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Author Topic: Survivor Benefit Plan (SBP) Update  (Read 11228 times)

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Offline DoggyDaddy

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Survivor Benefit Plan (SBP) Update
« on: August 15, 2007, 12:01:17 am »
 When a military retiree dies their retirement pay stops.
 This means that the surviving spouse  will be left without
 a substantial income source. If you are  considering retirement
 you need to give serious thought to
 how you can protect your spouse from the hardships caused
 by the loss your retirement pay.  One option available to
 you is the Survivor Benefit Plan (SBP). This is an insurance
 plan that will pay your surviving spouse a monthly payment
 (taxable annuity) to help make up for the loss of your
 retirement income.
The plan is designed to protect your
 survivors against the risks of your early death; your survivor
 outliving the benefits; and inflation. At retirement, full
 basic SBP for spouse and children will take effect
 automatically if you make no other valid election. You may not reduce
 or decline spouse coverage without your spouse's written
 consent. This means you will have to have your spouses input
 in the decision and his or her signature is required.  If
 you are divorced or not married than any future spouse can
 be signed up within one year of the marriage. 
 
    If you do not decline SBP you will be required to pay a
 monthly premium. If a marriage ends, the SBP premium
 payments are stopped when the retiree notifies DFAS. Premiums
 and benefits are based on the base amount or benefit level
 that you elect. Your base amount can be any amount from full
 coverage down to as little as $300 a month. Full coverage
 is based on your full retired pay meaning your spouse will
 receive 55% of your retirement pay. If you select lesser
 coverage then your spouse will receive 55% of your elected
 base amount.  A surviving spouse's SBP annuity is reduced when
 they reach age 62 and become eligible for Social Security.
 This is called the Social Security offset. In the past the
 offset reduced the SBP annuity to 35% of the base amount.
  Fortunately the NDAA of 2005 established a phase out of
 the offset.  This will increase the SBP offset percentage
 from the present 50 to 55% effective 1 APR 08. Categories of
 coverage are:
-   Spouse Only: Eligibility for this requires that a
 surviving spouse be a widow or widower who was married to a
 retiree at the time of his or her enrollment; or, if not married
 at the time of enrollment, was married to the deceased
 retiree for at least one year prior to the retireeís death; or,
 if not married at time of enrollment and was not married
 to the deceased retiree for at least one year prior to
 death, was the parent of issue by that marriage. Spouse coverage
 applies not only to the spouse a member has at time of
 enrollment, but also automatically to any subsequent spouse
 the member might acquire, unless the member elects to decline
 coverage for a subsequent spouse within one year of the
 date of marriage (concurrence of the subsequent spouse is not
 required, but that spouse will be notified of the memberís
 declination).
-   Spouse (or Former Spouse) and Child: SBP protection is
 expanded to cover an eligible child or children if there is
 no surviving spouse, or if a surviving spouse subsequently
 dies or becomes ineligible to receive benefits due to
 remarriage before the age of 55. Thus, if there is a divorce or
 if the spouse dies before the retiree, the full annuity will
 be paid to the eligible surviving child or children in the
 same manner as if the member had elected Child Only
 coverage.
-   Child Only: This option provides an annuity only for
 dependent children regardless of whether a member is married or
 not at time of enrollment (although a married memberís
 spouse must concur with a child only election). Children
 remain beneficiaries until age 18 or age 22 if a full-time,
 unmarried student. Children mentally or physically incapable of
 self-support remain eligible, while unmarried, for as long
 as the incapacitation exists. A member with no dependent
 children at time of eligibility to elect coverage may elect
 coverage for a child subsequently acquired, but the child
 must be added within one year of being acquired (born,
 adopted, etc.).
-   Former Spouse: A member who has a former spouse upon
 becoming eligible to elect a survivor annuity may elect
 coverage for a former spouse. If the member has more than one
 former spouse, the member must specify which former spouse is
 being covered. An election for a former spouse prevents
 payment of an annuity to a current spouse. A former spouse who
 was not a memberís former spouse on the date a member
 became eligible to participate in SBP must have been married to
 the member for at least one year in order to be named as a
 former spouse beneficiary.
-   Insurable Interest:  A member who does not have a spouse
 or dependent child when eligible to make a program election
 may elect to provide coverage for a person with an
 insurable interest in the member (such as, a business partner or
 parent). DoD defines an insurable interest as a natural
 person who has a reasonable and lawful expectation of financial
 benefit from the continued life of the participating
 member, or any individual having a reasonable and lawful basis,
 founded upon the relation of parties to each other, either
 financial or of blood or affinity, to expect some benefit
 or advantage from the continuance of the life of the retired
 member. If the election is for a person who is more nearly
 related than a cousin, no proof of financial expectation
 is required. An election for insurable interest coverage,
 for other than a dependent made by a member retiring on or
 after 24 NOV 03 under a military disability provision, who
 dies within one year after being retired due to a cause
 related to the disability for which retired, shall be voided and
 any premiums paid for that coverage will be paid to the
 person to whom the annuity would have been paid.

