Servicemembers' Group Life Insurance-Family Servicemembers' Group Life Insurance-Member Married to Member
| Published date | 11 February 2020 |
| Citation | 85 FR 7683 |
| Record Number | 2020-02673 |
| Section | Proposed rules |
| Court | Veterans Affairs Department |
Federal Register, Volume 85 Issue 28 (Tuesday, February 11, 2020)
[Federal Register Volume 85, Number 28 (Tuesday, February 11, 2020)]
[Proposed Rules]
[Pages 7683-7686]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-02673]
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DEPARTMENT OF VETERANS AFFAIRS
38 CFR Part 9
RIN 2900-AQ37
Servicemembers' Group Life Insurance--Family Servicemembers'
Group Life Insurance--Member Married to Member
AGENCY: Department of Veterans Affairs.
ACTION: Proposed rule.
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SUMMARY: VA proposes to clarify implementation of sec. 642 of the
National Defense Authorization Act (NDAA) for Fiscal Year 2013 (FY13),
which eliminated automatic enrollment in Family Servicemembers' Group
Life Insurance (FSGLI) for insurable dependents who are members of a
uniformed service and are automatically covered under Servicemembers'
Group Life Insurance (SGLI). VA proposes that a SGLI-covered member who
marries another SGLI-eligible member after January 1, 2013, the date on
which the FY13 NDAA was enacted, or is married to a person who becomes
eligible for SGLI after January 1, 2013, may only enroll or re-enroll
in or increase FSGLI-spousal coverage, upon applying for such coverage
and providing proof of his or her spouse's good health. Further, VA
proposes not to require a SGLI covered member to apply or provide proof
of good health for a member spouse or for a member dependent child to
continue FSGLI coverage in force at the time the spouse or dependent
child became a SGLI eligible member.
DATES: Comments must be received on or before April 13, 2020.
ADDRESSES: Written comments may be submitted through http://www.Regulations.gov; by mail or hand-delivery to: Director, Office of
Regulation Policy and Management (00REG), Department of Veterans
Affairs, 810 Vermont Ave. NW, Room 1064, 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-AQ37--Servicemembers' Group Life Insurance--Family Servicemembers'
Group Life Insurance Regulation Update--Member Married to Member.''
Copies of comments received will be available for public inspection in
the Office of Regulation Policy and Management, Room 1064, between the
hours of 8:00 a.m. and 4:30 p.m., Monday through Friday (except
holidays). Please call (202) 461-4902 for an appointment. (This is not
a toll-free telephone number.) In addition, during the comment period,
comments may be viewed online through the Federal Docket Management
System (FDMS) at http://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. 4404. (This is not a toll-
free number.)
SUPPLEMENTARY INFORMATION: The Veterans' Survivor Benefits Improvements
Act of 2001 (``2001 Act''), Public Law 107-14, sec. 4, 115 Stat. 25,
originally created FSGLI, which provides automatic coverage for spouses
and dependent children of SGLI-covered members. The FSGLI automatic
coverage provisions were created to simplify the process for obtaining
FSGLI coverage during deployment. The 2001 Act provides for free,
automatic dependent coverage for children in the amount of $10,000,
which cannot be declined or reduced so long as the member carries SGLI.
See 38 U.S.C. 1967(a)(1)(A)(ii), (a)(2), (a)(3)(A)(iii), (a)(3)(B);
1969(g)(1)(A). In addition, the 2001 Act prohibits requiring proof of
good health for a child. See 38 U.S.C. 1967(c). FSGLI dependent child
coverage is effective from the latest of the applicable dates
enumerated under 38 U.S.C. 1967(a)(5)(A)-(D) and (F), which refers to
the date a child becomes an insurable dependent, namely the date of
birth, date of adoption, or the date of entrance into the member's
household, and this coverage remains effective for as long as the
member maintains SGLI coverage or until the child no longer qualifies
as an insurable dependent.
In contrast, automatic FSGLI-spousal coverage requires payment of
premiums and can be declined or reduced by the member to less than the
$100,000 statutory maximum as long as the spousal coverage is equal to
or less than the amount of SGLI coverage held by the member. See 38
U.S.C. 1967(a)(2)(B), (a)(3). Once a member declines or reduces FSGLI-
spousal coverage, or when a spouse eligible for FSGLI coverage is
otherwise not insured under FSGLI, an application and proof of the
spouse's good health is required to elect, reinstate, or increase
coverage. See 38 U.S.C. 1967(c). FSGLI-spousal coverage is effective
from the latest of any of the applicable dates enumerated under 38
U.S.C. 1967(a)(5)(A)-(D) and (E), which refers to the date of marriage
of the spouse to the member.
