[Federal Register Volume 82, Number 162 (Wednesday, August 23, 2017)]
[Proposed Rules]
[Pages 39974-39976]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-17587]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 8

RIN 2900-AQ03


Eligibility for Supplemental Service-Disabled Veterans' Insurance

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 the Service-Disabled Veterans' Insurance (S-DVI) 
program in order to explain that a person who was granted S-DVI as of 
the date of death under is not eligible for supplemental S-DVI because 
the insured's total disability did not begin after the date of the 
insured's application for insurance and while the insurance was in 
force under premium-paying conditions.

DATES: Comments must be received on or before October 23, 2017.

ADDRESSES: Written comments may be submitted through 
www.Regulations.gov; by mail or hand-delivery to: Director, Regulations 
Management (00REG), Department of Veterans Affairs, 810 Vermont Ave. 
NW., Room 1068, Washington, DC 20420; or by fax to (202) 273-9026 (this 
is not a toll-free telephone number). Comments should indicate that 
they are submitted in response to ``RIN 2900-AQ03--Eligibility for 
Supplemental Service-Disabled Veterans' Insurance.'' Copies of comments 
received will be available for public inspection in the Office of 
Regulation Policy and Management, Room 1063B, between the hours of 8:00 
a.m. and 4:30 p.m., Monday through Friday (except Federal holidays). 
Please call (202) 461-4902 for an appointment (this is not a toll-free 
telephone number). In addition, comments may be viewed online through 
the Federal Docket Management System (FDMS) at www.Regulations.gov.

FOR FURTHER INFORMATION CONTACT: Paul Weaver, Department of Veterans 
Affairs Insurance Center (310/290B), 5000 Wissahickon Avenue, 
Philadelphia, PA 19144, (215) 842-2000, ext. 4263 (this is not a toll-
free number).

SUPPLEMENTARY INFORMATION: Under 38 U.S.C. 1922(a), a veteran 
``suffering from a disability or disabilities for which compensation 
would be payable if 10 per centum or more in degree and except for 
which such person would be insurable according to the standards of good 
health'' is eligible for S-DVI up to a maximum of $10,000 upon 
``application in writing made within two years from the date service-
connection of such disability is determined by the Secretary and 
payment of premiums as provided in this subchapter.'' See 38 U.S.C. 
1903 (amount of insurance). Section 1922(b) of title 38, United States 
Code, provides in pertinent part that a veteran who qualifies for 
insurance under 38 U.S.C. 1922(a) but who did not apply for such 
insurance and who was mentally incompetent from a service-connected 
disability, remained mentally incompetent until the date of death, and 
died before the appointment of a guardian or within 2 years after the 
appointment of a guardian ``shall be deemed to have applied for and to 
have been granted such insurance, as of the date of death.'' See 38 
U.S.C. 1922(b). VA refers to insurance provided under 38 U.S.C 1922(b) 
as ``gratuitous'' insurance.
    ``Any person insured under section 1922(a) [of title 38, United 
States Code,] who qualifies for a waiver of [S-DVI] premiums under [38 
U.S.C.] 1912 . . . is eligible'' for supplemental S-DVI of up to 
$30,000. 38 U.S.C. 1922A(a). Section 1912(a) of title 38, United States 
Code, states in pertinent part:

    [P]ayment of premiums on insurance may be waived during the 
continuous total disability of the insured . . . if such disability 
began . . . after the date of the

[[Page 39975]]

insured's application for insurance, [and] . . . while the insurance 
was in force under premium-paying conditions . . . [.]

    In Martin v. Shinseki, 26 Vet. App. 451, 458 (2014), the U.S. Court 
of Appeals for Veterans Claims (Veterans Court) held that a person 
granted S-DVI ``as of the date of death'' under section 1922(b) 
satisfies the first requirement for supplemental S-DVI in 38 U.S.C. 
1922A(a), i.e., insurance under 38 U.S.C. 1922(a), because a grant of 
S-DVI under section 1922(b) is treated, by operation of law, as an 
award of the insurance under section 1922(a). However, the Veterans 
Court also held that a person granted S-DVI under section 1922(b) is 
not eligible for supplemental S-DVI because the following two 
requirements for a premium waiver in section 1912(a) cannot be 
satisfied. First, the total disability of a person insured under S-DVI 
under 38 U.S.C. 1922(b) began before rather than after the date of 
application for S-DVI because as provided in the statute, the person is 
``deemed to have applied for and to have been granted such insurance[ ] 
as of the date of death.'' See Id. at 458-59. Second, the insured's 
total disability did not begin while the S-DVI was in force under 
premium paying conditions because as explained above, the person was 
granted S-DVI as of the date of death under section 1922(b) and 
therefore, the insured would not have been required to pay premiums. 
See Id. at 459.
    VA proposes to add section 8.34 to title 38, Code of Federal 
Regulations, which would codify the last two Martin holdings by 
explaining that a grant of supplemental S-DVI is precluded if S-DVI was 
granted under section 1922(b). This would reflect the Veterans Court's 
conclusion that the insured cannot qualify for a waiver of premiums 
under 38 U.S.C. 1912(a) because the insured's total disability did not 
begin after the date of the insured's application for insurance and 
while the insurance was in force under premium-paying conditions.
    VA's proposed regulation would promote the continued viability of 
the S-DVI program. The S-DVI program is not self-supporting because S-
DVI insureds pay standard premium rates which account for age but not 
their disabilities. See 38 U.S.C. 1922(a) (computation of premium 
rates). As a result, the S-DVI program requires an annual subsidy from 
the U.S. Treasury. VA's budget submission for FY 2017 requested an 
appropriation of $77.6 million. VA estimates that, if veterans' 
beneficiaries were entitled to receive both gratuitous S-DVI and 
supplemental S-DVI for which no premiums were paid due to the death of 
the insured, the costs to the S-DVI program would increase by more than 
$1 million per year.

