I did some further digging into the matter after I asked here. You can learn more about this program at https://www.va.gov/opa/persona/dependent_survivor.asp. Because of their varying needs, some families may want or need life insurance, some families may want or need an annuity, some families may want or need both. I have never understood this perspective perhaps you can help me? Basic Employee Death Benefit Surviving Spouse. Hopefully she will still receive payment. he will turn 70 in a few month and has paid pretty close to the 360 month requirement but he not in good health. If your surviving spouse remarries before age 55, SBP payments will stop, but may be resumed if the marriage later ends due to death or divorce." SBP coverage would then be the only coverage. I appreciate the information on the military benefit plan. You may choose to purchase or not purchase. Subscribe now for my newsy emails, which come about once every two weeks. Thank you, Shellie (daughter). Im unaware of any other situation in which premiums are refunded. Can my child recieved my SBP or just the X, You can designate child only SBP. The instructions for applying for SBP are on this page: https://www.dfas.mil/retiredmilitary/survivors/Retiree-death/sbp.html Also, if your parents have any records from before his death, he should have been receiving Retiree Account Statements (RAS) that would show whether SBP premiums were being deducted. And then the payout summary reflects the amounts I provided previously. You can use the formula from the Office of the Actuary to determine real costs. The $310 SSIA offset is given when DIC is more than what she would have received for SBP monthly. can you answer this question for a follow vet? I think this benefit sounds good but is paying for 2 different policies common? Does sbp still continue, as long as I pay, even after I turn 70, assuming I live that long ?? endobj While the law says that a beneficiary can not receive the full amount of both SBP and DIC, there is a special program that refunds a portion of the offset amount. Kate, I have been paying into the SBP for 11 years now. (Heck, Im related to one ). So, the answer to the question how long does it take? depends on how swiftly the SM notice of the FSs passing. I am currently at 90% from the VA and have my payments sent to DFAS from my VA offset. Good evening Kate, Are you asking if the premiums must continue to be paid if the insured dies? https://www.katehorrell.com/understanding-sbp-dic-offset/. The Survivor Benefit Plan (SBP) helps make up for the loss of part of this income. Full retirement age . Will they also reeimburse me for all my medical bills that I paid in the past? That marriage to another service member (NG or Reserve, not sure) lastet for about 7 years. The premiums will be automatically deducted by DFAS from your monthly retirement check. Is that a correct assumption? I dont understand this as unless this means I no longer have to pay for SBP, my benefit would be far greater than my DIC. Thanks. I had forgotten to consider the reciprocal tax treaty. Pregnant Air Force B-1 pilot soars to new heights, Tax scams How to report them Money Minute, Capitol Hill weighs action on two controversial topics: medical marijuana and abortion, Lockheed wins hypersonics contract | Defense Dollars, Go inside a secret nuclear fallout bunker sealed for decades, Veterans Affairs deputy secretary to leave post on April 1, US increases military support for Somalia against al-Shabab, Air Force advisers study use of satellites for tracking moving targets. Ive been separated for eight years(2011) from my spouse (married in 2000). Think of the Survivor Benefit Plan (SBP) as an insurance policy, focused on protecting a survivor's income flow from the military retirement if the retiree dies first. Please try again. Jerry, yes, you should automatically stop paying premiums when your child turns 18, if the child is not in college. That is a very specific decision individual to each family. Theyre not charging anything under the section This Months Cost but keep tacking on 6% APR every time he gets one of these bills. Your monthly FERS pension is reduced by 10%. Hi Kate, great article thanks for the wealth of knowledge. The personal risk is harder to quantify, and can easily be overlooked. You may elect SBP spouse coverage for the first spouse you acquire after retirement; however, you must elect the coverage before the first anniversary of your marriage. With each adjustment in base amount, there is a corresponding adjustment in premiums and benefit payments. I did not know about the offset until his death. In addition my mother has suggested that my father put in his will that my younger sister (50 years old) be the beneficiary of this benefit. Thank you in advance. However, your analysis fails to include several important considerations and one glaring factual error. It is still in my name so I get those benefits after death? We received notice that the premium cost would have to be refunded. If we have regular life insurance is it over doing it to pay premiums for both? As a smart friend says, Life insurance is for when the insured doesnt live as long as youd hope. Im not aware of any provision to continue having SBP coverage without payment until you have hit the 360 payment and age 70 requirements. Your email address will not be published. Is there someplace I can download something or a place to ask for a copy of the award letters that I could receive in a timely