This post is part of a larger series about the Survivor Benefit Plan. Here’s the complete list of posts.
Everything About The Survivor Benefit Plan
Understanding the SBP-DIC Offset
Life Insurance or SBP? Asking The Right Questions
Retiring Military: Should You Choose SBP?
10+ Places To Learn About The Survivor Benefit Plan
The Survivor Benefit Plan (SBP) “Payback” Period
From The Mailbag: Term Life Instead of SBP
From The Mailbag: SBP When You Marry After Retirement
Important Update: Under the 2020 National Defense Authorization Act, the SBP-DIC offset was sunsetted and is completely eliminated as of 1 January 2023. This article remains for reference.
Prior to 2021, Survivor Benefit Plan (SBP) benefits were offset by any Dependency and Indemnity Compensation (DIC) benefits provided by the Department of Veterans Affairs (VA.) Under prior law, a survivor may not receive the full amount of both SBP and DIC. In order to receive DIC, the survivor had to waive the same amount of SBP.
Tax Issues
SBP payments are taxable income. DIC benefits are non-taxable. When subject to the SBP-DIC offset, the average survivor had several hundred dollars of net, take-home income because DIC is non-taxable.
Refund of Premiums
When a survivor was subject to SBP-DIC offset, the survivor received a pro-rated refund of the SBP premiums paid. If the entire SBP was offset, they received all SBP premiums paid; if there was a partial offset, the refund was calculated to the percentage of SBP being offset.
Any refund of SBP premiums was just the premiums and does not include any interest on that money.
The Ridiculous Remarriage Rule
Generally speaking, DIC benefits are lost when the beneficiary remarries, and SBP payments end if the beneficiary remarries prior to age 55. However, due to a strangely written law, and a court case about it, survivors who remarried after reaching the age of 57 may retain their full SBP and DIC benefits, with no offset applied. Since the offset has been eliminated, this rule is no longer relevant.
SBP If You Expect Your Survivors To Qualify for DIC
If you’ve left the military with a service-connected injury or illness, it may seem obvious that your survivors will be eligible for DIC, and that SBP is unnecessary coverage. Upon further digging, however, there are many reasons you may still want to purchase SBP coverage even if you anticipate DIC benefits.
SBP May Be More Than DIC
First, you’d have to look at the size of your SBP benefit vs. the amount of DIC. If you elected the full SBP, the benefit is 55% of your retirement pay. If that amount is more than the amount of DIC (currently $1,283.11), then your spouse would still get the difference of SBP and DIC from SBP.
They will receive the pro-rated refund of SBP premiums explained above.
The Offset Creates SSIA Entitlement
Survivors who were affected by the SBP-DIC offset were eligible for an additional monthly allowance called the Special Survivors Indemnity Allowance (SSIA). This allowance was $310 in 2018 and was adjusted each year for COLA until the offset, and SSIA, were fully eliminated in 2022.
DIC Eligibility Isn’t Always Guaranteed
Certain criteria must be met for survivors to be eligible for DIC benefits, and just having a service-connected illness or injury doesn’t mean that will be the cause of death. As awful as it is to consider, you could be involved in a car accident or develop a completely unrelated medical condition and it could mean that your survivors are not eligible for DIC. SBP coverage would then be the only coverage.
From the VA website, the eligibility requirements for DIC are:
- The Servicemember died while on active duty, active duty for training, or inactive duty training, OR
- The Veteran died from an injury or disease deemed to be related to military service, OR
- The Veteran died from a non service-related injury or disease, but was receiving, OR was entitled to receive, VA Compensation for service-connected disability that was rated as totally disabling
- For at least 10 years immediately before death, OR
- Since the Veteran’s release from active duty and for at least five years immediately preceding death, OR
- For at least one year before death if the Veteran was a former prisoner of war who died after September 30, 1999
You should note that even folks who have been determined to be 100% permanently and totally (P&T) disabled by the VA are not immediately guaranteed DIC benefits. If the death is not attributable to military service, survivors are not eligible for DIC until the veteran has been 100% P&T for 5 years (if they are considered 100% at the time of discharge) or 10 years if they don’t consider the 100% determination to have begun at the time of discharge.
