52614 Federal Register / Vol. 86, No. 181 / Wednesday, September 22, 2021 / Rules and Regulations 

(ii) Retroactive application. For 

distributions made on or before January 

4, 2001, see § 1.301–1(g) as contained in 

26 CFR part 1 revised April 1, 2021. 

(g) Basis. The basis of property 

received in a distribution to which 

section 301 applies is the fair market 

value of such property. See paragraph 

(b) of this section. 

(h) Transfers for less than fair market 

value. If property is transferred by a 

corporation to a shareholder for an 

amount less than its fair market value in 

a sale or exchange, such shareholder is 

treated as having received a distribution 

to which section 301 applies. In such 

case, the amount of the distribution is 

the excess of the fair market value of the 

property over the amount paid for such 

property at the time of the transfer. For 

example, on January 3, 2021, A, a 

shareholder of Corporation X, 

purchased property from X for $20 

when the fair market value of such 

property was $100. The amount of the 

distribution to A determined under 

section 301(b) is $80. 

(i) [Reserved] 

(j) Transactions treated as 

distributions. A distribution to 

shareholders with respect to their stock 

is within the terms of section 301, 

although it takes place at the same time 

as another transaction, if the 

distribution is in substance a separate 

transaction (whether or not connected 

in a formal sense). This situation is most 

likely to occur in the case of a 

recapitalization, a reincorporation, or a 

merger of a corporation with a newly 

organized corporation having 

substantially no property. For example, 

if a corporation having only common 

stock outstanding exchanges one share 

of newly issued common stock and one 

bond with a principal amount of $10 for 

each share of outstanding common 

stock, the distribution of the bond will 

be a distribution of property (to the 

extent of its fair market value) to which 

section 301 applies, even though the 

exchange of common stock for common 

stock may be pursuant to a plan of 

reorganization under the terms of 

section 368(a)(1)(E) (recapitalization) 

and may result in the shareholder not 

recognizing any gain or loss on the 

exchange by reason of section 354. 

(k) Cancellation of indebtedness. The 

cancellation of indebtedness of a 

shareholder by a corporation is treated 

as a distribution of property. 

(l) Cross-references. For certain rules 

relating to adjustments to earnings and 

profits and for determining the extent to 

which a distribution is a dividend, see 

sections 312 and 316 of the Code and 

the regulations in this part under 

sections 312 and 316. 

(m) Split-dollar and other life 

insurance arrangements—(1) Splitdollar life insurance arrangements—(i) 

Distribution of economic benefits. The 

provision by a corporation to its 

shareholder pursuant to a split-dollar 

life insurance arrangement, as defined 

in § 1.61–22(b)(1) or (2), of economic 

benefits described in § 1.61–22(d), or of 

amounts described in § 1.61–22(e), is 

treated as a distribution of property, the 

amount of which is determined under 

§ 1.61–22(d) and (e), respectively. 

(ii) Distribution of entire contract or 

undivided interest therein. A transfer 

(within the meaning of § 1.61–22(c)(3)) 

of the ownership of a life insurance 

contract (or an undivided interest 

therein) that is part of a split-dollar life 

insurance arrangement is a distribution 

of property, the amount of which is 

determined pursuant to § 1.61–22(g)(1) 

and (2). 

(2) Other life insurance arrangements. 

A payment by a corporation on behalf 

of a shareholder of premiums on a life 

insurance contract or an undivided 

interest therein that is owned by the 

shareholder constitutes a distribution of 

property, even if such payment is not 

part of a split-dollar life insurance 

arrangement under § 1.61–22(b). 

(3) When distribution is made—(i) In 

general. Except as provided in 

paragraph (m)(3)(ii) of this section, 

paragraph (c) of this section applies to 

determine when a distribution 

described in paragraph (m)(1) or (2) of 

this section is taken into account by a 

shareholder. 

(ii) Exception. Notwithstanding 

paragraph (c) of this section, a 

distribution described in paragraph 

(m)(1)(ii) of this section is treated as 

made by a corporation to its shareholder 

at the time that the life insurance 

contract, or an undivided interest 

therein, is transferred (within the 

meaning of § 1.61–22(c)(3)) to the 

shareholder. 

