SBP benefits are taxable to the recipient, whereas life insurance proceeds are generally non-taxable. Everything I read says you can receive dic and SBP is ofser. 1-Spouse: The surviving spouse is the beneficiary of RCSBP upon the death of the Soldier/Retiree. However, there are many reasons why you might still want SBP even if youll get DIC. Thanks for all of the information you have provided. 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. If it was not paid to you automatically when it was determined that your SBP would be offset by DIC, then Im thinking the next step would be to contact DFAS through one of these methods. The withholding tax rate is 30 percent of the payable annuity. His mother (my niece) died a couple years ago. My Mother passed away in August of 2006, and my Father, a retired Veteran, passed away at the end of December 2017. Have you ever heard of something like that? The benefit drops from 55% to 35% assuming the spouse elects to receive social security. Im asking around. The years they were married or the time between their passing? Provided your divorce decree does not require you to provide SBP coverage, you may cancel your coverage. blessings Yes. 2. The request must be received by DFASwithin one year after the date of the ex-spouse's death. Which one will be off-set, and how? Other issues related to the death of a FS, such as what can happen to a FSs Survivor Benefit Plan (SBP) can be found by clicking here. There is also a little counter at the bottom of the RAS that shows how many months of premiums have been paid. There is one regular opportunity to cancel your SBP coverage after retirement. A veterans service organization will often help with this and services are free. How Does the Servicemember Recoup the Former Spouses Share of Retired Pay if the Former Spouse Dies First? SBP payments are not reduced by any other source of income (except for Dependency and Indemnity Compensation. Mr. Mann, you can continue your SBP coverage by electing to have the SBP premiums deducted from your VA disability compensation or by paying the premiums directly. With the passage of the new law, he said, "a terrible wrong has now been corrected. She never received SBP prior to. This much be very difficult for you. Thank you! Instead of throwing my hands up I am considering trying to get some kind of life coach training to be able to assist other military wives that are transitioning into retirement-it feels like it is more difficult than it needs to be and I often wish there were more people like you to turn to for questions that just dont make you want to call the assigned number, talk to a computer, be transferred ten times and annoy someone until they are finally willing to help. I strongly advise to NOT waste one nickel on an SBP. Subscribe now for my newsy emails, which come about once every two weeks. With each adjustment in base amount, there is a corresponding adjustment in premiums and benefit payments. Did your husband inform DFAS of his divorce and elect to continue former spouse coverage on his ex-wife. And what kind of documentation should I submit? We have since been married for 28 years. 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. Also keep in mind that life insurance vs. SBP is not an either-or question, nor is it an all-or-nothing question. I elected full SBP (55%) for my wife on retirement. The benefit amount is based on the amount of retirement pay that you choose to cover anywhere from $300 to the full amount of retirement pay. Elected SBP for spouse. Gabriel, there are a couple of things going on here, but regardless he wont have wasted his money paying for SBP. Phil Odom, deputy director of government relations for the Military Officers Association of America, said that DFAS had allowedSBP transfers after the death of a former spouse from the time SBP was created in 1972 until the agency changed its interpretation of the law more than 2 years ago. Heres hoping you can clearify this (possibly) unusual situation for me. Unless you have a $1.5M house, why would you require a $1M term life policy to pay it off? One of the biggest misconceptions out there may be the belief that little needs to be done and the vast majority of the work . For spousal coverage, the monthly premium is the lesser of: For example, $3000 of base amount covered would require a $195 monthly premium for spouse or former spouse coverage. SBP benefits are tied to the beneficiary. Now if you have already been receiving the DIC payments, youre only going to receive one of the benefits fully unless you elect child only, advisable if your kids are still young but know that it ends after college. Generally, the lump-sum is paid to the surviving spouse who was living in the same household as the worker when they died. They are digging in their heels more and more now due to budgetary problems. If Your Former Spouse Dies and You Are Retired Under CSRS or FERS Call OPM to report the death of your former spouse. Partial Survivor Benefit: Your spouse receives 25% of your unreduced FERS pension, if you pass away first in retirement. 2022 Kate Horrell and Kings High Media. So grab a cup of coffee, tea, or whatever makes you happy, and let's get to know each other. Sending prayers to your wife and you during this difficult time. They are what they are. (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.) My suspicion is that spousal consent came into effect after 1982, but I am not sure and Im surprisingly having a hard tie pinning down the date. The SBP can be assigned to a former spouse as part of divorce proceedings. I retired as a Colonel (O6) with 30 years of service. I am the kind of person who wants to understand and to have the answers when my husband asks me what these things mean. The portion of your late spouse's Social Security that you can collect rises from 71.5 percent if you file at 60 (or during your 50s if you are disabled) to 100 percent at your full retirement age. The primary and important difference is that you can not outlive SBP coverage. If that marriage ends , the SBP annuity will resume. This site does contain advertising and affiliate links. 