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109th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 109-177
======================================================================
SERVICEMEMBERS' GROUP LIFE INSURANCE ENHANCEMENT ACT OF 2005
_______
July 20, 2005.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Buyer, from the Committee on Veterans' Affairs, submitted the
following
R E P O R T
[To accompany H.R. 3200]
[Including cost estimate of the Congressional Budget Office]
The Committee on Veterans' Affairs, to whom was referred
the bill (H.R. 3200) to amend title 38, United States Code, to
enhance the Servicemembers' Group Life Insurance programs, and
for other purposes, having considered the same, report
favorably thereon without amendment and recommend that the bill
do pass.
Introduction
On April 13, 2005, Honorable Rick Renzi, Honorable
Christopher H. Smith, Honorable J.D. Hayworth, and Honorable
Walter B. Jones introduced H.R. 1618, the Wounded Warrior
Servicemembers Group Disability Insurance Act of 2005, which
would establish a group disability insurance benefit for
members of the armed services who incur certain severe
disabilities.
On June 16, 2005, the Subcommittee on Disability Assistance
and Memorial Affairs held a hearing on draft legislation to
amend the Servicemembers' Group Life Insurance (SGLI) program;
the Traumatic Injury Protection provisions in Public Law 109-
13; and H.R. 1618, the Wounded Warrior Servicemembers Group
Disability Insurance Act of 2005.
On July 11, 2005, the Chairman and Ranking Member of the
Subcommittee on Disability Assistance and Memorial Affairs,
Honorable Jeff Miller and Honorable Shelley Berkley,
respectively, introduced H.R. 3200, the Servicemembers' Group
Life Insurance Enhancement Act of 2005, which would enhance the
Servicemembers' Group Life Insurance program.
On July 13, 2005, the Subcommittee on Disability Assistance
and Memorial Affairs met and ordered H.R. 3200 reported
favorably to the full Committee by unanimous voice vote.
On July 14, 2005, the full Committee met and ordered H.R.
3200 reported favorably to the House by unanimous voice vote.
Summary of the Reported Bill
H.R. 3200 would:
1. Effective August 31, 2005, repeal section 1012 of Public
Law 109-13, the Emergency Supplemental Appropriations Act for
Defense, the Global War on Terror, and Tsunami Relief, 2005,
which expires on September 30, 2005. Section 1012 of the
Supplemental makes changes to the Servicemembers' and Veterans'
Group Life Insurance programs (SGLI and VGLI, respectively)
operated by the Department of Veterans Affairs;
2. Increase from $250,000 to $400,000 the automatic maximum
in coverage under the Servicemembers' Group Life Insurance
(SGLI) and Veterans' Group Life Insurance (VGLI) programs;
3. Require the service Secretary concerned to notify in
writing the member's spouse or, if the member is unmarried, the
next of kin, if the member elects not to enroll in SGLI or
elects an amount less than the maximum amount. When an
unmarried member marries, the service Secretary concerned would
be required to notify the servicemembers' spouse as to whether
the member is insured under SGLI, or insured at an amount less
than the maximum;
4. Require the service Secretary concerned to notify in
writing the spouse of a servicemember when someone other than
the spouse or child is designated as the policy beneficiary.
When an unmarried servicemember marries, the Secretary
concerned would notify the spouse if the servicemember
designates someone other than the spouse or child as the policy
beneficiary;
5. Increase the increments of SGLI coverage a servicemember
may elect from $10,000 to $50,000; and
6. Permit a servicemember to decline participation in the
Traumatic Injury Protection program provided by section 1032 of
Public Law 109-13, the Emergency Supplemental Appropriations
Act for Defense, the Global War on Terror, and Tsunami Relief,
2005. If a servicemember who has declined traumatic injury
protection coverage wishes to enroll at a later date, the
servicemember could elect coverage upon written application,
proof of good health, and compliance with such other terms as
the Secretary may require.