way? Because this is such a valuable benefit, it's important to be sure you understand how the SBP works, especially if there is divorce. It was only for my kids, and when I signed up for it I had no clue what I was doing. However, if this subsequent marriage ends in death or divorce, SBP payments start up again. I did see that you anticipate a second career after the military. Dependency and Indemnity Compensation (DIC) is a tax-free monetary benefit payable to eligible survivors of certain Veterans. endobj Ms. Horrell What if I die at 69? Premiums are suspended effective the first section 3702 regarding SBP payment of any claim not received within 6 years from the date it accrues basically a claim for Arrears of Pay. My question is: Im 59 so remarriage cant change anything. If you look on his retiree account statement, it will show SBP premiums being deducted from his military retirement pay if he enrolled in SBP. The Survivor Benefit Plan (SBP) is often the most important decision of your financial life, and it is also probably the most confusing. Hi Kate What are the formulas used for calculating them? Plus college stuff, landlording, moving, taxes. 1-Spouse: The surviving spouse is the beneficiary of RCSBP upon the death of the Soldier/Retired Soldier. She was not aware of the divorce nor the fact he cancelled the SBP for her. If the dad was carrying Survivor Benefit Plan coverage on his child, you should file for SBP benefits for him. She knew nothing about a refund and that refund could result in a large irs tax penalty! How does 100% disability withdrawal work? (Theres a whole book in that statement, so be sure that you thoroughly understand the taxability of the proceeds of any insurance policy you purchase.) The SBP can be assigned to a former spouse as part of divorce proceedings. In response to calls to repeal the SBP-DIC offset, Congress enacted a special payment forsurviving spouses whose SBP payments have been offset as a result of receiving DIC. My mother is still alive but DFAS says that the word spouse is in the contract and because she is divorced from him and not his spouse she is not entitled to the SBP. The fourth thing to think about is whether the SBP-DIC offset will be repealed at some point in the future. I have a new wife, would it be worth it to transfer to her and get up to date? The surviving. Good afternoon Ms. Horrell, However, that is now not the case. (There are a couple of other categories, but it doesnt sound like your friend falls into them.) If a couple gets divorced, the ex-spouse of a retiree can still be awarded his or her SBP. It is not a loss of money, but a change of how the money is paid and results in a higher total amount of income for survivors, but it is confusing and many people find it frustrating. Coverage for active duty service members is automatic and does not require any action or payments. I never knew that some of the benefits military veterans get only activate when they retire. Parents married 18 years 1958-1976, Divorced 1976. About SBP- If annuity payable amount is 55% and base amount is approximately $2350.00 will the monthly spouse cost of $277.00 come out of the approximate payable benefit of $1292.00 if spouse hasnt met the 360 month and 70 year requirement? No I never requested that they withhold taxes on the return of premiums however when I was receiving sbp they used to withhold taxes so I expect I had asked them to do that in 2016 and they still had that information. Retired in 1978 and died in 2021. Kathryn, did you apply for SBP and it is being offset by DIC? There are several reasons why you might want to continue having SBP coverage even if your husband is 100% disabled, including the Special Survivors Indemnity Allowance (SSIA), if the SBP benefit is larger than the DIC benefit, etc. I receive SBP with DIC offset and SSIA (which is changning I am happy to find out). And this all happened a long time ago. Retired 2010 Obviously, if your survivors take a chunk to pay off the mortgage, the resulting income would be proportionately smaller. If that marriage ends , the SBP annuity will resume. If you click on an advertisement or link, I may be compensated. Nancy, great service you are providing. DFAS requires notice by fax or by mail. Yes, the requirements for SBP to be paid in full are the same for everyone. How frustrating for you. If it is forced by the process, then another option may be needed. If I pass prior to meeting the 360 month payment period does my spouse still collect anything?? Will SBP payments be subtracted from her monthly payment until it is paid in full? If an annuity is the right tool for your income planning needs, the price for SBP can not be beat. /% J9G n`cc Y\ k_\i\ kf gifk\Zk pfli jgflj\ `] pfl i\dXiip% If you lose your spouse and your SBP premiums stop, you will be able to elect SBP to cover a new spouse if you remarry. My question is list my only son 36 years old now as beneficiary. Did your husband inform DFAS of his new marriage and continue to elect his former spouse as beneficiaries even though he was married to you? The issue of military pay for surviving spouses (widows or widowers) is confusing and a little challenging. You can also look at it as if the tax benefits are decreasing the cost of the premiums. It is my understanding this must be filed within one year of the divorce in order to officially initiate the SBP coverage for the former spouse. Any info you can provide would be helpful. We were advised that since he was medically retired that only 10 years had to be paid into SBP to receive the full benefit but that since he was deemed 100% disabled at the time of his medical retirement that he would only have to pay 5 years to receive the same benefit. Military lobbying groups like MOAA have made this a top priority and I think it is possible that it may happen. 