(4) Applicability date—(i) General 

rule. This paragraph (m) applies to splitdollar and other life insurance 

arrangements entered into after 

September 17, 2003. For purposes of 

this paragraph (m)(4), a split-dollar life 

insurance arrangement is entered into as 

determined under § 1.61–22(j)(1)(ii). 

(ii) Modified arrangements treated as 

new arrangements. If a split-dollar life 

insurance arrangement entered into on 

or before September 17, 2003, is 

materially modified (within the 

meaning of § 1.61–22(j)(2)) after 

September 17, 2003, the arrangement is 

treated as a new arrangement entered 

into on the date of the modification. 

(n) Applicability date. Paragraphs (a) 

through (c), (e), (g), and (h) of this 

section apply to distributions under 

section 301 made after September 22, 

2021. 

■ Par. 3. Section 1.356–1 is amended by 

revising paragraph (f) to read as follows: 

§ 1.356–1 Receipt of additional 

consideration in connection with an 

exchange. 

* * * * * 

(f) See § 1.301–1(j) for certain 

transactions that are not within the 

scope of section 356. 

* * * * * 

■ Par. 4. Section 1.368–2 is amended by 

revising the last sentence of paragraph 

(m)(3)(iii) to read as follows: 

§ 1.368–2 Definition of terms. 

* * * * * 

(m) * * * 

(3) * * * 

(iii) * * * See § 1.301–1(j). 

* * * * * 

§ 1.902–1 [Amended] 

■ Par. 5. In § 1.902–1(a)(12), remove the 

language ‘‘§ 1.301–1(b)’’ and add in its 

place ‘‘§ 1.301–1(c)’’. 

§ 1.902–3 [Amended] 

■ Par. 6. In § 1.902–3(a)(7), remove the 

language ‘‘§ 1.301–1(b)’’ and add in its 

place ‘‘§ 1.301–1(c)’’. 

Douglas W. O’Donnell, 

Deputy Commissioner for Services and 

Enforcement. 

Approved: August 18, 2021. 

Mark J. Mazur, 

Acting Assistant Secretary of the Treasury 

(Tax Policy). 

[FR Doc. 2021–19980 Filed 9–21–21; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF VETERANS 

AFFAIRS 

38 CFR Part 71 

RIN 2900–AR28 

Extension of Program of 

Comprehensive Assistance for Family 

Caregivers Eligibility for Legacy 

Participants and Legacy Applicants 

AGENCY: Department of Veterans Affairs. 

ACTION: Interim final rule. 

SUMMARY: The Department of Veterans 

Affairs (VA) is revising its regulations 

that govern VA’s Program of 

Comprehensive Assistance for Family 

Caregivers (PCAFC) by extending 

eligibility for legacy participants, legacy 

applicants, and their Family Caregivers 

and the applicable benefits afforded to 

Family Caregivers, to include the 

Federal Register / Vol. 86, No. 181 / Wednesday, September 22, 2021 / Rules and Regulations 52615 

monthly stipend, by one year. This 

change will provide VA with an 

additional year to complete 

reassessments of legacy participants, 

legacy applicants, and their Family 

Caregivers. This change will also ensure 

that legacy participants, legacy 

applicants, and their Family Caregivers 

are treated equitably. 

DATES: 

Effective date: This interim final rule 

is effective September 22, 2021. 

Comment date: Comments must be 

received on or before November 22, 

2021. 

ADDRESSES: Comments must be 

submitted through 

www.Regulations.gov. Comments 

received will be available at 

regulations.gov for public viewing, 

inspection or copies. 

FOR FURTHER INFORMATION CONTACT: 

Colleen Richardson, PsyD, Executive 

Director, Caregiver Support Program, 

Patient Care Services, Veterans Health 

Administration, Department of Veterans 

Affairs, 810 Vermont Ave. NW, 

Washington, DC 20420, (202) 461–7337. 

(This is not a toll-free number.) 

SUPPLEMENTARY INFORMATION: 

Background 

In 2010, Congress established section 

1720G of title 38 of the United States 

Code (U.S.C.). Caregivers and Veterans 

Omnibus Health Services Act of 2010, 

Public Law (Pub. L.) 111–163, 124 Stat. 

