The Military Survivor Benefit Plan: A Description of Its Provisions

^Pr^ep^ar^{ed f}^o^r^M^e^m^b^ers^an^d^Com^mⁱ^t^t^ees^of^C^ong^r^e^ss

The military Survivor Benefit Plan (SBP) was created in 1972. Since its creation, it has been
subjected to a number of substantial legislative changes. This report describes the basic
provisions of the military Survivor Benefit Plan and all relevant changes or modifications that
have occurred.
Specifically, the military Survivor Benefit Plan is described and explained in terms of its
eligibility provisions, costs, benefits, and its integration with other federal programs (including
social security and Veterans’ Administration Dependency and Indemnity Compensation) for
members and retirees of active duty military service and the Reserve Components (both the
reserves and National Guard). In addition, tables and work sheets are provided to assist the reader
in computing the costs and benefits available under this program.
Nearly every Congress since 1972 has, in some way, modified the provisions of the military
Survivor Benefit Plan. These modifications have had a significant effect on current and
prospective participants and beneficiaries. In nearly every instance, these changes have made the
SBP more generous. Furthermore, these modifications involve complex issues and processes, and
are, therefore, a source of numerous requests for information from constituents to their
congressional representatives.

Introduc tion ..................................................................................................................................... 1
Major Provisions of the Survivor Benefit Plan...............................................................................2
Coverage for Military Members Retired from an Active Duty Career.....................................2
Spouse Only Coverage..............................................................................................................3
Computational Formulas.....................................................................................................3
Original Computational Formula........................................................................................3
Flat-Rate Formula...............................................................................................................4
Rema rriage .......................................................................................................................... 5
“Paid-Up” Provisions..........................................................................................................5
Spouse and Child(ren) Coverage...............................................................................................6
Child(ren) Only Coverage.........................................................................................................6
Persons with an Insurable Interest.............................................................................................7
Former Spouse Coverage..........................................................................................................8
Former Spouse and Child(ren) Coverage..................................................................................9
Coverage for Military Members Retired from the Reserve Components.................................9
“Forgotten Widow” Coverage.................................................................................................10
Coverage for Military Members Serving on Active Duty........................................................11
Survivor Benefit Plan and Social Security....................................................................................12
Social Security Coverage for Military Personnel....................................................................12
Integration of the Survivor Benefit Plan and Social Security Benefits...................................13
Two-Tier Survivor Benefit Plan..............................................................................................15
Comparison of the Social Security Offset and Two-Tier SBP................................................16
Supplemental Survivor Benefit Plan.............................................................................................18
Costs and Benefits of Supplemental Coverage.......................................................................19
Elimination of the Two-Tier and Social Security Offset Computational Formulas.......................19
Survivor Benefit Plan and Veterans’ Affairs Dependency and Indemnity Compensation.............22
“Concurrent Receipt”..............................................................................................................23
Retiree and Government Contributions to SBP.............................................................................24
Table 1. Computation of Survivor Benefit Plan Costs to a Hypothetical Retiree for
Spouse Only Coverage.................................................................................................................4
Table 2. Computation of SBP Costs under Persons with an Insurable Interest Coverage...............7
Table 3. Breakdown of Pre-Integration Monthly Benefits of a Hypothetical SBP
Benefi ciary ................................................................................................................................. 14
Table 4. Comparison of Monthly SBP and Social Security Benefits Computed Using the
Two-Tier and Offset Formulas...................................................................................................17
Table 5. SBP Supplemental Benefits and Costs by Age................................................................20
Table 6. Computation of Original Survivor Benefit Plan Cost to the Retiree for Spouse
Only Coverage (Work Sheet).....................................................................................................26

Table 7. Computation of Flat-Rate Survivor Benefit Plan Cost to the Retiree for Spouse
Only Coverage (Work Sheet).....................................................................................................27
Table 8. Computation of SBP Costs under Persons with an Insurable Interest Coverage
(Work Sheet)...............................................................................................................................27
Author Contact Information..........................................................................................................28

This report outlines the purpose and legislative background of providing benefits to the surviving
dependents of a deceased member/retiree of the uniformed services. In certain cases, individuals
other than dependents can be designated recipients of survivor benefits. This report describes the
categories of beneficiaries eligible for survivor benefits under the military Survivor Benefit Plan
(SBP), the formulas used in computing the income level (including the integration of SBP
benefits with other federal benefits), and the costs of SBP participation incurred by the retiree ¹
and/or the beneficiary.
Under the SBP, a military retiree can have a portion of his or her monthly retired pay withheld in ²
order to provide, after his or her death, a monthly survivor benefit (55% of base amount of
military retired pay at the time of the retiree’s death) to a surviving spouse or other eligible
recipient(s). The cost of this protection is shared by the retiree (in the form of reductions from
monthly military retired pay after retirement), the government, and possibly the beneficiary
(under certain types of coverage). The original intended purpose of the SBP (and its antecedents)
is to “insure that the surviving dependents of military personnel who die in retirement or after ³
becoming eligible for retirement will continue to have a reasonable level of income.” Coverage
was later expanded to active duty personnel as well.
The Survivor Benefit Plan was created by legislation enacted on September 21, 1972,⁴ and has
been modified by later legislation. The SBP replaced the Retired Serviceman’s Family Protection ⁵
Plan (RSFPP). The RSFPP was replaced because it had a number of unpopular features that
made it unattractive. The RSFPP could be expensive for the retiree; the cost was approximately
$0.23 of deducted retired pay per dollar of survivor benefits for a retired member age 45 who
elected to provide coverage for a spouse who was 5 full years younger. The RSFPP was intended
to be actuarially neutral in terms of costs—in other words, the cost of this program was fully paid
for by its participants. The decision to elect RSFPP coverage had to be made by the prospective ^th
military retiree before his or her 18 year of military service. Furthermore, the methods used in
computing the RSFPP’s cost and benefit could change between the time at which the
servicemember elected to provide coverage and the time at which the member actually retired.
Thus, the costs and benefits remained an unknown quantity, limiting the ability of the retiree to
make future financial plans. During its 19-year history, participation in the RSFPP never
exceeded more than 15% of eligible military retirees. It was expected—and has largely been
proven—that the SBP would be a significant improvement over the RSFPP, in terms of

¹^Retⁱ^r^{ees o}^f^t^h^{e u}ⁿⁱ^f^o^rm^ed^servi^c^e^s^(A^r^m^y,^Nav^y^,^M^a^riⁿ^e^Co^rp^s,^Aⁱ^{r F}^o^{rce an}^{d Co}^ast^G^u^ard⁾^,^{as w}^e^l^l^{as ret}ⁱ^r^{ees o}^f^t^h^e
^P^u^b^lⁱ^c^Heal^t^h^S^e^rvi^{ce (}^P^HS^{) and}^t^h^{e Nat}ⁱ^oⁿ^a^l^Oceanⁱ^c^an^d^A^t^m^o^sp^h^e^ri^{c A}^d^mⁱⁿⁱ^st^ratⁱ^oⁿ^(NOA^A⁾^ar^e^elⁱ^gⁱ^b^l^e^t^o
^pa^rtic^ipa^t^eⁱⁿ^the^Surv^iv^{or Be}^ne^f^it^P^l^aⁿ^.^T^h^{is re}^port^e^m^pha^siz^e^s^the^prov^isio^{ns of}^the^SB^P^a^s^t^h^e^y^re^l^a^te^{to m}^e^m^b^e^r^{s or}
^retⁱ^r^{ees o}^f^t^h^{e A}^r^med^F^o^rces.
²^B^a^s^e^r^e^tir^e^d^pa^y^is^tha^t^a^m^{ount o}^f^r^e^tir^e^d^pa^y^tha^t^the^r^e^tir^e^e^s^e^le^c^t^s^{to be}^us^e^dⁱⁿ^de^te^r^m^ining^the^S^B^{P be}^ne^f^{it a}^nd
^c^o^s^t^{. T}^h^is^a^m^{ount m}^a^y^{not be}^g^r^e^a^t^e^r^thaⁿ^t^o^ta^{l m}^onthly^r^e^tir^e^d^pa^y^a^{nd m}^a^y^{not be}^le^s^s^t^h^aⁿ⁽¹⁾^$⁶³⁵^m^onthly^a^s^of
^J^a^nua^r^y^{1, 200}^6,^or⁽²⁾^t^o^ta^{l r}^e^tir^e^d^pa^y^,^if^sm^a^lle^r^thaⁿ^$63^{5 m}^ont^h^l^y^.^T^h^is^55%^m^a^xⁱ^m^u^m^m^a^y^inc^l^ude^a^m^ounts
^recei^ved^f^r^o^m^o^t^h^e^{r f}^e^d^e^ral^so^u^r^ces.
³^U^.^{S. D}^e^pa^rtm^e^{nt of}^D^e^fe^ns^e^,^O^ffic^e^of^the^Se^c^r^e^t^a^r^y^of^D^e^fe^ns^e^,^Milita^ry^Com^p^eⁿ^s^a^{tion Ba}^c^k^g^r^ound^P^a^pe^rs^,
^C^o^m^p^eⁿ^s^a^tⁱ^oⁿ^Ele^m^eⁿ^ts^an^{d Re}^la^te^{d M}^aⁿ^pow^e^r^C^o^s^t^I^t^e^m^s^:^Theⁱ^r^Pur^pos^e^s^an^{d Le}^gis^l^ativ^e^B^a^c^k^g^r^oun^ds^{, 6}^th^Ed.,
^A^p^r^{il 200}^5:⁹⁰^2.
⁴^P^.^L^.^92-⁴²^5,¹⁰^U^.^S.C^.¹⁴⁴⁷^e^t^s^e^q.
⁵^O^r^ig^ina^lly^k^now^{n a}^s^the^Uⁿ^if^or^m^e^{d Se}^r^v^ic^e^s^C^onting^e^nc^y^O^p^tion^P^l^aⁿ^of¹⁹⁵³^,^P.L^.^83-²³^9,⁶⁷^Sta^t^{. 5}^01,¹⁹⁵³^;^na^m^e
^c^h^aⁿ^g^e^{d by}^P^.^L^.⁸⁷^-3⁸¹^{, 7}⁵^S^t^a^t^.⁸¹⁰^{, 1}⁹⁶¹^.

participation rates, costs to the retiree, and benefits for the survivors. It also entails higher costs to
taxpayers because the SBP costs are shared with the government in most cases.

Six separate types of coverage are available under the SBP for military members retired from an
active duty military career, characterized according to the relationship of the beneficiary or ⁶
beneficiaries to the military retiree:
• Spouse Only;
• Spouse and Child(ren);
• Child(ren) Only;
• Persons with an Insurable Interest;
• Former Spouse;
• Former Spouse and Child(ren).
The type of coverage and the amount of coverage provided are factors used in determining the
cost to the military retiree. Generally, a retiree is automatically enrolled in the SBP upon
retirement at the maximum level of coverage to his or her respective surviving spouse and
surviving dependent children, unless the retiree elects not to participate, to participate at a lesser
level of coverage, elects other than spouse coverage, or is ordered by a court to provide such
benefits to a former spouse. To participate at a reduced level of coverage, the retiree elects to have
his or her base amount of retired pay—that amount of monthly retired pay the retiree selects to be
used in determining the SBP benefit and cost—be less than his or her total retired pay subject to a
$635 minimum. The maximum SBP benefit is 55% of base amount of military retired pay, when
the base amount and total retired pay are the same. Reduced coverage consists of 55% of the base ⁷
amount of retired pay when the retiree elects a base amount that is less than total retired pay.
If a retiree elects not to participate, or to participate at a reduced level of coverage, the retiree’s
spouse must be notified, and in the case of such an election made on or after March 1, 1986, the ⁸
spouse must concur with the election for it to be effective. Any decision not to participate or to
participate at a reduced level is usually irrevocable. However, under certain circumstances, a
retiree who is unmarried at the time of his or her retirement and who elects not to participate in
the SBP, but who marries after his or her retirement, may elect within one year of marriage to

⁶^{In c}^e^r^ta^{in i}ⁿ^staⁿ^c^e^s^{, the}^aⁿⁿ^u^ity^m^a^y^be^pa^{id to}^the^re^pr^e^s^eⁿ^ta^tiv^e^of^a^le^g^a^ll^y^inc^o^m^p^e^t^eⁿ^{t surv}^iv^or^(P.L^{. 10}^2-1^90;
¹⁰⁵^S^t^at^{. 13}⁸⁹^;^Dec.⁵^,¹⁹⁹¹⁾^.
⁷^T^h^{e maxi}^m^u^m^co^v^e^rag^e^o^f⁵⁵^%^o^f^b^a^{se ret}ⁱ^r^ed^p^a^yⁱ^s^su^b^j^ect^t^o^a^red^u^c^tⁱ^oⁿ^w^h^en^cert^aⁱⁿ^su^rvi^v^o^r^s^reach^{age 6}²^.^Aⁿ
^e^x^plaⁿ^a^tion^of^the^s^e^re^duc^tio^{ns is}^prov^id^e^dⁱⁿ^the^se^c^tio^{ns be}^l^o^w^eⁿ^title^{d “}^I^nte^g^ra^tio^{n of}^the^Surv^iv^or^Be^ne^f^{it P}^l^aⁿ^aⁿ^d
^S^o^ci^al^S^ecu^ri^t^y^Ben^e^fⁱ^t^s^{” an}^d^“T^w^o^-Tⁱ^e^{r S}^u^rvi^v^o^r^Ben^e^fⁱ^t^P^l^aⁿ^.^”^{Use o}^f^t^h^{e “5}⁵^%^m^a^xi^m^u^m^co^ver^a^{ge” i}ⁿ^t^hⁱ^s^rep^o^r^t
^ap^p^lⁱ^e^{s t}^o^t^h^o^s^{e su}^rvi^v^o^r^{s d}ⁱ^scu^s^s^e^dⁱⁿ^t^h^{e sect}ⁱ^oⁿ^s^b^e^l^o^w^w^h^o^h^a^{ve n}^o^t^reach^ed^{age 62}^.
⁸^P^.^L^.^99-¹⁴^{5; N}^o^v^.^8,¹⁹⁸⁵^;⁹⁹^St^a^t^{. 67}^6,⁶⁷^7.