Background and Discussion
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-by-Section Analysis
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).
Performance Goals and Objectives
The reported bill would authorize life insurance program
enhancements under laws administered by the Secretary of
Veterans Affairs. The Department of Veterans Affairs'
performance goals and objectives are established in annual
performance plans and are subject to the Committee's regular
oversight and evaluation by the U.S. Government Accountability
Office. VA also publishes a performance and accountability
report for each fiscal year.
Statements of the Views of the Administration
----------
Statement of Thomas Lastowka, Director, Department of Veterans Affairs
Regional Office and Insurance Center, Philadelphia, PA, Before the
Subcommittee on Disability Assistance and Memorial Affairs, House
Committee on Veterans' Affairs, June 16, 2005
Mr. Chairman and Members of the Subcommittee, thank you for
the opportunity to testify today on legislative items of
interest to the Department of Veterans Affairs (VA).
Accompanying me today is Stephen Wurtz, Deputy Assistant
Director for Insurance.
H.R. 1618
H.R. 1618, 109th Cong., the ``Wounded Warrior
Servicemembers Group Disability Insurance Act of 2005,'' would
create a Servicemembers' Group Disability Insurance program,
which would provide an insurance benefit to servicemembers who
incur certain severe disabilities. We do not support H.R. 1618
because it would duplicate the intent of the recently passed
Administration bill that permanently establishes the traumatic
injury insurance provided under 38 U.S.C. Sec. 1980A, which was
added to title 38, United States Code, by the ``Emergency
Supplemental Appropriations Act for Defense, the Global War on
Terror, and Tsunami Relief, 2005,'' Pub. L. No. 109-13,
Sec. 1032, 119 Stat. 231.
Section 2(a) of H.R. 1618 would add a new subchapter V to
chapter 19 of title 38, United States Code. New section 1992(a)
of title 38, United States Code, would authorize the Secretary
of Veterans Affairs to purchase a group disability insurance
policy or policies from one or more private insurance companies
on behalf of members of the Armed Forces. New section 1993
would provide automatic insurance in the amount of $50,000 for
any person insured under Servicemembers' Group Life Insurance
(SGLI), unless the servicemember elects in writing not to be
insured under the new disability insurance program.
Under new section 1994, any of the following disabilities
would be a ``qualifying disability'' for which insurance
coverage would be provided: (1) complete and permanent loss of
movement of an extremity; (2) third-degree or higher burns
affecting more than one square foot of the body; (3) entire,
irrecoverable, and uncorrectable loss of sight of one or both
eyes; (4) permanent loss of one hand, by severance at or above
the wrist joint; (5) permanent loss of one foot, by severance
at or above the ankle joint; (6) entire, irrecoverable, and
uncorrectable loss of speech or hearing; and (7) any other
disability specified by regulation.
Under new section 1996(a), premiums for disability
insurance coverage would be deducted from a servicemember's
basic or other pay, less any costs traceable to the extra
hazards of duty, which would be paid from the appropriation for
active duty pay of the uniformed services. New section 1997(b)
would require that insurance settlements under the program be
made in a lump sum.
Section 2(b) of H.R. 1618 would permit the Secretary to
designate the effective date of the disability insurance but
require that such date be not later than one year after the
date of enactment.
SERVICEMEMBERS' GROUP LIFE INSURANCE ENHANCEMENT ACT
Section 2 of the draft ``Servicemembers' Group Life
Insurance Enhancement Act of 2005'' would amend 38 U.S.C.
Sec. 1967(a)(3)(A)(i) to increase the maximum amount of SGLI
and Veterans' Group Life Insurance (VGLI) to $400,000,
effective October 1, 2005, with respect to deaths occurring on
or after that date. This provision would extend the increase to
$400,000 made by section 1012 of Pub. L. No. 109-13, which will
terminate on September 30, 2005. VA supports enactment of
section 2 of this draft bill because it provides the
opportunity for servicemembers to increase insurance protection
for their families.
