Mr. President, I have sought recognition to comment on legislation I am introducing today to provide a cost-of-living, COLA, adjustment for certain veterans benefits programs. This COLA adjustment…
Mr. President, I have sought recognition to comment on legislation I am introducing today to provide a cost-of-living, COLA, adjustment for certain veterans benefits programs. This COLA adjustment would affect payments made to nearly 3 million Department of Veterans Affairs, VA, beneficiaries, and would be reflected in beneficiary checks that are received in January 2006, and thereafter.
An annual cost-of-living adjustment in veterans benefits is an important tool which protects veterans' cash-transfer benefits against the corrosive effects of inflation. The principal programs affected by the adjustment would be compensation paid to disabled veterans, and dependency and indemnity compensation--DIC--payments made to the surviving spouses, minor children and other dependants of persons who died in service, or who died after service as a result of service- connected injuries or diseases.
The President's budget anticipates inflation to be at a 2.3 percent level at the close of this year as measured by the consumer price index--CPI--published by the Department of Labor's Bureau of Labor Statistics. If inflation is held to the 2.3-percent level, that will be the level of COLA adjustment under this legislation since it ties the increase directly to the CPI increase as measured by the Department of Labor. Whatever the CPI increase eventually turns out to be, however, veterans' and survivors' benefits payments must be protected by being increased by a like amount. The Senate has already concurred with that judgment with passage of a budget resolution which assumes an increase equal to the CPI and which sets aside the funds necessary to finance the COLA increase envisioned by this legislation.
I ask my colleagues to support this vital legislation.
I request unanimous consent that this bill be printed in the Record.
Mr. President, I have sought recognition to comment on legislation that I have introduced today that will improve insurance and housing benefits available for our Nation's servicemembers and veterans. The ``Veterans Benefits Improvement Act of 2005'' would increase the maximum amount of Servicemembers' Group Life Insurance, SGLI, and Veterans' Group Life Insurance, VGLI, coverage from $250,000 to $400,000; would require the Secretary of Defense to notify spouses of insured servicemembers when those servicemembers elect an SGLI beneficiary other than their spouse or when they elect to reduce SGLI coverage amounts; would provide a two-year, post-discharge window within which totally disabled veterans might elect to convert their insurance coverage from SGLI to VGLI; and would provide flexibility to VA's hybrid adjustable rate mortgage program so that servicemembers and veterans might use their VA home loan benefits in conjunction with this popular type of mortgage financing.
There already has been a great deal of discussion in the 109th Congress about the adequacy of benefits for the survivors of those who have lost their lives in service. There has also been a great deal of action. Section 1012 of Public Law 109-13, the ``Emergency Supplemental Appropriation Act for Defense, the Global War on Terror, and Tsunami Relief, 2005,'' made improvements to the SGLI program. However, section 1012 also specified that the SGLI improvements made in the act be terminated effective September 30, 2005, and that the law as it existed prior to the enactment of Public Law 109-13 be revived on that date. As I understand it, the purpose of the termination language was to give the committee of jurisdiction--in this case, the Veterans' Affairs Committee, which I
chair in the Senate--the opportunity to proceed with proposals that would put a more permanent stamp on changes to the SGLI program.
Towards that end, and consistent with the changes enacted in Public Law 109-13, section 2(a) of my legislation would increase the maximum amount of SGLI and VGLI coverage from $250,000 to $400,000 effective October 1, 2005. SGLI coverage meets the insurance needs of servicemembers and Reserve members; VGLI coverage is available to meet the insurance needs of veterans as they transition out of military or naval service. The higher amount of coverage in my bill, in combination with other Federal assistance provided by VA, the Department of Defense, and the Social Security Administration, would provide for a more appropriate level of financial assistance for survivors of insured servicemembers and veterans. For example, the surviving spouse of an Army Sergeant killed in action who has two dependent children would have eligibility for up to $625,186 in lump-sum benefit assistance from the Federal government.