provide SBP benefits for the new spouse. This election takes effect only after a one-year waiting
period. With the enactment of P.L. 99-145 (November 8, 1985, effective March 1, 1986), the
spouse of a post-military-retirement marriage must be notified if the retiree does not elect to
provide an SBP benefit, or elects to provide an SBP benefit at a reduced level.
In order to be eligible for Spouse Only coverage, the intended SBP beneficiary must be a widow
or widower who was (1) married to the retiree at the time of retirement, (2) married to the
deceased retiree for at least one year prior to the retiree’s death, or (3) the parent of a child born
of a post-retirement marriage. The benefit (considering income from all federal sources—
including social security and veterans’ benefits—attributable to military service) was intended to
be at least 55% of the base amount of retired pay the retiree was receiving at the time of death—
which, for maximum coverage, is the same as total retired pay.
The computational formula for determining the amount of retired pay withheld is based on the
date the member entered the service and/or the type of retirement the service member is entitled
to receive. The formulas are discussed below as the “Original Computational Formula” and the
“Flat-Rate Formula.” Military personnel who entered the service on or after March 1, 1990, and
who are not entitled to retired pay under either Chapter 61 of title 10 U.S. Code (Retirement or
Separation for Physical Disability), or Chapter 67 (Retired Pay for Non-Regular Service), i.e.,
“Disability Retired Pay” or “Reserve Retired Pay,” will have their withholdings computed under
the “Flat-Rate” method. Those military personnel who first became a member before March 1,
1990, or those who have their retired pay computed under either Chapter 61 or 67 (regardless of
the date of retirement) will have their SBP withholdings computed under whichever alternative ⁹
(Original or Flat-Rate) is more financially advantageous. The reduction in retired pay does not
apply during any month in which there is no eligible spouse (or former spouse) beneficiary.
(Reductions to retired pay are not considered taxable income.)
Under this method, the retiree’s contribution to the total cost of providing the SBP benefit is
computed as 2.5% of the first $635 of the base amount of retired pay plus 10% of the remaining
base amount of retired pay. This contribution is withheld from the retiree’s total monthly retired ¹⁰
pay. For example, a hypothetical retiree (E-5, with 20 years of service in 2006) receives a
monthly base amount of military retired pay of $1,263 (see Table 1). The cost of providing

⁹^Me^m^b^e^r^s^w^{ith ba}^s^e^am^ounts^of^$1,2⁷⁵^{or m}^o^re^w^{ho re}^tire^on^or^a^f^t^e^{r J}^a^nua^ry^{1, 200}^{4, w}^ill^ha^v^e^theⁱ^{r c}^ontri^but^io^ns
^de^te^r^m^ine^d^us^ing^the^“^F^la^t-^R^a^te^”^m^e^thod.
¹⁰^I^f^tota^{l r}^e^tir^e^d^pa^y^is^le^s^s^thaⁿ^$6³⁵^pe^r^m^onth—^i.e^.^{, $}⁷^,⁶²⁰^pe^r^y^e^a^r^—^t^he^ba^s^e^a^m^{ount m}^u^s^t^be^e^q^u^a^{l to t}^o^ta^{l r}^e^tir^e^d
^p^a^y^.^A^s^o^f^Sep^t^e^m^b^e^{r 3}⁰^,²⁰⁰³^,^oⁿ^ly⁶^.⁵^%^o^f^m^ilitar^y^retire^e^{s recei}^v^e^d^{less th}^an^$⁷^,⁰⁰⁰^g^r^o^{ss y}^earl^y^(FY2⁰⁰³^DOD
^Sta^tis^tic^a^l^Re^port^oⁿ^the^Milita^ry^Re^tirem^eⁿ^{t Sy}^s^t^em^{, O}^f^fⁱ^c^e^of^the^A^c^tua^r^y^,^D^e^f^e^ns^e^Ma^npow^e^r^D^a^t^a^Ce^nte^r^{: 17}^7-1⁷⁸⁾^.
^S^ec.⁷¹⁴^o^f^P^.^L^.⁹⁹^-14⁵^,^t^h^{e F}^Y¹⁹⁸⁶^{DOD A}^u^th^o^r^ization^A^c^t,^p^r^ovid^e^d^th^at^th^{e t}^h^en^-$3⁰⁰^b^a^{se sh}^{all b}^eⁱⁿ^creased^b^y
^the^s^a^m^e^pe^rceⁿ^ta^g^e^am^{ount a}^nd^a^t^the^s^a^m^e^ti^m^e^as^a^c^r^os^s^-^the^-^bo^a^r^{d inc}^r^e^a^s^e^s^{in m}^ilita^r^y^ba^sⁱ^c^pay^a^f^te^{r O}^c^tobe^{r 1,}
¹⁹⁸^{5. T}^h^e^ba^sic^pa^y^inde^x^w^{ill a}^pply^only^{to re}^tire^e^s^w^hose^re^tir^e^d^pa^y^{is c}^o^m^pute^d^oⁿ^t^h^e^ba^{sis of}^b^a^sic^pa^y^ra^te^{s in}
^e^f^f^e^c^t^{on or}^a^f^te^r^the^da^te^of^the^b^a^sⁱ^c^pay^inc^r^e^a^s^e^.^A^s^of^J^a^nua^r^y^{1, 20}⁰⁶^{, t}^h^e^ba^s^e^a^m^{ount ha}^{d be}^eⁿ^inde^x^e^{d to}^$⁶³⁵^.
^A^m^ounts^a^r^e^r^oun^de^d^{to t}^h^e^l^o^w^e^r^dol^la^r^.

survivor protection for this retiree is $78.68. In other words, $78.68 is deducted from this
hypothetical retiree’s base amount of monthly retired pay of $1,263 to insure that upon the
retiree’s death, his or her surviving spouse will receive a monthly survivor benefit of 55% of his
or her base amount of retired pay, or $694 per month, if the retiree dies while receiving the
$1,263 amount. If the retiree received more than $1,263 per month in total military retired pay—
say as an E-8 with 20 years of service, or $2,035—but elected to provide less than the maximum
coverage (by using $1,183, rather than total retired pay, as the base amount), the computation of
costs and benefits would remain the same. If an individual’s retired pay increases as the result of
cost-of-living adjustments (COLAs), the amount deducted from his or her retired pay, and the
potential SBP benefit to his or her designated survivor (in this case, his or her spouse), usually
will increase proportionately as well. The costs of SBP protection and benefits are computed on
the basis of retired pay rates at the time of retirement [including any adjustments made to the base
($635) amount]. All subsequent post-retirement changes are a result of cost-of-living adjustments ¹¹
to retired pay.
Table 1. Computation of Survivor Benefit Plan Costs to a Hypothetical Retiree for
Spouse Only Coverage
^1.^Enter^{base a}^{mount of}^{retired pay}^.^$1,2^63.0⁰
^2.^Enter^$6^{35, or total retired pay}^{if less than}^$6^{35 (see}^{footnote 10)}^.^$63^5.00
^3.^{Multiply the figu}^{re in line two b}^y^2.5%.^$15.8⁸
^4.^{Subtract $6}^{35 from}^line^one.
^{If line one is less tha}^{n $}⁶³⁵^e^nter^zero.^$62^8.00
^5.^{Multiply line four}^{by 1}^0%.^$62.8⁰
^6.^{Add lines three and five.}^$78.6⁸
Line six is the cost of survivor protection under the Spouse Only coverage. The payment to the
beneficiary is 55% of base amount military retired pay, or $694. The base $635 is indexed for
inflation. Worksheets are at the end of this report.
P.L. 101-189 (November 29, 1989, 103 Stat. 1577 et seq.) revised and simplified the ¹²
computational formula for determining SBP withholdings. Under this new formula, SBP
withholdings are computed to be 6.5% of the base amount of retired pay. A retiree who used
$1,263 (E-5, 20 years of service) as the amount of the base amount of retired pay would have
$82.83 ($1,263 x 0.065) withheld in order to provide the same level of protection under the Flat-
Rate method.

¹¹^T^h^e^O^m^nibus^B^udg^e^t^Re^c^onc^ilia^tion^A^c^{t (O}^BR^A⁾^of¹⁹⁹³^de^la^y^e^d^no^ndis^a^b^ility^re^tire^e^s^{’ CO}^LA^unt^{il A}^p^{ril 1,}¹⁹⁹⁴^.
^T^h^{e OBR}^A^dⁱ^dⁿ^o^t^d^e^lay^th^{e in}^{crease in}^SB^P^co^{sts t}^o^eachⁿ^oⁿ^d^isa^b^ility^{retiree en}^ro^lledⁱⁿ^t^h^{e SB}^P^.^T^h^ere^f^o^r^{e, SBP}
^pr^e^m^iu^m^s^w^e^r^e^inc^r^e^a^s^e^{d f}^o^r^the^thr^e^e^m^onths^of^r^e^tir^e^d^pa^y^pa^y^a^ble^{on J}^aⁿ^u^a^r^y^{1, Fe}^br^ua^r^y^{1, a}ⁿ^d^Ma^r^c^{h 1,}¹⁹⁹⁴^.
^Becau^{se DOD co}^u^l^d^no^{t rep}^r^o^g^ram^{its retired}^p^a^y^co^m^p^u^t^{ers to}^acco^mm^o^d^a^{te th}^{e n}^e^w^la^w^b^y^Jan^u^a^ry¹^,¹⁹⁹⁴^,^t^h^e
^t^h^{ree m}^oⁿ^t^h^s^{’ o}^fⁱⁿ^creased^S^B^P^pre^mⁱ^u^m^s^{were t}^a^k^eⁿ^o^u^t^o^f^t^h^{e ret}ⁱ^red^p^a^y^recei^ved^oⁿ^A^p^ri^l¹^,¹⁹⁹⁴^.
¹²^T^h^{is le}^gⁱ^sla^{tion a}^l^so^provⁱ^d^e^d^f^o^r^the^re^c^o^m^puta^tio^{n of}^su^rv^iv^{or a}ⁿ^nuitie^{s i}ⁿ^t^h^e^c^a^s^e^of^a^m^e^m^b^e^r^who^die^s^oⁿ^a^c^tiv^e
^d^u^t^y^w^hⁱ^l^e^q^u^a^lⁱ^fⁱ^e^d^t^o^app^l^y^f^o^{r ret}ⁱ^r^ed^p^a^y^,^o^r^w^h^o^{serves at}^l^east²⁰^y^ears,^b^u^tⁱ^sⁿ^o^t^elⁱ^gⁱ^b^l^e^t^o^recei^{ve ret}ⁱ^r^ed^p^a^y^a^s
^{a co}^mmⁱ^ssi^oⁿ^e^d^o^f^fⁱ^{cer b}^ecau^{se h}^e^/^s^h^e^h^a^{s n}^o^t^served^at^l^east¹⁰^y^{ears as a co}^mmⁱ^ssi^oⁿ^e^d^o^f^fⁱ^cer.^Un^d^e^{r t}^hⁱ^s^l^aⁿ^g^u^a^ge,
^e^f^f^e^c^tiv^e^Ma^r^c^{h 1, 19}⁹⁰^{, t}^h^e^s^u^r^vⁱ^v^or^a^nnu^ity^w^ould^be^c^o^m^pute^d^b^a^s^e^{d on t}^h^e^g^r^a^d^e^{in w}^h^ic^h^the^m^e^m^b^e^r^w^a^s^s^e^r^v^ing
^a^t^the^tim^e^of^de^a^t^{h, u}ⁿ^le^{ss he}^/she^w^{ould ha}^v^e^be^eⁿ^eⁿ^title^d^to^be^re^tire^dⁱⁿ^a^hig^h^e^r^g^r^a^d^e^.

The basic benefit is not affected by the type of computational formula used. (See “Computational ¹³
Formulas” section for an explanation of who is eligible to use the Flat-Rate method.)
Regardless of which formula is used, a surviving spouse (or eligible former spouse) may become
ineligible to receive SBP benefits if he or she remarries. Eligibility for SBP benefits when
remarriage occurs is dependent upon the age at remarriage and the date that such a remarriage
occurs. A surviving spouse (or eligible former spouse) becomes ineligible to receive SBP benefits
if he or she remarries prior to reaching age 60, if such a remarriage took place prior to November
14, 1986 (remarriage after age 60 does not affect receipt of an SBP benefit). A surviving spouse
(or eligible former spouse) becomes ineligible to receive SBP benefits if he or she remarries prior
to reaching age 55 if such a remarriage took place on or after November 14, 1986 (remarriage
after age 55 for these beneficiaries does not affect receipt of SBP payments). If the second
marriage is terminated (by death, annulment, or divorce), the original SBP benefit can be
reinstated (subject to certain restrictions). The surviving spouse of two or more deceased military
retirees (each a participant in the SBP) may select and receive the more financially advantageous
benefit.
In 1999, Congress further expanded the generosity of the SBP by enacting the so-called “paid-up”
provision. Under this language, reductions in retired pay made to cover the retiree’s share cease
when two conditions are met: (1) the retiree reaches age 70, and (2) the retiree has participated in ¹⁴
the SBP for 360 months. As enacted, these provisions become effective October 1, 2008.
Language was included in the Senate version of the National Defense Authorization Act for Fiscal
Year 2006 to move the effective date of this provision to October 1, 2005. This language was ¹⁵
dropped by the Conference Committee. Again, language was included in the Senate version of
the National Defense Authorization Act for Fiscal Year 2007 to move the effective date of this ¹⁶
provision to October 1, 2006. This language, too, was dropped by the Conference Committee.