Like your retirement pay the SBP annuity is protected from
 inflation. Each year when retired pay gets a COLA, so does
 the base amount, and as a result, so do premiums and
 annuity payments.  Meaning that your premiums and annuity
 payments will increase with the COLA. These increases are
 determined by the previous year's Consumer Price Index and averages
 approximately 2.5%. For specific costs on your election
 refer to
 http://www.military.com/benefits/survivor-benefits/coverage-cost-and-benefits.
 NOTE: Survivors should report retiree deaths to the DFAS
 casualty office at 1(800) 269-5170. Faxes can be sent to the
 office at 1(800) 469-6559. 
[Source: NCPOA Don Harribine 2
 Aug 07 ++]
« Last Edit: December 01, 2008, 01:42:00 am by DoggyDaddy »
Joe Kleinsmith
All State VFW Post 1716 Cmdr (1998-2000)
Cpt, VFW Post Honor Guard, Retired (1991-2009)
SC-SB County Council Cmdr (1996-1997)
SFC, US Army, Retired (1971-1991)
Full Time RV'er
www.vfwwebcom.org/ca/post1716
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Offline DoggyDaddy

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SBP Paid-up Provision Update
« Reply #1 on: August 15, 2007, 12:24:35 am »
SBP PAID UP PROVISION UPDATE 03:  Effective 1 OCT 08

 Uniformed Services Survivor Benefit Plan (SBP) participants who
 reach 70 years of age and have made 360 payments (30 years),
 will no longer have to pay premiums for continued SBP
 coverage and will be placed in "Paid-up SBP" status.
Paid-up
 SBP provisions were mandated by the National Defense
 Authorization Act for fiscal 1999.  The law also established a
 paid-up status, also beginning on 1 OCT 08 for participants in
 the Retired Serviceman's Family Protection Plan once they
 reach 70 years of age. No action is required of SBP
 participants to be placed in Paid-up SBP status.  Once the
 eligibility criteria has been met, the Defense Finance and
 Accounting Service (DFAS) will automatically stop deducting
 premiums from qualifying military retired pay accounts. The law
 establishing Paid-up SBP does not allow for refunds of
 premiums paid before October 1, 2008, even though a retiree may
 have reached age 70 and made 360 or more premium payments.

      DFAS is currently developing changes to the military
 retiree pay systems that will monitor the number of SBP
 premiums paid and the age of the participant.  The system
 updates are targeted for a May 2008 completion date.  At that
 time, SBP participants who will be eligible for Paid-up SBP
 status on October 1, 2008, or will meet eligibility within
 a short time of the implementation date, will be notified
 by mail of their impending paid-up status.  Those military
 retirees who become eligible for Paid-up SBP status after
 the initial group will be notified of their SBP status on
 their DEC 08 annual Retiree Account Statements (RAS) that will
 note the number of premiums paid to date.  Each RAS issued
 after DEC 08, whether annually or as a result of a pay
 change, will include the Paid-up SBP premium ìcounter,î based
 on DFAS records, to help retirees monitor their eligibility
 status. More information on Paid-up SBP, including
 frequently asked questions and news updates, should be available
 at the DFAS Web site at www.dfas.mil/ retiredpay. html
 within the next several months.
[Source: DFAS Notice Aug 07 ++]
Joe Kleinsmith
All State VFW Post 1716 Cmdr (1998-2000)
Cpt, VFW Post Honor Guard, Retired (1991-2009)
SC-SB County Council Cmdr (1996-1997)
SFC, US Army, Retired (1971-1991)
Full Time RV'er
www.vfwwebcom.org/ca/post1716
http://vfwwebcom.org/ca/Post1716HonorGuard/