Section 3 of this bill would, effective October 1, 2005,
require the Secretary of the appropriate service department to
notify in writing a servicemember's spouse or, if unmarried,
the servicemember's next-of-kin whenever the servicemember: (1)
declines SGLI coverage; (2) elects less than the maximum amount
of SGLI coverage; (3) applies for SGLI coverage or for a change
in the amount of such coverage; or (4) in the case of a married
servicemember, designates someone other than his or her spouse
or child as a beneficiary. Section 3 would also require, when
an unmarried servicemember who is eligible for SGLI marries,
that the Secretary of the appropriate service department notify
the servicemember's spouse in writing as to whether the
servicemember: (1) is insured under SGLI; (2) has elected less
than the maximum amount of SGLI coverage; or (3) designated as
a beneficiary a person other than the member's spouse or child.
Failure to provide timely notification would not affect the
validity of any option elected by the insured. Except for the
effective date, section 3 is identical to section 5(b) of H.R.
2046, 109th Cong., the ``Servicemembers' Health Insurance
Protection Act of 2005,'' which the House of Representatives
passed on May 23, 2005.
Because this bill would not extend the current law that
goes into effect September 1, 2005, but instead defines a new
program that would start when the current program expires on
September 30, 2005, there are a number of potentially difficult
administrative challenges that would unnecessarily burden both
servicemembers and the Government. For example, those members
who elected less than the maximum coverage under current law
and whose spouses consented would once again have to fill out
the paperwork required to elect less than maximum coverage, and
the Government would have to notify the spouse. The
Administration would like to work with Congress to ensure that
these issues are addressed.
We note as well that, under 38 U.S.C. Sec. 1968(a)(1), SGLI
coverage terminates 120 days after separation or release from
active duty or active duty for training, unless the
servicemember is totally disabled on that date, in which event
SGLI coverage terminates one year after separation or release
from active duty or active duty for training. Also, section
1977(d) of title 38, United States Code, states that ``any
designation of beneficiary or beneficiaries for [SGLI] filed
with a uniformed service until changed, shall be considered a
designation of beneficiary or beneficiaries for [VGLI], but not
for more than sixty days after the effective date of the
insured's [VGLI].'' It is unclear whether the notification
provision of section 3 of the draft bill, which refers to a
``member'' of a uniformed service, would apply to any change in
beneficiary designation that a servicemember would make within
the 120-day period after discharge but prior to cessation of
SGLI coverage or that a VGLI insured would make within the 60-
day period referenced in section 1977(d). We also note that, if
section 3 were applicable to VGLI beneficiary designations, it
would be difficult to implement because OSGLI does not maintain
data regarding a VGLI insured's marital status. We recommend
that, if section 3 is enacted, it explain whether it is
applicable to any change in beneficiary during these two
periods of time.
Section 4 would amend 38 U.S.C. Sec. 1967(a)(3)(B) to
permit a servicemember to elect an amount of SGLI less than the
maximum available provided the amount of coverage on the member
is evenly divisible by $50,000, rather than $10,000, as
currently provided by section 1967(a)(3)(B). This would
simplify the administration of the SGLI program and would align
with the proposal by the Administration.
TRAUMATIC SGLI
Section 1032 of Pub. L. No. 109-13 created a program that
provides an insurance benefit to servicemembers who incur
traumatic injuries. The traumatic injury program provides
automatic insurance for any SGLI insured who suffers a
traumatic injury as prescribed by the Secretary of Veterans
Affairs in collaboration with the Secretary of Defense. Under
this program, payment will be made in accordance with a
schedule prescribed by the Secretary of Veterans Affairs in
collaboration with the Secretary of Defense based on the
severity of the condition and in an amount that is not less
than $25,000 and not more than $100,000. The maximum amount
payable for all injuries resulting from the same traumatic
event is $100,000, and if a servicemember suffers more than one
loss as a result of a traumatic injury, payment will be made in
accordance with the prescribed schedule for the single loss
providing the highest payment. Premiums for disability
insurance coverage will be deducted from a servicemember's
basic or other pay, less any costs traceable to the extra
hazards of duty. This benefit is effective on December 1, 2005;
however, any servicemember experiencing a traumatic injury
between October 7, 2001, and December 1, 2005, is eligible to
receive the insurance benefit if the qualifying loss was a
direct result of injuries incurred in Operation Enduring
Freedom or Operation Iraqi Freedom.