The Offset May Be Eliminated
Important Update: Under the 2020 National Defense Authorization Act, the SBP-DIC offset will be eliminated within the next three years. This article remains for reference.
The last thing to consider is the possibility that the SBP-DIC offset will be repealed at some point in the future. Military lobbying groups like MOAA have made this a top priority and bills are introduced every single year to eliminate the offset. It’s entirely possible the law could be changed, and no guarantee that the government would offer an open season to buy into SBP if that happens.
The Offset Doesn’t Decrease Your Income
If your survivor is impacted by the SBP-DIC offset, they will never have less income than you planned with SBP alone. They will always receive the higher of SBP or DIC. In terms of take-home money, those subject to the SBP-DIC offset will receive more than with SBP alone because DIC is non-taxable, and being subject to DIC kicks in the SSIA discussed above.
While the SBP-DIC offset may or may not be right or fair, anyone who says that you “lose” money due to the offset is incorrect. You just don’t get MORE money due to the offset.
Just like everything else about considering SBP, this stuff is complicated and there’s no single right answer. However, you can’t make the right decision for your specific situation if you don’t have all the facts.
Please ask question and let me know ways in which I can make this more clear!
This post is part of a larger series about the Survivor Benefit Plan. Here’s the complete list of posts.
Everything About The Survivor Benefit Plan
Understanding the SBP-DIC Offset
Life Insurance or SBP? Asking The Right Questions
Retiring Military: Should You Choose SBP?
10+ Places To Learn About The Survivor Benefit Plan
The Survivor Benefit Plan (SBP) “Payback” Period
From The Mailbag: Term Life Instead of SBP
From The Mailbag: SBP When You Marry After Retirement
Important Update: Under the 2020 National Defense Authorization Act, the SBP-DIC offset will be eliminated within the next three years. This article remains for reference.
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Just to make it more clear, if SBP is LESS than the DIC offset do you just get all of the money from DIC and none from SBP? Also, is SSIA in addition to DIC or do they subtract the SSIA from the DIC amount?
If SBP is less than DIC, you receive the amount of DIC. You will always receive at least as much money as your would receive under SBP, except that DIC is non-taxable so the amount that makes it to you pocket is larger.
SBP and DIC are not impacted by Social Security benefits.
Basically after staying with my spouse for 45 years a SGM 30 years retired 100% disabled. I thought I’d get SBP and DIS. So I’ll loose my house and not be able to pay my bills my house is 1540 a month. I’ve certainly learned a lot in the 2 months my spouse has been in the hospital and two weeks in the nursing home. He was getting retirement and combat related service pay about 6200 a month plus social security and civil service. I’ll probably end up with about 1800. What a joke. I hope these law makers choke. Their screwing all surviving spouses.
Are the SBP premium refunds taxable income?
Ms. Jacobs, Yes, SBP premium refunds are taxable, as the premium payments were made pre-tax.
I hope that helps!
The problem it is a lump sum payment … refunding premiums which may have been paid over 30 years … without interest. DoD keeps the interest in the retirement trust fund.
That lump sum payment is taxable … and likely to jump the tax bracket of the widow by a huge amount.
Had SBP premiums been paid after taxes … the total cost would be considerably less.
No commercial annuity program would be approved by state insurance authorities if an insurance company could just refund premiums without interest.
To go along with this question, if the retirement/disability income is non-taxable in the first place would I still have to pay taxes on the lump sum repayment?
DH’s income is all non-taxable so taxes wouldn’t have been taken out if we hadn’t opted to take SBP. By that reasoning, I would think the repayment should be non-taxable, too, right?
I am a FORMER Spouse and was married to John almost 30 years and during many years of his military career. We did divorce, but we both completed the proper forms after our divorce to comply with the requirements to insure my designation as the SBP beneficiary. Later John remarried and several years ago he was considered 100% disabled with the VA. I notified DFAS in a timely manner and I have completed all the necessary forms and sent to DFAS. Here is my question! As a FORMER Spouse and the beneficiary of SBP, HOW does his spouse who is eligible for DIC, well…..HOW does this affect my income, or Will It? I have read and read and never is this clearly addressed. My SBP was set up as 55% of John’s base income. John and I and his wife….we have all remained very good friends. They were married almost 10 years. Anyway, please help me understand and I thank you!