¹³^For^t^hos^eⁱⁿ^dⁱ^vⁱ^dua^ls^r^e^tirⁱⁿ^g^oⁿ^or^a^f^te^r^J^a^nua^r^y^{1, 2}⁰⁰⁴^w^{ith ba}^s^e^a^m^ounts^of^$1,²⁷⁵^or^g^r^e^a^t^e^r^{, the}ⁱ^r^pr^e^m^ium^s^a^r^e
^c^o^m^pute^d^us^ing^t^h^e^m^o^r^e^g^e^ne^r^ous^6.5%^m^e^thod,^r^e^g^a^r^d^le^s^s^of^w^h^eⁿ^the^y^eⁿ^te^r^e^{d the}^s^e^r^v^ic^e^.
¹⁴^P^.^L^.¹⁰^5-²⁶¹^,¹¹²^Sta^t^.²⁰⁴⁵^O^c^{t. 17}^{, 1}⁹⁹⁸^.^P.L^.¹^06-^65;¹¹³^Sta^t^.⁶⁶⁷^{; O}^c^t.^5,¹⁹^{99; T}^h^is^la^w^e^x^t^e^nde^{d t}^h^is
^pr^ov^is^io^{n t}^o^pa^r^ticⁱ^p^aⁿ^tsⁱⁿ^t^h^e^R^S^F^P^P^.^Fur^t^he^r^m^or^e^,^P^.^L^.¹⁰^5-²⁶¹^;¹¹^{2 S}^t^a^t^{. 2}⁰⁴⁵^{, O}^c^t.¹⁷^,¹⁹^98,^c^r^e^a^t^e^d^aⁿ^opeⁿ
^eⁿ^rollm^eⁿ^{t tha}^t^a^l^l^o^w^e^{d pe}^rsonsⁿ^o^{t c}^u^rreⁿ^tly^pa^rtic^ipa^tingⁱⁿ^the^S^B^{P to e}ⁿ^roll^su^bje^c^t^{to c}^e^r^taⁱⁿ^re^stric^tions.^P^.^L^.¹^06-
⁶⁵^ext^eⁿ^d^e^d^t^h^e^p^aⁱ^d^-^u^{p p}^r^o^vⁱ^sⁱ^oⁿ^t^o^t^h^{ese “l}^at^{e” en}^ro^l^l^ees,^p^r^o^vⁱ^d^ed^t^h^ey^p^aⁱ^d^t^h^{e t}^o^t^a^l^p^r^emⁱ^u^m^s^t^h^at^w^o^u^l^d^h^a^{ve b}^een
^w^ithhe^{ld f}^r^om^theⁱ^{r re}^tire^d^pa^y^,^ha^{d the}^y^be^eⁿ^pa^rtic^ipa^tⁱⁿ^g^sinc^e^t^h^e^y^fⁱ^{rst be}^c^a^m^e^e^lig^ible^{. In a}^d^ditⁱ^on,^f^r^om^A^p^{ril 1,}
¹⁹⁹^{2 t}^h^ro^ug^{h Ma}^rc^h³¹^,¹⁹^93,^re^tⁱ^re^e^s^w^{ho in}^itia^lly^re^je^c^t^e^d^c^o^v^e^rag^e^w^e^re^aff^o^rde^d^a^one^-y^e^a^r^oppo^rtunity^{to e}ⁿ^r^o^ll.
^T^h^is^la^te^eⁿ^r^o^llm^eⁿ^{t r}^e^quir^e^d^g^r^e^a^t^e^r^w^ithholdⁱ^ng^s^oⁿ^r^e^tir^e^d^pa^y^.⁽^S^e^e^P^.^L^.¹⁰^2-¹^90;¹⁰⁵^Sta^t^.1³⁸^8;^D^e^c^.^{5, 1}⁹⁹¹⁾
^L^a^s^t^l^y^{, P}^.^L^.¹⁰^5-⁸⁵^;¹¹^{1 Sta}^t^.¹⁷⁹⁷^{; N}^o^v^.^18,¹⁹⁹⁷^{, c}^r^e^a^t^e^d^a^oⁿ^e^-^y^e^a^r^opp^or^tu^nity^f^o^r^pa^r^tic^ipaⁿ^ts^t^o^dis^c^on^tin^ue^SB^P
^co^verag^e^,^su^b^j^ect^t^o^cert^aⁱⁿ^rest^ri^ctⁱ^oⁿ^s^.
¹⁵^U^.^{S. C}^ong^r^e^s^s^.^C^onf^e^r^eⁿ^c^e^C^o^m^m^itte^e^,^N^a^tiona^{l D}^e^f^e^ns^e^A^u^thorⁱ^z^a^{tion A}^c^{t f}^o^r^Fis^c^a^l^Y^e^a^r²⁰⁰⁶^,^H^.^R^e^{pt. 1}^09-³⁶^0,
¹⁰⁹^th^Co^ng^.,¹^st^S^e^ss.^,^H.^R^.¹⁸¹⁵^,^Dece^m^b^er¹⁸^,²⁰⁰⁵^:⁷³^8.
¹⁶^U^.^{S. C}^ong^r^e^s^s^.^C^onf^e^r^eⁿ^c^e^C^o^m^m^itte^e^,^N^a^tiona^{l D}^e^f^e^ns^e^A^u^thorⁱ^z^a^{tion A}^c^{t f}^o^r^Fis^c^a^l^Y^e^a^r²⁰⁰⁷^,^H^.^R^e^{pt. 1}^09-⁷²^0,
¹⁰⁹^th^Co^ng^.,²^nd^Se^s^s^{., H}^.^R^.⁵¹²²^,^Se^pte^m^be^r^29,²⁰^06:⁷^55-^6.

Under Spouse and Child(ren) coverage, upon the retiree’s death, SBP benefits are first paid to the
surviving spouse. If the surviving spouse predeceases the retiree, dies after becoming eligible to
receive SBP benefits, or becomes ineligible to receive SBP benefits (through remarriage, for
example), the SBP benefits will then be paid directly to the designated child or children. If there
is more than one child, the SBP benefits are paid in equal shares to each child for as long as he or
she remains eligible.
The cost of this coverage is additive to that of Spouse Only coverage, and is determined on an ¹⁸
actuarial basis, taking into account the age of the retiree, the spouse, and the youngest child. For
example, a retiree who is 45 years old, with a spouse who is 40 years old (i.e., 5 full years
younger than the retiree) and a child age 10, would have to pay an additional 0.10% of the base
amount of retired pay in order to cover a child or children in addition to the amount paid for
Spouse Only coverage. The hypothetical retiree mentioned above under Spouse Only coverage
who has $82.55 per month withheld from his or her retired pay (see Flat-Rate formula, p. 5) to
provide an SBP benefit for his or her spouse, would thus have an additional $1.26 ($1,263 x ¹⁹
0.10%) withheld per month in order to provide Spouse and Child(ren) coverage. The reduction
in retired pay that represents the cost of child protection continues only for as long as there is at
least one eligible child.
A child becomes ineligible for an SBP benefit upon reaching age 18 (or 22, if a full-time ²⁰²¹
student). A child who marries becomes ineligible to receive SBP benefits regardless of age. An
eligible child who becomes incapacitated (either physically or mentally) may continue to receive ^th
SBP benefits for the duration of the incapacitation if the condition existed prior to the child’s 18
birthday.
Under Child(ren) Only coverage, SBP benefits are paid directly to the surviving child(ren) of a
deceased military retiree regardless of whether or not there is a surviving spouse. Eligibility under
this coverage is subject to the same restrictions as a child is, or children are, under Spouse and
Child(ren) coverage. (Under certain circumstances, spouse coverage can be restored if a spouse
later becomes eligible.) The cost of this coverage is also computed on an actuarial basis (and
therefore subject to modification). For example, a military retiree who is 45 years old, has a child
age 10, and elects maximum coverage, would have approximately 2.5% of his or her base amount

¹⁷^T^h^{e t}^e^r^m^“chⁱ^l^d^{” i}ⁿ^cl^ud^{es an}^adop^t^e^d^chⁱ^l^d^,^{a st}^ep^chⁱ^l^d^,^f^o^st^{er ch}ⁱ^l^d^,^{or reco}^gnⁱ^zedⁿ^a^t^u^ral^chⁱ^l^d^w^h^o^lⁱ^v^ed^wⁱ^t^h^t^h^e
^p^a^rtⁱ^cⁱ^p^an^tⁱⁿ^{a regu}^l^a^r^p^a^ren^t^-chⁱ^l^d^rel^a^tⁱ^oⁿ^s^hⁱ^p^.^It^m^a^y^b^eⁿ^ecess^a^ry^f^o^{r t}^h^{e ch}ⁱ^l^d^t^o^p^r^o^v^{e d}^e^p^eⁿ^d^e^nc^yⁱⁿ^o^r^d^e^r^t^o^b^e
^elⁱ^gⁱ^b^l^e^t^o^recei^{ve an}^S^B^P^ann^uⁱ^t^y^.
¹⁸^{Costs tha}^t^a^r^e^a^c^t^ua^ria^lly^de^te^r^mⁱⁿ^e^d^a^r^e^ba^se^d^on^pro^b^a^b^il^itie^{s of}^k^now^{n lif}^e^e^x^pe^c^t^aⁿ^c^y^ra^te^{s, a}^s^we^{ll a}^s^inte^re^{st a}^nd
^inf^l^a^{tion a}^ssum^p^tions.
¹⁹^Sⁱⁿ^{ce t}^h^{e co}^st^o^f^co^{verage i}^s^co^mp^u^t^{ed on}^an^act^u^a^ri^al^b^a^si^s,^t^h^{e cost}^u^s^edⁱⁿ^t^hⁱ^s^exa^m^p^l^{e i}^s^su^b^j^ect^t^o^ch^an^ge.
^A^c^tua^r^ia^l^fⁱ^g^u^r^e^s^pr^ov^ide^d^by^L^.^Gⁱ^e^s^e^c^k^e^{, Of}^fⁱ^c^e^of^the^A^c^tua^r^y^,^D^e^f^e^ns^e^Ma^npow^e^r^D^a^ta^C^e^nte^r^{, Ma}^r^.³¹^,¹⁹^92.
²⁰^A^chⁱ^l^d^w^h^o^b^eco^m^e^{s i}ⁿ^elⁱ^gⁱ^b^l^e^b^ecau^{se h}^e^o^r^sh^{e reach}^{es age 1}⁸^an^d^t^h^en^l^a^t^e^r^b^eco^m^e^{s a}^f^u^l^l^-^tⁱ^m^e^st^u^d^e^nt^p^rⁱ^o^{r t}^o
^reachⁱⁿ^{g age 2}²^m^a^y^b^e^co^{me el}ⁱ^gⁱ^b^l^e^t^o^recei^{ve S}^B^P^b^eⁿ^e^fⁱ^t^s^w^hⁱ^l^e^{a f}^u^l^l^-^tⁱ^m^{e st}^u^d^eⁿ^t^.
²¹^A^m^a^rried^ch^ild^w^h^o^,^p^r^io^r^to^b^eⁱⁿ^g^m^a^rried^,^w^a^{s elig}^ib^{le to}^receiv^e^{SBP b}^eⁿ^e^f^{its w}^{ill n}^o^t^b^eco^m^e^el^ig^ib^{le to}^receiv^e
^t^h^{ese b}^eⁿ^e^fⁱ^t^s^an^ewⁱ^f^t^h^{e marri}^ag^{e en}^d^s^b^y^dⁱ^vo^rce.^If^,^h^o^w^ever,^t^h^{e marri}^ag^{e i}^s^t^e^r^mⁱⁿ^at^ed^{as t}^h^{e re}^su^l^t^o^f^an
^a^nnulm^e^{nt, SB}^{P e}^lig^ibili^ty^m^a^y^be^r^e^ins^t^a^t^e^d^.

of retired pay withheld in order to provide, at the time of his or her death, an SBP survivor benefit
for the surviving child. In other words, in the example mentioned above under Spouse Only
coverage, $31.58 ($1,263 x 2.5%) would be withheld from a retiree’s retired pay in order to
provide his or her surviving child(ren) with a benefit of $694 per month. (Child Only coverage is
less expensive due to the limitation on the number of years—until age 18 or 22 under most
circumstances—a beneficiary remains eligible to receive SBP benefits.)
Insurable Interest coverage may be selected only if there is neither a spouse nor a dependent child
at the time of retirement. Under this coverage a beneficiary is defined as “a natural person with an ²²
insurable interest” in the retiree. Included in this category are relatives of the retiree, such as a
parent, sibling, or a child who may not qualify for SBP beneficiary status under Spouse Only,
Spouse and Child(ren), or Child(ren) Only provisions. Non-relatives, such as a business partner,
may also be covered. Unlike other SBP options, Insurable Interest must be elected at the
maximum level.
The cost of Insurable Interest coverage is (1) 10% of the base amount of military retired pay plus
(2) 5% of total base amount of retired pay for each full 5 years that the named beneficiary is
younger than the retiree. Insurable Interest coverage is thus more expensive than other types of
coverage. However, the total cost to the retiree of this coverage cannot exceed 40% of total
military retired pay. In other words, a retiree who wishes to provide Insurable Interest coverage to
a person 30 or more years younger would have the maximum of 40% of the base amount of
military retired pay withheld.
For example, a retiree who is 50 years old and receives $1,263 per month as the base amount of
military retired pay, elects to provide protection to a person 10 full years younger. This retiree
would have the cost of this protection computed as follows: 10% of the base amount of retired
pay (or $126) plus 5% for each full 5 years the beneficiary is younger (in this case the beneficiary
is age 40) than the retiree. The SBP costs would thus be $252 (see Table 2).
According to language contained in the National Defense Authorization Act for FY1995,
Insurable Interest coverage could be voluntarily discontinued (except in those cases where a
former spouse is being covered). Retirees discontinuing this coverage, who later remarry or
acquire dependents, may again participate in the SBP under another allowable beneficiary ²³
category.
Table 2. Computation of SBP Costs under Persons with an Insurable Interest
Coverage
^1.^{The amount of}^{base military retir}^{ed pay.}^$1,26^3.00
^2.^{Multiply line one by}¹⁰^%.^$12^6.00

²²^{10 U}^.^S.C^.¹⁴⁴⁸⁽^b⁾⁽¹⁾^.
²³^U^.^{S. C}^ong^r^e^s^s^,^H^ous^e^C^o^nf^e^r^eⁿ^c^e^C^o^m^m^itte^e^,^N^a^tiona^{l D}^e^f^e^ns^e^A^u^th^or^iz^a^tio^{n A}^c^{t f}^o^r^Fis^c^a^l^Y^e^a^r¹⁹⁹⁵^{, H}^.^R^e^pt^.
¹⁰³^-⁷^01,¹⁰³^rd^Co^ng^.2^nd^Se^s^s^{., S.}²¹⁸^{2, A}^u^g^.¹²^,¹⁹^94:¹³^2-1³³^.⁽^P^.^L^{. 103-}³³^{6) It}^is^e^x^pe^c^t^e^d^tha^t^t^hⁱ^s^c^h^aⁿ^g^e^w^ill
^a^f^f^e^c^t^a^ppr^ox^im^a^t^e^l^y^3,000^of^the^m^o^r^e^tha^t^SB^{P 9}^00,⁰⁰⁰^pa^r^tic^ipaⁿ^ts^{. R}ⁱ^c^k^M^aze,^”S^u^r^vi^vo^{r Ben}^e^fⁱ^t^P^l^aⁿ^.^.^.^,^”^{Air F}^o^rce
^Tim^e^s^{, Se}^pt.¹²^{, 1}⁹⁹⁴^:²⁰^.

^3.^{Age of the retiree}^{at his/he}^{r last}^birthday.⁵⁰
^4.^{Age of prospec}^{tive be}^{neficiary as}^{of the date of the}^{retiree’s last bi}^rthday.⁴⁰
^5.^{Subtract line t}^{hree f}^{rom line four}^{. (If line three is less t}^{han line fou}^{r, enter}^0.)¹⁰
^6.^{Divide the sum in line five b}^y^the^num^ber^{5 and}^{round t}^{he q}^uotien^{t to the lower whole nu}^mber.²
^7.^{Multiply 5%}^{by line six.}^10%
^8.^{Multiply line one by line se}^ven.^$12^6.00
^9.^{Add line two and line eight.}^$25^2.00
^10.^{Multiply line one by}⁴⁰^%.^$50^5.00
^11.^{Compare lines nine a}^{nd ten: e}^nte^{r the lesser.}^$25^2.20
Line 11 is the cost of survivor protection under the Persons with an Insurable Interest category of
coverage. The payment to the beneficiary is 55% of the base amount of military retired pay less
the premium, or ($1,263-252) x 55%=$556. Worksheets are at the end of this report.

