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109TH CONGRESS REPORT " HOUSE OF REPRESENTATIVES ! 1st Session 109–177

SERVICEMEMBERS’ GROUP LIFE INSURANCE 

ENHANCEMENT ACT OF 2005

JULY 20, 2005.—Committed to the Committee of the Whole House on the State of 

the Union and ordered to be printed 

Mr. BUYER, from the Committee on Veterans’ Affairs, 

submitted the following 

R E P O R T 

[To accompany H.R. 3200] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Veterans’ Affairs, to whom was referred the 

bill (H.R. 3200) to amend title 38, United States Code, to enhance 

the Servicemembers’ Group Life Insurance programs, and for other 

purposes, having considered the same, report favorably thereon 

without amendment and recommend that the bill do pass.

INTRODUCTION

On April 13, 2005, Honorable Rick Renzi, Honorable Christopher 

H. Smith, Honorable J.D. Hayworth, and Honorable Walter B. 

Jones introduced H.R. 1618, the Wounded Warrior Servicemembers 

Group Disability Insurance Act of 2005, which would establish a 

group disability insurance benefit for members of the armed services who incur certain severe disabilities. 

On June 16, 2005, the Subcommittee on Disability Assistance 

and Memorial Affairs held a hearing on draft legislation to amend 

the Servicemembers’ Group Life Insurance (SGLI) program; the 

Traumatic Injury Protection provisions in Public Law 109–13; and 

H.R. 1618, the Wounded Warrior Servicemembers Group Disability 

Insurance Act of 2005. 

On July 11, 2005, the Chairman and Ranking Member of the 

Subcommittee on Disability Assistance and Memorial Affairs, Honorable Jeff Miller and Honorable Shelley Berkley, respectively, introduced H.R. 3200, the Servicemembers’ Group Life Insurance Enhancement Act of 2005, which would enhance the Servicemembers’ 

Group Life Insurance program. 

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On July 13, 2005, the Subcommittee on Disability Assistance and 

Memorial Affairs met and ordered H.R. 3200 reported favorably to 

the full Committee by unanimous voice vote. 

On July 14, 2005, the full Committee met and ordered H.R. 3200 

reported favorably to the House by unanimous voice vote. 

SUMMARY OF THE REPORTED BILL

H.R. 3200 would: 

1. Effective August 31, 2005, repeal section 1012 of Public Law 

109–13, the Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Tsunami Relief, 2005, which 

expires on September 30, 2005. Section 1012 of the Supplemental 

makes changes to the Servicemembers’ and Veterans’ Group Life 

Insurance programs (SGLI and VGLI, respectively) operated by the 

Department of Veterans Affairs; 

2. Increase from $250,000 to $400,000 the automatic maximum 

in coverage under the Servicemembers’ Group Life Insurance 

(SGLI) and Veterans’ Group Life Insurance (VGLI) programs; 

3. Require the service Secretary concerned to notify in writing 

the member’s spouse or, if the member is unmarried, the next of 

kin, if the member elects not to enroll in SGLI or elects an amount 

less than the maximum amount. When an unmarried member marries, the service Secretary concerned would be required to notify 

the servicemembers’ spouse as to whether the member is insured 

under SGLI, or insured at an amount less than the maximum; 

4. Require the service Secretary concerned to notify in writing 

the spouse of a servicemember when someone other than the 

spouse or child is designated as the policy beneficiary. When an unmarried servicemember marries, the Secretary concerned would notify the spouse if the servicemember designates someone other than 

the spouse or child as the policy beneficiary; 

5. Increase the increments of SGLI coverage a servicemember 

may elect from $10,000 to $50,000; and 

6. Permit a servicemember to decline participation in the Traumatic Injury Protection program provided by section 1032 of Public 

Law 109–13, the Emergency Supplemental Appropriations Act for 

Defense, the Global War on Terror, and Tsunami Relief, 2005. If 

a servicemember who has declined traumatic injury protection coverage wishes to enroll at a later date, the servicemember could 

elect coverage upon written application, proof of good health, and 

compliance with such other terms as the Secretary may require. 

BACKGROUND AND DISCUSSION

On February 14, 2005, the Administration submitted to Congress 

an emergency supplemental appropriation request for the fiscal 

year ending September 30, 2005, which the House considered as 

H.R. 1268, the Emergency Supplemental Appropriations Act for 

Defense, the Global War on Terror, and Tsunami Relief, 2005. The 

bill was subsequently enacted as Public Law 109–13, and contained 

the following amendments to the SGLI authorizations in chapter 

19 of title 38, United States Code: 

1. Increased the maximum SGLI and VGLI coverage amounts 

from $250,000 to $400,000; 

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2. Increased the increments of election of SGLI coverage from $10,000 to $50,000; 

3. Provided $150,000 in coverage for a servicemember who died 

of wounds, injuries or illnesses incurred while serving in a combat 

operation or zone of combat or who dies as the direct result of an 

injury or illness incurred or aggravated while serving in combat; 4. Provided that premiums attributable to $150,000 of coverage 

may, at the service Secretary’s discretion, be paid directly by the 

Secretary or by reimbursement to a servicemember serving in an 

operation or area of combat;

5. Prohibited married servicemembers from electing life insurance coverage in an amount less than the maximum, or decline coverage altogether, without the written consent of the spouse; 

6. Required DOD to notify the designated beneficiary or next of 

kin of a single servicemember if he or she elects less than the maximum coverage; and 

7. Required written notification to a married servicemember’s 

spouse in order for the servicemember to modify the beneficiaries 

designated by the servicemember. 

No hearings were held regarding the SGLI and VGLI provisions 

of H.R. 1268. However, on March 6, 2005, the Veterans’ Affairs 

Subcommittee on Disability Assistance and Memorial Affairs held 

a roundtable briefing on these provisions with officials from the Department of Veterans Affairs, the Department of Defense, and private sector insurance representatives. 