However, the automatic coverage provisions of the 2001 Act caused
the unintended consequence of creating debts for servicemembers when
lags occurred in updating personnel records to reflect changed marital
status, i.e., in the case of marriage. Such delays created premium
debts requiring the member to pay back premiums for automatic FSGLI-
spousal coverage in force prior to the branch of service receiving
notification of the member's marriage. In other words, a member was
required to pay premiums for automatic spousal coverage, even if it
meant paying retroactive premiums for a covered period during which the
branch of service was unaware of the member's marriage. In a case in
which a member married another member, since each married member was
responsible to pay any retroactive premiums associated with FSGLI-
spousal coverage for the other, the impact on multiple-member families
was magnified.
The FY13 NDAA, sec. 642, 126 Stat. 1632, 1783, was signed into law
on January 2, 2013, to address the problem of premium debts, at least
in multiple-
[[Page 7684]]
member families, by eliminating automatic FSGLI coverage for insurable
dependents who are also members of a uniformed service. Section 642
eliminated automatic FSGLI enrollment for any insurable dependent
covered under SGLI based on his or her own member status. The term
``insurable dependent'' includes a child as well as a spouse. See 38
U.S.C. 1965(10)(A) and (B). However, current law does not address
certain issues, such as what happens to FSGLI coverage of a spouse or
dependent child who later becomes a member, i.e., whether existing
FSGLI coverage continues for a member's spouse or dependent child who
is insured under FSGLI at the time he or she becomes a member; whether
a member can obtain or increase FSGLI coverage for a spouse or
dependent child who becomes a member or when a member marries another
member even though the coverage is not automatic; and what happens to
FSGLI coverage when a spouse or dependent child leaves service.
To promptly address the statutory gaps noted above, VA adopted an
interim policy that (1) allows FSGLI coverage to continue for a spouse
or dependent child who was covered by FSGLI prior to becoming a SGLI-
covered member based on his or her own member status after January 1,
2013, and (2) permits a servicemember who marries another SGLI-eligible
member after January 1, 2013, or is married to a person who becomes a
SGLI-eligible member based on his or her own member status after
January 1, 2013, to enroll or re-enroll in or increase FSGLI-spousal
coverage only upon applying for such coverage and providing proof of
the spouse's good health. In accordance with 38 U.S.C. 1967(c), this
policy continues any FSGLI coverage in force, while requiring an
application from the member and proof of the eligible spouse's good
health to enroll or re-enroll an FSGLI-eligible spouse who is not so
insured or to increase FSGLI coverage for the spouse. As such, this
policy applies to member-spouses while they are in service as well as
those member-spouses who separate from service. See 38 U.S.C. 1967(c).
VA believes that this policy effectively addresses some of the issues
arising from the FY13 NDAA that eliminated automatic FSGLI coverage for
the limited class of dependents addressed by the law, and we now seek
to codify this policy in regulations.
VA proposes to implement regulatory guidance for the amended
section 1967(a)(1) by adding a new paragraph (f) to 38 CFR 9.2,
redesignating Sec. Sec. 9.3 through 9.22 as Sec. Sec. 9.4 through
9.23 and adding a new Sec. 9.3. New paragraph (f) of 38 CFR 9.2 would
state that the effective date of coverage for an insurable spouse who
qualifies for FSGLI under 38 U.S.C. 1967(a)(1) but who was not so
insured or was insured at a reduced rate will be the date the uniformed
service receives an application and proof of the insurable spouse's
good health, subject to newly created 38 CFR 9.3.
New 38 CFR 9.3 would clarify VA's implementation of the amendments
to 38 U.S.C. 1967(a) made by the FY13 NDAA that was enacted on January
2, 2013. VA therefore proposes to provide, in proposed Sec. 9.3(a),
that a SGLI-covered member who (1) marries another SGLI-eligible member
after January 1, 2013, or (2) is married to a person who becomes a
SGLI-eligible member after January 1, 2013, may only enroll or re-
enroll the member-spouse in or increase FSGLI-spousal coverage upon
applying for such coverage and providing proof of the member-spouse's
good health. As proposed in Sec. 9.3(c), consistent with 38 U.S.C.