A military member may choose, or may be required by a court order, to provide SBP coverage for
a former spouse, depending on when the divorce occurred. This election can occur as part of or
incident to a divorce-related property settlement. For divorces occurring before November 14,
1986, federal law explicitly states that no court was authorized to order a member or retiree to
provide SBP protection to a former spouse. If a retiree voluntarily decides, in writing, to provide
benefits to a former spouse, this decision must be honored by the retiree. The retiree who elected
Spouse Only or Spouse and Child(ren) coverage, and was subsequently divorced before
November 14, 1986, may switch to Former Spouse coverage for the (now) ex-spouse. This latter
change in coverage must be elected within one year of the date the divorce decree becomes final.
If a divorce occurs on or after November 14, 1986, however, a court may order a member or
retiree to provide SBP protection as part of or incident to a divorce. According to changes in law
implemented by the FY1987 DOD Authorization Act (P.L. 99-661, November 14, 1986), “A court
order may require a person to elect (or to enter into an agreement to elect) ... to provide an ²⁵
annuity to a former spouse (or to both a former spouse and child).” This language does not
require courts to make such an order but gives them the freedom to do so.
The FY1986 DOD Authorization Act (P.L. 99-145, November 8, 1985) included a change in
Former Spouse coverage which provided that military retirees and “former spouses ... covered
under the insurable interest category (could) ... elect jointly to switch to spouse coverage at the
maximum level within one year (and it provided) current participants who had the option of
electing Former Spouse coverage in the past and chose not to do so, the option of electing Former ²⁶
Spouse coverage.” Those electing Former Spouse coverage after March 1, 1986, have the cost

²⁴^For^m^o^r^e^inf^o^r^m^a^{tion o}ⁿ^is^s^u^e^s^a^f^f^e^c^ting^f^o^r^m^e^r^s^pous^e^s^{, s}^e^e^C^R^S^R^e^por^{t R}^L³¹⁶⁶^3,^M^ilit^ary^Be^ne^fit^{s for Forme}^r
^Spo^us^e^s^:^Le^gis^l^ati^on^an^{d P}^o^lic^y^I^s^s^u^e^s^{, by}^Da^vⁱ^{d F. B}^u^rre^lli.
²⁵¹⁰^U^.^S.C.¹⁵⁵⁰^(f⁾⁽⁴^).
²⁶^U.^S^.^C^oⁿ^g^ress,^Ho^u^s^{e Con}^f^eren^{ce Co}^mmⁱ^t^t^ee,^D^e^par^tm^eⁿ^{t of D}^e^fe^ns^e^Aut^hor^iz^a^tio^{n Ac}^t^{, 19}⁸⁶^.^S^.^R^e^{pt. 99-}²³^5,^S^.
¹¹⁶^{0. 99}^th^Co^ng^.,¹^st^{Sess., Ju}^ly²⁹^{, 1}⁹⁸⁵^:⁴⁴³^.^(H^ereaf^{ter cited}^{as Co}ⁿ^f^eren^{ce Co}^mm^itte^{e, DOD 1}⁹⁸⁶^A^u^th^o^r^izatioⁿ^.⁾

of this coverage and benefit amount computed in the same manner as in the case of Spouse Only
coverage.
Because a retiree may provide only one type of SBP coverage for one category of beneficiary,
election of coverage for a former spouse can have the effect of denying SBP protection to a
second or future spouse. However, it is not clear whether courts have the authority to divide SBP
benefits between a former spouse and current/subsequent spouse. In other words, although the
services will provide SBP benefits to only one category of beneficiary (former spouse, for
example), it is not clear whether or not a court, as part of an equitable divorce property
settlement, has the authority to divide SBP benefits between a former spouse (designated to
receive them in this example) and a current/subsequent spouse.
The FY2000 National Defense Authorization Act provided for the “effectuation of intended SBP
annuity for [a] former spouse when not elected by reason of [the] untimely death of [the] ²⁷
retiree.” This language pertains to any retiree who, on or after August 21, 1983, agreed to (or
was required by a court to) provide SBP coverage to a former spouse, but who died within 21
days of making such an agreement (or being so required). Under this language, the former spouse
of such a retiree is deemed to have been covered effective November 5, 1999.
Coverage for a former spouse and child(ren) became available on March 1, 1986.²⁸ This coverage
is provided on the same terms as Spouse and Child(ren) coverage described above.
As with the Survivor Benefit Plan for active duty retirees, retirement eligible members of the
reserves (Army Reserve, Naval Reserve, Marine Corps Reserve, Air Force Reserve and Coast
Guard Reserve) and National Guard (Army National Guard and Air National Guard) may elect to
provide SBP protection for their survivors. However, because members of the Reserve ²⁹
Components are not eligible to receive Reserve Component retired pay until age 60, regardless
of the age at which they actually retire, the structure of the Reserve Component SBP (RCSBP) is
different from that applicable to active duty members.
Prior to 1978, Reserve Component personnel could not provide survivor protection for an eligible ³⁰
beneficiary until they were eligible to draw retired pay at age 60. Legislation passed in 1978
allows Reserve Component members to decide whether or how they will participate in the
RCSBP when they are notified of retirement eligibility (not yet eligible to receive retired pay)—
in almost all cases, many years before reaching age 60.

²⁷^P^.^L.¹⁰⁶^-⁶⁵^;¹¹³^St^at^.⁶⁶^8;^No^v.⁵^,¹⁹⁹⁹^.
²⁸^Conf^e^r^eⁿ^c^e^Com^m^itte^e^,^DOD^{1986 A}^u^th^oriz^a^tio^n:^96.
²⁹^“^R^e^s^e^r^ve^C^o^m^pone^nts^”^r^e^f^e^r^s^{to bot}^{h R}^e^s^e^r^v^e^a^{nd N}^a^tiona^l^G^u^a^r^{d pe}^r^s^on^ne^l.
³⁰^P^.^L^.^95-³⁹^7,⁹²^Sta^t^.⁸^43,^Se^pt.³⁰^{, 1}⁹⁷⁸^.

Reserve Component members who are not yet 60 years old and who are retirement eligible may
elect to provide SBP protection under one of three options. The costs and amount of coverage
available depend on the option selected and the category of beneficiary. A prospective Reserve
Component retiree must select one of the following RCSBP options within 90 days of being
notified of retirement eligibility:
^Op^ti^on^A^-^T^h^{e retiree m}^a^{y declin}^{e R}^C^SB^P^protection^.^Sh^{ould th}^{e retiree die bef}^o^re
^reachⁱⁿ^g^ag^{e 6}⁰^,ⁿ^o^RCSB^P^b^eⁿ^e^f^it^wⁱ^l^l^b^e^p^a^id^.^T^h^{e reti}^{ree w}^{ill ag}^aiⁿ^b^e^o^f^f^e^red^th^e
^oppo^rtuⁿⁱ^t^y^{to participate in}^{the S}^B^P^u^pon^reachⁱⁿ^g^a^g^{e 60.}
^Op^ti^on^B^-^T^h^{e r}^e^tir^{ee m}^a^y^el^{ect RCSB}^P^co^v^e^r^a^g^e^su^c^h^th^at^su^r^vⁱ^v^o^r^p^a^y^m^eⁿ^ts^w^{ill b}^e^gⁱⁿ
^on^{(1) th}^{e date}^of^t^h^{e retiree}^’^s^death^o^f^{(2) th}^e^{date t}^h^{e r}^e^tiree^w^o^u^l^d^h^a^v^e^t^u^rn^{ed 60,}
^w^h^ic^h^e^v^e^r^{is la}^ter^.
^Op^ti^on^C^-^T^h^{e r}^e^tir^{ee m}^a^y^ele^c^{t, u}ⁿ^d^er^th^{is o}^p^tioⁿ^,^to^p^r^o^v^id^{e an}^RCSB^P^b^eⁿ^e^fⁱ^t^th^a^t^w^o^u^l^d
^begⁱ^{n i}^m^m^e^diatel^y^f^o^llo^wⁱ^ng^t^h^{e deat}^h^{of t}^h^{e retiree, reg}^a^rdl^e^s^s^o^f^t^h^{e retiree}^’^s^ag^e^{at t}^h^e
^tⁱ^m^e^of^deat^h^.
Under option A, the costs and types of coverage available once the retiree reaches age 60 are the
same as under the active duty SBP. Under options B and C, the cost of RCSBP protection is
shared by the retiree, the Government, and the beneficiary. The retiree’s portion is paid through
deductions in retired pay beginning at age 60. The beneficiary’s or beneficiaries’ share is paid
through benefit reductions. The costs under options B and C are dependent upon the type of
coverage (see active duty retirees), as well as the age of the retiree and selected beneficiary(ies).
Under certain circumstance, an RCSBP benefit may be paid to the eligible surviving spouse,
dependent child(ren), or former spouse of a member of the Reserve Components who dies
⁽¹⁾^b^e^f^o^r^e^b^eⁱⁿ^gⁿ^o^ti^fⁱ^ed^t^h^at^h^e^o^r^s^h^e^h^a^d^co^m^p^leted^th^e^y^ear^{s o}^f^ser^v^ice^r^e^q^u^ir^ed^to^b^e
^elig^ib^le^f^o^r^Reser^v^e^Co^m^p^oⁿ^eⁿ^{t r}^e^tir^ed^p^a^y^;^o^r
^{(2) du}^riⁿ^g^t^h^{e 90-}^da^y^peri^{od beg}ⁱⁿⁿⁱⁿ^g^oⁿ^t^h^{e dat}^e^{of n}^o^tⁱ^fⁱ^catⁱ^oⁿ^t^h^at^t^h^e^m^e^m^b^er^h^a^d
^co^m^p^leted^t^h^e^y^ear^{s o}^f^ser^v^ice^r^e^q^u^ir^ed^f^o^r^elig^ib^ilit^y^f^o^r^Re^se^r^v^{e Co}^m^p^oⁿ^eⁿ^{t r}^e^tir^ed^p^a^y^,ⁱ^f
^h^e^{or s}^h^{e h}^a^dⁿ^o^{t already}^rej^ect^ed^p^a^r^ticip^atioⁿⁱⁿ^th^e^RCSB^P^.
The income payable is equal to 55% of retired pay which the member would have been entitled to
receive had the service member been retired and at least age 60 at the time of death (less any
Veterans Affairs Dependency and Indemnity Compensation payable, see below).
In 1997, Congress created a special annuity of then-$165, now $205.61, (subject to cost of living
adjustments) payable monthly to certain surviving spouses. These widows were married to certain
retired or retirement-eligible members who died without electing SBP coverage. Subject to
certain restrictions on remarriage and the receipt of certain other government-sponsored
compensation, the eligible surviving spouse must have been married to a member who
⁽^A⁾^b^eca^m^e^en^ti^tled^to^r^e^tir^ed^o^r^r^e^tain^er^p^a^y^bef^o^{re S}^e^pt^e^m^be^{r 21,}¹⁹^72,^di^ed^bef^o^{re March}
^{21, 1}^974,^an^d^w^a^s^eⁿ^{titled to retired or retain}^{er pay}^on^th^{e da}^{te of}^death^;^or
⁽^B⁾^dⁱ^ed^b^e^f^o^r^e^Octo^b^e^r¹^,¹⁹⁷⁸^,^an^d^{at t}^h^e^ti^m^e^o^f^hⁱ^s^d^eath^w^o^u^l^d^h^a^v^e^b^een^en^t^itled^to
^r^e^tir^ed^p^a^y^uⁿ^d^er^ch^ap^ter⁶⁷^[^R^etir^ed^P^a^y^f^o^r^Noⁿ^-^Reg^u^lar^Ser^v^ice]^o^f^{title 1}⁰^,^Unⁱ^t^e^d^S^t^a^t^e^s

^C^{ode (as}ⁱⁿ^eff^ect^bef^o^{re D}^ece^m^b^{er 1, 1994),}^bu^t^f^o^{r t}^h^{e f}^a^c^t^t^h^at^h^e^w^a^s^uⁿ^d^{er 60 y}^ear^s^of³¹
^ag^e.
Under the original SBP, an SBP benefit may be paid to an eligible spouse, dependent child(ren),
eligible former spouse, or eligible former spouse and dependent child(ren) following the death of
an active duty member. This benefit will be paid if the deceased active duty service member, at
the time of death,
^{(1) w}^a^s^{eligible to r}^eceiv^e^{retired pay}^;^or
^{(2) w}^a^s^{a co}^m^mⁱ^s^sⁱ^oⁿ^{ed of}^fⁱ^ce^{r, h}^a^{d com}^p^{leted 20 y}^ears^of^s^e^rv^{ice, bu}^t^w^a^sⁿ^o^t^y^e^{t eli}^g^ible³²
^{to retire as}^{a com}^mⁱ^s^s^ion^e^{d off}ⁱ^cer.
The SBP benefit payable to the survivor of such a deceased active duty member is equal to 55%
of the amount of retired pay (less any amount received on the basis of Department of Veterans
Affairs (VA) Dependency and Indemnity Compensation or DIC; see section below on VA DIC)
that the deceased service member would have been eligible for had he or she elected maximum
coverage and retired on the day of his or her death.
Recent legislation³³ has expanded the coverage to the survivors of individuals who die while on
active duty and who are not retirement-eligible, effective September 10, 2001. Under these
provisions, the surviving spouses of active duty personnel who die are provided an annuity. This
annuity for an active duty (non-retirement-eligible member) is determined by assuming the ³⁴
individual would have been eligible to retire under Sec. 1201, Title 10 USC, with a total
disability. The surviving spouse’s annuity is based on the amount of disability retired pay the
servicemember would have received under Sec. 1201. The spouse’s share is 55% of that amount
of the member’s disability retired pay if the surviving spouse is under age 62, and 35% if age 62
or over. Depending on when the individual entered the service, the amount used may be either the
terminal monthly basic pay (for those who entered service on or before September 7, 1980) or the
average basic pay for the 36- month period (i.e., “high three” years) the member earned the ³⁵
highest rate of basic pay (for those who entered the service after September 7, 1980). The
amount of monthly disability pay is computed either by multiplying the determined amount of
basic pay by the percentage disability or by computing 2.5% of basic pay times the member’s
years of service up to 75%, whichever is higher. Since the legislation assumes the level of
disability is 100%, the amount of basic pay (or “high three”) used would be multiplied by 75%. In