H.R. 1268, as amended, was reported by the Committee on Appropriations on March 11, 2005, and passed the House on March 

16, 2005, without hearings on the SGLI or VGLI provisions of the 

bill. On May 5, 2005, the House passed the conference report accompanying H.R. 1268, as amended, and it was signed into law on 

May 11, 2005 (Public Law 109–13). The provisions making changes 

to the Servicemembers’ Group and Veterans’ Group Life Insurance 

programs are effective September 1, 2005, and expire on September 

30, 2005. 

Section 1032 of Public Law 109–13, included a new Traumatic 

Injury Protection program for servicemembers enrolled in SGLI. 

This program provides financial assistance in amounts from 

$25,000 to $100,000 to servicemembers who suffer certain traumatic injuries, similar to dismemberment insurance in the private 

sector. Traumatic injury protection is mandatory for 

servicemembers who elect SGLI coverage, with premiums paid by 

the servicemember. Costs attributable to extra hazards (increased 

losses in wartime above peacetime rates) are reimbursed to the 

SGLI program by the Department of Defense in the same manner 

as SGLI extra hazards are reimbursed. A determination of eligibility for payment of the benefit is made by the Secretary of Defense. The new Traumatic Injury Protection program authorization 

will be effective December 1, 2005 for all members but is retroactive to October 7, 2001, for qualifying losses that are a direct result of injuries incurred in Operation Enduring Freedom and Operation Iraqi Freedom. 

Repealer.—Section 2 of the bill would repeal section 1012 of division A of the Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Tsunami Relief, 2005 (Public 

Law 109–13). Section 1012 amended sections 1967, 1969, 1970, and 

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1977 of title 38, United States Code. The provisions in section 1012 

expire on September 30, 2005. To ease the administrative burden 

on the Departments of Defense and Veterans Affairs, the Committee intends that H.R. 3200 replace existing authority established in section 1012 of Public Law 109–13 prior to its effective 

date. 

Increase from $250,000 to $400,000 in automatic maximum coverage under Servicemembers’ Group Life Insurance and Veterans’ Group Life Insurance.—Section 3 of the bill would make permanent 

the increase in maximum coverage allowable under SGLI and 

VGLI from $250,000 to $400,000. In response to recent concerns 

raised by servicemembers and the survivors of servicemembers 

killed in the War on Terror, Congress increased the maximum insurance coverage to $400,000 in Public Law 109–13; however, this 

increase expires on September 30, 2005. 

The VA administers six types of life insurance policies and supervises two programs for the benefit of servicemembers, veterans, 

and their families. The purpose of these programs is to provide affordable life insurance to servicemembers and veterans who, given 

the inherent risks of military service, may not be otherwise insurable in the commercial insurance industry. Ninety-eight percent of 

all active duty personnel, including mobilized reservists, participate 

in the SGLI program. As of July 2005, all but 45 servicemembers 

who died in Operation Enduring Freedom and Operation Iraqi 

Freedom were covered for the maximum amount. 

Congress regularly reviews the SGLI and VGLI programs to ensure that servicemembers and veterans are provided adequate coverage options. The last increase occurred in Public Law 106–419, 

when the maximum SGLI coverage was increased from $200,000 to 

$250,000, effective April 1, 2001. 

Notification to member’s spouses or next of kin of certain elections under the Servicemembers’ Group Life Insurance Program.— Section 4 of the bill would require the military service Secretary 

concerned to notify, in writing, a married servicemember’s spouse, 

or unmarried servicemember’s next of kin, of an election (1) not to 

be insured, (2) to be insured for an amount less than the maximum, or (3) to increase coverage if not insured or insured for an 

amount less than the maximum. Section 4 of the bill would also require the Secretary concerned to notify, in writing, the spouse of 

a married servicemember if the servicemember designated anyone 

other than the spouse or child of the member as the beneficiary. 

When a servicemember marries, the Secretary concerned would be 

required to notify the new spouse whether the servicemember is insured under SGLI, and if so insured, whether the servicemember 

has elected less than the maximum amount of coverage and whether the servicemember has designated someone other than the member’s spouse or child as the policy beneficiary. 

Finally, section 4 of the bill would provide that written notification under this section shall consist of a good faith effort by the 

service Secretary concerned to provide the required information to 

the servicemember’s spouse or other person at the last known address of the spouse or next of kin. The Secretary would be required 

to provide notification at the last address of the spouse or other 

person in the records of the Secretary. The Committee does not expect the Secretary to undertake a search for addresses of the 

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spouse or next of kin beyond the information contained in the service department’s own records. Failure of the Secretary concerned to 

provide notification would not affect the validity of any life insurance election or designation. 

Section 1012 of Public Law 109–13 amended the SGLI program 

to provide that a married servicemember may not decline SGLI 

coverage or elect an amount less than the maximum without the 

written consent of the servicemember’s spouse. Section 1012 also 

requires notification to the beneficiary or designated next of kin 

when an unmarried servicemember declines SGLI coverage or 

elects an amount less than the maximum. Finally, section 1012 of 

Public Law 109–13 provides that a servicemember may not modify 

his or her beneficiary designation without providing written notification to the spouse. 

The Committee does not support providing a spouse ‘‘veto’’ authority over life insurance elections. Public Law 109–13 mandates 

spousal consent even in cases where the spouses are estranged, as 

long as the couple remains legally married. Life insurance is fundamentally a contract. Requiring the consent of the spouse, who is 

not a party to the contract, to the servicemember’s decision concerning whether to enter into a contract is inconsistent with the 

principles of life insurance contracts. Additionally, the Committee 

is concerned that the spousal notification requirement of section 

1012 of Public Law 109–13 might discourage the servicemember 

from designating his or her children as beneficiaries if the current 

spouse does not concur with the servicemembers’ election. Finally, 

requiring spousal concurrence of the servicemember’s decision 

would in effect make SGLI a voluntary program for single 

servicemembers and an involuntary program for married 

servicemembers. 