Offline Jerry P3150

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Re: Survivor Benefit Plan (SBP) Basics Update
« Reply #2 on: August 15, 2007, 09:16:37 am »
One additional item needs to be addressed about SBP.  If a service member declines to participate in SBP (after the service members death) the surviving spouse is no longer is eligible for a DOD Dependent Identification card.  So in addition to no money, it also means no commissary, no medical, no exchange privileges.
The barracks lawyers will tell you to not take out SBP and take the money saved and buy term life insurance. This is very bad advice.
« Last Edit: August 15, 2007, 10:08:30 am by Jerry P3150 »
Jerry Peterson
VFW Post 12101
Joined as a Life Member in 1994
National Aide-De-Camp (2006-2007)
National Aide-De-Camp (2010-2011)
SMSgt, US Air Force (Retired)
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Offline easingwr670

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Re: Survivor Benefit Plan (SBP) Basics Update
« Reply #3 on: August 15, 2007, 10:48:30 am »
I was in Germany when the SBP came out. It was found that NO insurance plan could beat the cost of the basic SBP so that is what most of us in Germany went with.
Richard C. "Dick" Easingwood
Past NC Administrator
VFW Member Since 1969
Life Member Since 1989(Gold Legacy)
District QM (6 Yrs Total)
District Inspector
Past Post QM (12 Yrs Total)
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Asst Inspector General (2007 til     )
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Offline DoggyDaddy

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Re: Survivor Benefit Plan (SBP) Basics Update
« Reply #4 on: August 15, 2007, 12:38:08 pm »
If a service member declines to participate in SBP (after the service members death) the surviving spouse is no longer is eligible for a DOD Dependent Identification card.  So in addition to no money, it also means no commissary, no medical, no exchange privileges.
Jerry, Unless you can quote a source of regulations changing, I will strongly disagree with you.  The SBP is not linked to the dependent ID card or other privileges.  Example: I declined the SBP as I was single and divorced, but my kids still had their ID cards and all the privileges that went. I wore the AG shield for 20 years on my uniform and did my share of retirement counsellings.   8)

Joe Kleinsmith
All State VFW Post 1716 Cmdr (1998-2000)
Cpt, VFW Post Honor Guard, Retired (1991-2009)
SC-SB County Council Cmdr (1996-1997)
SFC, US Army, Retired (1971-1991)
Full Time RV'er
www.vfwwebcom.org/ca/post1716
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Offline Jerry P3150

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Re: Survivor Benefit Plan (SBP) Basics Update
« Reply #5 on: August 15, 2007, 02:03:18 pm »
I left out a word.  The word is Reserve service member.  A Reserve member who serves and qualifies for a twenty year annuity  must make a SBP selection at that time  (even though the member may still serve in the Reserves after qualifying  for a twenty year annuity).
  An Active duty member makes the SBP selection at time of actual retirement (and receives retirement pay) not when he/she is eligible to retire.  Example: I was retirement eligible in 1986, but did not actually retire until 1998.  I could not receive retirement pay until 2006.  If I did not make a SBP selection in 1986 my wife would not have any benefits (pay, commissary, etc.) if I died prior to me reaching 60 years old and getting retirement pay.  Ever hear of "Grey Area" Reservists? This is a Reservist who has separated (retired) but has not reached age 60 years old yet (no pay).
Sorry for the confusion I caused.

 
Jerry Peterson
VFW Post 12101
Joined as a Life Member in 1994
National Aide-De-Camp (2006-2007)
National Aide-De-Camp (2010-2011)
SMSgt, US Air Force (Retired)
http://www.vfwwebcom.org/nv/post12101

Offline DoggyDaddy

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Re: Survivor Benefit Plan (SBP) Basics Update
« Reply #6 on: August 15, 2007, 02:18:11 pm »
Now I will agree with you.  My brother-in-law falls into that area as he is 59 and awaiting his money. Thanks for the clarification. 