³¹^P^.^L^.¹⁰^5-⁸⁵^;¹¹^{1 S}^t^a^t^{. 1}⁸⁰⁰^{; N}^o^v^.¹⁸^{, 1}⁹⁹⁷^a^s^a^m^e^nde^{d by}^P^.^L^.¹⁰⁶^-⁶^{5; 1}¹³^Sta^t^.⁶⁶^{8; N}^o^v^.^5,¹⁹⁹⁹^a^s^am^e^nde^{d by}
^P.L^.¹⁰^7-³^14;^s^e^c^.⁶³^{4; D}^e^c^.²^,²⁰⁰²^.
³²^For^m^e^r^eⁿ^lis^te^{d pe}^r^s^o^nne^l^or^w^a^r^r^a^{nt of}^fⁱ^c^e^r^s^w^{ho a}^r^e^c^o^m^m^is^sⁱ^one^{d m}^u^s^t^c^o^m^p^le^te^a^t^le^a^s^{t 10 y}^e^a^r^s^of^a^c^tiv^e^duty
^a^s^c^o^m^mⁱ^s^sⁱ^one^{d of}^fⁱ^c^e^r^s^bef^o^r^e^the^y^a^r^e^a^llow^e^{d to r}^e^tir^e^a^s^c^o^m^mⁱ^s^sⁱ^one^d^of^fⁱ^c^e^r^s^.^Se^c^tion⁵²^3,^P.^L^.^101-⁵¹^{0, N}^o^v^.
^{5, 1}⁹⁹⁰^,^r^e^duc^e^d^the^te^n-^y^e^a^r^mⁱ^nim^u^m^{to e}ⁱ^g^h^{t y}^e^a^r^s^,^thr^oug^h^O^c^t.^1,¹⁹^95,^to^a^s^sⁱ^s^t^{in t}^h^e^dr^a^w^dow^{n of}^the^A^r^m^e^d
^F^o^rces.
³³^P^.^L.¹⁰⁷^-¹⁰^7,¹¹^{5 S}^t^at^{. 11}⁵¹^et^s^e^q^.^;^Dec.²⁸^,²⁰⁰¹^.
³⁴^U^nde^r^t^h^e^s^e^pr^ov^is^io^ns^{, t}^h^e^m^e^m^b^e^r^’^s^dis^a^bili^ty^m^a^y^{not be}^the^r^e^s^u^lt^of^inte^nti^ona^l^ne^g^l^e^c^t^of^mⁱ^s^c^onduc^t^.
³⁵^P^.^L^.¹⁰^8-³⁷⁵^,^s^e^c^.⁶^41,^O^c^{t. 2}⁸^,²⁰⁰^{4 m}^odifⁱ^e^d^the^c^o^m^puta^tion^o^f^r^e^tir^e^d^pa^y^f^o^r^r^e^s^e^r^v^is^{t w}^{ho die}^{on a}^c^tiv^e^du^ty
^“^b^y^c^a^lc^ula^ting^the^a^v^e^r^a^g^e^m^onthly^ba^sic^pa^y^f^o^{r purpose}^s^of^...^a^nnu^ity^pa^y^m^eⁿ^{ts a}^sⁱ^f^the^y^ha^{d be}^eⁿ^eⁿ^title^{d to}^ba^sic
^p^a^y^f^o^{r t}^h^{e 3}⁶^m^oⁿ^t^h^s^p^r^ecedⁱⁿ^{g t}^h^ei^{r ret}ⁱ^r^em^en^t^[^o^{r act}ⁱ^v^{e du}^t^y^d^e^a^t^h]^regard^l^e^{ss o}^f^w^h^et^h^e^{r t}^h^{e m}^e^m^b^{er ser}^v^ed^t^h^e
^eⁿ^tir^e^pe^rⁱ^o^d^{on a}^c^tiv^e^d^u^ty^.”^C^ong^r^e^s^sⁱ^ona^{l R}^e^c^o^r^d^{, O}^c^t.^8,²⁰^04:^H⁹⁵⁴^4.

2003, Congress allowed for these benefits to be paid to the surviving children, if any, of an active ³⁶

member who dies. This provision was made effective November 23, 2003. As part of the
National Defense Act for Fiscal Year 2007, Congress replaced the November 23, 2003 effective ³⁷
date with October 7, 2001. With the children as the SBP beneficiaries, the surviving spouse
avoids any offsets from the receipt of Dependency and Indemnity Compensation (see the sec.
entitled “Survivor Benefit Plan and Veterans’ Affairs Dependency and Indemnity
Compensation”).

The relationship between benefits received from the Survivor Benefit Plan and social security is
complicated and has been subjected to periodic changes. For this reason, the following three
sections describe how military personnel are covered under social security, the relationship
between SBP and social security benefits (integration) that existed before enactment of the ³⁸
FY1986 DOD Authorization Act, and the changes in the SBP which affected the interaction of
the two benefit systems that were made by this latter act and others.
Active duty military personnel have been fully covered by social security and have paid social
security taxes since January 1, 1957. In addition to providing monthly benefits to civilian retirees
and retired military personnel age 62 or older, social security provides benefits to the widows or
widowers of deceased military and civilian retirees.
The surviving spouse or former spouse of a military retiree is entitled to receive social security ³⁹
survivor benefits based on the deceased retiree’s active duty basic military pay. Persons eligible
for social security survivor benefits may also be entitled to social security retirement benefits
based on their own employment. However, this “dual entitlement” is prohibited under social
security law. People always receive social security benefits that they themselves earned as a result
of their own employment. If those benefits exceed the amount of social security survivor benefits,
the latter are not payable. However, if the survivor’s own social security retirement benefits are
less than the social security survivor benefits, the difference between the two is paid in addition
to the survivor’s own social security retirement benefits.
For example, assume that A and B are both surviving spouses of military retirees and are both
entitled to social security benefits—based on the military service of their deceased spouses—of ⁴⁰
$400 per month. Assume further that both surviving spouses have been employed and are
entitled to their own social security retirement benefits based on that employment. Survivor A is

³⁶^P^.^L.¹⁰⁸^-¹³^6,^No^v.²⁴^,²⁰⁰³^.
³⁷^U^.^{S. C}^ong^r^e^s^s^.^C^onf^e^r^eⁿ^c^e^C^o^m^m^itte^e^,^N^a^tiona^{l D}^e^f^e^ns^e^A^u^thorⁱ^z^a^{tion A}^c^{t f}^o^r^Fis^c^a^l^Y^e^a^r²⁰⁰⁷^,^H^.^R^e^{pt. 1}^09-⁷²^0,
¹⁰⁹^th^Co^ng^.,²^nd^Se^s^s^{., H}^.^R^.⁵¹²²^,^Se^pte^m^be^r^29,²⁰^06:⁷^48.
³⁸^P^.^L^.^99-¹⁴^5;⁹⁹^Sta^t^.⁶⁶^{6 e}^t^s^e^q^.^;^N^o^v^.^8,¹⁹⁸⁵^.
³⁹^T^h^e^s^u^rv^iv^ing^s^pous^e^mⁱ^g^h^{t a}^l^s^o^be^eⁿ^title^{d to}^a^d^d^itio^na^{l s}^o^cⁱ^a^l^s^e^c^u^rity^be^ne^f^its^ba^s^e^{d on a}ⁿ^y^cⁱ^v^ilia^{n e}^m^ploy^m^e^nt
^o^f^th^{e d}^eceased^{retiree. Fo}^{r ease o}^f^e^x^p^l^an^atioⁿ^,^h^o^w^e^v^e^{r, th}^is^rep^o^r^{t o}ⁿ^ly^dⁱ^scu^{sses th}^{e en}^titlem^eⁿ^t^to^su^rv^iv^o^r^b^eⁿ^e^f^its
^ba^se^{d on}^the^re^tire^e^’^{s m}^ilita^r^y^se^r^v^ic^e^.
⁴⁰^A^{ll am}^ounts^a^r^e^hy^pothe^tic^a^l^aⁿ^d^us^e^d^only^f^o^r^pur^p^o^s^e^s^of^e^x^am^pl^e^.

entitled to $450 per month in social security retirement benefits based on his or her own
employment. Because survivor A’s own social security retirement benefit of $450 per month
exceeds the social security survivor entitlement of $400 per month, only the $450 retirement
benefit is payable. Survivor B, on the other hand, is entitled to $350 per month in social security
retirement benefits based on his or her own employment. Because B’s social security retirement
benefit ($350) is less than the social security survivor benefit ($400), the full $350 retirement
benefit is payable, plus the $50 difference between the two, for a total of $400 per month in social
security benefits.
Social security survivor benefits based on a spouse’s or former spouse’s employment (including
military service) are first payable at age 60 (at age 50, if the surviving spouse is totally disabled,
or at any age if and as long as there are children under the age of 16), and social security
retirement benefits based on one’s own employment are first payable at age 62.
The SBP was (and for certain beneficiaries, is) “integrated” with social security: SBP benefits are
reduced or “offset” when the survivor reaches age 62. The rationale for this integration was (1)
the SBP was intended to provide a specific portion of a deceased military retiree’s retired pay to
the retiree’s surviving spouse or former spouse, and (2) to recognize the government’s employer
contribution under both social security and SBP. It was, therefore, considered appropriate by the
Congress that all sources of survivor benefits attributable to military service—DOD and non-
DOD—be considered in the computation of this specific portion of a deceased retiree’s retired
pay. The cost of the SBP as well as the benefit received by the survivor(s), therefore, reflect this ⁴¹
offset. The offset occurs at age 62 regardless of when the survivor actually begins to draw social ⁴²
security benefits.
The 1972 legislation which established the SBP provided that those social security survivor
benefits which a surviving spouse or former spouse of a deceased retiree is eligible to receive,
based solely on the military service of the retiree, are subtracted from the survivor’s SBP
payment. The legislative history of the SBP statute indicates that the sum of (1) the reduced SBP
payments, plus (2) social security benefits earned as a result of the retiree’s military service
(computed assuming the retiree lived to age 65 and the surviving spouse begins to draw social
security survivor benefits at age 62), and other sources as well, would provide the desired 55% of
the base amount of retired pay. The aggregate of these integrated benefits are used in determining
the 55%. In other words, this plan was designed to provide coverage at a rate no less than what
the survivor was entitled to on the basis of social security survivor benefits earned as a result of
military service. However, the eligible survivor may be too young to receive social security
survivor benefits at the time the member or retiree dies. Therefore, the SBP provides a larger

⁴¹^Iⁿ^t^h^e^le^gⁱ^s^l^a^tiv^e^his^t^or^y^of^P^.^L^.^92-⁴²^{5, (}^S^.R^e^p^t.^92-¹⁰⁸⁹⁾^{, it w}^a^s^note^d^tha^t^“^A^ddi^ng^a^s^u^r^v^iv^or^beⁿ^e^f^{it pla}ⁿ^{, s}ⁱ^m^ila^r
^t^o^t^h^{e on}^{e avai}^l^a^b^l^{e t}^o^ci^vi^l^servi^{ce ret}ⁱ^r^ees,^oⁿ^t^o^p^o^f^t^h^{e su}^rvi^v^o^r^ben^e^fⁱ^t^s^av^ai^l^a^b^l^{e f}^r^o^m^so^ci^al^secu^ri^t^y^w^o^u^l^d^p^r^o^vⁱ^d^e
^a^plaⁿ^s^u^pe^rⁱ^or^to^plaⁿ^s^a^v^a^ila^ble^{to o}^t^he^r^g^o^v^e^rⁿ^m^e^{nt em}^ploy^ee^s^{. . .}^[^T^]^h^e^pr^o^pos^e^d^be^ne^f^{it pr}^og^r^a^m^is^de^sⁱ^gⁿ^e^d^t^o
^buil^d^up^{on t}^h^eⁱⁿ^c^o^m^e^-^m^aⁱ^nteⁿ^aⁿ^c^e^f^ounda^tio^{n of}^the^s^o^cⁱ^a^l^s^e^c^u^rⁱ^t^y^sy^s^t^em^.^”
⁴²^A^s^u^r^v^iv^ing^s^pous^e^or^f^o^r^m^e^r^s^pous^e^w^{ho is}^t^h^e^pa^r^e^nt^of^a^c^h^ild^of^the^d^eceased^ma^y^al^so^recei^ve^so^ci^al^secu^ri^t^y
^m^o^t^h^{er’s o}^r^f^a^t^h^{er’s b}^eⁿ^e^fⁱ^t^s^at^an^y^age,^{as l}^oⁿ^g^{as t}^h^{e ch}ⁱ^l^dⁱ^s^un^d^e^{r age 1}⁶^.^T^h^{e S}^B^P^o^f^f^s^et^al^so^ap^plⁱ^e^{s t}^o^t^h^ese
^m^o^the^r^’^s^or^f^a^the^r^’^s^be^ne^f^its^if^the^r^e^is^only^one^s^u^c^h^c^h^il^d,^but^do^e^s^{not a}^p^ply^if^the^r^e^a^r^e^t^w^{o or}^m^o^r^e^c^h^il^dr^eⁿ^u^nde^r
^{age 1}⁶^.

benefit until the eligible survivor reaches age 62 (in recognition of eligibility for social security
benefits regardless of the age when a survivor begins to draw such benefits).
The Comptroller General has noted that it was the intention of Congress that the combined total
of the offset SBP benefit and the social security survivor benefit would not be less than the pre-
offset SBP benefit. The Comptroller General, noting congressional intention, stated that:
^T^h^{e m}^e^t^h^{od of}^com^p^u^tⁱⁿ^g^t^h^e^of^f^s^et^w^a^sⁱⁿ^teⁿ^d^{ed to be a “}^m^o^s^{t g}^eⁿ^e^rous^f^o^r^m^u^l^{a ... to}
^ass^u^r^e^t^h^{at a}^wⁱ^d^o^w^wⁱ^l^l^r^ece^iv^{e at}^leas^{t 5}⁵^p^e^r^cen^t^o^f^th^e^m^aⁿ^’^s^m^ilitar^y^r^e^tir^ed^p^a^y^.^”^st
^H^.^R^e^pt^{. 92-}^481,⁹²^{d C}^oⁿ^g^{., 1}^Se^ss.^,^Se^p^t^e^m^b^e^r¹⁶^,¹⁹⁷¹^,^a^c^c^o^m^p^aⁿ^yⁱ^ng^H^.^R^.^1067,^at^pag^e
^{14. S}ⁱ^mⁱ^l^a^{r s}^t^at^e^m^eⁿ^t^s^{appear on}^pag^e^s^{30, 3}¹^an^d⁵³^of^S^.^R^e^pt^{. 92-}¹⁰⁸⁹^{, 9}^{2d C}^oⁿ^g^{., 2d}
^S^e^s^s^{., S}^e^pt^e^m^{ber 6, 1972.}
^{It is}^{clear, th}^eref^{ore, th}^{at C}^oⁿ^g^r^es^s^{did n}^o^{t in}^ten^d^{to au}^t^h^{orize an}^of^fs^et^w^h^ich^w^{ould am}^o^uⁿ^t
^to^m^o^{re th}^an^th^{e co}^m^p^arable^s^o^{cial s}^ecu^rit^y^ben^e^f^{it. W}^e^{do n}^o^{t f}ⁱⁿ^d^t^h^{at t}^h^{e s}^t^at^u^t^or^y⁴³
^lan^g^u^a^g^e^o^f^t^h^{e S}^u^r^vⁱ^v^o^r^B^eⁿ^e^f^{it P}^l^an^r^e^q^u^ir^{es o}^r^p^e^r^m^{its t}^h^a^t^r^e^su^lt.
Thus, it was the intent of Congress that (1) the SBP benefit alone, or (2) the offset SBP benefit
and social security survivor benefit combined, would be at least equal to 55% of the base amount
of retired pay.
However, the amount of social security survivor benefits can vary based on a variety of factors.
These include (1) the survivor’s age when he or she begins to receive benefits, (2) the age of the
military retiree at the time of death, and (3) whether or not the retiree had begun to receive social
security benefits before death. The actual social security benefit due to some or all of these factors
may therefore be less than the hypothetical benefit computed under the assumptions of the SBP
statute, and on which the SBP offset is based.
As an example of the integration of the SBP and social security, assume a survivor is receiving an
SBP income of $600 per month. The survivor is also entitled to social security survivor benefits
of $100 (based on the military service of his or her deceased spouse or former spouse). Because
of the survivor’s own employment, this same survivor is eligible to receive social security
retirement benefits of $150 per month (see Table 3). Because the social security survivor benefit
is less than the social security retirement benefit (and therefore not payable) the survivor only
receives his or her own earned social security retirement benefit of $150. However, because the
survivor was entitled to a social security survivor benefit of $100 based on the military service of
the deceased spouse, the SBP payment is reduced or offset by $100 when the survivor reaches age

62. Thus, the survivor’s final monthly income is computed as follows:

Table 3. Breakdown of Pre-Integration Monthly Benefits of a Hypothetical SBP
Beneficiary
^{SBP benefit}^$60⁰
^Social^{Security Survivor Benefits}^$10⁰
^Social^{Security Benefits based o}ⁿ^{the Survivor’s own em}^ployment^$15⁰
^Note:^{(The SB}^{P benefit minu}^{s th}^{e social security sur}^{vivor bene}^{fit) plus t}^{he social security retirem}^e^{nt be}^nefit
^{equals th}^{e total sum re}^{ceived from both social security a}^{nd the}^{SBP, or}

⁴³^Offⁱ^c^e^o^f^the^Com^p^trolle^{r G}^e^ne^ra^{l of}^the^Unite^{d Sta}^t^e^s^.^Vo^l.^62,^B^-²⁰³³⁹^3,^Ma^tte^r^of^{: D}^o^r^a^M^.^L^a^m^b^e^r^{t, J}^u^ne¹⁵^,
¹⁹⁸^{3: 47}^2-⁴⁷³^.