Recent reports of servicemembers failing to communicate with 

their spouse or next of kin concerning their life insurance coverage 

or lack thereof, and thus leaving surviving spouses or families 

without the financial security provided by life insurance, have 

prompted congressional action. A letter from the Secretary concerned notifying the spouse or next of kin of the servicemember’s 

coverage election is the preferable way of ensuring that the spouse 

or beneficiary is informed about this important financial decision, 

while preserving the individual right of the servicemember to make 

decisions about life insurance coverage, the amount of coverage, the 

beneficiary or beneficiaries, and from whom to purchase it. 

Increments of insurance that may be elected.—Section 5 of the 

bill would make permanent the increments of SGLI coverage allowable from $10,000 to $50,000. Prior to Public Law 109–13, the 

amount of insurance elected by a servicemember had to be evenly 

divisible by $10,000. With the increased amount of insurance available under the bill, the Committee intends to relieve the administrative burden of small increments in insurance elections. Reduced 

administrative burdens lower the cost of the program and keep 

down the premium rates for the servicemember. 

Authority to elect the new traumatic injury protection program.—Section 6 of the bill would amend the Traumatic Injury 

Protection program to permit a servicemember to elect in writing 

not to be covered under this program. The servicemember who declines coverage would be able to elect coverage at a later date upon 

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written application, but coverage would apply only with respect to 

injuries occurring after a subsequent election. In any case, the 

servicemember would be required to be insured under 

Servicemembers’ Group Life Insurance to participate in Traumatic 

Injury Protection. 

Public Law 109–13 added a new section 1980A to chapter 19 of 

title 38, United States Code, Traumatic Injury Protection. The 

Traumatic Injury Protection program is designed to provide financial assistance to servicemembers during their recovery period from 

a serious service-related traumatic injury. The traumatic injury 

coverage will pay servicemembers between $25,000 and $100,000, 

depending on the severity of the injury, at a rate to be determined 

by the Secretary of Veterans Affairs. The servicemember pays a 

monthly premium for this additional coverage and, under current 

law, participation is mandatory. The Committee notes testimony of 

the Wounded Warrior Project before the Veterans’ Affairs Subcommittee on Disability Assistance and Memorial Affairs on June 

16, 2005, regarding this new program, ‘‘This coverage * * * give[s] 

all active duty servicemembers the ability to protect themselves 

and their families * * * should they suffer a life altering injury.’’ The Committee is dedicated to ensuring that our servicemembers 

have a variety of insurance options to assist them in planning for 

the future. 

SECTION-BY-SECTION ANALYSIS

Section 1 of the bill would provide that this Act may be cited as 

the ‘‘Servicemembers’’ Group Life Insurance Enhancement Act of 

2005’’. Section 2 of the bill would, effective August 31, 2005, repeal section 1012 of division A of the Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and the Tsunami 

Relief, 2005 (Public Law 109–13; 119 Stat. 244), including the 

amendments made by that section, and sections 1967, 1969, 1970, 

and 1977 of title 38, United States Code, shall be applied as if section 1012 of Public Law 109–13 had not been enacted. 

Section 3(a) of the bill would amend section 1967(a)(3)(A)(i) and 

section 1967(d) of title 38, United States Code, by striking $250,000 

and inserting $400,000. 

Section 3(b) of the bill would amend section 1977(a) of title 38, 

United States Code, by striking $250,000 and inserting $400,000. 

Section 3(c) of the bill would provide an effective date for the 

changes made by section 3(a) and 3(b) for deaths occurring on or 

after September 1, 2005. 

Section (4) of the bill would add a new subsection (f)(1)(A), effective September 1, 2005, to section 1967 of title 38, United States 

Code, to require the Secretary concerned to provide written notice 

to a member’s spouse, or, if the member is unmarried, to the member’s next of kin, in writing, whenever a member eligible for insurance executes a life insurance option. 

New section 1967(f)(1)(B) of title 38, United States Code, would 

specify the life insurance options that require notification under 

1967(f)(1)(A) of title 38, United States Code: (i) an election not to 

be insured, (ii) an election for insurance in an amount that is less 

than the maximum amount, (iii) an application for insurance coverage or for a change in the amount of insurance coverage, and (iv) 

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in the case of a married member, a designation under 1970(a) of 

title 38, United States Code, of any person other than the spouse 

or child of the member as the beneficiary of the member for any 

amount of insurance. 

New section 1967(f)(2) of title 38, United States Code, would provide that in the case of an unmarried member who is eligible for 

insurance marries, the Secretary concerned must notify the member’s spouse in writing as to whether the member is insured. The 

notification would include: (A) if the amount of insurance is less 

than the maximum and (B) if the member has designated a beneficiary other than the spouse or a child of the member for any 

amount of insurance. 

New section 1967(f)(3)(A) of title 38, United States Code, would 

provide that notification of a spouse or any other person under 

paragraph (1) shall consist of a good faith effort to provide information to the spouse or other person at the last address of the spouse 

or other person in the records of the Secretary concerned. 

New section 1967(f)(3)(B) of title 38, United States Code, would 

provide that failure to notify, or to notify in a timely manner, 

would not affect the validity of any life insurance option referred 

to in (1)(B). 

Section 5(a) of the bill would amend subsection 1967(a)(3)(B) of 

title 38, United States Code, to provide that a servicemember’s life 

insurance election be evenly divisible by $50,000. 

Section 5(b) of the bill would make the amendment made by section 5(a) effective September 1, 2005. 

Section 6(a) of the bill would amend section 1980A of title 38, 

United States Code, by adding a new paragraph (b) to permit a 

member to elect in writing not to be insured under section 1980A 

of title 38, United States Code. If a member eligible for insurance 

under this section is not insured by reason of an election made, the 

member may thereafter elect to be insured upon written application by the member, proof of good health, and compliance with such 

other terms and conditions as may be prescribed by the Secretary. 

Insurance under this section upon such an election is effective upon 

the date of receipt by the Secretary of such application and shall 

apply only with respect to injuries incurred after that date. The 

Secretary would be required to prescribe by regulation conditions 

as to how and when elections shall be made, including limiting the 

time for such elections to an annual open season, for duration each 

year prescribed by the Secretary. 