1130 (2010). Section 1720G required 

VA, in part, to establish a Program of 

Comprehensive Assistance for Family 

Caregivers (PCAFC) for Family 

Caregivers of eligible veterans who have 

a serious injury incurred or aggravated 

in the line of duty in the active military, 

naval, or air service on or after 

September 11, 2001. VA implemented 

PCAFC through its regulations in part 

71 of title 38, Code of Federal 

Regulations (CFR). PCAFC provides 

certain benefits such as training, respite 

care, counseling, technical support, 

beneficiary travel (to attend required 

caregiver training and for an eligible 

veteran’s medical appointments), access 

to health care (if qualified) through the 

Civilian Health and Medical Program of 

the Department of Veterans Affairs 

(CHAMPVA), and a monthly stipend. 38 

U.S.C. 1720G; 38 CFR 71.40. 

In 2018, section 161 of the John S. 

McCain III, Daniel K. Akaka, and 

Samuel R. Johnson VA Maintaining 

Internal Systems and Strengthening 

Integrated Outside Networks Act of 

2018 (VA MISSION Act of 2018), Public 

Law 115–182, 132 Stat. 1393 (2018), 

amended 38 U.S.C. 1720G by expanding 

PCAFC to Family Caregivers of eligible 

veterans who incurred or aggravated a 

serious injury in the line of duty before 

September 11, 2001 in a phased 

approach, establishing new benefits for 

designated Primary Family Caregivers of 

eligible veterans, and making other 

changes affecting program eligibility 

and VA’s evaluation of PCAFC 

applications. To incorporate these and 

other necessary changes to improve and 

expand VA’s PCAFC, VA amended 38 

CFR part 71. 85 Federal Register (FR) 

46226 (July 31, 2020). These changes 

took effect on October 1, 2020. Id. As 

part of that rulemaking, VA revised the 

eligibility criteria for PCAFC in § 71.20. 

VA recognized that there were 

individuals whose applications had 

already been received by VA and were 

in the process of being evaluated under 

the pre-October 1, 2020 criteria and who 

would be approved for PCAFC on or 

after October 1, 2020, as well as 

individuals who were already 

participating in PCAFC before October 

1, 2020. Id. VA classified these 

individuals as legacy applicants and 

legacy participants, respectively. 38 CFR 

71.15. A legacy applicant is a veteran or 

servicemember who submits a joint 

application for PCAFC that was received 

by VA before October 1, 2020 and for 

whom a Family Caregiver(s) was 

approved and designated on or after 

October 1, 2020, subject to certain 

criteria. Id. A legacy participant is an 

eligible veteran whose Family 

Caregiver(s) was approved and 

designated by VA under 38 CFR part 71 

as of September 30, 2020 so long as the 

Primary Family Caregiver (as 

applicable) continues to be approved 

and designated as such. Id. 

In § 71.30, VA set forth requirements 

for reassessment to determine whether 

legacy applicants, legacy participants, 

and their Family Caregivers would 

continue to be eligible for PCAFC. 

Paragraph (e)(1) states that if the eligible 

veteran is a legacy participant or a 

legacy applicant, that eligible veteran 

and their Family Caregiver(s) will be 

reassessed by VA during the one-year 

period beginning on October 1, 2020 to 

determine whether the legacy 

participant or legacy applicant meets 

the new eligibility requirements in 

§ 71.20(a). VA acknowledged that it 

would need to reassess legacy 

applicants, legacy participants, and 

their Family Caregivers to determine 

their continued eligibility for PCAFC, 

and believed one year from the effective 

date of the final rule would be necessary 

and appropriate to ensure these 

reassessments were completed. 85 FR at 

46253. 

VA foresaw possible impacts of the 

new regulation on the legacy cohort. For 

instance, there was the possibility that 

a legacy applicant or legacy participant 

would no longer be eligible for PCAFC 

under the criteria in § 71.20(a). In 

addition, there was the possibility that 

the legacy applicant or legacy 

participant would be determined 

eligible for PCAFC, but the Primary 

Family Caregiver would be eligible for 

a stipend amount that was less than 

they were receiving under the previous 

regulations. Because of these potential 

impacts, VA allowed for an extension of 

eligibility under the pre-October 1, 2020 

criteria for a one-year transition period 

under § 71.20(b) and (c) for legacy 

participants, legacy applicants, and 

their Family Caregivers. During this 

transition period, legacy participants, 

legacy applicants, and their Family 

Caregivers would continue to be eligible 

to receive benefits under PCAFC and 

would not have the amount of their 

monthly stipend reduced (except as the 

result of the eligible veteran moving to 

a new address). 