1. Maximum Survivor Benefit: Your spouse receives 50% of your unreduced FERS pension, if you pass away first in retirement. If not the military is there an actual insurance company that runs the annuity? The SBP-Social Security offset was eliminated in 1986one less thing to worry about! Longevity risk is a serious issue with lump sum payouts or investments. Your monthly pension is reduced by 10%. In addition to the regular 25th to 36th month option, you also may withdraw from SBP once you hit the 5 year/10 year milestone discussed above. You say you were not paid the right amount of SBP. If the veteran withdraws from the SBP program, there is no premium so no one is paying it. In fact, Im pretty thankful that I havent been involved in a situation that required a claim. For many people, it lasts between 6 and 12 months, but not everybody experiences it, and sometimes it goes on for longer. % The amount of SBP is offset, or reduced, by the amount of DIC received by the beneficiary. My question is this 2. Im unaware of any other situation in which premiums are refunded. Using that rule, if your heirs invested the full $1M, they would probably be able to take $40,000 in income each year and would probably not run out of money. I have read that I may receive prorated SBP premium refunds. This is a huge problem and its getting worse. First is the ability of the beneficiary to manage the lump sum while dealing with grief. I raised him as single parent throughout career. When I buy food, it isnt a loss, its trading money for a goods or service. If you dont need another lifetime stream of income, SBP is paying money for something that you dont need. The only conversation I remember is someone sold him a VGLI which at the time was less than 6.5% SBP premium he would have paid. It is an annuity. My question is: If he passes away before me, will I have to pay this, or will they deduct it from my DIC payments, or can we just keep ignoring the bills and just withdraw next year after the 10-yr. mark? (I dont know how thats coded on your paperwork.) The most frequently selected beneficiary is the spouse or former spouse, and the premiums for these two categories are the same. To continue SBP coverage for a former spouse, either (a) the retiree must voluntarily request coverage be continued for the former spouse, or, (b) the former spouse must request the coverage (but she/he may do so only if a court order requires the coverage). Can you give me any advice on what to do? Thank you, Shellie (daughter). Im sure you mean well, but please, show all the facts. We received notice that the premium cost would have to be refunded. Pat, Im sorry to hear that this has turned out this way. 1994 and he passed away in 2004. Now Im just waiting on the denial letter from DFAS for my claim so I can appeal. "I've been waiting and waiting and waiting," said Brown, 90. Author Jim Cramp is a retired active duty colonel and the founder and principal attorney at the Cramp Law Firm . Thanks! I hope that helps; please let me know what happens and if I can do anything else to help. Feel free to send more! The SBP-Social Security offset was eliminated in the 2005 National Defense Authorization Act. Will I get SBP? I gave too many briefings to widows of recent retirees who didnt elect SBP or VGLI and a $400,000 insurance policy usually is not enough to pay off a mortgage, other bills and future college. I worked for one for a few years, and this same scenario happened in our office twice! They were separated but not divorced. Now check your email to confirm your subscription. Putting children on the plan (minors only, or under 22 if students) in inexpensive and may be worth it. The base monthly amount is $1,437.66 for all surviving spouses. The number for Casualty Affairs Headquarters for your husbands branch of service can be found on Google. You would almost definitely know if this had happened. When my children reach age 22, will my monthly premiums be reduced (since they will no longer be covered)? Cant find gov info on that particular subject. SBP coverage would then be the only coverage. If military retirement pay is a small part of your overall income strategy, then SBP may not be right for you. The value in SBP is the inflation adjusted, lifetime guaranteed income. Kate <> This means less tax and less out-of-pocket cost for SBP. We cover a little bit of everything. Since she didnt file the paperwork in time I was told by DFAS that I would receive the annuity. Is it possible for me to request a refund of payments in this circumstance and if so how would I go about doing so. Here at the blog, I talk about the financial issues that affect military families - pay, allowances, and benefits. My goal is to give you the tools to make the best decisions right now, so you'll be confidently prepared for whatever comes next - whether that's a PCS move, transition to civilian life, or retirement. Survivor: For most widows and widowers, the earliest age of eligibility for survivor benefits is 60 (50 if you are disabled). First though they deduct taxes and then deduct any monthly SBP payments paid out while waiting