For my military surviving spouse friends – my story for you.
I am the wife of a retired US Army SGM. We were married for 29 years, and he was “the light of my life”. He gave 28 years of his life for his country, and often said “the Army was his family”. He loved it! When he enlisted, it was during the Vietnam Era, and I did not even know him, and ironically, he enlisted on my 16th birthday. When he told his dad he enlisted, his dad went to the recruiter and tried to pull his son’s enlistment.
I remember when he had me sign the form, when we married, to apply for my SBP.
So sadly, I lost my husband to “Septic Shock” two years ago.
I just would like to say that he did pay into SBP every pay while he served.
Unfortunately, I was affected by three benefit “offsets” after my husband’s death.
First, due to my receipt of a 40-year civil service retirement pension.
Second, when applying for his social security.
And third, when I applied for his SBP.
Because he received some disability from his tours in Vietnam, I received the DIC from the VA. But the DIC benefit was deducted from the SBP, and I only receive a portion of the SBP.
Also, I did not receive his social security, nor mine, because of my civil service pension. Upon asking social security where our social security monies went, I was told “into a trust”. A “trust” for “who”?
I do receive the $310 monthly SSIA pension that was extended in President Trump’s Budget Submission last December.
My dad served in WWII and was an Army Ranger at Omaha Beach on D-Day. He was wounded twice. He received two Purple Hearts and a silver star for his service there. Sadly, we lost him in 2015 from COPD. These brave soldiers, from a bygone generation, are passing everyday. I am so proud of my husband, and my dad, for their service and for the honor of being part of their lives. I would like to say, though, that it is bittersweet to think that my husband payed (sometimes fighting for his life) into the SBP, and I only receive a portion of this benefit. He served his country, and he looked toward providing a loved one with his memory and future security.
I have written/visited my Congressman, joined The Retired Enlisted Association (TREA) Women’s Auxiliary, written to politicians and The Gold Star Mother’s, etc. in support of HR 846 toward the elimination of the offset placed on all of our SBP benefits. I have performed these actions because I feel it was my right as a spouse, and a feeling that it was the right thing to do. I do appreciate the benefits that I presently receive and, like many other spouses, do feel we all deserve the full benefit, just as all civil service SBP spouses do. Time is not standing still for us! This is what my husband would want me to do. And, especially, for the time he served and for the respect he had for the US Army and especially his country.
I miss him so.
Respectfully, I am
Oh my, I so feel your pain. My husband passed from COPD in 2007, 6 weeks from diagnosis to death and it still feels like 5 minutes ago.
My husband was a 29 year veteran and also paid for years into SBP for me, I also receive DIC or should I say, 45% of my pension tax free! Beside the reduction of pension, they also garnered 2 weeks of my pension check that, we had already received because he didn’t survive for the entire month.
So all of my husband’s 29 years of honorable service ,that ended in his unbelievable suffering ,meant absolutely nothing to the government, unless,of course,you count 45% of my pension.
I tried to contact all the sponsors of 846 from state through house senate and up to the White house (I know what an optimist) I now have enough rejections,form letters thanking me for my support for a totally unconnected cause to repaper my living room. My Wa State sponsor denied my right to contact her because I did not live within her district, it was the same with the Texas rep (Wilson) because I belonged to Wa State and not Texas. I wondered if they actually think that all surviving spouses live together in one corner of the country.
I honestly feel my husband and I have been robbed and continue to be robbed every month by the same government we supported for our entire adult lives.I am 70 this year and as much as I am for the benefits for education,and preference for federal jobs etc ,may be a great help to the younger survivors, but for me and the thousands in the same senior boat, cannot use those benefits. Myself, I am simply trying to survive until my full pension is restored and the money stolen is returned RETROACTIVELY from my husbands death which for me would be circa $120,000 not to mention the interest. I would like to leave my Grandchildren something before I go.