Section 6(b) of the bill would provide an effective date for subsection (a) to take effect immediately after section 1980A of title 38, 

United States Code, takes effect pursuant to section 1032(d)(1) of 

division A of the Emergency Supplemental Appropriations Act for 

Defense, the Global War on Terror, and Tsunami Relief, 2005 (Public Law 109–13; 119 Stat. 260). 

PERFORMANCE GOALS AND OBJECTIVES

The reported bill would authorize life insurance program enhancements under laws administered by the Secretary of Veterans 

Affairs. The Department of Veterans Affairs’ performance goals and 

objectives are established in annual performance plans and are 

subject to the Committee’s regular oversight and evaluation by the 

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U.S. Government Accountability Office. VA also publishes a performance and accountability report for each fiscal year. 

STATEMENTS OF THE VIEWS OF THE ADMINISTRATION

STATEMENT OF THOMAS LASTOWKA, DIRECTOR, DEPARTMENT OF VETERANS AFFAIRS REGIONAL OFFICE AND INSURANCE CENTER, PHILADELPHIA, PA, BEFORE THE SUBCOMMITTEE ON DISABILITY ASSISTANCE AND MEMORIAL

AFFAIRS, HOUSE COMMITTEE ON VETERANS’ AFFAIRS, 

JUNE 16, 2005

Mr. Chairman and Members of the Subcommittee, thank 

you for the opportunity to testify today on legislative items 

of interest to the Department of Veterans Affairs (VA). Accompanying me today is Stephen Wurtz, Deputy Assistant 

Director for Insurance. 

H.R. 1618

H.R. 1618, 109th Cong., the ‘‘Wounded Warrior 

Servicemembers Group Disability Insurance Act of 2005,’’ would create a Servicemembers’ Group Disability Insurance program, which would provide an insurance benefit to 

servicemembers who incur certain severe disabilities. We 

do not support H.R. 1618 because it would duplicate the 

intent of the recently passed Administration bill that permanently establishes the traumatic injury insurance provided under 38 U.S.C. § 1980A, which was added to title 

38, United States Code, by the ‘‘Emergency Supplemental 

Appropriations Act for Defense, the Global War on Terror, 

and Tsunami Relief, 2005,’’ Pub. L. No. 109–13, § 1032, 119 

Stat. 231. 

Section 2(a) of H.R. 1618 would add a new subchapter 

V to chapter 19 of title 38, United States Code. New section 1992(a) of title 38, United States Code, would authorize the Secretary of Veterans Affairs to purchase a group 

disability insurance policy or policies from one or more private insurance companies on behalf of members of the 

Armed Forces. New section 1993 would provide automatic 

insurance in the amount of $50,000 for any person insured 

under Servicemembers’ Group Life Insurance (SGLI), unless the servicemember elects in writing not to be insured 

under the new disability insurance program. 

Under new section 1994, any of the following disabilities 

would be a ‘‘qualifying disability’’ for which insurance coverage would be provided: (1) complete and permanent loss 

of movement of an extremity; (2) third-degree or higher 

burns affecting more than one square foot of the body; (3) 

entire, irrecoverable, and uncorrectable loss of sight of one 

or both eyes; (4) permanent loss of one hand, by severance 

at or above the wrist joint; (5) permanent loss of one foot, 

by severance at or above the ankle joint; (6) entire, irrecoverable, and uncorrectable loss of speech or hearing; and (7) 

any other disability specified by regulation. 

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Under new section 1996(a), premiums for disability insurance coverage would be deducted from a 

servicemember’s basic or other pay, less any costs traceable to the extra hazards of duty, which would be paid 

from the appropriation for active duty pay of the uniformed services. New section 1997(b) would require that 

insurance settlements under the program be made in a 

lump sum. 

Section 2(b) of H.R. 1618 would permit the Secretary to 

designate the effective date of the disability insurance but 

require that such date be not later than one year after the 

date of enactment. 

SERVICEMEMBERS’ GROUP LIFE INSURANCE ENHANCEMENT

ACT

Section 2 of the draft ‘‘Servicemembers’ Group Life Insurance Enhancement Act of 2005’’ would amend 38 U.S.C. 

§ 1967(a)(3)(A)(i) to increase the maximum amount of SGLI 

and Veterans’ Group Life Insurance (VGLI) to $400,000, 

effective October 1, 2005, with respect to deaths occurring 

on or after that date. This provision would extend the increase to $400,000 made by section 1012 of Pub. L. No. 

109–13, which will terminate on September 30, 2005. VA 

supports enactment of section 2 of this draft bill because 

it provides the opportunity for servicemembers to increase 

insurance protection for their families. 

Section 3 of this bill would, effective October 1, 2005, require the Secretary of the appropriate service department 

to notify in writing a servicemember’s spouse or, if unmarried, the servicemember’s next-of-kin whenever the 

servicemember: (1) declines SGLI coverage; (2) elects less 

than the maximum amount of SGLI coverage; (3) applies 

for SGLI coverage or for a change in the amount of such 

coverage; or (4) in the case of a married servicemember, 

designates someone other than his or her spouse or child 

as a beneficiary. Section 3 would also require, when an unmarried servicemember who is eligible for SGLI marries, 

that the Secretary of the appropriate service department 

notify the servicemember’s spouse in writing as to whether 

the servicemember: (1) is insured under SGLI; (2) has 

elected less than the maximum amount of SGLI coverage; 

or (3) designated as a beneficiary a person other than the 

member’s spouse or child. Failure to provide timely notification would not affect the validity of any option elected by 

the insured. Except for the effective date, section 3 is identical to section 5(b) of H.R. 2046, 109th Cong., the 

‘‘Servicemembers’ Health Insurance Protection Act of 

2005,’’ which the House of Representatives passed on May 

23, 2005. 

