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[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
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