We welcome the addition of this valuable benefit to the
package of SGLI benefits currently available to members of the
uniformed services and their families. We believe this law will
help to reduce the financial burden and mental strain on
servicemembers and their families following a traumatic and
often life-changing injury. Immediately following enactment of
Pub. L. No. 109-13, the VA Insurance Service met with DOD and
Prudential Insurance Company of America to discuss
implementation of the new program. At this point, we do not
know whether there are any issues that would need to be
resolved through amendment to section 1032. We hope to be able
to point out to the Subcommittee any such issues prior to the
December 1, 2005, effective date of this legislation.
Congressional Budget Office Cost Estimate
July 15, 2005.
Hon. Steve Buyer,
Chairman, Committee on Veterans' Affairs,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 3200, the
Servicemembers' Group Life Insurance Enhancement Act of 2005.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Dwayne M.
Wright.
Sincerely,
Douglas Holtz-Eakin.
Enclosure.
H.R. 3200--Servicemembers' Group Life Insurance Enhancement Act of 2005
Summary: H.R. 3200 would make permanent the authority in
the Emergency Supplemental Appropriations Act for Defense, the
Global War on Terror, and Tsunami Relief Act, 2005, that
increased the maximum coverage under the Servicemembers' Group
Life Insurance (SGLI) and the Veterans' Group Life Insurance
(VGLI) programs. The bill also would allow those servicemembers
who are insured under SGLI to opt out of the Traumatic Injury
Protection Insurance portion of SGLI.
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.
H.R. 3200 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA)
and would not affect the budgets of state, local, or tribal
governments.
Estimated cost to the Federal Government: The estimated
budgetary impact of H.R. 3200 is shown in the following table.
The costs of this legislation fall within budget function 050
(national defense).
------------------------------------------------------------------------
By fiscal year, in millions of
dollars--
---------------------------------------
2006 2007 2008 2009 2010
------------------------------------------------------------------------
CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Estimated Authorization Level... 95 64 34 6 0
Estimated Outlays............... 95 64 34 6 0
------------------------------------------------------------------------
Basis of Estimate: Section 2 would make permanent the
current authority that increased the maximum coverage under
SGLI from $250,000 to $400,000 for all servicemembers,
effective September 1, 2004. That authority is currently in
place only through fiscal year 2005.
Under current law, the Department of Defense (DoD) is
required to reimburse the Department of Veterans Affairs (VA)
for the costs of benefit claims for deaths that exceed levels
set by VA each year. VA calculates these levels based on
mortality rates expected under peacetime conditions and refers
to these costs as hazard costs. In 2004, DoD reimbursed VA $105
million to cover these costs.
For this estimate, CBO assumes that force levels in theater
for Operating Enduring Freedom and Operation Iraqi Freedom for
2006 will remain at levels expected for 2005 (about 200,000
servicemembers) and then decline gradually over several years
to about 50,000 by 2010. Based on that assumption regarding
force levels, current death rates observed in those two
operations, and information provided by DoD regarding the death
rates for the remainder of the force, CBO estimates that DoD
would need to reimburse VA for 640 claims in 2006. CBO also
estimates that the number of claims exceeding VA levels would
decline to about 40 by 2009 and that the number of claims for
benefits would not exceed levels set by VA after 2009. Based on
information from VA, CBO assumes that DoD would be responsible
for reimbursing VA for the maximum benefit amount of $400,000
per claim under this provision. Thus, CBO estimates that DoD
would reimburse VA $95 million for hazard costs in 2006 and
$199 million over the 2006-2009 period, subject to the
availability of appropriated funds.