Because this bill would not extend the current law that 

goes into effect September 1, 2005, but instead defines a 

new program that would start when the current program 

expires on September 30, 2005, there are a number of potentially difficult administrative challenges that would unnecessarily burden both servicemembers and the GovernVerDate jul 14 2003 22:13 Jul 21, 2005 Jkt 039006 PO 00000 Frm 00009 Fmt 6659 Sfmt 6969 E:\HR\OC\HR177.XXX HR177
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ment. For example, those members who elected less than 

the maximum coverage under current law and whose 

spouses consented would once again have to fill out the paperwork required to elect less than maximum coverage, 

and the Government would have to notify the spouse. The 

Administration would like to work with Congress to ensure 

that these issues are addressed. 

We note as well that, under 38 U.S.C. § 1968(a)(1), SGLI 

coverage terminates 120 days after separation or release 

from active duty or active duty for training, unless the 

servicemember is totally disabled on that date, in which 

event SGLI coverage terminates one year after separation 

or release from active duty or active duty for training. 

Also, section 1977(d) of title 38, United States Code, states 

that ‘‘any designation of beneficiary or beneficiaries for 

[SGLI] filed with a uniformed service until changed, shall 

be considered a designation of beneficiary or beneficiaries 

for [VGLI], but not for more than sixty days after the effective date of the insured’s [VGLI].’’ It is unclear whether 

the notification provision of section 3 of the draft bill, 

which refers to a ‘‘member’’ of a uniformed service, would 

apply to any change in beneficiary designation that a 

servicemember would make within the 120-day period 

after discharge but prior to cessation of SGLI coverage or 

that a VGLI insured would make within the 60-day period 

referenced in section 1977(d). We also note that, if section 

3 were applicable to VGLI beneficiary designations, it 

would be difficult to implement because OSGLI does not 

maintain data regarding a VGLI insured’s marital status. 

We recommend that, if section 3 is enacted, it explain 

whether it is applicable to any change in beneficiary during these two periods of time. 

Section 4 would amend 38 U.S.C. § 1967(a)(3)(B) to permit a servicemember to elect an amount of SGLI less than 

the maximum available provided the amount of coverage 

on the member is evenly divisible by $50,000, rather than 

$10,000, as currently provided by section 1967(a)(3)(B). 

This would simplify the administration of the SGLI program and would align with the proposal by the Administration. 

TRAUMATIC SGLI

Section 1032 of Pub. L. No. 109–13 created a program 

that provides an insurance benefit to servicemembers who 

incur traumatic injuries. The traumatic injury program 

provides automatic insurance for any SGLI insured who 

suffers a traumatic injury as prescribed by the Secretary 

of Veterans Affairs in collaboration with the Secretary of 

Defense. Under this program, payment will be made in accordance with a schedule prescribed by the Secretary of 

Veterans Affairs in collaboration with the Secretary of Defense based on the severity of the condition and in an 

amount that is not less than $25,000 and not more than 

$100,000. The maximum amount payable for all injuries 

resulting from the same traumatic event is $100,000, and 

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if a servicemember suffers more than one loss as a result 

of a traumatic injury, payment will be made in accordance 

with the prescribed schedule for the single loss providing 

the highest payment. Premiums for disability insurance 

coverage will be deducted from a servicemember’s basic or 

other pay, less any costs traceable to the extra hazards of 

duty. This benefit is effective on December 1, 2005; however, any servicemember experiencing a traumatic injury 

between October 7, 2001, and December 1, 2005, is eligible 

to receive the insurance benefit if the qualifying loss was 

a direct result of injuries incurred in Operation Enduring 

Freedom or Operation Iraqi Freedom. 

We welcome the addition of this valuable benefit to the 

package of SGLI benefits currently available to members 

of the uniformed services and their families. We believe 

this law will help to reduce the financial burden and mental strain on servicemembers and their families following 

a traumatic and often life-changing injury. Immediately 

following enactment of Pub. L. No. 109–13, the VA Insurance Service met with DOD and Prudential Insurance 

Company of America to discuss implementation of the new 

program. At this point, we do not know whether there are 

any issues that would need to be resolved through amendment to section 1032. We hope to be able to point out to 

the Subcommittee any such issues prior to the December 

1, 2005, effective date of this legislation.

CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

JULY 15, 2005. 

Hon. STEVE BUYER, 

Chairman, Committee on Veterans’ Affairs, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 3200, the 

Servicemembers’ Group Life Insurance Enhancement Act of 2005. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Dwayne M. Wright. 

Sincerely, 

DOUGLAS HOLTZ-EAKIN. 

Enclosure. 

H.R. 3200—Servicemembers’ Group Life Insurance Enhancement 

Act of 2005 

Summary: H.R. 3200 would make permanent the authority in 

the Emergency Supplemental Appropriations Act for Defense, the 

Global War on Terror, and Tsunami Relief Act, 2005, that increased the maximum coverage under the Servicemembers’ Group 

Life Insurance (SGLI) and the Veterans’ Group Life Insurance 

(VGLI) programs. The bill also would allow those servicemembers 

who are insured under SGLI to opt out of the Traumatic Injury 

Protection Insurance portion of SGLI. 

CBO estimates that implementing this bill would cost $95 million in 2006, and $199 million over the 2006–2010 period, assumVerDate jul 14 2003 22:13 Jul 21, 2005 Jkt 039006 PO 00000 Frm 00011 Fmt 6659 Sfmt 6602 E:\HR\OC\HR177.XXX HR177
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ing appropriation of the necessary amounts. Enacting H.R. 3200 

would not affect direct spending or revenues. 

H.R. 3200 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act (UMRA) 

and would not affect the budgets of state, local, or tribal governments. 

Estimated cost to the Federal Government: The estimated budgetary impact of H.R. 3200 is shown in the following table. The costs 

of this legislation fall within budget function 050 (national defense).

By fiscal year, in millions of dollars—

2006 2007 2008 2009 2010 

CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Estimated Authorization Level ................................................................................ 95 64 34 6 0 

Estimated Outlays ................................................................................................... 95 64 34 6 0 

Basis of Estimate: Section 2 would make permanent the current 

authority that increased the maximum coverage under SGLI from 

$250,000 to $400,000 for all servicemembers, effective September 1, 

2004. That authority is currently in place only through fiscal year 

2005. 

