2024-28138. Servicemembers' Group Life Insurance and Veterans' Group Life Insurance-Accelerated Benefit Option Regulation Update

Document Headings

Document headings vary by document type but may contain the following:

1. the agency or agencies that issued and signed a document
2. the number of the CFR title and the number of each part the document amends, proposes to amend, or is directly related to
3. the agency docket number / agency internal file number
4. the RIN which identifies each regulatory action listed in the Unified Agenda of Federal Regulatory and Deregulatory Actions

See the Document Drafting Handbook for more details.

Department of Veterans Affairs

1. 38 CFR Part 9
2. RIN 2900-AR67

AGENCY:

Department of Veterans Affairs.

ACTION:

Proposed rule.

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; [phone], 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 § 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 § 9.14(c) to allow an alternate ( print page 96628) applicant to apply for an Accelerated Benefit if certain conditions are met.

VA proposes to set forth in proposed § 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 § 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 § 9.14(f)(1), and amend current § 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, ( print 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 § 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 § 9.1(m) and “a stepchild who is a member of a veteran's household” in § 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 § 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 § 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

( print 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

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 § 9.1 by revising paragraph (b) and adding paragraphs (m) and (n) to read as follows:

§ 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.

3. Revise § 9.14 to read as follows:

§ 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 ( print 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.