1967(c), the requirements for application and proof of the spouse's
good health also apply when a member seeks to enroll or re-enroll a
member-spouse who is not insured in FSGLI, or seeks to increase FSGLI-
spousal coverage, after the member-spouse separates from service.
However, as provided in proposed Sec. 9.3(b), if a member's spouse was
insured under FSGLI at the time the spouse became a member, the pre-
service FSGLI-spousal coverage would continue without the need for the
member to apply or provide proof of the spouse's good health.
Similarly, as provided in proposed Sec. 9.3(c), if a member's spouse
was insured under FSGLI at the time the spouse separates from military
service, the FSGLI-spousal coverage carried in service would continue
post-separation without the need for the member to apply or provide
proof of the spouse's good health.
For a member married to another member, VA has determined that
requiring an application that asks for proof of good health to enroll
or re-enroll in or to increase spousal FSGLI strikes the appropriate
balance between offering FSGLI coverage to the extent permitted by law
and adhering to sound actuarial principles. By requiring an application
that asks for proof of good health to enroll a member's spouse for
FSGLI-spousal coverage, the proposed rule would provide insureds the
opportunity to meet their financial needs while mitigating the
potentially negative impact of ``adverse selection'' in the program.
Adverse selection occurs when individuals use their superior
knowledge of their insurability to minimize the period of time over
which they are likely to pay premiums for coverage. Such a practice
unfairly shifts the premium paying burden to other individuals paying
premiums for coverage over a longer period of time, and potentially
undermines the financial health of the program to the detriment of all
insureds. Insurance programs rely on a pooling of risks, and premium
rates are set according to the expected mortality of the insurance
pool. If a disproportionate number of insureds in substandard health
enter the program or carry higher coverage amounts than healthier
individuals in the program, the increased mortality experience will
exceed that upon which the premium rates are based and could impact the
program negatively by driving up the cost of premiums for all program
participants. As such, the proof of health requirement incorporated in
the proposed rule would minimize the potential for adverse selection.
Further, by initiating coverage from the date the member submits an
FSGLI application to enroll their SGLI-eligible spouse, the proposed
rule would remain consistent with Congressional intent to prevent debts
resulting from retroactive coverage during an extensive period when the
member had not paid premiums. Moreover, VA has determined that
maintaining existing coverage for dependent spouses enrolled in FSGLI
prior to becoming a SGLI-eligible member, or enrolled in FSGLI at the
time of separation from service, should continue because it is not the
type of ``automatic coverage'' intended to be curtailed by the FY13
NDAA and would not invoke the concerns with overpayments sought to be
remedied by the change in law.
VA notes that SGLI-insurable dependent children, like a member
married to another member (i.e., a member-spouse), are automatically
enrolled in SGLI based on their status as members. Since passage of the
2013 NDAA, however, they are no longer automatically insured for FSGLI
under their parent's coverage.
We propose to provide in 38 CFR 9.3(d) that, after January 1, 2013,
an insurable child who is a member when a parent's SGLI coverage
commences is not eligible for automatic dependent coverage under the
parent's FSGLI. We further propose that dependent coverage in effect
for an insurable child prior to the child becoming a member shall
remain in effect so long as the child remains an insurable dependent.
However, if an insurable child was not
[[Page 7685]]
covered prior to becoming a member, the child could not be covered
under a parent's FSGLI after the child becomes a member.
VA believes that this proposal would comply with the 2013 law
change and allow FSGLI coverage to remain in place for those multiple-
member families who (1) had been carrying FSGLI prior to a dependent
child becoming a SGLI-eligible member and (2) anticipate keeping FSGLI
coverage for the duration of their member-child's status as a
dependent.
Because current statute at 38 U.S.C. 1967(c) prohibits requiring
proof of good health to enroll any dependent child in FSGLI, regardless
of whether the child is also eligible for SGLI as a member, VA cannot
allow enrollment in FSGLI for this limited class of dependent children
upon application and providing proof of good health. The statutory bar
to requiring proof of good health to enroll dependent children makes
such a policy necessary. VA believes that allowing dependent children
with automatic SGLI coverage to also enroll in FSGLI by simply
submitting an application, without also requiring proof of good health,
would run counter to sound actuarial principles by encouraging adverse
selection. VA recognizes that dependent children who are also eligible
for SGLI would only be eligible to retain FSGLI coverage in force prior
to becoming a member, and unlike a member married to another member,
they would not be able to enroll in new FSGLI coverage upon application
and providing proof of good health. However, because VA is precluded by
statute from requiring proof of good health to enroll any dependent in
FSGLI, we cannot adopt such a policy as was done for a member married
to another member.