The SBP has changed throughout the years to be fair and competitive with other pension insurance plans. There was a time that once you elected SBP you continued paying it even if your spouse died. 
Joe Kleinsmith
All State VFW Post 1716 Cmdr (1998-2000)
Cpt, VFW Post Honor Guard, Retired (1991-2009)
SC-SB County Council Cmdr (1996-1997)
SFC, US Army, Retired (1971-1991)
Full Time RV'er
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Offline DoggyDaddy

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Survivor Benefit Plan Automativ Coverage Options
« Reply #7 on: August 31, 2007, 12:11:41 pm »
DFAS reports that there appears to be some confusion regarding the application of the automatic coverage provision under the Survivor Benefit Plan SBP and the SBP options available to the military
 retiree after retirement.  The information below serves as guidance on these issues.
 
1.   Member with Beneficiaries at Time of Retirement:
Automatic SBP coverage applies only at retirement.  The automatic coverage provision does not apply to any situation which may occur after the memberís retirement date.  Automatic coverage does apply to any member who, on the date of retirement, 1) did not make a valid SBP election, that is, an election for full coverage, less than full coverage, or declined coverage; and, 2) has a qualified spouse and/or child beneficiary.

2.    Member with No Beneficiaries at Time of Retirement:
A member who has no eligible beneficiaries at retirement is not required to submit an SBP election.  Automatic coverage does not apply in this case since the member has no eligible beneficiaries.  However, if such member later acquires a spouse and/or child he may elect SBP coverage.  The member would have one year from the date of acquisition to make an election to cover the newly acquired beneficiary.  An election may be submitted by letter provided the intent to elect is clear and all information required for an election is provided.  A letter which only notifies us that the member has married does not constitute an election of SBP. Again, there is no automatic coverage for any spouse and/or children newly acquired after retirement.  In order to provide SBP coverage in this situation, the member must submit a valid positive written election which is received within the
 election period prescribed by law.

3.   Member Who Had SBP Coverage for Spouse and/or Child at Retirement:
A member fitting this situation who later loses a beneficiary will have SBP coverage suspended during the period in which there is no eligible beneficiary.  Should the member subsequently acquire a new beneficiary in the same class as was originally provided at retirement, the original coverage is reinstated for the newly acquired beneficiary.  Reinstatement of coverage is not the same as automatic coverage.  The reinstatement will happen when that person qualifies as an eligible beneficiary.  For a new spouse, it would be on the first anniversary date, or sooner, if a child is born of the marriage.  For a new child, it would be the date of birth (if a natural child) or the date of acquisition (if other than a natural child).

It should be noted that upon acquisition of a new spouse the member does have the option to either increase the level of coverage (base amount), or to terminate coverage.  Such a request must be made by the member before the first anniversary date of the marriage. 
[Source:  DFAS Retired Pay Newsletter Aug 07 ++]
Joe Kleinsmith
All State VFW Post 1716 Cmdr (1998-2000)
Cpt, VFW Post Honor Guard, Retired (1991-2009)
SC-SB County Council Cmdr (1996-1997)
SFC, US Army, Retired (1971-1991)
Full Time RV'er
www.vfwwebcom.org/ca/post1716
http://vfwwebcom.org/ca/Post1716HonorGuard/

Offline DoggyDaddy

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Re: Survivor Benefit Plan (SBP) Basics Update # 02
« Reply #8 on: October 14, 2007, 12:28:48 pm »
SBP BASICS UPDATE 02:

 A question raised by many older retirees is, "I've been paying into SBP for decades.  The government has made a lot of money on me.  Why can't I get some of that money back after all these years?"  On the flip side, those nearing military retirement want to know "Is SBP really worth it?  It seems awfully expensive - how much bang for my buck am I going to get?" Anyone who thinks the government is making money on SBP is way off-base.  As shown in the premium vs. payment chart at http://www.moaa.org/lac_issues_fully_retired_sbp.htm for the years 1985 though 2006 the government has paid out more than twice as much in SBP benefits to survivors than it collects in retiree premiums.  And that difference will continue to grow, since we recently won a benefit increase for survivors age 62 and older. For members retiring after 20 or more years of active duty, the government expects that the average retiree's lifetime SBP premiums will only cover about 60% of the average benefits that will be paid to the retiree's survivor. 