^($60^{0 - $}¹⁰^{0) + $}¹⁵⁰^{= $}⁶⁵^0.
In 1980, legislation was enacted that limited the reduction of SBP income due to social security ⁴⁴
benefits to 40%. For example, assume a survivor receives a monthly SBP benefit of $600 and
becomes entitled to social security survivor payments (based on the member’s military service) of
$300 per month. The social security survivor benefit is therefore 50% of the SBP income.
However, because the offset can be no more than 40% of the SBP income, the SBP benefit will be
offset or reduced, at age 62, by the maximum of 40% ($600 x 40% = $240) and not by the entire
$300 from social security. The total amount the survivor will receive is $660, or (1) $300 of social
security benefits plus (2) $600-$240=$360 of the reduced SBP income.
In title VII of the FY1986 DOD Authorization Act (P.L. 99-145, November 8, 1985),⁴⁵ Congress
modified the Survivor Benefit Plan so that retirees and their prospective spouse survivors would
know the exact amount of the SBP benefit that would be paid upon the retiree’s death. Congress
did this by eliminating the integration with social security. The House Armed Services Committee
report on the legislation stated the rationale for such a change regarding the social security offset:
^T^h^{e prin}^{cipal pro}^b^lem^s^as^s^o^ci^ated^wⁱ^t^h^th^e^s^o^{cial s}^e^c^u^rit^y^o^f^f^s^et^s^{are t}^w^o^f^old:
⁽¹⁾^th^{e o}^f^f^s^{et is}ⁿ^o^{t calcu}^lated^uⁿ^t^{il th}^{e ti}^m^e^o^f^d^eath^;^h^eⁿ^ce^m^ilitar^y^m^e^m^b^er^s^c^aⁿⁿ^o^t^p^r^e^dⁱ^c^t
^th^{e i}^m^{pact o}^f^th^{e offs}^{et at th}^{e ti}^m^e^of^retire^m^eⁿ^t^w^h^en^t^h^{e d}^ecisioⁿ^to^p^a^r^ticip^{ate in}^th^{e p}^l^aⁿ
^{is m}^a^d^e^;
^{(2) t}^h^{e prov}ⁱ^sⁱ^oⁿⁱ^s^di^ffⁱ^c^u^l^t^t^o^ex^pl^ai^{n a}ⁿ^{d t}^o^uⁿ^d^ers^t^aⁿ^d;^h^eⁿ^c^e^m^a^ny^percei^v^e^t^h^at^an⁴⁶
^e^a^r^ne^d^b^e^ne^fi^tⁱ^s^uⁿ^f^aⁱ^r^l^y^t^a^ke^{n a}^w^a^y^.
The new plan was labeled the “two-tier” SBP. Under the two-tier SBP, a surviving spouse of a
deceased military retiree will receive 55% of the base amount of military retired pay as a survivor
benefit (as was the case under the original plan). Upon reaching age 62, the SBP benefit will be
reduced automatically to 35% of the base amount of military retired pay for any surviving spouse
or former spouse covered under the two-tier SBP. Since it is expected that benefits for those
eligible for the two-tier plan would have been subjected to the full 40% social security offset (i.e.,
a reduction from 55% to 33% in SBP benefits at age 62), 35% was considered an appropriate
approximation. Under the two-tier SBP, a spouse or former spouse who becomes a widow or
widower after age 62 will receive an SBP payment equal to 35% of the base amount of military
retired pay. For example, assume a military retiree receives $1,183 per month in military retired
pay at the time of his or her death and has elected to provide the maximum SBP coverage of 55%
of total—and base—retired pay (see Table 1). The retiree’s surviving spouse or former spouse
will receive a $650 per month SBP payment if under age 62 at the time the retiree dies, as was the
case before enactment of the two-tier system. When the surviving spouse or former spouse
reaches age 62, the SBP payment will be reduced to $414 per month (or 35% of the original base
amount military retired pay of $1,183 per month). This reduction from 55% to 35% occurs at age

⁴⁴^P^.^L^.^96-⁴⁰^{2, O}^c^t.^9,¹⁹⁸⁰^{. Se}^e^U^.^{S. C}^o^ng^r^e^s^s^,^Se^na^te^,^Unif^orme^{d S}^e^rv^ic^e^s^Survⁱ^v^o^{r Be}^ne^{fits Ame}ⁿ^d^m^eⁿ^{t of}¹⁹⁸⁰^,
^S.R^e^{pt. 96-}⁷⁴^{8, 96}^th^Co^ng^{., 2}^nd^Se^s^s^{., Se}^pt.²⁹^,¹⁹⁸^0.
⁴⁵^{See Co}ⁿ^f^eren^{ce Co}^mm^itte^{e, DOD 1}⁹⁸⁶^A^u^th^o^r^izatioⁿ^:⁸⁸^-¹⁰⁰^.
⁴⁶^{U.S. C}^ong^re^{ss, House}^Com^m^itte^e^{on A}^r^m^e^{d Se}^rv^ic^e^,^De^pa^rt^m^e^{nt of}^De^f^e^nse^A^u^thoriz^a^tio^{n A}^c^{t, 19}^{86. H}^.^Re^pt.^99-
^{81, H}^.^R^.¹⁸^72,⁹⁹^th^Cong^.,¹^st^Se^s^s^{., Ma}^y^{10, 1}⁹⁸⁵^:²⁵^1.

62 and is not affected by the receipt of social security benefits.⁴⁷ The two-tier plan thus allowed
retirees and their prospective surviving spouses or former spouses to predict what their survivors’
future SBP payments will be upon a retiree’s death and/or when the survivors reach age 62.
Two selected groups will have their SBP payments calculated under either the pre-two-tier plan
(including the social security offset) or the two-tier plan, depending upon which is more
financially advantageous to the survivor. The first group includes those beneficiaries (widow or
widowers) who were receiving an SBP benefit on October 1, 1985. The second group includes the
spouses or former spouses of military personnel who were qualified for or were already receiving ⁴⁸
military retired pay on October 1, 1985. The spouses or former spouses of military personnel
who were not qualified to receive military retired pay on October 1, 1985 (i.e., those who had not
been on active duty with 20 or more years of service or completed 20 or more years of creditable
Reserve Component service as of October 1, 1985) will have their SBP payments computed using
the two-tier method.
Participation rates have increased since the introduction of the two-tier plan. Of those retiring in
FY1984, 54% elected to participate in the SBP. Of those retiring in FY1990 and FY1993, 60 and
58% elected to participate, respectively. (Some of those retiring in FY1990 may be eligible to
have the benefits for there survivors calculated under either the two-tier or social security offset ⁴⁹
method.) In other words, the change to the two-tier benefit has been associated with an increase
in participation over the social security offset method.
The complicated nature of the social security offset was not fully understood by many
servicemembers, retirees, or widow(er)s. Thus, when the two-tier SBP was introduced, with its
straight forward reduction of benefits at age 62, many felt that the two-tier SBP represented a
reduction in their benefits or potential benefit over what was available under the social security
offset SBP. Table 4 provides a comparison of both plans computed for an active duty service
member (E-7) who retires from the military at age 42 with 20 years of service. Upon retirement
from the military, the retiree is enrolled in the SBP and selects coverage for a base pay amount
equal $1,670. This retiree then accepts civilian employment (including social security deductions)
for another 15 years. In this case, the hypothetical retiree has SBP withholdings computed under
the Flat-Rate formula, $1,670 x 6.5%=$108.55. (For the purposes of this example, cost of living
adjustments are not used. All numbers represent reasonable approximations.)
At age 59, the retiree dies. The surviving spouse begins receiving a military Survivor Benefit
equal to 55% of base military retired pay or $1,670 x 55%=$918 per month.
In addition, the retiree’s spouse was employed and earned social security benefits of $500 per
month from this employment. Since the military retiree made social security payments both in the

⁴⁷^U^nde^r^t^h^e^s^o^cⁱ^a^l^s^e^c^u^r^ity^of^f^s^e^t^t^h^e^be^ne^f^{it of}^a^s^pous^e^or^f^o^r^m^e^r^spous^eⁱⁿ^t^h^is^e^x^a^m^ple^c^{ould be}^r^e^duc^e^d^f^r^om^$65⁰
^pe^r^m^{onth t}^o^$⁶⁹⁰^pe^r^m^{onth a}^t^a^g^e^{62 (}ⁱ^.e^.,^a⁴⁰^%^of^f^s^e^t⁾^.
⁴⁸^“^R^e^tir^em^eⁿ^{t qua}^lif^ie^d”^inc^l^u^d^e^s^t^hos^e^m^e^m^b^e^r^s^of^the^R^e^s^e^r^v^e^C^o^m^pone^nts^w^{ho a}^r^e^qua^lif^ie^{d t}^o^r^eceiv^e^m^ilitar^y
^r^e^tir^e^d^pa^y^e^x^c^e^p^{t f}^o^r^the^f^a^c^t^tha^t^the^y^a^r^e^unde^r^a^g^e^{60 a}ⁿ^{d, t}^h^e^r^e^f^or^e^,^m^a^y^{not be}^gⁱ^{n t}^o^dr^a^w^r^e^s^e^r^v^e^r^e^tir^e^d^pa^y^.
⁴⁹^D^e^pa^r^t^m^e^{nt of}^D^e^f^e^ns^e^,^O^f^fⁱ^ce^of^the^A^c^tua^r^y^,^R^C^S^N^o^{. D}^D^M⁽^A⁾¹³^75,^{DOD S}^t^a^tistica^l^Rep^o^{rt o}ⁿ^th^{e M}^ilita^ry
^R^e^tⁱ^r^emen^t^S^y^st^em,^F^Y¹⁹⁸⁴^:²¹⁵^a^{nd R}^C^S^N^o^{. D}^D^-^F^M^&^P⁽^Q⁾¹³⁷⁵^{, FY}¹⁹^90:²^33;^{DOD S}^t^a^t^istica^l^Rep^o^r^t,^FY¹⁹⁹³^:
²⁴⁷^.

service and in the subsequent civilian employment, the surviving spouse is eligible to receive
social security survivor benefits of $631 per month based on the retiree’s entire career. For the
sake of this example, $378 of the $631 are attributed to the social security contributions made
during military service. (It is this $378 per month that will be taken into account under the offset
plan.)
As described above, a person (in this case the surviving spouse) receives his/her own earned
social security benefits first. Thus, this spouse will receive $500 per month in social security
benefits. In addition, since the social security survivor benefit is greater ($631) than the spouse’s
earned benefit ($500), the spouse will also receive the difference ($631 - $500=$131) added to
his/her own earned benefit ($131 + $500) for a total social security benefit of $631 per month. In
this example, the spouse begins receiving these benefits at age 62.
Table 4. Comparison of Monthly SBP and Social Security Benefits Computed Using
the Two-Tier and Offset Formulas
^Social
^Security^Two-Tier
^Offset
^{Base retired pay (1}⁹⁹^{4, E-7, with}^{20 yea}^{rs of ser}^vice)^$1,67⁰^$1,67⁰
^{SBP monthly withholdings (Flat-}^R^{ate or 6.5% of}^base^pay)^$10^8.55^$10^8.55
^{SBP benefit for a s}^pouse^{under ag}^{e 62 (}^55%^{of base}^pay)^$91⁸^$91⁸
^{Social security benefits of t}^{he su}^r^{viving spouse}
^{Based on the s}^{urviving s}^{pouse’s c}^areer^$50⁰^$50⁰
^$63^{1 $63}¹^{Based on the retiree’s civilian and}^{military career}
^($37^{8 attrib}^{utable to military ser}^{vice only)}
^{Total soci}^{al security bene}^{fit (spouse’s $5}⁰⁰^plus^$1^{31 [}⁶³^1-5^00]^{from the me}^mbe^{r’s career}^$63^{1 $63}¹
^$58⁴
^$55⁰^{(35% or}
^{SBP benefits at age 6}²^($91^{8 - $}³⁷⁸^{or 4}^0%,^base)
^whichever^{is less)}
^$1,18¹^$1,21⁵
^{Total survivor income from both}^{SBP and social security}^($55^{0 + $}⁶³¹⁾^($58^{4 +}
^$63¹⁾
Under the two-tier formula, the military SBP amount is reduced from 55 to 35% of base military
retired pay or from $918 to ($1,670 x 35%=) $584 per month at age 62. When the social security
benefit is added, the surviving spouse’s income is ($584 + $631=) $1,215 per month. In other
words, prior to age 62, the surviving spouse receives $918 per month from the military Survivor
Benefit Plan. Assuming the spouse begins receiving social security benefits at age 62, total
income for the spouse (from both the reduced military SBP and social security) increases to
$1,215 per month.
Turning to SBP benefits computed under the offset method, prior to age 62, this spouse receives
the same SBP benefit of 55% of base military retired pay ($918 per month). At age 62, however,
the SBP is offset—reduced—by social security benefits attributable to the member’s military

service, ($378), subject to the 40% limit on the offset. Under law, this offset occurs regardless of
whether or not the spouse is actually receiving these benefits. Since the $378 of social security
benefits based on the service member’s career is greater than 40% of the SBP (40% of $918 is
rounded to $367), the SBP is offset by 40% or $367 rather than by entire social security benefit
attributable to the member’s military service (i.e., $918 - $367= $551). Thus, at age 62, the
surviving spouse’s SBP benefit is reduced from $918 to $551 per month. When the total social
security benefit is added in, the surviving spouse’s total income is $551 + $631 for a total of
$1,182 per month.
In other words, prior to age 62, a spouse receives the same SBP benefit under either the two-tier
or original offset formula SBP ($918). However, as this example shows, at age 62, monthly
benefits from both SBP and social security are greater under the two-tier method ($1,215) than
under the offset formula ($1,182).
This example can only allude to some of the possible effects and interactions of the SBP and
social security. The amount of SBP benefits and the final income of the surviving spouse are
dependent upon a number of factors including, but not limited to, the retiree’s years of service,
rank at retirement, year in which the retirement occurred, social security payments made by the
retiree, the work history of the surviving spouse and the eligibility for VA benefits (as described
below).