In § 71.40(c)(4), VA set forth 

requirements for determining monthly 

stipend amounts for Primary Family 

Caregivers. This paragraph explains 

how the stipend is calculated for 

Primary Family Caregivers of legacy 

participants and legacy applicants 

during the one-year transition period. 

As explained in the proposed rule, 

VA believed that a one-year transition 

period was reasonable. It would allow 

individuals who are participating in 

PCAFC as of September 30, 2020, the 

day before the effective date of the rule, 

to remain eligible for the program and 

not experience a stipend amount 

decrease (except as specified) while VA 

completes a reassessment to determine 

eligibility under the new criteria— 

regardless of when such reassessment 

occurred during the one-year period. 

This was important because it would be 

inequitable for similarly situated 

veterans and their Family Caregivers to 

be disadvantaged based solely on when 

VA conducted their reassessment. In 

addition, this one-year period would 

minimize disruption to these 

individuals by allowing for a period to 

plan and adjust to the possibility of a 

legacy applicant or legacy participant 

being determined no longer eligible or 

eligible such that the monthly stipend 

would be a lesser amount. We believed 

this to be fair, reasonable, and an 

appropriate use of taxpayer dollars. 85 

FR 13356 (March 6, 2020); 85 FR 46226 

(July 31, 2020). 

For the reasons explained below, we 

are extending the one-year transition 

period and timeline for VA to complete 

reassessments of legacy applicants, 

legacy participants, and their Family 

52616 Federal Register / Vol. 86, No. 181 / Wednesday, September 22, 2021 / Rules and Regulations 

Caregivers for one additional year. 

Legacy applicants, legacy participants, 

and their Family Caregivers will remain 

eligible for PCAFC in accordance with 

revised § 71.20(b) and (c) and will 

continue to receive benefits in 

accordance with revised § 71.40 for the 

additional one-year period. 

Accordingly, we are amending 

§§ 71.20(b) and (c) regarding program 

eligibility, § 71.30(e) regarding 

reassessments, and §§ 71.40(c)(4)(i)(B) 

through (D), (c)(4)(ii)(C)(2)(i) and (ii), 

and the note to (c)(4)(ii)(C)(2) regarding 

the stipend methodology, to account for 

the additional one-year period through 

September 30, 2022. 

Discussion 

When the prior rulemaking became 

effective on October 1, 2020, VA 

intended to complete reassessments for 

all legacy participants, legacy 

applicants, and their Family Caregivers 

within a one-year period to determine 

their eligibility under new § 71.20(a); 

however, this is no longer achievable. 

For the reasons explained below, VA is 

unable to conduct all necessary 

reassessments of legacy applicants, 

legacy participants, and their Family 

Caregivers within the one-year period. It 

is therefore necessary to extend PCAFC 

eligibility of legacy applicants, legacy 

participants, and their Family 

Caregivers under §§ 71.20(b) and (c) and 

their applicable benefits, including the 

monthly stipend calculation under 

§ 71.40(c)(4), for an additional one-year 

period through September 30, 2022. 

The VA MISSION Act of 2018 

expanded eligibility for PCAFC to 

Family Caregivers of eligible veterans 

who incurred or aggravated a serious 

injury in the line of duty before 

September 11, 2001 in a phased 

approach. The first phase, which 

became effective on October 1, 2020, 

expanded PCAFC eligibility to include 

eligible veterans who incurred or 

aggravated a serious injury in the line of 

duty on or before May 7, 1975. Since the 

onset of this first phase of expansion, 

VA has seen a dramatic increase in new 

applications for PCAFC. This increase is 

significantly higher than VA 

anticipated. 