for DIC to start. Just curious did DFAS ever request repayment of your moms SBP since DIC gave back pay? It is very important that retiring service members and their spouses understand all the aspects of SBP so that they can make the right election at the time of retirement. I realize that this is an uncomfortable thing to say, but I probably will not have the opportunity to chat with you again. Especially the United States DOD. worked for 30 years in the Marine. Father died oct 2014. First, the standard deduction for married filing jointly in 2021 is $25,100 in 2020. Does that make sense? Im not sure he knew to do that. Thank you for your explanations- These matters can be so confusing. Is there anything she can do? I have been looking around some websites like DFAS, Military.com, DODWarrior to name a few and have found that upon retirement the spouse has to consent in writing to reduce coverage or elect no coverage, I have not found any paper work showing that my mother made this election nor have I found a SBP election certificate (DD-1883). My husband hasnt made an SBP payment since he was declared 100% P&T disabled in 2009. Frankly, I think he may have been unaware. 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? can you answer this question for a follow vet? I m not planning on remarrying due to my poor health. Im a little surprised that the lawyer is willing to take on the case, but I often dont understand the things lawyers choose to do. Kings High Media/KateHorrell.com is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com. This nice lady was not bitter and still talks of fondly of her military memories. Im not sure if the retirement officer told you the wrong information, or explained it in a way that was confusing. However, there is no return of premiums if you withdraw from the plan vs. return of premiums if you continue with SBP and your survivors are impacted by the offset. No, a spouse does not automatically inherit everything in Scotland. If that sounds confusing, we get it! I dont know of anyone who has dealt with this situation. Im guessing that I will still be making this payment in my early 90s. I did not know about the offset until his death. stream The VA though was aware that my Mother had passed as I applied in 2015 for Emergency Financial Assistance for my Father. They seem to struggle with international issues. I calculate that an O-5 retiring at 31 years of service will receive approximately $5574 in retirement pay if retiring under the High 3 system. It was only for my kids, and when I signed up for it I had no clue what I was doing. I elected SBP when I retired in 1977 and am now 82 years of age. 2. Are you asking if the premiums must continue to be paid if the insured dies? Theres another whole book in that, but definitely read up! Required fields are marked *. You must pay premiums for SBP coverage once you retire. You may also keep in mind that if a survivor is subject to the SBP-DIC offset, they will receive a refund of the premiums paid for the amount that is offset. Thanks for clarifying. For example, if someone paid $20,000 into SBP over 30 years and became eligible for DIC then DFAS will do a cost of refund. One downside to SBP coverage is that you do not have the choice whether to pay premiums with pre-tax or post-tax money. The chief complaint about SBP is the Dependency and Indemnity Compensation (DIC) offset. My husband retired in 1993 and I pulled out all of his retirement papers and and there is no forms with my signature on anything giving up my rights to SBP or form of any sort to SBP. Now my sbp benefit was forfeited (expires). What do you think? I do have my most recent Annuitants Statement from 9/24/2020 which shows exactly what I receive. Hi Kate, Added to this difficult time often is the additional stress of not fully understanding what should or should not be done with your significant other's estate. (The numbers vary, and that is rounded.) (There are a couple of other categories, but it doesnt sound like your friend falls into them.) My youngest attends college full time and will turn 22 in 2 months(december). That depends on your situation. But that was it. Because DIC benefits are non-taxable, the net income is higher than if just SBP were received. If a recipient of SBP remarries, payments will stop. He was a 30 year Navy Vet serving from 1948 to 1978. Someone called once and she answered some additional questions. SBP is like insurance there is no refund of premiums. And what kind of documentation should I submit? I wrote an entire post about the SBP-DIC offset here: Understanding The SBP-DIC Offset. They havent been paid out of your retirement pay or your disability compensation? Since he is not longer eligible for benefits, what happens to the money I paid into the plan for 15 years? It is very important that retiring service members and their spouses understand all the aspects of SBP so that they can make the right election at the time of retirement. I have been told that SBP payments and Social Security survivor benefits may affect one another. Premiums paid vs SBP received? My 83 yr.old mother sent in form 2656-1 and was just denied and we have 30 days to appeal. The Survivor Benefit Plan (SBP) is a program through which the Department of Defense provides monthly, cost-of-living-adjusted income to eligible survivors of Soldiers who die on Active Duty in the line of duty, including Reserve Soldiers and National Guard Soldiers who die on Federal Active . Make your plans with the rules as they currently exist, and deal with changes if they occur. 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