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Week Ending September 30, 2005, 2005
H.R.3200 To amend title 38, United States Code, to enhance the Servicemembers' Group Life Insurance program, and for other purposes.
BRIEF
The bill would increase from $250,000 to $400,000 the automatic coverage maximum under the Servicemembers Group Life Insurance and Veterans Group Life Insurance programs.
Spouses or next of kin of service members that did not enroll in the program or agrees to a lower death gratuity would be notified of that decision as would a new spouse if the service member is enrolled or insured at a lower payout. The spouse would also be notified if he or she is not the beneficiary.
Service members could decline to participate in the Traumatic Injury Protection program recently made law in the President’s Emergency Supplemental for the war on terrorism and tsunami aid.
Sponsor: Representative Jeff Miller (R-FL-1st)
Vote: Passed House 424 to 0 (RC 420) (July 25, 2005) a substitute for the bill passed the Senate by Unanimous Consent on September 27, 2005. Details of that bill can be found here--S 1235 Signed by President Bush as Public Law 109-80 September 30, 2005
Cost to the taxpayers: “CBO estimates that implementing this bill would cost $95 million in 2006, and $199 million over the 2006-2010 period, assuming appropriation of the necessary amounts. Enacting H.R. 3200 would not affect direct spending or revenues.”
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MORE INFORMATION
SECTION BY SECTION ANALYSIS FROM THE COMMITTEE REPORT
On February 14, 2005, the Administration submitted to Congress an emergency supplemental appropriation request for the fiscal year ending September 30, 2005, which the House considered as H.R. 1268, the Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Tsunami Relief, 2005. The bill was subsequently enacted as Public Law 109-13, and contained the following amendments to the SGLI authorizations in chapter 19 of title 38, United States Code:
1. Increased the maximum SGLI and VGLI coverage amounts from $250,000 to $400,000;
2. Increased the increments of election of SGLI coverage from $10,000 to $50,000;
3. Provided $150,000 in coverage for a servicemember who died of wounds, injuries or illnesses incurred while serving in a combat operation or zone of combat or who dies as the direct result of an injury or illness incurred or aggravated while serving in combat;
4. Provided that premiums attributable to $150,000 of coverage may, at the service Secretary's discretion, be paid directly by the Secretary or by reimbursement to a servicemember serving in an operation or area of combat;
5. Prohibited married servicemembers from electing life insurance coverage in an amount less than the maximum, or decline coverage altogether, without the written consent of the spouse;
6. Required DOD to notify the designated beneficiary or next of kin of a single servicemember if he or she elects less than the maximum coverage; and
7. Required written notification to a married servicemember's spouse in order for the servicemember to modify the beneficiaries designated by the servicemember.
No hearings were held regarding the SGLI and VGLI provisions of H.R. 1268. However, on March 6, 2005, the Veterans' Affairs Subcommittee on Disability Assistance and Memorial Affairs held a roundtable briefing on these provisions with officials from the Department of Veterans Affairs, the Department of Defense, and private sector insurance representatives.
H.R. 1268, as amended, was reported by the Committee on Appropriations on March 11, 2005, and passed the House on March 16, 2005, without hearings on the SGLI or VGLI provisions of the bill. On May 5, 2005, the House passed the conference report accompanying H.R. 1268, as amended, and it was signed into law on May 11, 2005 (Public Law 109-13). The provisions making changes to the Servicemembers' Group and Veterans' Group Life Insurance programs are effective September 1, 2005, and expire on September 30, 2005.
Section 1032 of Public Law 109-13, included a new Traumatic Injury Protection program for servicemembers enrolled in SGLI. This program provides financial assistance in amounts from $25,000 to $100,000 to servicemembers who suffer certain traumatic injuries, similar to dismemberment insurance in the private sector. Traumatic injury protection is mandatory for servicemembers who elect SGLI coverage, with premiums paid by the servicemember. Costs attributable to extra hazards (increased losses in wartime above peacetime rates) are reimbursed to the SGLI program by the Department of Defense in the same manner as SGLI extra hazards are reimbursed. A determination of eligibility for payment of the benefit is made by the Secretary of Defense. The new Traumatic Injury Protection program authorization will be effective December 1, 2005 for all members but is retroactive to October 7, 2001, for qualifying losses that are a direct result of injuries incurred in Operation Enduring Freedom and Operation Iraqi Freedom.
Repealer- Section 2 of the bill would repeal section 1012 of division A of the Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Tsunami Relief, 2005 (Public Law 109-13). Section 1012 amended sections 1967, 1969, 1970, and 1977 of title 38, United States Code. The provisions in section 1012 expire on September 30, 2005. To ease the administrative burden on the Departments of Defense and Veterans Affairs, the Committee intends that H.R. 3200 replace existing authority established in section 1012 of Public Law 109-13 prior to its effective date.