We acknowledge that anticipating the 

number of applications that may be 

received is subject to significant 

variability and subjectivity. An 

individual need not be eligible to apply 

for PCAFC; there is no restriction on 

who may choose to apply. However, VA 

estimated that it would receive 76,635 

applications in FY 2021, and as of July 

1, 2021, VA has received approximately 

90,500 applications. The number of 

applications received so far exceeds the 

total number of applications PCAFC 

received in any previous year and 

exceeds VA’s projections for the entire 

FY 2021. For reference, in FY 2020, VA 

received approximately 22,900 

applications, with an average of 1,900 

applications per month. Between 

October 1, 2020 and July 1, 2021, VA 

has received an average of 

approximately 10,000 applications per 

month.. We note that, of the 

approximately 90,500 applications VA 

received between October 1, 2020 and 

July 1, 2021, approximately 11 percent 

of these veteran applicants were born in 

1983 or later, demonstrating that new 

applicants are not only from those 

veterans who have been waiting for 

expansion to begin, but also from 

veterans who may have incurred or 

aggravated a serious injury in the line of 

duty on or after September 11, 2001, 

and are newly interested in the Program. 

As part of planning for PCAFC 

expansion, a staffing model was 

developed to guide and inform staffing 

decisions to augment resources 

available to administer, monitor, and 

oversee PCAFC. In particular, this 

action was necessary to prepare for the 

anticipated increased workload 

associated with expanding PCAFC, to 

include application processing, 

completion of wellness contacts, 

completion of reassessments, and 

supporting delivery of clinical care. The 

first phase of the staffing augmentation 

called for an additional 680 field based 

and Veteran Integrated Service Network 

(VISN) level staff to support 

administration and delivery of caregiver 

support programming. The second 

phase of staffing augmentation began in 

August 2020 and sought to add over 750 

additional field-based front-line staff. As 

of July 2021, over 90 percent of staff had 

been hired. 

Despite these staffing augmentations, 

given the significantly larger volume of 

applications than was anticipated, VA 

focused its resources on processing new 

applications versus reassessing 

eligibility of legacy applicants, legacy 

participants and their Family 

Caregivers. As a result, as of July 1, 

2021, VA has only completed 4 percent 

of the estimated 19,800 reassessment 

needed for the legacy cohort. VA will be 

unable to complete reassessments of 

each legacy applicant, legacy 

participant, and their Family 

Caregiver(s) within the one-year period 

provided in § 71.30(e). 

While VA received higher than 

anticipated applications, it is important 

to note that educating and training new 

staff as well as educating and training 

existing staff on the program changes 

has continued, culminating in more 

streamlined processes, implementation 

of best practices, and increased 

efficiencies. As a result of these efforts, 

VA has significantly increased the rate 

in which applications are being 

adjudicated. During the first quarter of 

FY 2021, VA adjudicated an average of 

4,075 applications per month. In 

comparison, during the third quarter of 

FY 2021, VA adjudicated an average of 

10,663 applications per month—an 

increase of 162 percent in adjudications 

made. While VA’s rate of application 

adjudication has been increasing, there 

has been a corresponding decrease in 

the number of new PCAFC applications 

being received. The average number of 

applications received each month in the 

third quarter of FY 2021 was 

approximately 7,300 compared to an 

average of approximately 11,600 each 

month during the first quarter—a 

decrease of approximately 59 percent in 

the average number of new applications 

received each month (during third 

quarter compared to first quarter). As 

noted above, VA’s rate of adjudicating 

applications has increased with the 

passage of time during FY 2021. With 

the rate of new application submissions 

decreasing and adjudications of such 

new applications increasing, VA has 

been able to devote more resources to 

reassessments of legacy participants, 

legacy applicants, and their Family 

Caregivers. With these continued efforts, 

VA believes that reassessments of legacy 

participants, legacy applicants, and 

their Family Caregivers will be able to 

be completed with the extension of an 

additional one-year period. 

Extending the eligibility period of 

legacy participants, legacy applicants, 

and their Family Caregivers from a oneyear period to a two-year period from 

October 1, 2020 will ensure that all 

legacy participants, legacy applicants, 

and their Family Caregivers have the 

same transition period and the same 

effective date for any termination or 

reduction in benefits, regardless of 

when VA conducts the reassessment 

during the two-year period. Without this 

extension, legacy applicants, legacy 

participants, and their Family 

Caregivers who are reassessed and 

found to be no longer eligible for PCAFC 

under § 71.20(a) or who have their 

stipend reduced under § 71.40(c)(4) 

would be impacted at different times, 

resulting in unequal treatment in the 

provision of PCAFC benefits. As noted 

above, VA has already begun 

conducting some reassessments. If those 

individuals were determined through a 

reassessment completed before October 

1, 2021, to be no longer eligible for 

PCAFC or to be eligible but the Primary 

Federal Register / Vol. 86, No. 181 / Wednesday, September 22, 2021 / Rules and Regulations 52617 