One more point I only discovered lately that the survivors who were denied DIC because they remarried before age 59 now receive it because they sued for it and guess what? Theirs is SEPARATED from their SBP!!! Perhaps the rest of us should sue since we cannot even get justice with President Trump in office.
P.S. To add insult to injury, I am a 16 year veteran as well. Grrrr!! I am so sorry for your loss of your soulmate.
Holly-Thank you so much for your kind reply to my story. It was very appreciated. I have recently heard the phrase “double standards” used among some of our leaders in Washington, DC. I would like someone to please explain to me the “standard” that is applied to a federal employee’s spouse receiving the full SBP benefit upon his/her death and why a military spouse is denied. As advised, we have to keep current this issue and pray that someday someone somewhere will support us as well as future servicemen and women. We cannot give up.
Kate,
Can you please clarify the status of SSIA ($310) ending in May 2018? I have written my Congressional reps and researched the status but cannot obtain a clear, decisive response as to whether the $310 monthly SSIA will end after May 2018. My annuitant statement for June indicates it has been eliminated from my SBP/DIC Offset payments.
Section 621 of the National Defense Authorization Act for Fiscal Year 2018 (Public Law 115-91) amended section 1450 of title 10, United States Code, to permanently extend the authority to pay the Special Survivor
Indemnity Allowance at the current rate and require inflation adjustments to that Allowance by the amount of the
military retired pay cost-of-living adjustment for each calendar year beginning in 2019. Through the end of 2018, the maximum payment is $310 per month, after which it will be adjusted through COLA.
No worries. By law now the additional $310.00 have been passed by congress to be permament. I too was so worried. Because have very little income.DIC/SBP but do not get paidright. So off im writing letters. Hope to rectify theinjustice.
Congress thinks they have fixed the problem. All they did was lock in SSIA offset to the offset at 35 cents on the dollar taken.
S.1990 being considered in SVAC this week. If enacted would increase DIC by about $300/month near wiping out the the locked in $310/month SSIA.
Next week the 2019 National Defense Authorization Act NDAA is going before the Senate for a vote.
The SBP offset is Amendment SA #2411…..please in the next few days google your Senators and call their Washington DC office or their local office and ask them to cosponsor #2411 to end this very unfair offset! Also know as Widows Tax. In the past when this offset came up for a vote to repeal and was missed by only a few votes.
In 2012 we needed 60 votes and got 58 votes….we missed our offset repeal BY 2 VOTES!!!!
You got to call your Senators!!!!! The more calls they get the more attention we’ll get!
Thank you!
I disagree with your statement …
“While the SBP-DIC offset may or may not be right or fair, anyone who says that you “lose” money due to the offset is incorrect. You just don’t get MORE money due to the offset.”
Of course you lose money! The retiree paid for the SBP annuity for as long as 30 years. There is no language in the documents you sign on retirement that outline the DIC offset. DA says all personnel are briefed … but there is no block on the form to indicate with initials or signature that even addresses DIC offset.
SBP and DIC are two different programs by two different agencies. SBP premiums are paid out of retired pay and go into the DoD trust fund. DIC is funded by the VA. By your assertion if Dept of Ag paid you food stamps … then their value could be deducted from your SBP annuity and you would be okay with that since the income would be the same. The programs are separate.
No other surviving spouse of a Federal government retiree suffers the offset. If your spouse was a Dept of Ag retiree … participating in the Fed employee SBP program … and had served in the military … and it is determined that your spouse died due to a military service connected disabilty or illness … then you the surviving spouse get your SBP plus DIC. Military spouses don’t. SBP is reduced dollar for dollar by DIC payment.
Saying that you get the same amount … just not more is wrong. Especially when every other surviving spouse of a Federal retiree is not similarly had their annuity reduced.
Thank you Mr. Berry for your comment re: the inaccuracy in the article and the examples you included. You are correct! Both benefits should be paid in full when a service member loses their life because of a service connection, whether in retirement or on active duty. We need more like you fighting for the repeal of the offset.
kate@katehorrell.com is the author’s email address. She could benefit from being sent some of the articles on the topic.