Established under P.L. 101-189,⁵⁰ the Supplemental Survivor Benefit Plan provides SBP
participants an opportunity to avoid or limit any reductions in SBP benefits that would occur at
age 62 for a spouse or former spouse. This legislation also created an open season that would
allow certain retirees to enroll in the SBP, increase SBP coverage, and opt to participate in the
new Supplemental SBP.
Participation in the Supplemental SBP is voluntary and not automatic. In order to be eligible,
retirees must be participants in the two-tier SBP. Those eligible to have their benefits computed
under either the Social Security offset method or the two-tier method had an opportunity to make
an irrevocable switch to the two-tier method in order to participate in the Supplemental SBP.
(Such a shift may not be a wise change for all retirees—particularly for those who retired before
or around 1957 or who may also be civil service retirees. In certain instances, the social security
offset would be less than that which would occur under the two-tier plan. Such a limited
reduction may negate the need for purchasing supplemental benefits.) Members who are
retirement-eligible may elect to participate in the Supplemental SBP prior to actually retiring.
Should the member die while retirement-eligible (but before actually retiring) that member’s
designated spouse or former spouse would be provided benefits under SBP without the
Supplemental. Actual eligibility for Supplemental benefits begins only after retired pay is
withheld. Should a retirement-eligible member elect to participate in the Supplemental before
retiring and later refuse SBP participation at retirement, the Supplemental SBP would be voided.
Those members who are participants without an eligible spouse and who remarry, may elect to
participate in the Supplemental SBP. Such an election is irrevocable and must be made within one
year of the remarriage.

⁵⁰¹⁰^{3 Sta}^t^{. 1}⁵⁷⁷^{, e}^t^s^e^q^{., N}^o^v^.²⁹^,¹⁹⁸^{9; a}^s^a^m^e^nde^{d by}^P^.^L^.¹⁰^1-⁵¹⁰^{, 1}⁰⁴^Sta^t^.¹⁵⁸⁰^{, N}^o^v^.^5,¹⁹⁹⁰^.

An eligible participant may voluntarily elect to provide Supplemental coverage for a former
spouse. The service secretary concerned must be provided with a statement (in a manner
prescribed by the secretary) setting forth whether such an agreement is part of or incident to a
divorce settlement and, if so, whether it has been voluntarily incorporated in the court order. This
documentation must be provided to the secretary within one year of the date of the court order or
filing invoice. With the receipt of the appropriate documentation, such an election is deemed to
have been made.
Under current two-tier SBP rules, 6.5% of pre-tax base amount retired pay is withheld (as
described above under “Flat-Rate”). A surviving spouse or former spouse is eligible to receive

55% of the base amount of retired pay until reaching age 62 when benefits are reduced to 35%.

Under the Supplemental SBP, the change that occurs at age 62 can be reduced or eliminated. The
cost of this coverage depends on the age of the retiree at sign-up time, as well as the amount of
coverage to be provided to the survivor at age 62.
Table 5 provides a breakdown of costs by level of coverage. According to this breakdown, a
retiree who enrolls in the SBP under the two-tier option (benefits of 55% of the base amount of
retired pay until age 62, then reduced to 35%) will have 6.5% of the base amount of retired pay
withheld regardless of the retiree’s age at the time of enrollment. Should this same retiree enroll
at age 46 and opt to limit the age-62-reduction to 45% of the base amount of retired pay, 9.48% of
the base amount of retired pay will be withheld. Conversely, a retiree who enrolls at age 45 and
opts to eliminate entirely the age-62-reduction will have 12.22% of the base amount of retired pay ⁵¹
withheld.

The FY2005 National Defense Authorization Act⁵² contained language that made a substantial
change in the computation of the SBP benefit for those age 62 and over. Simply stated, this law
phased out the two-tier and Social Security offset formulas discussed above. The actual
mechanics of this process depend on various scenarios.
Generally speaking, this language raised the minimum SBP benefit for those age 62 and over as
follows: On October 1, 2005, the minimum SBP benefit for those survivors age 62 and older was
increased to 40%. This amount will increase to 45% on April 1, 2006, 50% on April 1, 2007, and
55% on April 1, 2008. In other words, a survivor who is age 62 or over and receiving 35% of base
retired pay under the two-tier method will see the benefit increase over the next few years to 55%.
This increase occurs without any additional cost to the retiree or the survivor and therefore
represents a substantial increase for many.

⁵¹^Ri^{ck M}^aze,^“F^ace-lⁱ^f^t^yⁱ^el^d^s^fⁱ^ve^S^B^P^op^tⁱ^oⁿ^s^,^”^{Army T}ⁱ^mes^,^O^c^{t. 28, 19}⁹¹^:¹⁰^.
⁵²^P^.^L^.¹⁰^8-³⁷⁵^;¹¹⁸^Sta^t^.¹⁸¹¹^{; Se}^c^s^{. 64}^4-⁶^{45; O}^c^t.²⁸^,²⁰^04.

Table 5. SBP Supplemental Benefits and Costs by Age
^{Percentage Coverage at Age}⁶²
^{Sign Up A}^ge
^35%^40%^45%^50%^55%
³⁷^{6.5 7.62 8.74}^9.86^10.9⁸
³⁸^{6.5 7.63 8.76}^9.89^11.0²
³⁹^{6.5 7.67 8.84}^10.0¹^11.1⁸
⁴⁰^{6.5 7.72 8.94}^10.1⁶^11.3⁸
⁴¹^{6.5 7.77 9.04}^10.3¹^11.5⁸
⁴²^{6.5 7.78 9.06}^10.3⁴^11.6²
⁴³^{6.5 7.81 9.12}^10.4³^11.7⁴
⁴⁴^{6.5 7.87 9.24}^10.6¹^11.9⁸
⁴⁵^{6.5 7.93 9.36}^10.7⁹^12.2²
⁴⁶^{6.5 7.99 9.48}^10.9⁷^12.4⁶
⁴⁷^{6.5 8.06 9.62}^11.1⁸^12.7⁴
⁴⁸^{6.5 8.12 9.74}^11.3⁶^12.9⁸
⁴⁹^{6.5 8.17 9.84}^11.5¹^13.1⁸
⁵⁰^{6.5 8.24 9.98}^11.7²^13.4⁶
⁵¹^6.5^{8.30 10.1}⁰^11.9^{0 13.7}⁰
⁵²^6.5^{8.38 10.2}⁶^12.1^{4 14.0}²
⁵³^6.5^{8.47 10.4}⁴^12.4^{1 14.3}⁸
⁵⁴^6.5^{8.57 10.6}⁴^12.7^{1 14.7}⁸
⁵⁵^6.5^{8.67 10.8}⁴^13.0^{1 15.1}⁸
⁵⁶^6.5^{8.77 11.0}⁴^13.3^{1 15.5}⁸
⁵⁷^6.5^{8.87 11.2}⁴^13.6^{1 15.9}⁸
⁵⁸^6.5^{8.98 11.4}⁶^13.9^{4 16.4}²
⁵⁹^6.5^{9.10 11.7}⁰^14.3^{0 16.9}⁰
⁶⁰^6.5^{9.12 11.7}⁴^14.3^{6 16.9}⁸
⁶¹^6.5^{9.37 12.2}⁴^15.1^{1 17.9}⁸
⁶²^6.5^{9.52 12.5}⁴^15.5^{6 18.6}⁸
⁶³^6.5^{9.66 12.8}²^15.9^{8 19.1}⁴
⁶⁴^6.5^{9.81 13.1}²^16.4^{3 19.7}⁴
⁶⁵^6.5^{9.96 13.4}²^16.8^{8 20.3}⁴
⁶⁶^{6.5 10.1}^{2 13.7}⁴^17.3^{6 20.9}⁸
⁶⁷^{6.5 10.3}^{0 14.1}⁰^17.9^{0 21.7}⁰
⁶⁸^{6.5 10.4}^{5 14.4}⁰^18.3^{5 22.3}⁰
⁶⁹^{6.5 10.6}^{3 14.7}⁶^18.8^{9 23.0}²
⁷⁰^{6.5 10.8}^{0 15.1}⁰^19.4^{0 23.7}⁰
⁷¹^{6.5 11.0}^{0 15.5}⁰^20.0^{0 24.5}⁰

^{Percentage Coverage at Age}⁶²
^{Sign Up A}^ge
^35%^40%^45%^50%^55%
⁷²^{6.5 11.2}^{4 15.9}⁸^20.7^{2 25.4}⁶
⁷³^{6.5 11.4}^{5 16.4}⁰^21.3^{5 26.3}⁰
⁷⁴^{6.5 11.6}^{8 16.8}⁶^22.0^{4 27.2}²
⁷⁵^{6.5 11.8}^{8 17.2}⁶^22.6^{4 28.0}²
⁷⁶^{6.5 12.1}^{4 17.7}⁸^23.4^{2 29.0}⁶
⁷⁷^{6.5 12.4}^{0 18.3}⁰^24.2^{0 30.1}⁰
⁷⁸^{6.5 12.6}^{3 18.7}⁶^24.8^{9 31.0}²
⁷⁹^{6.5 12.9}^{2 19.3}⁴^25.7^{6 32.1}⁸
⁸⁰^{6.5 13.1}^{8 19.8}⁶^26.5^{4 33.2}²
A survivor who turns 62 during the scheduled increase will have the benefit computed to the
amount that is applicable in the above schedule. For example, consider a covered widow
receiving 55% of base retired pay prior to reaching age 62. If this widow turns 62 on April 30,
2007, the benefit will be reduced to 50% of base retired pay. On April 1, 2008, according to the
schedule, the SBP benefit will be returned to the 55% level.
For those individuals who purchased Supplemental SBP coverage prior to the enactment of this
law, they will see their benefits increase as well after reaching age 62. For example, a 62 year old
widow who is receiving 45% of base retired pay (i.e. 35% under the two-tier computation plus
10% in supplemental coverage), had the benefit increase to 50% on October 1, 2005 and finally to
55% on April 1, 2006. (Note: Effective October 28, 2004, reductions in retired pay used to cover
the supplemental benefit were terminated; however, the supplemental coverage remained in
effect.)
As noted, certain individuals had the opportunity to remain under the Social Security offset
computational formula. These individuals will likewise see their benefits increase under the
above schedule, ultimately reaching 55% on April 1, 2008. The increase in these benefits will
occur when the scheduled increases pass their current benefit level. For example, a widow
receiving say 48% of base retired pay (as computed under the Social Security offset method) will
see no change in benefits until April 1, 2007 when the benefit will increase in 50%, and again to
55% on April 1, 2008. In other words, these beneficiaries will have their benefits computed either
under the Social Security offset method or according to the above schedule, depending on which
is more financially advantageous.
In enacting the above language, Congress also created an open-enrollment period or “open
season” to allow certain retirees to begin SBP participation or to increase their current level of
coverage. The open season began on October 1, 2005 and lasted one year. Those who took
advantage of the open season must have participated for at least two years from the date of
making such an election in order to qualify their survivors for these new benefits. If the retiree
dies before the end of this two-year period, amounts deducted from retired pay to effectuate the
benefits resulting from the open season will be returned to the designated survivor. Premiums
charged “would be calculated based on the total amount of the premium, plus interest, by which

the members’ retired pay would have been reduced if they had elected to participate in the SBP at ⁵³
the first opportunity that they had been afforded.”
In addition, those opting for supplemental coverage during the open season will see the
supplemental premiums phased out by April 1, 2008. Critics have raised doubts about the wisdom
of participating in this open season supplemental coverage given the two-year participation
minimum imposed under law. Critics note that a retiree who signs up for supplemental coverage
on the first day of the open season (October 1, 2005) must contribute to the supplemental for two
years. Should the retiree die two years after making the election (on October 1, 2007), the SBP
benefit will already be increased to 50% under the above schedule for those survivors over age
62, and will reach the 55% level 6 months later. In other words, a retiree will make 2 or more
years worth of supplemental payments in order to effectuate a 6-month or less benefit.
Furthermore, a retiree who waited until April 1, 2006 of the open season (or later) to sign up for
supplemental coverage, or one whose survivor will not turn 62 until after April 1, 2008, will see
no benefit in electing the supplemental coverage during the open season. For these reasons, it has
been suggested that retirees consider the limited benefits and additional costs of such an election
before deciding to participate in the supplemental SBP during the open season and for the same
reasons, DOD may elect not to offer supplemental coverage during this period.

Department of Veterans Affairs (VA) Dependency and Indemnity Compensation (DIC) was ⁵⁴
established in 1956 by the Servicemen’s and Veteran’s Survivor Benefit Act. “Under this Act, as
amended, DIC is paid to the survivors ... of servicemen or veterans who died on or after January
1, 1957, from: (1) a disease or injury incurred or aggravated in line of duty while on active duty
or active duty training; or (2) an injury incurred or aggravated in line of duty while on inactive ⁵⁵
duty training; or (3) a disability compensable under laws administered by the VA.”
A service member can, for example, (1) contract a disease or incur an injury during active duty or
active duty training, (2) recover and return to active duty, (3) retire from an active duty or
Reserve Component military career and participate in the SBP, and (4) subsequently die because
of complications resulting from the original service-related disease or injury. The surviving
spouse or former spouse of the retiree is then entitled to DIC payments from the VA. In this
situation, however, the surviving spouse or former spouse of the retiree is not entitled to receive
the combined total of full SBP and DIC benefits. Instead, the SBP benefit is offset by the ⁵⁶
amount of DIC received (with certain limitations). This offset occurs regardless of the retiree’s
enrollment in the SBP Supplemental.

⁵³^C^ong^r^e^s^sⁱ^ona^{l R}^e^c^o^r^d^{, O}^c^t.^8,²⁰^{04: H}⁹⁵^44.
⁵⁴^P^.^L^.^84-⁸⁸^1,⁷⁰^Sta^t^.⁸^62,⁸^67.
⁵⁵^Milita^ry^Com^p^eⁿ^sa^{tion Ba}^c^k^g^r^o^und^P^a^pe^rs:⁴⁵^7.
⁵⁶^T^h^e^am^ount^of^D^I^{C pa}^y^a^ble^{to a}^s^u^rv^iv^ing^s^pous^e^is^c^o^ntaⁱ^ne^{d i}ⁿ^oⁿ^e^s^e^c^tion^of^la^w^—^title^{38 U}^.^S.C.⁴¹^1(a⁾^{. U}ⁿ^de^r
^thr^e^e^ot^he^r^s^e^c^tions^—³^{8 U}^.^S^.^C^.^if^{, f}^o^r^e^x^am^ple^,^the^s^p^o^u^s^e¹⁾^is^s^u^p^por^ti^ng^a^de^peⁿ^d^eⁿ^t^c^h^il^{d or}^c^h^il^d^r^eⁿ^{, 2)}^isⁱⁿ^a
ⁿ^u^r^siⁿ^g^h^o^m^e,^b^lⁱⁿ^d^o^r^requⁱ^rⁱⁿ^g^ai^d^o^r^assi^st^an^{ce f}^r^o^m^an^o^t^h^e^{r p}^e^r^s^oⁿ^,^o^r^,³⁾ⁱ^s^,^b^ecau^{se o}^f^{a d}ⁱ^sabⁱ^lⁱ^t^y^,^hous^e^b^o^uⁿ^d^or
^ins^titu^tio^na^liz^e^dⁱⁿ^a^w^a^{rd or c}^linⁱ^c^{. SB}^P^aⁿ^nui^tie^s^a^r^e^only^of^fs^e^t^by^the^am^{ount of}^D^I^{C r}^ecei^ved^uⁿ^d^e^{r 3}⁸^U.^S^.^C^.
⁴¹¹^(a^{) a}^nd^no^{t by}^aⁿ^y^inc^r^e^a^s^e^to^this^a^m^{ount a}^s^a^re^s^u^lt^of^e^lig^ibili^ty^unde^{r 38}^U^.^S.C.⁴¹¹⁽^b)-(d)^.