Family Caregiver would receive a lesser 

stipend amount, an advanced notice 

would be issued to the legacy 

applicants, legacy participants, and 

their Family Caregivers on October 1, 

2021 (at the conclusion of the one-year 

period) and the change would take 

effect not less than 60 days following 

this notification. For those determined 

to no longer be eligible, benefits would 

be extended for an additional 90 days 

after the date of discharge. Individuals 

who VA is unable to reassess prior to 

October 1, 2021 and who are ultimately 

determined not eligible or eligible but 

with a lesser stipend amount would 

continue to receive benefits in effect 

prior to October 1, 2020 for longer than 

those reassessed prior to October 1, 

2021 for no reason other than when VA 

conducted their reassessment. 

When VA established the initial oneyear transition period for legacy 

participants, legacy applicants, and 

their Family Caregivers, it was intended 

to provide a reasonable amount of time 

for VA to conduct reassessments, 

minimize disruption to those 

individuals, and provide a fair and 

reasonable time for transition. 85 FR at 

46253. VA intended that all legacy 

applicants, legacy participants, and 

their Family Caregivers would have the 

same transition period, regardless of 

when the reassessment is completed 

during the one-year transition period. 

Id. This transition period was intended 

to ensure equitable treatment for all 

legacy applicants, legacy participants, 

and their Family Caregivers. Id. 

Extending the transition period for an 

additional year beyond the one-year 

period beginning October 1, 2020 for all 

legacy participants, legacy applicants, 

and their Family Caregivers will 

continue to ensure equitable treatment 

among this cohort. 

Changes to 38 CFR Part 71 

For the reasons explained above, VA 

amends its regulations codified in 

§ 71.20 regarding program eligibility, 

§ 71.30 regarding reassessments, and 

§ 71.40 regarding caregiver benefits, to 

extend the transition period for legacy 

applicants, legacy participants, and 

their Family Caregivers from one year to 

two years (that is, until October 1, 2022) 

and to extend the time period for 

reassessments of such individuals from 

one year to two years (that is, until 

October 1, 2022). 

VA amends § 71.20 by removing the 

words ‘‘one year’’ in §§ 71.20(b) and (c), 

and adding, in their place, the words 

‘‘two years’’. 

VA amends § 71.30 by removing the 

words ‘‘one-year’’ in paragraphs (e)(1) 

and (2) and adding, in their place, the 

words ‘‘two-year’’. 

VA also amends § 71.40 by removing 

the words ‘‘one year’’ in paragraphs 

(c)(4)(i)(B) through (D) and adding, in 

their place, the words ‘‘two years’’. VA 

similarly amends paragraph 

(c)(4)(ii)(C)(2)(i) by removing the words 

‘‘one-year’’ and adding, in their place, 

the words ‘‘two-year’’. Lastly, VA 

amends paragraph (c)(4)(ii)(C)(2)(ii) and 

the note to paragraph (c)(4)(ii)(C)(2) by 

removing the words ‘‘the date that is 

one year after October 1, 2020’’, and 

adding, in their place, the words 

‘‘October 1, 2022’’. 

Administrative Procedure Act 

The Secretary of Veterans Affairs 

finds that there is good cause under the 

provisions of 5 U.S.C. 553(b)(B) to waive 

prior notice and an opportunity for 

public comment and publish this rule, 

as notice and comment would be 

contrary to public interest. VA is issuing 

this rule to extend the time to complete 

reassessments for legacy applicants, 

legacy participants, and their Family 

Caregivers for an additional year, 

through September 30, 2022, and to 

similarly extend the transition period. 

As discussed earlier, VA will not be able 

to complete the required reassessments 

of this legacy cohort by October 1, 2021. 

Absent regulatory action, effective 

October 1, 2021 the reassessment period 

of legacy applicants, legacy participants, 

and their Family Caregivers sunsets. 