That means three things:

ï   Your SBP benefit is 40% subsidized by the government to help recognize the value of your service...(much different than the negative subsidy of civilian insurance, for which premiums must cover 100% of benefit costs, as well as company overhead, salaries, commissions, and profit).

ï   Much like Social Security, every dollar you pay in SBP premiums goes toward paying part of the benefit for someone elseís survivor, just as other retirees' premiums will help fund your survivor's benefits in the event of your death.

ï   Any civilian insurance that provides cash back if you don't die is going to cost you a lot bigger premium per death benefit dollar (and we don't know of any civilian insurance that provides a fully inflation-protected annuity like SBP does).

[Source: MOAA Leg Up 5 Oct 07 ++]
Joe Kleinsmith
All State VFW Post 1716 Cmdr (1998-2000)
Cpt, VFW Post Honor Guard, Retired (1991-2009)
SC-SB County Council Cmdr (1996-1997)
SFC, US Army, Retired (1971-1991)
Full Time RV'er
www.vfwwebcom.org/ca/post1716
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Offline DoggyDaddy

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SBP Paid Up Provision UPDATE 04 JAN 08
« Reply #9 on: January 15, 2008, 03:21:26 am »
SBP PAID UP PROVISION UPDATE 04:

1) What is Paid-up SBP?  Paid-up SBP refers to a provision
 of the Survivor Benefit Plan (SBP) law passed by Congress
 in OCT 98and which is due to take effect in OCT 08. This
 change in the law applies to qualified members who will no
 longer be required to pay SBP premiums once they satisfy
 certain age and premium payment requirements.

2) Who is eligible to have their SBP premiums stopped? Any
 retiree who is age 70 or older and whose retired pay has
 been reduced for SBP premiums for at least 360 months will
 qualify to have their SBP costs terminated.

3) Are retirees with Reserve Component SBP (RCSBP) coverage
 eligible? Yes. Any reference made to SBP premiums also
 includes RCSBP premiums.

4) Is a retiree who has paid SBP premiums for 360 months or
 more but has not reached age 70 eligible to have premiums
 terminated? No. In order to qualify for the termination of
 SBP premiums, a retiree must satisfy both requirements of
 the law. The retiree must be age 70 or older and made
 payments for at least 360 months of SBP costs.

5) Does the termination of premium payments also apply to
 retirees with RSFPP coverage? Yes. Congress amended the law
 in OCT 99 to include Retired Servicemanís Family Protection
 Plan (RSFPP) participants. Any retiree who is age 70 or
 older and currently enrolled in the RSFPP is eligible to have
 their RSFPP costs terminated.

6) When does Paid-up SBP begin? The earliest effective date
 that a qualified retiree may stop paying SBP premiums is 1
 OCT 08. The first retired pay payment affected will be the
 payment dated 1 NOV 08.

7) What if the retiree has paid more than 360 months of
 premiums before 1 OCT 08? Will there be a refund? No. There
 will be no refund of excess premiums paid prior to the 1 OCT
 08, effective date of Paid-up SBP.

8) When will SBP premiums stop for retirees who reach age
 70 and have paid 360 months of premiums after 1 OCT 08?
 Retirees who fall into this category will not be charged SBP
 premiums beginning with the month they reach age 70 and have
 paid 360 months of premiums.

9) How will the 360 months of paid-up premiums be
 determined? The retiree will receive a one-month credit for each
 month retired pay was reduced. This will be determined by
 using both current election records and historical records of
 the initial SBP election.

10) What if the retiree does not have 360 months of paid-up
 premiums on 1 OCT 08? A retiree who does not have 360
 months of paid-up premiums on 1 OCT 08 is not eligible to have
 the SBP costs stopped. In these cases the retiree will
 receive an additional one-month credit for each month retired
 pay is reduced until 360 months of paid premiums is reached.