Effect of Rulemaking

    Title 38 of the Code of Federal Regulations, as proposed to be 
revised by this rulemaking, would represent VA's implementation of its 
legal authority on this subject. Other than future amendments to this 
regulation or governing statutes, no contrary guidance or procedures 
would be authorized. All existing or subsequent VA guidance would be 
read to conform with this rulemaking if possible or, if not possible, 
such guidance would be superseded by this rulemaking.

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. 
Executive Order 12866 (Regulatory Planning and Review) defines a 
``significant regulatory action,'' which requires review by the Office 
of Management and Budget (OMB), as ``any regulatory action that is 
likely to result in a rule that may: (1) Have an annual effect on the 
economy of $100 million or more or adversely affect in a material way 
the economy, a sector of the economy, productivity, competition, jobs, 
the environment, public health or safety, or State, local, or tribal 
governments or communities; (2) Create a serious inconsistency or 
otherwise interfere with an action taken or planned by another agency; 
(3) Materially alter the budgetary impact of entitlements, grants, user 
fees, or loan programs or the rights and obligations of recipients 
thereof; or (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
this Executive Order.''
    The economic, interagency, budgetary, legal, and policy 
implications of this proposed regulatory action have been examined and 
it has been determined not to be a significant regulatory action under 
Executive Order 12866. VA's impact analysis can be found as a 
supporting document at www.regulations.gov, usually within 48 hours 
after the rulemaking document is published. Additionally, a copy of the 
rulemaking and its impact analysis are available on VA's Web site at 
www.va.gov/orpm by following the link for ``VA Regulations Published.''

Paperwork Reduction Act

    This action contains no provision constituting a collection of 
information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-
3521); no new or proposed revised collections of information would be 
associated with this proposed rule.

Regulatory Flexibility Act

    The Secretary hereby certifies that the adoption of this 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), this rule is exempt from the 
initial and final regulatory flexibility analysis requirements of 
sections 603 and 604.

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 1 year. This rule would have no such effect on State, 
local, and tribal governments, or on the private sector.

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance number and title for the 
program affected by this document is 64.103, Life Insurance for 
Veterans.

Signing Authority

    The Secretary of Veterans Affairs, or designee, approved this 
document 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. Gina S. 
Farrisee, Deputy Chief of Staff, Department of Veterans Affairs, 
approved this document on August 15, 2017, for publication.


[[Page 39976]]


    Dated: August 15, 2017.
Jeffrey Martin,
Office Program Manager, Office of Regulation Policy & Management, 
Office of the Secretary, Department of Veterans Affairs.

List of Subjects in 38 CFR Part 8

    Life insurance, Veterans.

    For the reasons stated in the preamble, VA proposes to amend 38 CFR 
part 8 as set forth below:

PART 8--NATIONAL SERVICE LIFE INSURANCE

0
1. The authority citation for part 8 continues to read as follows:

    Authority:  38 U.S.C. 501, 1901-1929, 1981-1988, unless 
otherwise noted.

0
2. Adding new section 8.34 to read as follows:


Sec.  8.34  Ineligibility for insurance under section 1922A of title 
38, U.S.C. (supplemental Service-Disabled Veterans' Insurance) if 
person insured under section 1922(b) of title 38, U.S.C.

    A person who is granted Service-Disabled Veterans' Insurance under 
38 U.S.C. 1922(b) is not eligible for supplemental Service-Disabled 
Veterans' Insurance under 38 U.S.C. 1922A.

(Authority: 38 U.S.C. 1912, 1922, 1922A)


[FR Doc. 2017-17587 Filed 8-22-17; 8:45 am]
BILLING CODE 8320-01-P