Section 6 would allow servicemembers who are covered under
SGLI, to opt out of Traumatic Injury Protection Insurance that
is automatically added to a servicemember's SGLI coverage under
current law. The Congress authorized Traumatic Injury
Protection Insurance coverage under SGLI as part of the
Emergency Supplemental Appropriations Act for Defense, the
Global War on Terror, and Tsunami Relief Act, 2005. That
coverage would provide up to a maximum of $100,000 for
traumatic injuries (as defined through collaboration by VA and
DoD) sustained to a servicemember. According to VA--the
administrator of the SGLI program--servicemembers currently pay
$26 a month for $400,000 of SGLI coverage. VA indicates that a
servicemember's monthly premium for SGLI coverage will increase
by $1 for Traumatic Injury Protection Insurance.
VA indicates that 98 percent of servicemembers participate
in SGLI and take out the maximum coverage. Under current law,
DoD is required to pay the costs of any claims for Traumatic
Injury Protection Insurance that exceed the level VA expects to
be able to cover with premiums collected from servicemembers.
If a significant number of servicemembers chose to opt out of
Traumatic Injury Protection Insurance, VA would eventually
adjust the premium amount to cover expected costs. In the near
term, however, the amount of premiums collected might be
insufficient and DoD would be required to pay the additional
costs associated with paying servicemember claims.
However, CBO expects that few servicemembers would opt out
of the additional insurance coverage given the small
incremental cost ($1 per month) for this insurance and the
inability of servicemembers to predict when a traumatic injury
could occur. Thus, CBO estimates that any near-term costs
associated with implementing this provision would be
insignificant.
Intergovernmental and private-sector impact: H.R. 3200
contains no intergovernmental or private-sector mandates as
defined in the Unfunded Mandates Reform Act (UMRA) and would
not affect the budgets of state, local, or tribal governments.
Previous CBO estimate: On June 2, 2005, CBO transmitted a
cost estimate for S. 1042, the National Defense Authorization
Act for Fiscal Year 2006, as reported by the Senate Committee
on Armed Services on May 17, 2004. Section 641 of S. 1042 is
similar to section 2 of H.R. 3200 as both provisions would make
permanent the authority to increase the maximum amount of SGLI
coverage from $250,000 to $400,000. Section 641 of S. 1042
would also direct DoD to pay the cost of premium payments for
up to $150,000 of SGLI coverage for servicemembers serving in
an operation or area that DoD designates as a combat operation
or a zone of combat, whereas H.R. 3200 would not. Differences
in the estimated costs reflect differences in the two versions
of the legislation.
Estimate prepared by: Federal Costs: Dwayne M. Wright.
Impact on State, Local, and Tribal Governments: Melissa
Merrell. Impact on the Private Sector: Joshua Lee.
Estimate approved by: Peter H. Fontaine, Deputy Assistant
Director for Budget Analysis.
Statement of Federal Mandates
The preceding Congressional Budget Office cost estimate
states that the bill contains no intergovernmental or private
sector mandates as defined in the Unfunded Mandates Reform Act.
Statement of Constitutional Authority
Pursuant to Article I, section 8 of the United States
Constitution, the reported bill is authorized by Congress'
power to ``provide for the common Defense and general Welfare
of the United States.''