I’m intimately familiar with every aspect of the DIC-SBP offset, thanks. There are no inaccuracies in the article – everything stated is factually correct. Mr. Berry’s assertion that those affected by the offset “lose” money is mathematically incorrect.
There are many good reasons that the offset should be repealed, but making factually inaccurate points is not the way to convince Congress. Congressional staffers can see that the “losing money” argument is factually incorrect, and it hurts the cause of repealing the offset to continue repeated it. Our chances of repealing the offset would be greatly improved if we stuck to factually correct information instead of appealing on the basis of emotions and the “losing money” argument.
I know quite a bit about SBP-DIC Offset as well. It remains fact that military spouses lose due to the inequity of the DIC offset to paid for SBP.
No other surviving spouse of a Federal government retiree suffers the offset.
Every surviving spouse of a Federal civil service retiree whose death is attributed to a service connected disability or is paid SPB PLUS DIC… even a Federal civil service retiree from DoD.
The ONLY surviving spouses not paid both SBP and DIC are the surviving spouses of military retirees whose death whose death is determined to have been caused by military service.
If there wasn’t clear recognition of the loss suffered by military surviving spouse Congress would never have instituted SSIA to (at this point) partially offset the offset.
Ms. Horrell I believe you are being misinformed by civilian OSD and Service Personnel authorities who have long advocated against eliminating the offset for military widows and widowers. They do not want to eliminate the offset for military surviving spouses … but their surviving spouses will not suffer the offset.
SSIA is proof that the SBP-DIC Offset is an inequity resulting in surviving spouses not being paid the same as surviving spouses of federal civilian retirees. Those affected by the offset lose money.
I have never disagreed that there are some good argument for repealing the offset. My disagreement is specifically with the argument that survivors receive less money when they are eligible for DIC. If their loved one’s death was not the result of an eligible condition, they would receive only SBP. Because their service member’s death can be attributed to an eligible cause, they receive DIC, plus it’s tax benefit, plus SBP offset by DIC, plus SSIA. That’s more than just SBP – no amount of emotional pleas or rewording changes that mathematical fact.
Survivors and lobbying groups have been trying for years to repeal the offset using emotionally charged testimony and claiming that they’re “losing” money. It’s been unsuccessful so far, and I believe that is in part because of the tactics being used. Congress, and it’s staffers, are interested in factually accurate information. It weakens the case to repeal the offset to present math that just doesn’t add up.
Comparing the offset to the lack of offset with the federal survivor’s annuity is an interesting study. While I see how that could seem to establish a precedent that military SBP survivors are being treated unfairly, they’re not comparable systems. The federal survivor’s annuity has significantly higher premiums than SBP, just under 10% for 55% under CSRS and 10% for 50% under FERS. I have fears that if we are successful in repealing the SBP-DIC offset, the result will be higher SBP premiums for all. As you know, the SSIA has been paid for by increasing pharmacy co-pays on all military families – not exactly a desirable outcome.
It’s important that we look at the big picture. The DIC-SBP offset is not a new rule; it’s been part of the SBP program since it was created in its current form. It was part of the program when each retiring military family decided to elect SBP. No one changed the rules mid-game. It would be absolutely unacceptable if the government decided to change the SBP rules for people already enrolled, right? So why should the survivors get to demand that the rules be changed?
I was just approved for DIC, will I have to pay back the SBP I received prior to my DIC being approved? I was retro paid for DIC from the month after my military retired husband passeing and DIC getting approved. My SBP is much lower than DIC, so am I to assume that SBP will cease and I will only receive DIC, also will I receive the $310.00 SSIA?
“While the SBP-DIC offset may or may not be right or fair, anyone who says that you “lose” money due to the offset is incorrect. You just don’t get MORE money due to the offset.“
WRONG.
Veterans no longer have the offset! Are they ‘gaining’ money? My husband earned SBP by serving 21 years. He earned DIC by dying. So you are wrong. The offset is stealing and EVERYONE knows it. Accepting SSIA was a mistake- they give it to pacify widows- like the cheaters they are- no matter what or how you want to explain it.