1994 and he passed away in 2004. Thank you so much for responding because I dont know what else to do. The base monthly amount is $1,437.66 for all surviving spouses. Recently I applied to have the VA disability increased from 60% to 100%, which was approved. Every person has different factors to consider, but many families do have multiple insurance policies to meet different needs. What does your spouse think about all this? SBP gives automatic coverage, at no cost to service members, to anyone . Ive not heard of this situation. I have 2 children one of whom is severely mentally disabled. In the meantime, you can make arrangements for your SBP premiums to be made from your VA pay using Form 2891 or you can make payments directly to the VA using the address listed on this webpage. According to statement something was deducted. He was married to another lady when he originally elected to take SBP, although he says he felt forced to do it by his officers at that time without proper explanation of what it was all about. Both of these contribute to a higher premium and higher annuity benefit than was intended or may be needed. However, it would be unusual for a beneficiary to be in a higher tax bracket than the covered retiree. Who can I contact to try and help Dad. My father remarried and was married for 35 years until his spouse passed away in July 2020. My wife passed away two years ago. In particular, life insurance/survivor benefits and renting a house. If you elected the full SBP, the benefit is 55% of your retirement pay. It will make a tremendous difference to them," he said. Does military pay the whole premium if Veteran becomes 100% disabled and Veteran withdrawls? I am a guardian for a adult disabled child,his deceased dad was a 30 year lifer in the army, after his death he did have survival insurance,but I filed for dic and pension from VA,denied,did I filed wrong insurance?and if so what can I do? View on Amazon Military Guide to Financial Independence Best of luck to you making an adjustment to your taxes I hope everything works out well for you. The most frequently selected beneficiary is the spouse or former spouse, and the premiums for these two categories are the same. 1. The request must be received by DFASwithin one year after the date of the ex-spouse's death. I do wonder about the amount youve chosen. She was the mother of my two children. This could have been ordered in their divorce decree or could have been done voluntarily. Premiums for child coverage are based upon the age of the retiree, the age of the youngest child at the time of retirement, and the age of the spouse/former spouse, if combination coverage is selected. Great question! My child will be 22 and no longer eligible for the benefit in a few years. Yes, they are both food, but otherwise they not similar. Keep in mind that this premium is paid pre-tax, so the net effective cost is lower. Success! Finally made calls and thats when I learned that there would be back payments that needed to be calculated. "We thought it was common sense to ensure service members are able to pass their benefits on to their loved ones,." 2. Ive never paid anything into spb, but have been recieving Bills forever. 1. The value in SBP is the inflation adjusted, lifetime guaranteed income. It is my understanding that those bills would eventually be paid out of any beneficiary payments, but if all your kids have aged out, then you shouldnt be adding any new premium costs. Check with the Internal Revenue Service or DFAS for more information. https://www.retirees.af.mil/Library/Fact-Sheets/Display/Article/440093/spouse-only-sbp-coverage/. Im afraid the best advice I can give is to retain a lawyer and/or reach out to your elected representatives. Wed really appreciate it if you could find out how taxes are withheld on the refund. The check just showed up in the mail she told me at first she thought it wasnt real! As awful as it is to consider, you could be involved in a car accident or develop a completely unrelated medical condition during this time. SBP and Life Insurance do not compare equally, but SBP is a form of life insurance. There is no equity or return on investment while the insured retiree is alive. SBP (a portion of your retirement) will be paid with no questions asked to your spouse at least till he/she deceases. Or would SHE be liable to pay back the money? Can you look at your husbands past retiree account statements and see if the SBP premium deductions are reflected there? You are absolutely correct that term life insurance is often much less expensive than SBP, but they are very different products. Me, I wouldnt sleep well at night with a lump sum of money and the responsibility to make it last and to ensure that its value isnt eroded by inflation. Now check your email to confirm your subscription. Upon Loss of Spouse SBP spouse coverage is not terminated when a spouse loses eligibility (spouse dies or member and spouse divorce). Linda, there is no provision to change beneficiaries on SBP. First though they deduct taxes and then deduct any monthly SBP payments paid out while waiting for DIC to