This would leave legacy applicants, 

legacy participants, and their Family 

Caregivers in a state of uncertainty 

about their status and eligibility for 

benefits moving forward. Extending the 

reassessment period in advance of 

October 1, 2021 will provide clarity to 

the legacy applicants, legacy 

participants, and their Family 

Caregivers about the duration of their 

current benefits and about next steps. 

Additionally, if the date to complete the 

reassessments and the period of 

transition is not extended, legacy 

applicants, legacy participants, and 

their Family Caregivers who are 

reassessed and found to be no longer 

eligible for PCAFC, or eligible but with 

a reduced stipend amount, would be 

impacted at different times. Some legacy 

participants, legacy applicants, and 

their Family Caregivers would 

experience negative impacts before 

others within this same cohort based on 

when they are reassessed. The varying 

impact would result from no reason 

other than that VA was able to reassess 

certain individuals earlier than others. 

Therefore, VA must amend its 

regulations to provide a one-year 

extension for the reassessment period 

and for VA to conduct the 

reassessments. 

Notwithstanding the effective date of 

this rulemaking, VA invites public 

comments on this interim final rule and 

will fully consider and address any 

comments received. Generally, VA 

would seek notice and comment in 

advance of a rule becoming effective. 

However, in this circumstance, VA does 

not have sufficient time to provide the 

public with the opportunity for prior 

notice and comment and have the 

amendments effective by October 1, 

2021. As noted earlier in the preamble, 

the number of applications received has 

far exceeded expectations, and by 

focusing its resources on processing 

new applications (while also 

implementing new regulations and 

processes for evaluating PCAFC 

eligibility), VA was unable to prioritize 

the reassessment of legacy participants, 

legacy applicants, and their Family 

Caregivers. In October 2020, VA 

received an estimated 18,400 

applications with a decline in 

applications received in November and 

December 2020. However, during the 

second quarter of FY 2021, VA received 

another surge in applications, which 

further delayed VA’s ability to prioritize 

the reassessment of legacy participants, 

legacy applicants, and their Family 

Caregivers. To manage these competing 

issues, VA explored options to complete 

the reassessments while continuing to 

process applications. During this 

exploration, however, VA determined 

that, even with processing applications 

while conducting legacy reassessments, 

an additional 12-month period would be 

required to complete the legacy 

reassessments, which is the basis for 

this interim final rule. 

For the reasons stated above, the 

Secretary also finds good cause under 5 

U.S.C. 553(d)(3) to make this interim 

final rule effective on the date of its 

publication in the Federal Register. 

VA recognizes that this extension will 

continue for an additional year the 

existing disparity between PCAFC 

participants who applied for the 

program on or after October 1, 2020 (and 

were approved for PCAFC based on the 

existing regulatory criteria), and legacy 

participants, legacy applicants, and 

their Family Caregivers (who were 

approved for PCAFC based on preOctober 1, 2020 regulatory 

requirements). However, any harm 

associated with continuing the current 

inequity between these two cohorts for 

an additional one-year period, does not 

outweigh the harm associated with the 

alternative outcomes that would result 

in the absence of this regulatory action. 

In contrast to PCAFC participants who 

52618 Federal Register / Vol. 86, No. 181 / Wednesday, September 22, 2021 / Rules and Regulations 

applied for the program on or after 

October 1, 2020, legacy participants and 

their Family Caregivers were not aware 

of the regulatory changes that would go 

into effect on October 1, 2020, and are 

therefore at the greatest risk of being 

affected by those changes. 

Executive Orders 12866 and 13563 

Executive Orders 12866 and 13563 

direct agencies to assess the costs and 

benefits of available regulatory 

alternatives and, when regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, and other advantages; 

distributive impacts; and equity). 

Executive Order 13563 (Improving 

Regulation and Regulatory Review) 

emphasizes the importance of 

quantifying both costs and benefits, 

reducing costs, harmonizing rules, and 

promoting flexibility. The Office of 

Information and Regulatory Affairs has 

determined that this rule is not a 

significant regulatory action under 

Executive Order 12866. The Regulatory 

Impact Analysis associated with this 

rulemaking can be found as a 

supporting document at 

www.regulations.gov. 