Hi,
I am about to hit 5 years since I was medically retired with 100% PandT. My question is once I hit 5 years can I stop paying SBP premiums? That is kind of what I’m interpreting but i’m Far from sure. If that is the case who do I contact and I just request to stop paying How does it work?
If you have you have a total disability rating for five continuous years from the last date of active duty, you may withdraw from SBP participation. However, there are good reasons why you may not want to do that, as discussed in the article above. If you do want to withdraw, you would submit written notice to DFAS, and your beneficiary will have to give written permission for you to withdraw.
Hi, I am at a lost, I was turned down for receiving DICand SBP. I remarried at age 64.I applied for the SBPand was told I couldn’t receive it.I have been receiving DIC since my husband passed in 2008.I received a full refund of all that he had paid into the SBP fund.
I’m a little confused about what you are saying. Could you say it another way so that I understand?
I receive DIC.My late husband was retired AirForce.He was 100% VA disable.Since I was going to get DIC the AirForce refunded the SBP money he had paid in.Then I remarried in March ,2017,at the age of 65. You wrote in an article that if you remarry after age 57 you can get DIC and SBP.I had also read it in other places.When I applied I was turned down,
Thanks for clarifying. Did you explain when you applied that you were reapplying based on the situation? I’m speculating that you were denied because you don’t currently show as eligible due to the refund. Under the rules to collect both, you’ll need to repay that refund in order to start collecting SBP benefits again. You may need to call and explain your unique situation. https://www.dfas.mil/retiredmilitary/survivors/Understanding-SBP-DIC-SSIA.html I hope that helps.
Thank you.I did ask could I re-pay the money back. I was told no, I don’t qualify. I read off the 2009 Sharp, et.al.vThe United States Sharp decision ,which became final on Oct.19,2009. H e read back this to me.The DIC entitlement must be a result of a remarriage after the age of 57.Wow, what ever that means.I live in a town with lots of military retirees.We have a group of women who get DIC ,remarried after age 57, some got their SBP restored getting DIC too.Some of us don’t.It seems to me its depending on who does your approval as to if they understand the remarriage rule or not.
Paula, would you like to email me? I’d like to try and get you hooked up with a Survivor Benefits Plan specialist, but I don’t want you to share personal details here. Kate at katehorrell.com.
How long does it take to start receiving a refund from the SBP and getting the SSIA monthly payment ?
My sister’s veteran husband recently passed away. She applied for DIC and is receiving month DIC. However, her entire SBP is off-set by the DIC. Can she receive a refund on the SBP premium her husband paid. If so, how can she go about get the refund?
My situation is I am 100% disabled and unemployable that began well after discharge in 2016. She draws $804 in SSA after the Medicare premium and does not have a W4 on her SSA. I retired as an E9 with 27 years 6 months and 29 days of AD service and elected SBP upon separation in 2002. To date I have made 200 SBP payments at the 55% rate. How do I know what she would get in the event of my demise? My monthly SSA payment is 1344.
Current 55% base pay total is $2397.87
DIC if eligible $1599.00
SSA $ 804.00
Thanks,
Kelly
Social Security and VA benefits are totally separate.
In the event of your demise, there are two possible ways in which your wife would receive military benefits. If your death was not DIC eligible, then she would receive 55% of your military retirement from the SBP program. If your death was DIC eligible, she would receive SBP minus DIC (taxable), plus DIC (non-taxable), plus the Special Supplemental Indemnity Allowance (non-taxable.)
She would also receive the regular Social Security Survivor’s benefits. Depending on the amount of taxable income received from other sources, she may need to pay taxes on her Social Security income. https://www.ssa.gov/planners/taxes.html
Thanks… I was well aware of the SSA not being connected to any form of Military or Disability pay.
So she would get $788.87? (Taxable)
$2397.87-$1599= $788.87? +1599 +318 and change?
There are quite a few variables, and the numbers change each year. Keep in mind that your may die from a non-service related cause and before your 100% disability rating is 10 years old. In that case, she would not be eligible for DIC.