Under current law, the Department of Defense (DoD) is required 

to reimburse the Department of Veterans Affairs (VA) for the costs 

of benefit claims for deaths that exceed levels set by VA each year. 

VA calculates these levels based on mortality rates expected under 

peacetime conditions and refers to these costs as hazard costs. In 

2004, DoD reimbursed VA $105 million to cover these costs. 

For this estimate, CBO assumes that force levels in theater for 

Operating Enduring Freedom and Operation Iraqi Freedom for 

2006 will remain at levels expected for 2005 (about 200,000 

servicemembers) and then decline gradually over several years to 

about 50,000 by 2010. Based on that assumption regarding force 

levels, current death rates observed in those two operations, and 

information provided by DoD regarding the death rates for the remainder of the force, CBO estimates that DoD would need to reimburse VA for 640 claims in 2006. CBO also estimates that the number of claims exceeding VA levels would decline to about 40 by 

2009 and that the number of claims for benefits would not exceed 

levels set by VA after 2009. Based on information from VA, CBO 

assumes that DoD would be responsible for reimbursing VA for the 

maximum benefit amount of $400,000 per claim under this provision. Thus, CBO estimates that DoD would reimburse VA $95 million for hazard costs in 2006 and $199 million over the 2006–2009 

period, subject to the availability of appropriated funds. 

Section 6 would allow servicemembers who are covered under 

SGLI, to opt out of Traumatic Injury Protection Insurance that is 

automatically added to a servicemember’s SGLI coverage under 

current law. The Congress authorized Traumatic Injury Protection 

Insurance coverage under SGLI as part of the Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, 

and Tsunami Relief Act, 2005. That coverage would provide up to 

a maximum of $100,000 for traumatic injuries (as defined through 

collaboration by VA and DoD) sustained to a servicemember. According to VA—the administrator of the SGLI program—

13

servicemembers currently pay $26 a month for $400,000 of SGLI 

coverage. VA indicates that a servicemember’s monthly premium 

for SGLI coverage will increase by $1 for Traumatic Injury Protection Insurance. 

VA indicates that 98 percent of servicemembers participate in 

SGLI and take out the maximum coverage. Under current law, 

DoD is required to pay the costs of any claims for Traumatic Injury 

Protection Insurance that exceed the level VA expects to be able to 

cover with premiums collected from servicemembers. If a significant number of servicemembers chose to opt out of Traumatic Injury Protection Insurance, VA would eventually adjust the premium amount to cover expected costs. In the near term, however, 

the amount of premiums collected might be insufficient and DoD 

would be required to pay the additional costs associated with paying servicemember claims. 

However, CBO expects that few servicemembers would opt out of 

the additional insurance coverage given the small incremental cost 

($1 per month) for this insurance and the inability of 

servicemembers to predict when a traumatic injury could occur. 

Thus, CBO estimates that any near-term costs associated with implementing this provision would be insignificant. 

Intergovernmental and private-sector impact: H.R. 3200 contains 

no intergovernmental or private-sector mandates as defined in the 

Unfunded Mandates Reform Act (UMRA) and would not affect the 

budgets of state, local, or tribal governments. 

Previous CBO estimate: On June 2, 2005, CBO transmitted a 

cost estimate for S. 1042, the National Defense Authorization Act 

for Fiscal Year 2006, as reported by the Senate Committee on 

Armed Services on May 17, 2004. Section 641 of S. 1042 is similar 

to section 2 of H.R. 3200 as both provisions would make permanent 

the authority to increase the maximum amount of SGLI coverage 

from $250,000 to $400,000. Section 641 of S. 1042 would also direct 

DoD to pay the cost of premium payments for up to $150,000 of 

SGLI coverage for servicemembers serving in an operation or area 

that DoD designates as a combat operation or a zone of combat, 

whereas H.R. 3200 would not. Differences in the estimated costs reflect differences in the two versions of the legislation. 

Estimate prepared by: Federal Costs: Dwayne M. Wright. Impact 

on State, Local, and Tribal Governments: Melissa Merrell. Impact 

on the Private Sector: Joshua Lee. 

Estimate approved by: Peter H. Fontaine, Deputy Assistant Director for Budget Analysis. 

STATEMENT OF FEDERAL MANDATES

The preceding Congressional Budget Office cost estimate states 

that the bill contains no intergovernmental or private sector mandates as defined in the Unfunded Mandates Reform Act. 

STATEMENT OF CONSTITUTIONAL AUTHORITY

Pursuant to Article I, section 8 of the United States Constitution, 

the reported bill is authorized by Congress’ power to ‘‘provide for 

the common Defense and general Welfare of the United States.’’

14

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

existing law in which no change is proposed is shown in roman): 

EMERGENCY SUPPLEMENTAL APPROPRIATIONS ACT 

FOR DEFENSE, THE GLOBAL WAR ON TERROR, AND 

TSUNAMI RELIEF, 2005

* * * * * * *

DIVISION A—EMERGENCY SUPPLEMENTAL APPROPRIATIONS ACT FOR 

DEFENSE, THE GLOBAL WAR ON TERROR, AND TSUNAMI RELIEF, 2005

That the following sums are appropriated, out of any money in the 

Treasury not otherwise appropriated, for the fiscal year ending 

September 30, 2005, and for other purposes, namely: 

TITLE I—DEFENSE-RELATED APPROPRIATIONS 

DEPARTMENT OF DEFENSE—MILITARY 

MILITARY PERSONNEL 

* * * * * * *

GENERAL PROVISIONS, THIS TITLE 

* * * * * * *

øSERVICEMEMBERS’ GROUP LIFE INSURANCE

øSEC. 1012. (a) INCREASED MAXIMUM AMOUNT OF SERVICEMBERS’

GROUP LIFE INSURANCE.—Section 1967 of title 38, United States 

Code, is amended—

ø(1) in subsection (a)(3)(A), by striking clause (i) and inserting the following new clause: 

ø‘‘(i) In the case of a member—

ø‘‘(I) $400,000 or such lesser amount as the member may 

elect as provided in subparagraph (B); 

ø‘‘(II) in the case of a member covered by subsection (e), 

the amount provided for or elected by the member under 

subclause (I) plus the additional amount of insurance provided for the member by subsection (e); or 

ø‘‘(III) in the case of a member covered by subsection (e) 

who has made an election under paragraph (2)(A) not to 

be insured under this subchapter, the amount of insurance 

provided for the member by subsection (e).’’; and 

ø(2) in subsection (d), by striking ‘‘$250,000’’ and inserting 

‘‘$400,000’’. 