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
EMERGENCY SUPPLEMENTAL APPROPRIATIONS ACT FOR DEFENSE, THE GLOBAL WAR
ON TERROR, AND TSUNAMI RELIEF, 2005
* * * * * * *
DIVISION A--EMERGENCY SUPPLEMENTAL APPROPRIATIONS ACT FOR DEFENSE, THE
GLOBAL WAR ON TERROR, AND TSUNAMI RELIEF, 2005
That the following sums are appropriated, out of any money in
the Treasury not otherwise appropriated, for the fiscal year
ending September 30, 2005, and for other purposes, namely:
TITLE I--DEFENSE-RELATED APPROPRIATIONS
DEPARTMENT OF DEFENSE--MILITARY
MILITARY PERSONNEL
* * * * * * *
GENERAL PROVISIONS, THIS TITLE
* * * * * * *
[SERVICEMEMBERS' GROUP LIFE INSURANCE
[Sec. 1012. (a) Increased Maximum Amount of Servicembers'
Group Life Insurance.--Section 1967 of title 38, United States
Code, is amended--
[(1) in subsection (a)(3)(A), by striking clause (i)
and inserting the following new clause:
[``(i) In the case of a member--
[``(I) $400,000 or such lesser amount as the
member may elect as provided in subparagraph
(B);
[``(II) in the case of a member covered by
subsection (e), the amount provided for or
elected by the member under subclause (I) plus
the additional amount of insurance provided for
the member by subsection (e); or
[``(III) in the case of a member covered by
subsection (e) who has made an election under
paragraph (2)(A) not to be insured under this
subchapter, the amount of insurance provided
for the member by subsection (e).''; and
[(2) in subsection (d), by striking ``$250,000'' and
inserting ``$400,000''.
[(b) Increments of Decreased Amounts Electable by Members.--
Subsection (a)(3)(B) of such section is amended by striking
``member or spouse'' in the last sentence and inserting
``member, be evenly divisible by $50,000 and, in the case of a
member's spouse''.
[(c) Additional Amount for Members Serving in Certain Areas
or Operations.--
[(1) Increased amount.--Section 1967 of such title is
further amended--
[(A) by redesignating subsection (e) as
subsection (f); and
[(B) by inserting after subsection (d) the
following new subsection (e):
[``(e)(1) A member covered by this subsection is any member
as follows:
[``(A) Any member who dies as a result of one or more
wounds, injuries, or illnesses incurred while serving
in an operation or area that the Secretary designates,
in writing, as a combat operation or a zone of combat,
respectively, for purposes of this subsection.
[``(B) Any member who formerly served in an operation
or area so designated and whose death is determined
(under regulations prescribed by the Secretary of
Defense) to be the direct result of injury or illness
incurred or aggravated while so serving.
[``(2) The additional amount of insurance under this
subchapter that is provided for a member by this subsection is
$150,000, except that in a case in which the amount provided
for or elected by the member under subsection (a)(3)(A)(i)(I)
exceeds $250,000, the additional amount of insurance under this
subchapter that is provided for the member by this subsection
shall be reduced to such amount as is necessary to comply with
the limitation in paragraph (3).
[``(3) The total amount of insurance payable for a member
under this subchapter may not exceed $400,000.
[``(4) While a member is serving in an operation or area
designated as described in paragraph (1), the cost of insurance
of the member under this subchapter that is attributable to
$150,000 of insurance coverage shall, at the election of the
Secretary concerned--
[``(A) be contributed as provided in section
1969(b)(2) of this title, rather through deduction or
withholding from the member's pay; or
[``(B) if deducted or withheld from the member's pay,
be reimbursed to the member through such mechanism as
the Secretary concerned determines appropriate.''.
[(2) Funding.--Section 1969(b) of such title is
amended--
[(A) by inserting ``(1)'' after ``(b)''; and
[(B) by adding at the end the following new
paragraph:
[``(2) For each month for which a member insured under this
subchapter is serving in an operation or area designated as
described by paragraph (1)(A) of section 1967(e) of this title,
there may, at the election of the Secretary concerned under
paragraph (4)(A) of such section, be contributed from the
appropriation made for active duty pay of the uniformed service
concerned an amount determined by the Secretary and certified
to the Secretary concerned to be the cost of Servicemembers'
Group Life Insurance which is traceable to the cost of
providing insurance for the member under section 1967 of this
title in the amount of $150,000.''.