Increase from $250,000 to $400,000 in automatic maximum coverage under Servicemembers' Group Life Insurance and Veterans' Group Life Insurance- Section 3 of the bill would make permanent the increase in maximum coverage allowable under SGLI and VGLI from $250,000 to $400,000. In response to recent concerns raised by servicemembers and the survivors of servicemembers killed in the War on Terror, Congress increased the maximum insurance coverage to $400,000 in Public Law 109-13; however, this increase expires on September 30, 2005.
The VA administers six types of life insurance policies and supervises two programs for the benefit of servicemembers, veterans, and their families. The purpose of these programs is to provide affordable life insurance to servicemembers and veterans who, given the inherent risks of military service, may not be otherwise insurable in the commercial insurance industry. Ninety-eight percent of all active duty personnel, including mobilized reservists, participate in the SGLI program. As of July 2005, all but 45 servicemembers who died in Operation Enduring Freedom and Operation Iraqi Freedom were covered for the maximum amount.
Congress regularly reviews the SGLI and VGLI programs to ensure that servicemembers and veterans are provided adequate coverage options. The last increase occurred in Public Law 106-419, when the maximum SGLI coverage was increased from $200,000 to $250,000, effective April 1, 2001.
Notification to member's spouses or next of kin of certain elections under the Servicemembers' Group Life Insurance Program- Section 4 of the bill would require the military service Secretary concerned to notify, in writing, a married servicemember's spouse, or unmarried servicemember's next of kin, of an election (1) not to be insured, (2) to be insured for an amount less than the maximum, or (3) to increase coverage if not insured or insured for an amount less than the maximum. Section 4 of the bill would also require the Secretary concerned to notify, in writing, the spouse of a married servicemember if the servicemember designated anyone other than the spouse or child of the member as the beneficiary. When a servicemember marries, the Secretary concerned would be required to notify the new spouse whether the servicemember is insured under SGLI, and if so insured, whether the servicemember has elected less than the maximum amount of coverage and whether the servicemember has designated someone other than the member's spouse or child as the policy beneficiary.
Finally, section 4 of the bill would provide that written notification under this section shall consist of a good faith effort by the service Secretary concerned to provide the required information to the servicemember's spouse or other person at the last known address of the spouse or next of kin. The Secretary would be required to provide notification at the last address of the spouse or other person in the records of the Secretary. The Committee does not expect the Secretary to undertake a search for addresses of the spouse or next of kin beyond the information contained in the service department's own records. Failure of the Secretary concerned to provide notification would not affect the validity of any life insurance election or designation.
Section 1012 of Public Law 109-13 amended the SGLI program to provide that a married servicemember may not decline SGLI coverage or elect an amount less than the maximum without the written consent of the servicemember's spouse. Section 1012 also requires notification to the beneficiary or designated next of kin when an unmarried servicemember declines SGLI coverage or elects an amount less than the maximum. Finally, section 1012 of Public Law 109-13 provides that a servicemember may not modify his or her beneficiary designation without providing written notification to the spouse.
The Committee does not support providing a spouse `veto' authority over life insurance elections. Public Law 109-13 mandates spousal consent even in cases where the spouses are estranged, as long as the couple remains legally married. Life insurance is fundamentally a contract. Requiring the consent of the spouse, who is not a party to the contract, to the servicemember's decision concerning whether to enter into a contract is inconsistent with the principles of life insurance contracts. Additionally, the Committee is concerned that the spousal notification requirement of section 1012 of Public Law 109-13 might discourage the servicemember from designating his or her children as beneficiaries if the current spouse does not concur with the servicemembers' election. Finally, requiring spousal concurrence of the servicemember's decision would in effect make SGLI a voluntary program for single servicemembers and an involuntary program for married servicemembers.
Recent reports of servicemembers failing to communicate with their spouse or next of kin concerning their life insurance coverage or lack thereof, and thus leaving surviving spouses or families without the financial security provided by life insurance, have prompted congressional action. A letter from the Secretary concerned notifying the spouse or next of kin of the servicemember's coverage election is the preferable way of ensuring that the spouse or beneficiary is informed about this important financial decision, while preserving the individual right of the servicemember to make decisions about life insurance coverage, the amount of coverage, the beneficiary or beneficiaries, and from whom to purchase it.
Increments of insurance that may be elected- Section 5 of the bill would make permanent the increments of SGLI coverage allowable from $10,000 to $50,000. Prior to Public Law 109-13, the amount of insurance elected by a servicemember had to be evenly divisible by $10,000. With the increased amount of insurance available under the bill, the Committee intends to relieve the administrative burden of small increments in insurance elections. Reduced administrative burdens lower the cost of the program and keep down the premium rates for the servicemember.