ø(b) INCREMENTS OF DECREASED AMOUNTS ELECTABLE BY MEMBERS.—Subsection (a)(3)(B) of such section is amended by striking 

15

‘‘member or spouse’’ in the last sentence and inserting ‘‘member, be 

evenly divisible by $50,000 and, in the case of a member’s spouse’’. 

ø(c) ADDITIONAL AMOUNT FOR MEMBERS SERVING IN CERTAIN

AREAS OR OPERATIONS.—

ø(1) INCREASED AMOUNT.—Section 1967 of such title is further amended—

ø(A) by redesignating subsection (e) as subsection (f); 

and 

ø(B) by inserting after subsection (d) the following new 

subsection (e): 

ø‘‘(e)(1) A member covered by this subsection is any member as 

follows: 

ø‘‘(A) Any member who dies as a result of one or more 

wounds, injuries, or illnesses incurred while serving in an operation or area that the Secretary designates, in writing, as a 

combat operation or a zone of combat, respectively, for purposes of this subsection. 

ø‘‘(B) Any member who formerly served in an operation or 

area so designated and whose death is determined (under regulations prescribed by the Secretary of Defense) to be the direct 

result of injury or illness incurred or aggravated while so serving. 

ø‘‘(2) The additional amount of insurance under this subchapter 

that is provided for a member by this subsection is $150,000, except that in a case in which the amount provided for or elected by 

the member under subsection (a)(3)(A)(i)(I) exceeds $250,000, the 

additional amount of insurance under this subchapter that is provided for the member by this subsection shall be reduced to such 

amount as is necessary to comply with the limitation in paragraph 

(3). 

ø‘‘(3) The total amount of insurance payable for a member under 

this subchapter may not exceed $400,000. 

ø‘‘(4) While a member is serving in an operation or area designated as described in paragraph (1), the cost of insurance of the 

member under this subchapter that is attributable to $150,000 of 

insurance coverage shall, at the election of the Secretary concerned—

ø‘‘(A) be contributed as provided in section 1969(b)(2) of this 

title, rather through deduction or withholding from the member’s pay; or 

ø‘‘(B) if deducted or withheld from the member’s pay, be reimbursed to the member through such mechanism as the Secretary concerned determines appropriate.’’. 

ø(2) FUNDING.—Section 1969(b) of such title is amended—

ø(A) by inserting ‘‘(1)’’ after ‘‘(b)’’; and 

ø(B) by adding at the end the following new paragraph: 

ø‘‘(2) For each month for which a member insured under this 

subchapter is serving in an operation or area designated as described by paragraph (1)(A) of section 1967(e) of this title, there 

may, at the election of the Secretary concerned under paragraph 

(4)(A) of such section, be contributed from the appropriation made 

for active duty pay of the uniformed service concerned an amount 

determined by the Secretary and certified to the Secretary concerned to be the cost of Servicemembers’ Group Life Insurance 

16

which is traceable to the cost of providing insurance for the member under section 1967 of this title in the amount of $150,000.’’. ø(d) CONFORMING AMENDMENT.—Section 1967(a)(2)(A) of such 

title is amended by inserting before the period at the end the following: ‘‘, except with respect to insurance provided under paragraph (3)(A)(i)(III)’’. ø(e) COORDINATION WITH VGLI.—Section 1977(a) of such title is 

amended— ø(1) by striking ‘‘$250,000’’ each place it appears and inserting ‘‘$400,000’’; and 

ø(2) by adding at the end of paragraph (1) the following new 

sentence: ‘‘Any additional amount of insurance provided a 

member under section 1967(e) of this title may not be treated 

as an amount for which Veterans’ Group Life Insurance shall 

be issued under this section.’’. ø(f) REQUIREMENTS REGARDING ELECTIONS OF MEMBERS TO REDUCE OR DECLINE INSURANCE.—Section 1967(a) of such title is further amended—

ø(1) in paragraph (2), by adding at the end the following new 

subparagraph: 

ø‘‘(C) Pursuant to regulations prescribed by the Secretary of Defense, notice of an election of a member with a spouse not to be 

insured under this subchapter, or to be insured under this subchapter in an amount less than the maximum amount provided 

under paragraph (3)(A)(i)(I), shall be provided to the spouse of the 

member.’’; and 

ø(2) in paragraph (3)—

ø(A) in the matter preceding clause (i), by striking ‘‘and 

(C)’’ and inserting ‘‘, (C), and (D)’’; and 

ø(B) by adding at the end the following new subparagraphs: 

ø‘‘(D) A member with a spouse may not elect not to be insured 

under this subchapter, or to be insured under this subchapter in 

an amount less than the maximum amount provided under subparagraph (A)(i)(I), without the written consent of the spouse. 

ø‘‘(E) Whenever a member who is not married elects not to be insured under this subchapter, or to be insured under this subchapter in an amount less than the maximum amount provided for 

under subparagraph (A)(i)(I), the Secretary concerned shall provide 

a notice of such election to any person designated by the member 

as a beneficiary or designated as the member’s next-of-kin for the 

purpose of emergency notification, as determined under regulations 

prescribed by the Secretary of Defense.’’. ø(g) REQUIREMENT REGARDING REDESIGNATION OF BENEFICIARIES.—Section 1970 of such title is amended by adding at the 

end the following new subsection: 

ø‘‘(j) A member with a spouse may not modify the beneficiary or 

beneficiaries designated by the member under subsection (a) without providing written notice of such modification to the spouse.’’. ø(h) EFFECTIVE DATE.—This section and the amendments made 

by this section shall take effect on the first day of the first month 

that begins more than 90 days after the date of the enactment of 

this Act. 