[(d) Conforming Amendment.--Section 1967(a)(2)(A) of such
title is amended by inserting before the period at the end the
following: ``, except with respect to insurance provided under
paragraph (3)(A)(i)(III)''.
[(e) Coordination With VGLI.--Section 1977(a) of such title
is amended--
[(1) by striking ``$250,000'' each place it appears
and inserting ``$400,000''; and
[(2) by adding at the end of paragraph (1) the
following new sentence: ``Any additional amount of
insurance provided a member under section 1967(e) of
this title may not be treated as an amount for which
Veterans' Group Life Insurance shall be issued under
this section.''.
[(f) Requirements Regarding Elections of Members to Reduce or
Decline Insurance.--Section 1967(a) of such title is further
amended--
[(1) in paragraph (2), by adding at the end the
following new subparagraph:
[``(C) Pursuant to regulations prescribed by the Secretary of
Defense, notice of an election of a member with a spouse not to
be insured under this subchapter, or to be insured under this
subchapter in an amount less than the maximum amount provided
under paragraph (3)(A)(i)(I), shall be provided to the spouse
of the member.''; and
[(2) in paragraph (3)--
[(A) in the matter preceding clause (i), by
striking ``and (C)'' and inserting ``, (C), and
(D)''; and
[(B) by adding at the end the following new
subparagraphs:
[``(D) A member with a spouse may not elect not to be insured
under this subchapter, or to be insured under this subchapter
in an amount less than the maximum amount provided under
subparagraph (A)(i)(I), without the written consent of the
spouse.
[``(E) Whenever a member who is not married elects not to be
insured under this subchapter, or to be insured under this
subchapter in an amount less than the maximum amount provided
for under subparagraph (A)(i)(I), the Secretary concerned shall
provide a notice of such election to any person designated by
the member as a beneficiary or designated as the member's next-
of-kin for the purpose of emergency notification, as determined
under regulations prescribed by the Secretary of Defense.''.
[(g) Requirement Regarding Redesignation of Beneficiaries.--
Section 1970 of such title is amended by adding at the end the
following new subsection:
[``(j) A member with a spouse may not modify the beneficiary
or beneficiaries designated by the member under subsection (a)
without providing written notice of such modification to the
spouse.''.
[(h) Effective Date.--This section and the amendments made by
this section shall take effect on the first day of the first
month that begins more than 90 days after the date of the
enactment of this Act.
[(i) Termination.--The amendments made by this section shall
terminate on September 30, 2005. Effective on October 1, 2005,
the provisions of sections 1967, 1969, 1970, and 1977 of title
38, United States Code, as in effect on the day before the date
of the enactment of this Act shall be revived.]
* * * * * * *
----------
TITLE 38, UNITED STATES CODE
* * * * * * *
PART II--GENERAL BENEFITS
* * * * * * *
CHAPTER 19--INSURANCE
* * * * * * *
SUBCHAPTER III--SERVICEMEMBERS' GROUP LIFE INSURANCE
* * * * * * *
Sec. 1967. Persons insured; amount
(a)(1) * * *
* * * * * * *
(3)(A) Subject to subparagraphs (B) and (C), the amount for
which a person is insured under this subchapter is as follows:
(i) In the case of a member, [$250,000] $400,000.
* * * * * * *
(B) A member may elect in writing to be insured or to insure
the member's spouse in an amount less than the amount provided
for under subparagraph (A). The member may not elect to insure
the member's child in an amount less than $10,000. The amount
of insurance so elected shall, in the case of a [member or
spouse] member, be evenly divisible by $50,000 and, in the case
of a member's spouse,, be evenly divisible by $10,000.