Regulatory Flexibility Act 

The Secretary hereby certifies that 

this interim final rule will not have a 

significant economic impact on a 

substantial number of small entities as 

they are defined in the Regulatory 

Flexibility Act (5 U.S.C. 601–612). This 

interim final rule extends the time for 

VA to conduct legacy reassessments and 

the transition period for legacy 

applicants, legacy participants, and 

their Family Caregivers. This rule has 

no impact on small entities. Therefore, 

pursuant to 5 U.S.C. 605(b), the initial 

and final regulatory flexibility analysis 

requirements of 5 U.S.C. 603 and 604 do 

not apply. 

Unfunded Mandates 

The Unfunded Mandates Reform Act 

of 1995 requires, at 2 U.S.C. 1532, that 

agencies prepare an assessment of 

anticipated costs and benefits before 

issuing any rule that may result in the 

expenditure by State, local, and tribal 

governments, in the aggregate, or by the 

private sector, of $100 million or more 

(adjusted annually for inflation) in any 

one year. This interim final rule will 

have no such effect on State, local, and 

tribal governments, or on the private 

sector. 

Paperwork Reduction Act 

This interim final rule contains no 

provisions constituting a collection of 

information under the Paperwork 

Reduction Act of 1995 (44 U.S.C. 3501– 

3521). 

Catalog of Federal Domestic Assistance 

The Catalog of Federal Domestic 

Assistance numbers and titles for the 

programs affected by this document are 

64.009, Veterans Medical Care Benefits. 

Congressional Review Act 

Pursuant to the Congressional Review 

Act (5 U.S.C. 801 et seq.), the Office of 

Information and Regulatory Affairs 

designated this rule as not a major rule, 

as defined by 5 U.S.C. 804(2). 

List of Subjects in 38 CFR Part 71 

Administrative practice and 

procedure, Caregivers program, Claims, 

Health care, Health facilities, Health 

professions, Mental health programs, 

Travel and transportation expenses, 

Veterans. 

Signing Authority 

Denis McDonough, Secretary of 

Veterans Affairs, approved this 

document on July 30, 2021, 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. 

Consuela Benjamin, 

Regulations Development Coordinator, Office 

of Regulation Policy & Management, Office 

of General Counsel, Department of Veterans 

Affairs. 

For the reasons stated in the 

preamble, the Department of Veterans 

Affairs amends 38 CFR part 71 as 

follows: 

PART 71—CAREGIVERS BENEFITS 

AND CERTAIN MEDICAL BENEFITS 

OFFERED TO FAMILY MEMBERS OF 

VETERANS 

■ 1. The authority citation for part 71 

continues to read as follows: 

Authority: 38 U.S.C. 501, 1720G, unless 

otherwise noted. 

Section 71.40 also issued under 38 U.S.C. 

111(e), 1720B, 1782. 

Section 71.47 also issued under 31 U.S.C. 

3711; 38 U.S.C. 5302, 5314. 

Section 71.50 also issued under 38 U.S.C. 

1782. 

§ 71.20 [Amended] 

■ 2. Amend § 71.20 in paragraphs (b) 

and (c) by removing ‘‘one year’’ and 

adding ‘‘two years’’ in its place. 

§ 71.20 [Amended] 

■ 3. Amend § 71.30 in paragraphs (e)(1) 

and (2) by removing ‘‘one-year’’ and 

adding ‘‘two-year’’ in its place. 

§ 71.40 [Amended] 

■ 4. Amend § 71.40: 

■ a. In paragraphs (c)(4)(i)(B) 

introductory text and (c)(4)(i)(C) and 

(D), by removing the words ‘‘one year’’ 

and adding in their place the words 

‘‘two years’’. 

■ b. In paragraph (c)(4)(ii)(C)(2)(i), by 

removing the words ‘‘one-year’’ each 

place they appear and adding in their 

place the words ‘‘two-year’’. 

■ c. In paragraph (c)(4)(ii)(C)(2)(ii) and 

note to paragraph (c)(4)(ii)(C)(2), by 

removing the words ‘‘the date that is 

one year after October 1, 2020’’ each 

place they appear and adding in their 

place the words ‘‘October 1, 2022’’. 

[FR Doc. 2021–20112 Filed 9–21–21; 8:45 am] 

BILLING CODE 8320–01–P