If your current military retirement pay is $4,359.76, and your death is not DIC-eligible, and you die in 2019, then she would receive $2,397.87, taxable, in 2019. That number would then be COLA adjusted each subsequent year.
If your current military retirement pay is $4,359.76, and you death is deemed DIC-eligible, and you die before you have been permanently and totally disabled for 8 years.
2019 DIC rates are $1319.04, with an additional $280.09 if you have been been rated 100% disabled (including unemployable) for 8 consecutive years prior to your death and if you were married to the same spouses for those same 8 years. If I understand your first comment correctly, that additional amount will not come into play until 2024. These rates change each year.
If you were to die in 2019, your wife would receive $1078.83 from SBP (taxable), plus $1319.04 from DIC (non-taxable), plus $318 from SSIA (non-taxable.) That amount would increase in each subsequent year.
If you pass away before 2024, and your death is DIC eligible, then your wife would receive 55% of your then-current retirement pay, minus the current amount of DIC (taxable), plus the current amount of DIC (non-taxable), plus the current SSIA (non-taxable.) Again, that amount would increase each year.
If you pass away before 2024, and your death is DIC eligible, then your wife would receive 55% of your then current retirement pay, minus the current DIC including the current additional amount (taxable), plus the current DIC including the additional amount (non-taxable), plus the current SSIA (non-taxable.)
Once you reach 2026, then your death would be automatically DIC eligible under the 100% 10 year rule.
All of these scenarios assume that you do not have children covered under either SBP or DIC and that she is not eligible for any additional allowances such as Aid & Attendance, Housebound, or the transitional benefit for those caring for children under the age 18. If you’re really tracking out all the possibilities, there are special rules for remarriage at different ages.
Thank you so much for the information Kate. My initial thought was that since I am now 100 P&T that it only makes sense to stop the SBP payments (about $153.00 per month) If I understand your posts correctly, DIC is not automatically assumed unless the service member has had the 100% P&T rating for 5 years? I thought that a 100% P&T rating assumed that the Service Members’ death would be attributed to the service-connected disabilities allowing for access to the DIC payments.
My personal situation: I’ve paid 70 months into the SBP program, only 290 more to go:) Are you saying that currently, you would suggest that I continue to pay into SBP even if stopping the payment now would mean the equivalent of not paying almost $45,000 into a system that would be offset by a tax-free DIC program assuming that I live another 5 years with the100% P&T rating?
Also, do you think that the offset will ever be eliminated?
Your knowledge and advice are much appreciated.
Respectfully,
David G
David, the 2020 National Defense Authorization Act has instructions for eliminating the offset within the next three years.
Did I not put that in the article enough? I will add more…
Hi, I have DIC/SPB . Paid into the SPB since my husband could no long er secure life insurance from military connected disease. It was quite a large payment every month especially we were trying to survive on 1/2 retirement pension. Since the VA actually does not give you a widow/widower pension promised you actually only end up with DIC tax free. The DIC tax free is actually circa 1/2 of the SPB you pay in. You don’t really get actual money you pay for the tax free allotment out of your on savings. Some widows have waited for decades to receive the actual monetary pension they were promise, foe decades now. I have waited 15 years. The thing is that when you partner passes DOD immediately reduces your pension check by 45%,no, I’m not kidding. For me I received a phone call offering condolences for my loss. On the same call they informed me that I owed 50% of my husbands last check since he died during the first two weeks of the month and I was not eligible because he failed to remain alive until the end of the month. I was also told that my next check would be reduced by the owed amount within the next ten days. Needless to say I still had the same bills coming in and had no idea how I could possibly do it. Thank goodness we didn’t need much and were happy with the basics. The status of the OFF Set DIC/SPB I heard last actually last month,whoever the people were pretending to represent us managed to agree to the following deal; We would be paid 1/3rd of our real VA pension beginning in 2021, then we would receive 2/3rd of it in 2022 then the entire amount beginning in 2023. Here’s the extra “Kicker” there will be NO retro payments for anybody many of whom have since died of course,also the interest we could have gained from the extra money was even FURTHER from reality. It was supposed to be tacked on to the 2020 military budget but I have no idea if the President signed it into law. In your case it could be worth it if they got rid rid of the off-set before you began paying into it but for those who have paid for years are just out of luck. For widow’s and widowers now from present war they receive $100,000 death gratuity tax free right away, free dental, medical,interim housing along with other monies for immediate bill due, food rent car payment etc. So it really depends how old you are and you own situation. To receive the death gratuity your vet has to die on the battlefield,injuries,med discharge death from military within 30 days of release. See now that’s how they managed to leave us old ones out in the wilderness again. Oh one more thing only the newer survivor spouses were included in the RAND report which said we received the equivalent of civilian workers, I know they didn’t note down the $35,000 a year that I make. By the way federal workers do not have their DIC off-set! The two of us did 42 years of combined service.