In addition, section 2(a) of the legislation I have introduced today would require the Secretary of Defense to notify, in writing, the spouses of servicemembers who elect either to name beneficiaries other than their spouses, or who elect to reduce their SGLI coverage. Under existing law, servicemembers have the right to name the insurance beneficiary of their choice. There are, however, some incidences of spouses of married servicemembers being left without adequate insurance for themselves or their children because they were unaware of the insurance decisions the servicemembers had made. I believe the spousal notification requirement in my bill strikes an appropriate balance between the long-standing rights of servicemembers to make their own, unfettered insurance choices, and the rights of spouses to be informed of matters that may impact on their future financial stability.
Turning to the insurance needs of severely disabled servicemembers, section 2(b) of this bill would extend for 1 year the period within which totally disabled veterans discharged from service might apply to convert their SGLI coverage to VGLI coverage. Under current law, servicemembers discharged from service have a 120-day grace period within which they are provided premium-free coverage under SGLI and may convert to VGLI coverage without needing to meet underwriting requirements. Servicemembers separated from service who are totally disabled may apply for an extension of the free SGLI coverage and VGLI conversion benefit that lasts up to one year after military discharge. There are two benefits of applying for the 1 year extension. The first is that SGLI coverage during the 1 year period is provided at no cost to the servicemember. The second is that the application for extension also serves as an application for automatic conversion from SGLI to VGLI. The opportunity to convert life insurance coverage to VGLI is essential for totally disabled veterans, many of whom have no hope of obtaining commercial insurance coverage.
VA's Insurance Service conducts targeted outreach to severely disabled veterans in an attempt to encourage them to apply for the 1 year extension of SGLI and conversion to VGLI benefit. However, information obtained from this outreach effort reveals that many severely disabled veterans are not taking advantage of the extension because they are precluded from post-separation financial planning by the effects of their disabilities and their need to focus on rehabilitation. Preliminary data obtained from VA suggest only 45 percent of totally disabled servicemembers apply for the extension despite VA's outreach effort. My legislation will provide 1 additional year within which severely disabled veterans may apply. The extra year will give VA more time--a total of 2 years after their discharge from the military--to reach veterans when they are perhaps more able to focus on their financial planning needs.
Finally, section 3 of the legislation I have introduced today would provide VA with greater flexibility to set appropriate interest rate cap protections on hybrid ARM loans it guarantees. Under existing law, VA has the authority to guaranty hybrid ARM loans through fiscal year 2008. Hybrid ARM loans are a new, and popular, financing option for borrowers that features a fixed period of interest on a loan for between 3 and 10 years followed by a period of annual adjustments thereafter. For VA hybrid ARM loans with an initial fixed rate of 5 or more years, VA may prescribe the maximum increase of the initial adjustment and the maximum adjustment permitted over the life of the loan. These interest rate ``caps'' are common in the mortgage financing industry, and serve to protect borrowers against wild upward swings in interest rates that might make a borrower more likely to default. However, unlike the flexibility given to VA to set caps for the initial adjustment and for the aggregate adjustment for the life of a loan, the law specifically limits annual interest rate adjustments after the initial adjustment to one percentage point. I am informed by industry and VA experts that without providing VA with greater flexibility to set an appropriate interest rate cap for annual adjustments, lenders will either be reluctant to make VA hybrid ARM loans available to veterans, or will require that veterans pay higher interest rates than otherwise would be required. My legislation would provide VA with the flexibility it needs to fix this problem.
Mr. President, the provisions of this legislation are important for veterans and their loved ones. We must give greater peace of mind to the families of those serving in the military, especially during a wartime period, that their Government has made available to them life insurance coverage to meet their basic financial needs in the event of death. We must give every opportunity for severely wounded servicemembers, many with war wounds, to remain insured under a government life insurance policy if their injuries might preclude them from being covered at reasonable cost under a private policy. And we must ensure that we remain flexible with mortgage industry standards so that veterans have the greatest array of financing options available to them when seeking to partake in the American dream of home ownership. My bill will accomplish all of these things and I ask my colleagues for their support of it.
Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.