ø(i) TERMINATION.—The amendments made by this section shall 

terminate on September 30, 2005. Effective on October 1, 2005, the 

17

provisions of sections 1967, 1969, 1970, and 1977 of title 38, United 

States Code, as in effect on the day before the date of the enactment of this Act shall be revived.¿

* * * * * * *

TITLE 38, UNITED STATES CODE 

* * * * * * *

PART II—GENERAL BENEFITS 

* * * * * * *

CHAPTER 19—INSURANCE 

* * * * * * *

SUBCHAPTER III—SERVICEMEMBERS’ GROUP LIFE 

INSURANCE 

* * * * * * *

§ 1967. Persons insured; amount 

(a)(1)***

* * * * * * *

(3)(A) Subject to subparagraphs (B) and (C), the amount for 

which a person is insured under this subchapter is as follows: 

(i) In the case of a member, ø$250,000¿ $400,000. 

* * * * * * *

(B) A member may elect in writing to be insured or to insure the 

member’s spouse in an amount less than the amount provided for 

under subparagraph (A). The member may not elect to insure the 

member’s child in an amount less than $10,000. The amount of insurance so elected shall, in the case of a ømember or spouse¿ member, be evenly divisible by $50,000 and, in the case of a member’s 

spouse,, be evenly divisible by $10,000. 

* * * * * * *

(d) Whenever a member has the opportunity to make an election 

under subsection (a) not to be insured under this subchapter, or to 

be insured under this subchapter in an amount less than the maximum amount øof $250,000¿ in effect under paragraph (3)(A)(i) of 

that subsection, and at such other times periodically thereafter as 

the Secretary concerned considers appropriate, the Secretary concerned shall furnish to the member general information concerning 

life insurance. Such information shall include—

(1) * * *

* * * * * * *

(f)(1)(A) Whenever a member who is eligible for insurance under 

this section executes a life insurance option specified in subparagraph (B), the Secretary concerned shall notify the member’s spouse 

or, if the member is unmarried, the member’s next of kin, in writing, 

of the execution of that option. 

(B) A life insurance option referred to in subparagraph (A) is any 

of the following: 

18

(i) An election under subsection (a)(2)(A) not to be insured 

under this subchapter. 

(ii) An election under subsection (a)(3)(B) for insurance of the 

member in an amount that is less than the maximum amount 

provided under subsection (a)(3)(A)(i). 

(iii) An application under subsection (c) for insurance coverage under this subchapter or for a change in the amount of 

such insurance coverage. 

(iv) In the case of a married member, a designation under 

section 1970(a) of this title of any person other than the spouse 

or a child of the member as the beneficiary of the member for 

any amount of insurance under this subchapter. 

(2) Whenever an unmarried member who is eligible for insurance 

under this section marries, the Secretary concerned shall notify the 

member’s spouse in writing as to whether the member is insured 

under this subchapter. In the case of a member who is so insured, 

the Secretary shall include with such notification— (A) if the member has made an election described in paragraph (1)(B)(ii), notice that the amount of such insurance is less 

than the maximum amount provided under subsection 

(a)(3)(A)(i); and 

(B) if the member has designated a beneficiary other than the 

spouse or a child of the member for any amount of such insurance, notice that such a designation has been made. 

(3)(A) Notification of a spouse under paragraph (1) or (2), or of 

any other person under paragraph (1), for purposes of this subsection shall consist of a good faith effort to provide information to 

the spouse or other person at the last address of the spouse or other 

person in the records of the Secretary concerned. 

(B) Failure to provide such notification, or to provide such notification in a timely manner, does not affect the validity of any life 

insurance option referred to in paragraph (1)(B).

* * * * * * *

§ 1977. Veterans’ Group Life Insurance 

(a)(1) Veterans’ Group Life Insurance shall be issued in the 

amounts specified in section 1967(a) of this title. In the case of any 

individual, the amount of Veterans’ Group Life Insurance may not 

exceed the amount of Servicemembers’ Group Life Insurance coverage continued in force after the expiration of the period of duty 

or travel under section 1967(b) or 1968(a) of this title. No person 

may carry a combined amount of Servicemembers’ Group Life Insurance and Veterans’ Group Life Insurance in excess of 

ø$250,000¿ $400,000 at any one time. 

(2) If any person insured under Veterans’ Group Life Insurance 

again becomes insured under Servicemembers’ Group Life Insurance but dies before terminating or converting such person’s Veterans’ Group Insurance, Veterans’ Group Life Insurance shall be 

payable only if such person is insured for less than ø$250,000¿

$400,000 under Servicemembers’ Group Life Insurance, and then 

only in an amount which, when added to the amount of 

Servicemembers’ Group Life Insurance payable, does not exceed 

ø$250,000¿ $400,000. 

* * * * * * *

19

§ 1980A. Traumatic injury protection 

(a) * * *

(b)(1)***

* * * * * * *

(4)(A) A member may elect in writing not to be insured under this 

section. 

(B) If a member eligible for insurance under this section is not so 

insured by reason of an election made under subparagraph (A), the 

member may thereafter elect to be insured under this section upon 

written application by the member, proof of good health, and compliance with such other terms and conditions as may be prescribed 

by the Secretary. Insurance under this section upon such an election 

is effective upon the date of the receipt by the Secretary of such application and shall apply only with respect to injuries incurred after 

that date. 

(C) The Secretary shall prescribe by regulation conditions as to 

how and when elections under subparagraph (B) shall be made. 

Such regulations may include limiting the time for such elections to 

an annual open season, for a duration each year prescribed by the 

Secretary.

* * * * * * *

Æ