11) What if the retiree does not have SBP costs deducted
 from retired pay but pays by direct remittance? For the
 purpose of computing the number of months of retired pay
 reductions, direct remittance payments shall apply as if retired
 pay was reduced.

12) Will retirees be notified of their paid-up status?
 Notices will be mailed to retirees informing them of the number
 of months of coverage that have been credited to their
 account toward paid-up status.

13) When will retirees receive notification from DFAS?
 Details regarding a retireeís personal account will not be
 ready for release until May 2008. DFAS will begin the
 notification process at that time.

14) Who can expect to receive notification letters from
 DFAS in May 2008? Retirees enrolled in either the SBP or RSFPP
 programs that are at least 68 years of age or have been
 retired and paying premiums for at least 27 years will
 receive notification letters in MAY 08.

15) What type of information will be provided in the
 notification letter? The notice retirees will receive will
 provide Paid-up SBP information as well as specific information
 about their account, the number of months of paid-up
 premiums and their current paid-up status. The notice will also
 instruct retirees of the right to challenge their paid-up
 status if they disagree with the number of months of paid-up
 premiums calculated by DFAS.

16) What if the retiree does not agree with the number of
 months of coverage provided on their notice? If the retiree
 does not agree with the number of months of coverage
 credited to their retired pay account the retiree will have the
 option to prove differently.

17) What information must the retiree provide to have their
 months of coverage adjusted? The retiree must submit DD
 Form 2656-11, ìStatement Certifying Number of Months of SBP
 Premiums Paid.î In addition, the retiree may be requested to
 provide documentary evidence for each month of Paid-up SBP
 credit claimed. Upon receipt of the DD Form 2656-11, DFAS
 will review and adjust the retired pay record to reflect
 the number of months that the retiree certifies has been
 paid.

18) Can the DD Form 2656-11 be filed at any time? No.
 Retirees who elect to submit a DD Form 2656-11 must do so within
 one year after initial notification of the number of
 months of Paid-up SBP credited.

19) How often may retirees challenge their paid-up status
 by filing a DD Form 2656-11? Retirees will be permitted to
 challenge their paid-up status only once. They will not be
 permitted to submit multiple forms to DFAS.

[Source: Retiree Activities Office 314AW/CVR 7 Jan 08 ++]
Joe Kleinsmith
All State VFW Post 1716 Cmdr (1998-2000)
Cpt, VFW Post Honor Guard, Retired (1991-2009)
SC-SB County Council Cmdr (1996-1997)
SFC, US Army, Retired (1971-1991)
Full Time RV'er
www.vfwwebcom.org/ca/post1716
http://vfwwebcom.org/ca/Post1716HonorGuard/

Offline DoggyDaddy

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DIC+SBP UPDATE 04:
« Reply #10 on: July 31, 2008, 06:53:24 pm »

 The husband of Anne Parks-- a military
 policeman exposed to the defoliant Agent Orange during two
 tours in Vietnam -- paid 30 years of premiums on their
 Defense Department Survivor Benefit Plan (SBP) insurance
 policy the couple believed would allow her to pay the bills and
 live comfortably after his death.  When he died in 2006,
 Parks learned that the law allows the government to
 significantly cut -- and in many cases eliminate -- that Defense
 Department insurance payment if the surviving spouse elects to
 receive a Veterans Affairs benefit (DIC) established to
 compensate for the loss of a family member whose death was
 service-related. DoD refunded the Parks' premiums, but it
 paid no interest on the money, which was counted as income and
 taxed. Called an "offset," the dollar-for-dollar cut was
 created to limit how much compensation payments cost the
 government.  Nearly 57,000 surviving spouses of military
 retirees argue that the benefits are separate. One is insurance,
 bought and paid for through premiums, and the other is a
 federal benefit for surviving dependents.