Kate,
I have a 30% disability. When I die will my wife receive 55% of my total annuity, or will it be reduced by the VA waiver that I have been paying? One other question please, With the newly passed law is it only for 100% disabled and combat related?
Thank you for your work and time.
Kind Regards,
R. Tetrev
Mr. Tetrev, the new law applies to all survivors who are eligible for both DIC and SBP.
What your wife will receive will depend on the cause of your death. If your death qualifies for DIC, she will receive both. There is still a small offset for the years 2021 and 2022 but there is no offset effective 1 January 2022.
If your death does not qualify for DIC, she will receive the full 55% of your total retirement pay amount.
I hope that helps.
Does she have to pay taxes on that amount ? In 2021,2022,202, SBP
Hi Ph, yes, SBP benefits are taxable income.
As I understand it, the law affecting military retirement (SBP) and disability (DIC) in 2021 for surviving spouses will reduce the SBP by 2/3rds to eliminate ”double dipping”. I suppose that formula works well if the retiree’s SSIA payments exceed the SBP. However, when the DIC is considerably less than the SBP, the surviving spouse can be severe penalized.
In my mother’s case, her 2020 SBP was $1,657.80 (after taxes) each month, and she received two Navy annuity payments, $105.20 and $323. In 2021 her estimated monthly SBP of $1,785 (before taxes) will be reduced to $665.43 (before taxes). Her SSIA payment will be $327 for a monthly total of $992.43. The DIC offset for her is a $1,19.57 reduction, I think far exceeding the monthly amount that constituted “double dipping”. Is what Congress intended?
In my mother’s case, we can handle the reduction. And since she is 100 years old, she probably won’t live more than a year or two longer. I do wonder about the long term impact on other surviving spouses who may not be able to afford a similar reduction.
Thank you for your efforts to keep everyone informed.
Mr. Pennington, I think you are misunderstanding what is happening. SBP is not being reduced – the offset is being reduced. The net effect will be more money for surviving spouses.
If I’m understanding your numbers correctly, in 2021, your mother will receive the full amount of DIC ($1357.56). Instead of having her SBP offset by the full amount of DIC, as previously, she will have her SBP offset by 2/3 of the amount of DIC (904.95.) Therefore, her SBP payment in 2021 will be approximately $880. She will also receive the full SSIA of $327 because her offset still exceeds the amount of SSIA. Her total payments between the three benefits should be approximately $2564 per month in 2021.
In 2022, she will receive the full amount of DIC (we’ll stick with the $1357 figure for 2021, because we don’t know what it will be for 2022. Her SBP will be offset by 1/3 the amount of DIC (approximately $453). She will continue to receive the full SSIA of $327 (2021 figures) because her offset exceeds the amount of SSIA. Her total payments between the three benefits should be approximately $3017 per month in 2022.
In 2023, the SBP-DIC offset will be fully repealed. She will receive DIC in the amount of $1357 (2021) plus her full SBP of $1785. SSIA will be eliminated because the offset will be gone. Her total payments at that point will be approximately $3142 per month.
I hope that I’ve explained this in a way that makes sense. It’s a little confusing. But no one will be losing money with this change. Thank you for looking out for your mom.