Other Benefits: Survivor Benefits - Getting Out, Military Retirement - Military Times

Other Benefits: Survivor Benefits

To enable retirees to provide for their families after their deaths, the government offers an annuity program called the Survivor Benefit Plan.

SBP coverage also is given to all active-duty members at no cost as long as they remain in uniform. Active-duty and reserve retirees, however, must pay monthly premiums. The SBP provides up to 55 percent of a member’s monthly retired pay to his survivors.

To participate in the SBP or the Reserve Component SBP, or to decline participation, both the retiring service member and spouse must agree to the option in writing.

Monthly premiums are deducted from retired pay. Retirees who elect SBP coverage when they leave active duty must remain covered for two years, after which they have a one-time, one-year window of opportunity to withdraw from the program.

When retirees elect to participate in SBP, they select a dollar amount of their retirement pay, called the base amount, as the foundation of the benefit. This must be between $300 and the full amount of monthly retirement pay. The cost of SBP generally is 6.5 percent of the amount of coverage a retiree selects. Surviving spouses then receive 55 percent of the base as their SBP payment.

Surviving spouses of retirees have SBP annuities suspended if they remarry before age 55. If the marriage ends for any reason, the SBP will be reinstated when requested and when appropriate documentation is provided. However, the dependent ID card and its associated entitlements are not reinstated.

Cost-of-living adjustments

SBP premiums and annuities to survivors increase yearly, following the same guidelines used for retired pay COLAs.

DIC offset

Survivors of service members who die on active duty, and survivors of retirees who die of service-connected causes, are eligible for Dependency and Indemnity Compensation from the Department of Veterans Affairs. However, if survivors also receive SBP payments, those payments are reduced dollar-for-dollar by the amount paid in DIC. A pro-rated share of SBP premiums is refunded to the surviving spouse in a lump sum, but with no interest.

The 2008 Defense Authorization Act created a special payment to partially offset the reduction in SBP benefits required for those who also receive DIC. The special payments began Oct. 1, 2008, the start of fiscal 2009. The monthly payment in fiscal 2009 was $50, and is rising by $10 each year to $100 per month in fiscal 2013. It will stay at $100 through February 2016, when the special payment will end.

Paid-Up SBP

A policy change ordered by Congress took effect Oct. 1, 2008, under which SBP participants who have paid monthly premiums for 360 months — 30 years — and have reached age 70 are considered “paid up” in the program. The monthly deductions from their retirement checks end, and they do not have to pay into the program any more for the rest of their lives. The Defense Finance and Accounting Service now includes a tally of the number of monthly payments credited toward paid-up status on retiree pay statements.

Retirees with Reserve Component SBP (RC-SBP) are covered under the program; however, credit for Paid-Up SBP applies only to months in which premiums are deducted from retired pay. Since reserve retirees do not have premiums deducted until they are eligible to receive retired pay (usually age 60), months in which they were in RC-SBP but paid no premiums do not count toward Paid-Up SBP.

Eligible retirees do not need to do anything to terminate premiums. DFAS is supposed to notify them directly of their paid-up status and when premiums payments will stop.

DFAS has set up an appeals process for retirees who believe the number of credited months on their pay statements is incorrect. The appeals process runs through June 30, 2009.

Contact: More information on Paid-Up SBP and the appeals process can be found at www.dfas.mil/retiredpay.html.

Disability

Retirees who have a service-connected disability that has been rated by VA as totally disabling for 10 or more continuous years, or have a total disability rating that has been held for not less than five continuous years from the last date of active duty, may withdraw from SBP participation.

Withdrawal is allowed because the surviving spouse will qualify for Dependency and Indemnity Compensation benefits. This is because the retiree’s death will be presumed to be from service-connected reasons.

A request for withdrawal requires the written consent of the beneficiary. When the retiree dies, the surviving spouse will be entitled to a refund of all the SBP costs that were paid. When a retiree requests withdrawal under these rules, the Defense Finance and Accounting Center must provide a written statement outlining the advantages and disadvantages of withdrawing. The change will not take effect until the retiree confirms receipt of the information and acknowledges that he or she still wishes to withdraw.

If, for some reason, the VA disability rating is withdrawn or reduced, SBP coverage may be resumed. The retiree must make the resumption request within one year after the VA rating has been withdrawn or reduced.

Divorce

If a service member’s marriage ends, SBP deductions stop when the retiree notifies the finance center or service. No further deductions are made unless the retiree remarries. The retiree then has a year to opt out of the benefit for the new spouse.

Retirees who do not notify the Defense Finance and Accounting Service of their remarriage, and therefore fail to decline coverage with approval of the new spouse, will owe any premiums not deducted from their retirement pay.

SBP benefits also can be provided for ex-spouses, and courts can order coverage for them. They are eligible for benefits at the same cost as spouses. Divorce decrees from state courts can allow service members to name ex-spouses as SBP beneficiaries.

Contact: http://militarypay.defense.gov/survivor/sbp/