* * * * * * *
(d) Whenever a member has the opportunity to make an election
under subsection (a) not to be insured under this subchapter,
or to be insured under this subchapter in an amount less than
the maximum amount [of $250,000] in effect under paragraph
(3)(A)(i) of that subsection, and at such other times
periodically thereafter as the Secretary concerned considers
appropriate, the Secretary concerned shall furnish to the
member general information concerning life insurance. Such
information shall include--
(1) * * *
* * * * * * *
(f)(1)(A) Whenever a member who is eligible for insurance
under this section executes a life insurance option specified
in subparagraph (B), the Secretary concerned shall notify the
member's spouse or, if the member is unmarried, the member's
next of kin, in writing, of the execution of that option.
(B) A life insurance option referred to in subparagraph (A)
is any of the following:
(i) An election under subsection (a)(2)(A) not to be
insured under this subchapter.
(ii) An election under subsection (a)(3)(B) for
insurance of the member in an amount that is less than
the maximum amount provided under subsection
(a)(3)(A)(i).
(iii) An application under subsection (c) for
insurance coverage under this subchapter or for a
change in the amount of such insurance coverage.
(iv) In the case of a married member, a designation
under section 1970(a) of this title of any person other
than the spouse or a child of the member as the
beneficiary of the member for any amount of insurance
under this subchapter.
(2) Whenever an unmarried member who is eligible for
insurance under this section marries, the Secretary concerned
shall notify the member's spouse in writing as to whether the
member is insured under this subchapter. In the case of a
member who is so insured, the Secretary shall include with such
notification--
(A) if the member has made an election described in
paragraph (1)(B)(ii), notice that the amount of such
insurance is less than the maximum amount provided
under subsection (a)(3)(A)(i); and
(B) if the member has designated a beneficiary other
than the spouse or a child of the member for any amount
of such insurance, notice that such a designation has
been made.
(3)(A) Notification of a spouse under paragraph (1) or (2),
or of any other person under paragraph (1), for purposes of
this subsection 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.
(B) Failure to provide such notification, or to provide such
notification in a timely manner, does not affect the validity
of any life insurance option referred to in paragraph (1)(B).
* * * * * * *
Sec. 1977. Veterans' Group Life Insurance
(a)(1) Veterans' Group Life Insurance shall be issued in the
amounts specified in section 1967(a) of this title. In the case
of any individual, the amount of Veterans' Group Life Insurance
may not exceed the amount of Servicemembers' Group Life
Insurance coverage continued in force after the expiration of
the period of duty or travel under section 1967(b) or 1968(a)
of this title. No person may carry a combined amount of
Servicemembers' Group Life Insurance and Veterans' Group Life
Insurance in excess of [$250,000] $400,000 at any one time.
(2) If any person insured under Veterans' Group Life
Insurance again becomes insured under Servicemembers' Group
Life Insurance but dies before terminating or converting such
person's Veterans' Group Insurance, Veterans' Group Life
Insurance shall be payable only if such person is insured for
less than [$250,000] $400,000 under Servicemembers' Group Life
Insurance, and then only in an amount which, when added to the
amount of Servicemembers' Group Life Insurance payable, does
not exceed [$250,000] $400,000.
* * * * * * *
Sec. 1980A. Traumatic injury protection
(a) * * *
(b)(1) * * *
* * * * * * *
(4)(A) A member may elect in writing not to be insured under
this section.
(B) If a member eligible for insurance under this section is
not so insured by reason of an election made under subparagraph
(A), the member may thereafter elect to be insured under this
section 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 the
receipt by the Secretary of such application and shall apply
only with respect to injuries incurred after that date.
(C) The Secretary shall prescribe by regulation conditions as
to how and when elections under subparagraph (B) shall be made.
Such regulations may include limiting the time for such
elections to an annual open season, for a duration each year
prescribed by the Secretary.
* * * * * * *
