservator, VA-appointed fiduciary, or military trustee; and attach
the form to a true and correct copy of the power of attorney, court
order establishing the guardianship or conservatorship, or
documentation designating the alternate applicant as the member's VA-
appointed fiduciary or military trustee.
(D) If the member is covered under Servicemembers' Group Life
Insurance, the alternate applicant must submit the application to the
member's uniformed service, who then must also complete part of the
form and submit it to the Office of Servicemembers' Group Life
Insurance. If the member is covered under Veterans' Group Life
Insurance, the alternate applicant must submit the completed
application form to the Office of Servicemembers' Group Life Insurance.
(d) Applying for an Accelerated Benefit--Member's Spouse: (1) If a
member's insured spouse (i.e., member's spouse) is terminally ill
(i.e., has a life expectancy of nine months or less), only the member
can apply for an Accelerated Benefit by completing the SGLV 8284A
application form. The member's spouse's physician is required to
complete part of the form by certifying that the member's spouse is
terminally ill. The member's uniformed service must also complete part
of the form and submit it to the Office of Servicemembers' Group Life
Insurance.
(2) If the member's spouse is terminally ill and the member is
medically incapacitated, an alternate applicant acting on behalf of
such member can apply for the Accelerated Benefit. The alternate
applicant can apply by completing the SGLV 8284A application form if
all of the following conditions are met:
(A) The member's spouse's physician must certify that the member's
spouse is terminally ill;
(B) The member's physician must certify that the member is
medically incapacitated;
(C) The alternate applicant must have power of attorney,
guardianship, or conservatorship over the member, or be the member's
VA-appointed fiduciary under 38 U.S.C. chapters 55 and 61 or military
trustee under 37 U.S.C. 602; and
(D) The alternate applicant must sign the SGLV 8284A application
form; identify that he or she holds the member's power of attorney to
act on the member's behalf or is the member's court-appointed guardian
or conservator, VA-appointed fiduciary, or military trustee; and attach
the form to a true and correct copy of the power of attorney, court
order establishing the guardianship or conservatorship, or
documentation designating the alternate applicant as the member's VA-
appointed fiduciary or military trustee.
(E) The member's uniformed service must also complete part of the
form and submit it to the Office of Servicemembers' Group Life
Insurance.
(e) Medically Incapacitated: For the purposes of paragraphs (c) and
(d) of this section, the term ``medically incapacitated'' means that a
member has been determined by a medical professional to be physically
or mentally impaired by physical disability, mental illness, mental
deficiency, advanced age, chronic use of
[[Page 96631]]
drugs or alcohol, or other causes that prevent sufficient understanding
or capacity to manage his or her own affairs competently.
(f) Amount of Accelerated Benefit Request: (1) A member can request
as an Accelerated Benefit an amount up to a maximum of 50% of the face
value of the insurance coverage.
(2) A member's request for an Accelerated Benefit must be $5,000 or
a multiple of $5,000 (for example, $10,000, $15,000).
(g) Accelerated Benefit Decision: The Office of Servicemembers'
Group Life Insurance will review the application and determine whether
a member meets the requirements of this section for receiving an
Accelerated Benefit.
(1) They will approve the application if the requirements of this
section are met.
(2) If the Office of Servicemembers' Group Life Insurance
determines that the application form does not fully and legibly provide
the information requested by the application form, they will contact
the member or their alternate applicant and request that the member or
their alternate applicant submit the missing information to them. They
will not take action on the application until the information is
provided.
(h) Payment of Accelerated Benefit: An Accelerated Benefit will be
paid in a lump sum.
(i) Cancellation of Application for Accelerated Benefit: (1) An
election to receive the Accelerated Benefit is made at the time the
Accelerated Benefit is cashed or deposited. After that time, the
Accelerated Benefit cannot be cancelled. Until that time, a request for
the Accelerated Benefit may be cancelled by informing the Office of
Servicemembers' Group Life Insurance in writing and returning payment,
if issued by check, or stopping payment before deposit in the member's
account, if issued by electronic funds transfer. If a member wants to
change the amount of benefits requested or decides to reapply after
cancelling a request, the member must file another application
requesting either the same or a different amount of benefits.
(2) If a member dies before cashing or depositing an Accelerated
Benefit payment, the payment must be returned to the Office of
Servicemembers' Group Life Insurance.
[FR Doc. 2024-28138 Filed 12-4-24; 8:45 am]
BILLING CODE 8320-01-P