The National Defense Authorization Act of 2008 contained an amendment to allow un-uniformed service members, military retirees, and veterans to render a hand salute during the hoisting, lowering, or passing of the U.S. flag.
A later amendment further authorized hand-salutes during the national anthem by veterans and out-of-uniform military personnel. This was included in the Defense Authorization Act of 2009, which President Bush signed on Oct. 14, 2008.
With no cover or head-dress?
I have heard some announcers say at some NASCAR races and some baseball games that retired veterans are encouraged to render the hand salute.