20 Jan Survivor Benefit Plans: Congress Approved Open Enrollment Through the End of 2023
Congress passed significant, but temporary, changes to military Survivor Benefit Plan.
Survivor Benefit Plan (SBP) protects a spouse or former spouse’s interest in a service member’s military retired pay. Without SBP, a spouse’s interest in the military retired pay extinguishes when the service member dies. Previously, congress/DFAS imposed strict guidelines when SBP could be requested: generally within one year of the Court order award SBP and prior to the service member’s retirement.
This strict timeline can result in some spouses not being awarded SBP when the deadline was missed. However, the 2023 National Defense Authorization Act (NDAA), signed by the President on December 23, 2022, short about year, reopens the window for military members to elect their spouse or former spouse to receive SBP.
If you, as prior or active service member or a spouse/former spouse of a service member missed the opportunity to elect SBP, may want to consider the benefits (or drawbacks) of SPB enrollment during the 2023 Survivor Benefit Plan (SBP) Open Season.
The SBP Open Season begins on December 23, 2022 and ends on January 1, 2024.
It allows retirees receiving retired pay, eligible members, or former members awaiting retired pay who are currently NOT enrolled in SBP or RCSBP (Reserve Component Survivor Benefit Plan) to enroll their spouses into SBP. For a member who enrolls during the SBP Open Season, the law generally requires that the member will be responsible to pay retroactive SBP premium costs that would have been paid if the spouse/former spouse was timely enrolled in to SBP.
The SBP Open Season also allows eligible members and former members who are currently enrolled in either SBP or RCSBP to permanently discontinue their SBP coverage. However, the law requires the covered spouse beneficiaries to concur in writing with the election to discontinue. However, previously paid premiums will not be refunded.
The Department of Defense and DFAS are working to prepare the forms, policies, and processes required to facilitate this SBP Open Season. To obtain additional information regarding the new law and SBP Open season, please see the following links.
What is a Survivor Benefit Plan (SBP)?
The Survivor Benefit Plan is like a life insurance policy which can provide income to a surviving spouse upon the death of the retired service member. It is a Department of Defense sponsored and subsidized program that provides up to 55 percent of a service member’s retired pay to an eligible beneficiary upon the death of the member. The program provides no-cost automatic coverage to members serving on active duty, and reserve component members who die of a service-connected cause while performing inactive duty training. In addition, active-duty members can purchase coverage upon retirement and reserve component members can elect coverage when they have 20 years of qualifying service for reserve retired pay.
If you are going through a divorce and either you or your soon-to-be-ex spouse has or is eligible to receive an SBP, you should consider the pros and cons of SBP and the requirements to select SBP. For example, in divorce cases, a Court order might be required to compel service member to elect SBP. That Order will require specific language to provide award the spouse/former spouse SBP.
SBP Costs (Premiums)
According to DFAS, https://militarypay.defense.gov/Benefits/Survivor-Benefit-Program/Costs-and-Benefits/Spouse-Coverage/, in 2023, the SBP premiums for spouse coverage are as follows:
- 5% of your chosen base amount, or if less,
- 5% of the first $725.00 of the elected base amount (referred to hereafter as the “threshold amount”), plus 10% of the remaining base amount.
As of January 1, 2010, the threshold amount was $725.00 For new retirees, the threshold amount increases at the same time and by the same percentage as future active duty basic pay. For existing SBP-electing retirees, it increases with future COLAs.
If you became a member of a uniformed service on or after March 1, 1990, and you are retiring for length of service (not for disability), and you are not retiring under reserve retirement, SBP costs will be calculated only under the formula in (1) above. Otherwise, it will be the lesser of (1) or (2).
The following table shows the costs associated with several “base amount” options and the benefits your spouse will receive based on these options.
SBP and Other Divorce Issues – Spouse Remarriage
If the former spouse remarries before age 55, the former spouse will lose his/her eligibility to receive SBP during their remarriage. A former spouse may remarry after age 55 without losing his/her SBP eligibility. As service member, if your former spouse was not awarded SBP, and you remarry, you may elect SBP for your current spouse within one year of your remarriage.
This posting is to provide you some information about the 2023 National Defense Authorization Act (NDAA) and SBP. It is not “legal advice” for your current situation. If you would like to discuss SBP with an experienced former JAG officer and divorce attorney, please contact Travis Law Group, PLLC, 719-520-5011, and asked to schedule a consultation or visit https://travislawgroup.com/contact/ to fill out a contact form and have us reach out to you.