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
This proposed rule contains no provisions constituting a collection
of information under the Paperwork Reduction Act of 1995 (44 U.S.C.
3501-3521).
Executive Orders 12866, 13563 and 13771
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. VA's impact analysis can be found as a supporting document at
http://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 website at
http://www.va.gov/orpm/, by following the link for ``VA Regulations
Published.''
This proposed rule is not expected to be an E.O. 13771 regulatory
action because this proposed rule is not significant under E.O. 12866.
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.
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.
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.
List of Subjects in Part 9
Life insurance, Military personnel, 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. Pamela
Powers, Chief of Staff, Department of Veterans Affairs, approved this
document on February 5, 2020, for publication.
Luvenia Potts,
Regulation Development Coordinator, Office of Regulation Policy &
Management, Office of the Secretary, Department of Veterans Affairs.
For the reasons stated in the preamble, VA 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. Section 9.2 is amended by adding paragraph (f) to read as follows:
Sec. 9.2 Effective date; applications.
* * * * *
(f) Except as provided in Sec. 9.3:
(1) For an insurable spouse who was eligible for coverage under 38
U.S.C. 1967(a)(1)(A)(ii) but was not so insured or was insured at a
reduced rate and who became a member, and
(2) For a member-spouse covered under 38 U.S.C. 1967(a)(1)(A)(i)
and who was also eligible for coverage under 38 U.S.C.
1967(a)(1)(A)(ii) but who was not so insured or was insured at a
reduced amount, the effective date of enrollment, re-enrollment, or an
increase in coverage under 38 U.S.C. 1967(a)(1) shall be the date the
uniformed service receives an application and proof of the insurable
spouse's good health.
Sec. Sec. 9.3 through 9.22 [Redesignated]
0
3. Redesignate Sec. Sec. 9.3 through 9.22 as Sec. Sec. 9.4 through
9.23.
0
4. Add a new Sec. 9.3 to read as follows:
Sec. 9.3 Family Servicemembers' Group Life Insurance insurable
dependents who become Servicemembers' Group Life Insurance eligible
members, and Servicemembers' Group Life Insurance eligible members who
marry Servicemembers' Group Life Insurance eligible members.
(a) A Servicemembers' Group Life Insurance-covered member who--
(1) Marries another Servicemembers' Group Life Insurance eligible
member after January 1, 22013, or
(2) Is married to a person who becomes a Servicemembers' Group Life
Insurance eligible member after January 1, 2013, may only enroll or re-
enroll the member-spouse in or increase Family Servicemembers' Group
Life Insurance spousal coverage upon applying for such coverage and
providing proof of the spouse's good health.
[[Page 7686]]
(b) A spouse shall remain eligible to be covered by any existing
Family Servicemembers' Group Life Insurance spousal coverage without
the member applying for such coverage or providing proof of the
spouse's good health in a case where the spouse is enrolled in coverage
under 38 U.S.C. 1967(a)(1)(A)(ii) prior to becoming a member married to
another member.
(c) A member's spouse who was insured under Family Servicemembers'
Group Life Insurance at the time the spouse separates from military
service will continue to be covered under the spousal Family
Servicemembers' Group Life Insurance carried while in service, and the
member will not need to apply or provide evidence of the spouse's good
health post-separation. However, if a member seeks to enroll or re-
enroll for coverage under Family Servicemembers' Group Life Insurance a
spouse who did not have such spousal insurance coverage, or seeks to
increase Family Servicemembers' Group Life Insurance coverage for such
spouse, after the spouse separates from military service, the member
will need to apply and provide proof of the spouse's good health post-
separation.
(d) After January 1, 2013, an insurable child who is a member at
the time a parent's Servicemembers' Group Life Insurance coverage
commences is not eligible for automatic dependent coverage under 38
U.S.C. 1967(a)(1)(A)(ii). Dependent coverage in effect for an insurable
child prior to becoming a member shall remain in effect so long as the
child remains an insurable dependent. If an insurable child was not
covered prior to becoming a member, the child cannot be covered under
38 U.S.C. 1967(a)(1)(A)(ii) after the child becomes a member.
[FR Doc. 2020-02673 Filed 2-10-20; 8:45 am]
BILLING CODE 8320-01-P