      In most cases, surviving spouses were unaware they
 wouldn't get that money after their husbands or wives died.   :(
 The offset has forced some elderly surviving spouses to live
 solely on the VA benefit -- with a base rate of about
 $13,100 a year -- or to get a job to make the rent or house
 payments. Eliminating the offset between the SBP and DIC
 programs is estimated to cost between $6 billion and $8 billion
 over the first 10 years, an argument used by some people
 who oppose eliminating the offset. "That cost is a cost of
 war," said Jeanne Thompson, president of the El Paso del
 Norte Chapter of the Gold Star Wives of America. "They don't
 mind spending money" on equipment and operations in Iraq and
 Afghanistan.  The Gold Star Wives have been at the
 forefront of the effort eliminate the offset.  "They (members of
 Congress) don't feel they need to find the money because
 we're not a very vocal group," said Edith Smith, a Virginia
 resident who is on the Gold Star Wives Government Relations
 Committee and has been trying to persuade lawmakers to remove
 the offset since 1999. "Most of our members don't
 understand the process of government and how important it is to participate
--just to call their representatives in Congress."

       Legislation has been introduced in the past years
 and amendments to the NDAA have been proposed but neither has
 gained the support of enough legislators to change the
 law. Currently S.935 in the Senate has 50 cosponsors but even
 if it passes it is doubtful the House, which has no bill on
 the issue, will act by the end of the 110th Congress.
 Thus, new legislation will have to be introduced in the 111th
 Congress to keep this issue alive. SBP, for the most part,
 is offered to military retirees who pay a monthly premium of
 6.5% of their retirement pay. It is supposed to provide
 the surviving spouse up to 55% of that retirement pay. After
 the 911 terrorist attacks, the benefit was expanded to
 include military members who die on active duty.  DIC is paid
 to surviving dependents of service members who die on active
 duty and military retirees who die of a service-related
 condition. The basic payment is $1,091 a month. If the
 surviving spouse elects to receive this benefit, that amount is
 deducted from the SBP payment, in some cases wiping it out
 completely. Most surviving spouses choose the VA's DIC
 benefit because it is not taxed. The Defense Department annuity
 is.

     Anne Parks' husband died of pneumonia after paying 30
 years of SBP premiums. His death was considered
 service-connected.  It took eight months to be approved for the VA
 benefit, and she was paid retroactively to the date of her
 husband's death.  But that triggered cuts in her SBP payments,
 which took her by surprise. The Defense Department paid
 her a lump sum of $24,000 for the 30 years of premiums the
 couple had paid, and the federal government immediately took
 $7,000 of that back in taxes. The cuts to her SBP payment
 amounted to about $1,100 a month, she said. "It seems that
 it's unfair because they give it to you and then they take
 it away," Parks said.  >:( Melitta Pisarcik's husband died at
 the relatively young age of 57. He had been exposed to Agent
 Orange. She received a refund of $5,000 for payments to the
 Survivor Benefit Plan, which was taxed. "What happened to
 the interest?" ???
Pisarcik asked, adding that she was faced
 with living on $833 a month.   
[Source:  El Paso Times Chris Roberts article 27 Jul 08 ++]
Joe Kleinsmith
All State VFW Post 1716 Cmdr (1998-2000)
Cpt, VFW Post Honor Guard, Retired (1991-2009)
SC-SB County Council Cmdr (1996-1997)
SFC, US Army, Retired (1971-1991)
Full Time RV'er
www.vfwwebcom.org/ca/post1716
http://vfwwebcom.org/ca/Post1716HonorGuard/

Offline DoggyDaddy

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Survivor Benefit Plan (SBP) Lawsuit Update
« Reply #11 on: December 01, 2008, 01:41:16 am »
SBP LAWSUIT UPDATE 04:   The government is appealing a recent decision by the U.S. Court of Federal Claims that found DoD unlawfully had withheld $150,000 combined in survivor benefit payments from three military widows. If the claims court decision stands — as advocates for the widows think it will — DoD would be forced to restore full Survivor Benefits Plan (SBP) payments worth millions of dollars to several hundred surviving spouses. The surviving spouses with a stake in the outcome all remarried after age 57, which made them eligible, under the Veterans Benefits Act of 2003 [Public Law 108-183] to have their Dependency and Indemnity Compensation (DIC) restored by the VA. But the widows argued successfully to the claims court that the same law did something more; it exempted them from the dreaded dollar-for-dollar reduction in SBP payments that occurs if they also elect to receive DIC. The widows contend that Congress made them the first group of surviving spouses eligible for “concurrent receipt” of DIC and SBP, thus taking a first step five years ago toward eventually eliminating the DIC-SBP offset for up to 44,000 surviving spouses. At the claims court last June, Judge George W. Miller ruled that the facts and the law support the widows’ argument that the 2003 law “partially repealed” the SBP-DIC offset, targeting widows eligible who remarry after age 57. Here is some background to understand the ruling.

