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

DEPARTMENT OF VETERANS AFFAIRS <CFR>38 CFR Part 9</CFR> <RIN>RIN 2900-AR67</RIN> <SUBJECT>Servicemembers' Group Life Insurance and Veterans' Group Life Insurance—Accelerated Benefit Option Regulation Update</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Department of Veterans Affairs. <HD SOURCE="HED">ACTION:</HD> Proposed rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> 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. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> Comments must be received on or before February 3, 2025. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> Comments must be submitted through <E T="03">www.regulations.gov.</E> Except as provided below, comments received before the close of the comment period will be available at <E T="03">www.regulations.gov</E> 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 <E T="03">www.regulations.gov</E> as soon as possible after they have been received. VA will not post on <E T="03">Regulations.gov</E> 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 <E T="03">Regulations.gov</E> , under RIN 2900-AR67. <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> 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). </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> Section 1980 of title 38, United States Code, authorizes the payment of accelerated death benefits to terminally ill members in the SGLI, FSGLI, and VGLI programs. Consistent with the statute, current 38 CFR 9.14 allows terminally ill members to receive up to 50 percent of the face value of their insurance coverage before they die if they have 9 months or less to live. Current § 9.14(c) only allows the terminally ill member to apply for an Accelerated Benefit, which is often used to pay his or her medical bills or make other financial arrangements before death. During Policy Years 2020 through 2023 (July 1, 2019, through June 30, 2023), 223 terminally ill members applied for and received such benefits. Considering that terminally ill members often have severe medical conditions that render them unable to apply for the Accelerated Benefit, VA proposes to amend § 9.14(c) to allow an alternate applicant to apply for an Accelerated Benefit if certain conditions are met. VA proposes to set forth in proposed § 9.14(c)(2) the following conditions for an alternate applicant to apply for an Accelerated Benefit on behalf of a terminally ill member ( <E T="03">i.e.,</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, <E T="03">i.e.,</E> physically or mentally incapable of applying for an Accelerated Benefit; (2) the alternate applicant must have power of attorney, guardianship, or conservatorship over the member, or be the member's VA-appointed fiduciary under 38 U.S.C. chapters 55 and 61 or military trustee under 37 U.S.C. 602; and (3) the alternate applicant must sign the application for an Accelerated Benefit; identify that he or she holds the member's power of attorney to act on the member's behalf or is the member's court-appointed guardian or conservator, VA-appointed fiduciary, or military trustee; and attach the form to a true and correct copy of the power of attorney, court order establishing the guardianship or conservatorship, or documentation designating the alternate applicant as the member's VA-appointed fiduciary or military trustee. VA also proposes, in § 9.14, to remove current paragraphs (e), (f), and (j), redesignate current paragraph (d) as (f), and add new paragraphs (d) and (e). Current paragraph (e) states that a member may only be advanced up to 50% of the face value of their insurance coverage, which is already covered in current paragraph (d) and would be covered in redesignated paragraph (f). New paragraph (d)(1) would clarify who can apply for an Accelerated Benefit in cases where a member's insured spouse ( <E T="03">i.e.,</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 ( <E T="03">i.e.,</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, <E T="03">i.e.,</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, <E T="03">i.e.,</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). 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