start. Secondly, there is no way out of the SBP after the 36 Month mark ? I can not emphasize enough how vitally important it is to thoroughly understand the Survivor Benefit Plan if a member of your family will remain in the military until retirement. The SBP program costs the federal government. Is it true that this benefit can be taken away from me?? The withholding tax rate is 30 percent of the payable annuity. So Im doing more research that I should have done prior to paying in. Please dont assume that you know the answer for every family. Unlike some other military benefits, only one spouse/former spouse may be covered by SBP at any time, and there are a web of rules regarding changes. My husband passed away back in December2017 and learned he did not elect to take out SBP when he retired in 1993. Have you reached out to DFAS for the answer to this question? Youre trying to get a refund of the SBP premiums that your father continued to pay after your mothers death? If you do not hear from me in a few days, please remind me! I am retired Navy. Im not sure he knew to do that. Like most insurance policies, the hope is that you never get to collect on the policy. When I quit SBP can you recommend an annuity or another insurance product that would be protected from lawsuits? His mother (my niece) died a couple years ago. My 81 yr old mom is not sure. When I elected to buy into the SBP I did it so my wife would continue receiving a portion of my retirement after Im gone. This is another way that SBP ensures that benefits are not diminished by inflation. Please do not worry you are covered! My question is I just recently found out I wouldnt be getting my husbands retired pension because he didnt elect to take out SBP when he retired from the military back in 1993 after serving 30 years in the Navy. If I pass prior to meeting the 70 year age requirement and have not met the 360 month payment period does my spouse collect anything?? Whatever is remaining DFAS will send to her in a lump sum amount. In addition, a compelling feature of SBP is the annual cost of living adjustment. Another question: my wife is ~8 years older than I. I understand that if I die before I turn 60 that she will being receiving SBP; what happens to my premiums if she passes before I do? Thank You for your input. Since the physical separation and while working through the agreement and court review before final decree, I was promoted and continued to drill. 4 0 obj You must pay premiums for SBP coverage once you retire. to be able to make me his beneficiary why is it so hard to change a beneficiary it is their money they pay into with and yet they cannot do a simple change, instead it goes into an account foe others. If married, the spouse is required to agree with the service members SBP choice to elect anything less than full SBP. How do I continue to provide SBP for my spouse, or does she lose that benefit despite these years of payments. My mother never received notice of her entitlement for RCSBP (could be they sent notice to an old address) and never knew she was entitled to it and neither did I until I read about it online recently. The chief complaint about SBP is the Dependency and Indemnity Compensation (DIC) offset. The reason for enrolling into SBP is to take care of your loved ones if you (military member) pass. 3. Hi! endobj It is hard at any age. I dont like that if my husband dies first I get nothing out of all of the premiums we paid to SBP which in my opinion is way to expensive for a 50% chance of getting nothing. Information was not immediately available onwhether or when DFAS will have revised procedures in place to implement the new law, or whether retirees will simply be able to submit a standard DD Form 2656-6, as they did before May2013. I strongly advise to NOT waste one nickel on an SBP. However, there are many reasons why you might still want SBP even if youll get DIC. For long-term income, there are a couple of significant risks to using a lump-sum payout. (And honestly, $20,000? This problem makes the DFAS SBP worthless. ***. I elected full SBP (55%) for my wife on retirement. My parents divorced in 1985. If your parents were already divorced at the time your father retired, your mother would not have received any notification because it is not required for former spouses as they dont have any inherent rights to SBP coverage. What would happen if they do not pay the 360 months? As discussed in a. Can we increase the deductible? The former spouse left the U.S. shortly after the divorce and I have had no contact with nor do I even know where she is located. If she dies after he retires (and before he dies), can he then name me as his beneficiary in her place? The request for the change originally came from defense officials, said Dustin Walker, spokesman for the Senate Armed Services Committee. Just curious did DFAS ever request repayment of your moms SBP since DIC gave back pay? This is a separate program from military retirement pay, and it requires certain actions and payment for the coverage after retirement. Widow brain is the fogginess that can occur after losing a spouse. If the retiree was not married at the time of their former spouse's death, but later marries, the new spouse can still be listed as the SBP beneficiary. Due to COLA, the actual payback period is significantly less than 3 years (exact time will vary depending on the various COLA during any individual timeframe.

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