•    Under SBP, military retirees forfeit a monthly premium so that, if they die first, their surviving spouse, or a dependent child, will continue to receive up to 55 percent of their retired pay as an SBP annuity. Some of these same survivors also qualify for DIC — monthly compensation from the VA payable to surviving spouse if a servicemember dies while on active duty or a military retiree dies of a service-related disability.
•     The long-time hitch for surviving spouses eligible for both SBP and DIC is that to elect to draw tax-free DIC, they must agree to have their SBP reduced by an equal amount. The basic DIC rate is $1,091 a month, with more added for each dependent child. Accepting DIC suspends SBP entirely for many widows.
•    Before Dec. 16, 2003, eligibility for DIC ended when a surviving spouse remarried. The Veterans Benefits Act of 2003 modified that rule, allowing DIC to continue or to be restored from that date forward, if the remarriage occurred when a surviving spouse was age 57 or older. This change made more than 12,000 widows eligible again for DIC — if they knew to apply for it.
•    Advocates for military widows said the 2003 law intentionally was worded so that widows who remarried after age 57 would be the first to receive both SBP and DIC. But DoD pay officials and lawyers interpreted the law so that all surviving spouses continued to have their SBP reduced or wiped out by their restored DIC.
•    In July 2007, three widows, backed by the Gold Star Wives of America, filed their claims court lawsuit. In June, Judge Miller ruled in their favor, saying Patricia R. Sharp, remarried widow of an Army brigadier general, was owed nearly $74,000; Margaret M. Haverkamp, remarried widow of a retired Army lieutenant colonel, was owed $46,300; and Iva Dean Rogers, remarried widow of an Army master sergeant, was owed nearly $32,400.
•    Government attorneys have said they will appeal that decision. Their appeal brief is due to the U.S. Court of Appeals for the Federal District by Nov. 21. They will argue anew that Congress didn’t intend, in passing the 2003 law, to allow concurrent receipt of SBP and DIC for such a narrow class of surviving spouses, those who remarry after age 57. Even if Congress had that intention, they will argue, the law is written too ambiguously to allow concurrent receipt.

Michael R. Franzinger, a lawyer representing the widows, says he is confident the appeals court will uphold Miller’s 25-page opinion, which persuasively details how Congress intended the law to be interpreted: to shield these remarried widows from any reduction in SBP when their DIC was restored. Indeed, this columnist confirmed this intention of members and staff of the House Veterans’ Affairs Committee in JAN 04. Rep. Henry E. Brown Jr. (R-S.C.), then chair of the personnel subcommittee, says: “We put a special paragraph in there to, basically, get [DoD] to do that. This was to get the camel’s nose under the tent, sort of like we did with concurrent receipt” for disabled retirees. Judge Miller referred to Brown’s quote in his opinion, though he relied on legal arguments for his actual opinion.  “They’ll wait until we die,” says 83-year-old Rogers, with a laugh, when told it could take another year to get a final decision on the government’s appeal. “I believe it will eventually come through. My husband fought in three wars, and he was confident I would be taken care of. … I’m not going to give up.” Franzinger said the government won’t restore any of the disputed SBP payments until its appeal is exhausted. But it likely will have to pay the widows interest back to the June date of Miller’s original ruling.
[Souce: MOAA News Exchange Tom Philpott article 5 Nov 08 ++]

Joe Kleinsmith
All State VFW Post 1716 Cmdr (1998-2000)
Cpt, VFW Post Honor Guard, Retired (1991-2009)
SC-SB County Council Cmdr (1996-1997)
SFC, US Army, Retired (1971-1991)
Full Time RV'er
www.vfwwebcom.org/ca/post1716
http://vfwwebcom.org/ca/Post1716HonorGuard/