Authority to elect the new traumatic injury protection program- Section 6 of the bill would amend the Traumatic Injury Protection program to permit a servicemember to elect in writing not to be covered under this program. The servicemember who declines coverage would be able to elect coverage at a later date upon written application, but coverage would apply only with respect to injuries occurring after a subsequent election. In any case, the servicemember would be required to be insured under Servicemembers' Group Life Insurance to participate in Traumatic Injury Protection.
Public Law 109-13 added a new section 1980A to chapter 19 of title 38, United States Code, Traumatic Injury Protection. The Traumatic Injury Protection program is designed to provide financial assistance to servicemembers during their recovery period from a serious service-related traumatic injury. The traumatic injury coverage will pay servicemembers between $25,000 and $100,000, depending on the severity of the injury, at a rate to be determined by the Secretary of Veterans Affairs. The servicemember pays a monthly premium for this additional coverage and, under current law, participation is mandatory. The Committee notes testimony of the Wounded Warrior Project before the Veterans' Affairs Subcommittee on Disability Assistance and Memorial Affairs on June 16, 2005, regarding this new program, `This coverage * * * give[s] all active duty servicemembers the ability to protect themselves and their families * * * should they suffer a life altering injury.' The Committee is dedicated to ensuring that our servicemembers have a variety of insurance options to assist them in planning for the future.
Section 1 of the bill would provide that this Act may be cited as the `Servicemembers' Group Life Insurance Enhancement Act of 2005'.
Section 2 of the bill would, effective August 31, 2005, repeal section 1012 of division A of the Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and the Tsunami Relief, 2005 (Public Law 109-13; 119 Stat. 244), including the amendments made by that section, and sections 1967, 1969, 1970, and 1977 of title 38, United States Code, shall be applied as if section 1012 of Public Law 109-13 had not been enacted.
Section 3(a) of the bill would amend section 1967(a)(3)(A)(i) and section 1967(d) of title 38, United States Code, by striking $250,000 and inserting $400,000.
Section 3(b) of the bill would amend section 1977(a) of title 38, United States Code, by striking $250,000 and inserting $400,000.
Section 3(c) of the bill would provide an effective date for the changes made by section 3(a) and 3(b) for deaths occurring on or after September 1, 2005.
Section (4) of the bill would add a new subsection (f)(1)(A), effective September 1, 2005, to section 1967 of title 38, United States Code, to require the Secretary concerned to provide written notice to a member's spouse, or, if the member is unmarried, to the member's next of kin, in writing, whenever a member eligible for insurance executes a life insurance option.
New section 1967(f)(1)(B) of title 38, United States Code, would specify the life insurance options that require notification under 1967(f)(1)(A) of title 38, United States Code: (i) an election not to be insured, (ii) an election for insurance in an amount that is less than the maximum amount, (iii) an application for insurance coverage or for a change in the amount of insurance coverage, and (iv) in the case of a married member, a designation under 1970(a) of title 38, United States Code, of any person other than the spouse or child of the member as the beneficiary of the member for any amount of insurance.
New section 1967(f)(2) of title 38, United States Code, would provide that in the case of an unmarried member who is eligible for insurance marries, the Secretary concerned must notify the member's spouse in writing as to whether the member is insured. The notification would include: (A) if the amount of insurance is less than the maximum and (B) if the member has designated a beneficiary other than the spouse or a child of the member for any amount of insurance.
New section 1967(f)(3)(A) of title 38, United States Code, would provide that notification of a spouse or any other person under paragraph (1) shall consist of a good faith effort to provide information to the spouse or other person at the last address of the spouse or other person in the records of the Secretary concerned.
New section 1967(f)(3)(B) of title 38, United States Code, would provide that failure to notify, or to notify in a timely manner, would not affect the validity of any life insurance option referred to in (1)(B).
Section 5(a) of the bill would amend subsection 1967(a)(3)(B) of title 38, United States Code, to provide that a servicemember's life insurance election be evenly divisible by $50,000.
Section 5(b) of the bill would make the amendment made by section 5(a) effective September 1, 2005.
Section 6(a) of the bill would amend section 1980A of title 38, United States Code, by adding a new paragraph (b) to permit a member to elect in writing not to be insured under section 1980A of title 38, United States Code. If a member eligible for insurance under this section is not insured by reason of an election made, the member may thereafter elect to be insured upon written application by the member, proof of good health, and compliance with such other terms and conditions as may be prescribed by the Secretary. Insurance under this section upon such an election is effective upon the date of receipt by the Secretary of such application and shall apply only with respect to injuries incurred after that date. The Secretary would be required to prescribe by regulation conditions as to how and when elections shall be made, including limiting the time for such elections to an annual open season, for duration each year prescribed by the Secretary.
Section 6(b) of the bill would provide an effective date for subsection (a) to take effect immediately after section 1980A of title 38, United States Code, takes effect pursuant to section 1032(d)(1) of division A of the Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Tsunami Relief, 2005 (Public Law 109-13; 119 Stat. 260).
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