The total of DIC and offset SBP payments combined is, at least, equal to the full SBP benefit. A
surviving spouse or former spouse who remarries loses his or her entitlement to Dependency and
Indemnity Compensation payments. Upon losing Dependency and Indemnity Compensation,
however, the remarried spouse or former spouse has his or her full SBP benefit restored, provided
the remarriage—in accordance with SBP restrictions—occurs after age 60 or age 55 if the
remarriage occurs after November 14, 1986. Also, if the DIC is paid to an SBP-eligible surviving
spouse or former spouse, a percentage of the deceased retiree’s original contributions to the SBP
offset by DIC will be returned to the surviving spouse or former spouse. In other words, if the
SBP is offset by DIC, that proportion of deductions from the deceased retiree’s retired pay which
financed the offset portion of the SBP will be refunded to the surviving spouse or former spouse.
SBP payments can be restored, if the beneficiary becomes ineligible for DIC and remains eligible
for SBP, provided that the refunded SBP payments are returned.
In recent years, Congress has addressed an issue concerning the payment of military retired pay to
retirees who qualify for disability compensation from the Department of Veterans Affairs (VA). In

1891, Congress passed language prohibiting what it regarded as “dual compensation” for either ⁵⁷

past or current service and a disability pension. As modified in 1941, the law prevented the
concurrent receipt of both military nondisability retired pay and VA disability compensation. For
those eligible for both, military retired pay was offset or reduced, dollar for dollar, by VA
disability benefits.
Numerous attempts to address this issue over the past few years or so resulted initially in the
creation of “Combat Related Special Compensation” for certain disabled military retirees whose
disability was a direct result of military combat operations or training and whose disability is
rated at 10% or more.
Later, in FY2004, Congress authorized concurrent receipt for all retirees with at least a 50% ⁵⁸
disability, regardless of the cause of the disability. However, 100% disabled retirees were ⁵⁹
entitled to immediate concurrent receipt effective January 1, 2005.
Although such changes do not affect the receipt of an SBP annuity, some have claimed that if
concurrent receipt or “special pays” for military retirees is allowed, such should also be afforded
their survivors. Under this reasoning, if a military retiree is allowed to receive both military
retired pay and VA disability payments or other “special pay”, it is only fair that the surviving
spouse also receive both the SBP annuity and DIC benefits. Critics contend that concurrent
receipt was originally barred because Congress viewed it as “double dipping” or paying someone
twice for the same period of service. These critics reason that allowing concurrent receipt to the
retiree or the retiree’s survivor are forms of “double dipping” that are inherently unfair to the
taxpayer.
In order to avoid this SBP-DIC offset, surviving spouses of active duty personnel are allowed to
designate their children, if any, as the recipient of the SBP benefit. Unlike retirees, active duty

⁵⁷^{See CRS Rep}^o^r^{t 9}⁵^-4⁶⁹^,^M^ilita^r^y^Retiremen^{t a}ⁿ^d^Veteraⁿ^s^’^Co^mp^en^sa^tioⁿ^:^C^oⁿ^c^u^rren^t^Receip^t^Iss^u^es^{, by}^R^obe^r^t^L^.
^G^o^ldic^{h a}ⁿ^d^Ca^roly^{n L}^.^Me^rc^k^.
⁵⁸^S^{ee CRS}^Issu^{e Bri}^e^f^IB8⁵¹⁵⁹^,^M^ilitary^Re^tire^m^eⁿ^{t: M}^a^j^o^{r Le}^gisl^at^iv^e^Issue^s^{, by}^C^h^a^r^le^s^A^.^H^e^nning^.
⁵⁹^S^{ee CRS}^Issu^{e Bri}^e^f^IB8⁵¹⁵⁹^,^M^ilitary^Re^tire^m^eⁿ^{t: M}^a^j^o^{r Le}^gisl^at^iv^e^Issue^s^{, by}^C^h^a^r^le^s^A^.^H^e^nning^.

personnel do not designate a beneficiary. (As stated earlier, children remain eligible to receive
SBP until they reach age 18 or 22; or for life if mentally of physically incapacitated and if the ⁶⁰
incapacitating condition existed prior to age 18. Eligibility terminates if the child marries.)
The Senate version of the National Defense Authorization Act for Fiscal Year 2006 contained a
provision that would eliminate the SBP-DIC offset entirely. This language was dropped by the ⁶¹
Conference Committee prior to final passage. Again, the Senate version of the National Defense
Authorization Act for Fiscal Year 2007 contained a provision that would eliminate the SBP-DIC
offset entirely. This language was, too, dropped by the Conference Committee prior to final ⁶²
passage.

As noted above, the cost of the SBP is shared by the government and the retirees. The amount
paid by a particular retiree varies depending on level of coverage, years of payments, years the
survivor receives an annuity, etc. For active duty personnel who make no contributions, the
benefit is essentially free. Certain retirees and organizations representing their interests have
claimed that, as originally structured, withholdings from retired pay for SBP were expected, on
average, 40% of the cost of this benefit. Further it is claimed that since retirees are living longer
and since the government has manipulated the withholdings formula, the retirees’ share has ⁶³
increased to more than 73%. These claims are made in an effort to increase government
payments into the SBP in hopes of increasing benefits (particularly with regard to the apparently
successful effort of eliminating the reduction in benefits that occurs when the surviving spouse
reaches age 62).
In reviewing these claims, a number of points may be considered. First, as noted, there is no legal
mandate for any ratio of retiree to government contributions. Second, such claims of a shift in the
retiree/government share appear to be based on a selective use of retiree data. Third, the claim
that retirees are living longer and paying more ignores the obvious point that survivors, too, are
living longer and collecting more. Fourth, the above history of this benefit shows that Congress
has expanded eligibility (including ‘free’ benefits to “forgotten widows” and active duty
survivors), increased benefits, reduced costs, will eliminate withholdings under the “paid-up
provision” afforded supplemental coverage, etc. At no time did Congress reduce the benefit. As
such, the claims that the government’s contribution to SBP have been reduced are unreliable. Nor
do such claims rationalize the increase of benefits at age 62 for surviving spouses (a change that
arguably creates a superior benefit relative to those available to the survivors of other federal
employees).
It is noteworthy that after the SBP was introduced, the FY1973 cost to retirees was $36,145,000
with a fiscal year payment to families of only $5,700,000. This is due to the relatively small
number of participants who died shortly after signing up. Ten years later, as more retirees signed

⁶⁰^P^.^L^.¹⁰^8-¹³⁶^;^s^e^c^.⁶^45;^N^o^v^e^m^b^e^r^24,²⁰⁰³^.
⁶¹^U^.^{S. C}^ong^r^e^s^s^.^C^onf^e^r^eⁿ^c^e^C^o^m^m^itte^e^,^N^a^tiona^{l D}^e^f^e^ns^e^A^u^thorⁱ^z^a^{tion A}^c^{t f}^o^r^Fis^c^a^l^Y^e^a^r²⁰⁰⁶^,^H^.^R^e^{pt. 1}^09-³⁶^0,
¹⁰⁹^th^Co^ng^.,¹^st^S^e^ss.^,^H.^R^.¹⁸¹⁵^,^Dece^m^b^er¹⁸^,²⁰⁰⁵^:⁷³^8.
⁶²^U^.^{S. C}^ong^r^e^s^s^.^C^onf^e^r^eⁿ^c^e^C^o^m^m^itte^e^,^N^a^tiona^{l D}^e^f^e^ns^e^A^u^thorⁱ^z^a^{tion A}^c^{t f}^o^r^Fis^c^a^l^Y^e^a^r²⁰⁰⁷^,^H^.^R^e^{pt. 1}^09-⁷²^0,
¹⁰⁹^th^Co^ng^.,²^nd^Se^s^s^{., H}^.^R^.⁵¹²²^,^Se^pte^m^be^r^29,²⁰^06:⁷^55.
⁶³^Mik^e^L^a^z^o^rc^ha^k^,^“^SBP^still^a^g^o^od^prog^ra^m^,^{but ra}^ti^{o ha}^{s c}^h^aⁿ^g^e^d,”^Na^{vy T}ⁱ^mes^{, J}^a^n.¹⁵^,²⁰^01:¹⁸^.

up and more died, the FY1983 cost to retirees grew to $652,536,000 while the payment to
families grew to $406,887,000. In FY1993, as participant deaths increased, the cost to retirees
was $822,955,000 with payments to families reaching $1,177,185,000. Finally, in FY2005, costs
to retirees was reported to be $1,099,363,000 while payments to families surged to
$2,253,728,000. From 1973 through 2005, the cumulative cost to retirees was $22,597,064,000
while cumulative payments to families was $30,923,249,000. Considering the cumulative
payments by retirees and to military families, the government paid $8,326,185,000 more in
benefits to families than it received. The cost to retiree/family payment gap will grow as the age ⁶⁴
62 reduction is phased out and the “paid-up provision” is implemented. From this perspective, if
the cost/benefit share has shifted, the shift has been in the favor of recipients with taxpayers
assuming an increasing cost of the program.
The National Defense Authorization Act for Fiscal Year 2006 directed Comptroller General to ⁶⁵
report on the actuarial soundness of the Survivor Benefit Plan.
On July 26, 2006, the Government Accountability Office issued its report.⁶⁶ The following is
verbatim from that report:
^Re^sult^{s i}ⁿ^B^r^ie^f
^T^h^{e s}ⁱ^gⁿⁱ^fⁱ^caⁿ^t^s^t^at^u^t^or^y^SB^P^prog^ram^ch^aⁿ^g^e^sⁱ^m^p^l^e^m^eⁿ^te^{d w}^ithⁱⁿ^th^{e pas}^t^{7 f}ⁱ^s^cal^y^ears
^th^at^w^e^revⁱ^e^w^ed^h^a^v^e^resu^l^t^edⁱⁿⁱⁿ^creased^{DOD n}^o^rm^al^c^o^s^t^p^a^y^m^eⁿ^t^s^aⁿ^d^aⁿⁿ^u^a^l^Tr^e^a^s^u^r^y
^a^m^o^r^tizatioⁿ^p^a^y^m^en^ts^to^th^e^F^uⁿ^dⁱⁿ^o^r^d^e^r^to^m^aⁱⁿ^taiⁿ^t^h^{e ac}^t^u^ar^ial^so^uⁿ^dⁿ^es^{s o}^f^t^h^e^Fuⁿ^d^.
^W^h^en^ch^aⁿ^g^e^s^are^m^a^{de to SB}^P^cov^e^rag^e^or^ben^e^f^its^{, th}^{e DO}^{D OOA}^[^O^f^fⁱ^c^e^o^f^t^h^e^A^c^tu^a^r^y^]
^calcu^late^{s th}^{e n}^ece^ssar^y^DOD^an^d^T^r^easu^r^y^coⁿ^t^rib^u^tioⁿ^s^to^en^s^u^{re th}^{at s}^u^ff^icien^t^m^oⁿ^e^y^s
^{are av}^{ailable to m}^a^k^e^{all ben}^e^fⁱ^{t pay}^m^eⁿ^ts^{to e}^lig^{ible recipien}^t^s^each^y^{ear, an}^{d th}^a^t^s^u^f^fⁱ^cⁱ^eⁿ^t
^Fuⁿ^d^asset^s^w^{ill b}^e^av^ailab^l^{e i}ⁿ^th^e^f^u^tu^r^e^to^liq^uⁱ^d^a^{te all c}^u^r^r^en^{t u}ⁿ^f^uⁿ^d^ed^liab^ilities.
^A^cco^rdⁱⁿ^g^to^th^{e DOD OO}^A^e^s^ti^m^a^{tes, th}^{e s}ⁱ^gⁿⁱ^f^icaⁿ^{t SB}^P^p^r^o^g^ra^m^ch^aⁿ^g^e^s⁶⁷^we^r^e^vⁱ^e^w^e^d
^h^a^v^e^r^e^s^u^ltedⁱⁿ^th^e^f^o^llo^wⁱⁿ^g^:
^–^E^limⁱⁿ^a^tⁱⁿ^{g the}^r^e^d^u^c^tio^{n i}ⁿ^sur^v^ivⁱⁿ^{g sp}^o^u^se^{s’ SB}^P^b^e^ne^fi^ts^w^h^eⁿ^suc^h^sp^o^u^se^{s a}^r^e^a^l^so
^e^lⁱ^gⁱ^b^l^e^f^o^r^S^o^cⁱ^a^l^S^e^c^u^rⁱ^t^y^b^eⁿ^e^fⁱ^t^s^a^t^a^g^e⁶²^aⁿ^d^t^h^e^r^e^a^f^t^e^rⁱⁿ^c^r^e^a^s^e^d^t^h^e^S^B^P^liab^ility^b^y^an
^es^ti^m^a^{ted $25.2}^billion^as^of^Septe^m^{ber 30,}²⁰^{04. Of}^th^is^a^m^o^uⁿ^t^,^Tr^e^a^s^u^r^y^aⁿ^d^{DOD w}^ill^b^e
^res^pon^sⁱ^{ble f}^o^{r an}^es^ti^m^a^ted^{$23.7 billio}ⁿ^an^{d $}¹^.5^billion^,^res^p^ec^tiv^el^y^.^DO^D’s^{$1.5 billion}
^liab^ilit^yⁱⁿ^c^l^u^d^es^$¹^.³^b^illioⁿⁱⁿⁿ^o^r^m^{al co}^s^t^s^f^o^r^c^u^r^r^eⁿ^t^acti^v^{e d}^u^t^y^aⁿ^d^f^u^ll^-^tⁱ^m^{e r}^e^ser^v^ist^s
⁽^f^u^l^l^-^tⁱ^m^e^e^m^p^l^o^y^ees)^aⁿ^d^$⁰^.²^b^illioⁿⁱⁿⁿ^o^r^m^{al co}^sts^f^o^r^cu^r^r^en^{t p}^a^r^t^-^tⁱ^m^{e r}^e^ser^vⁱ^s^t^s⁽^p^ar^t-
^tⁱ^m^e^em^pl^oy^e^e^s⁾^.
^{– P}^e^rio^d^ically^,^C^ong^res^s^h^a^s^a^llo^w^e^{d an}^open^s^eas^oⁿ^f^o^{r SB}^P^en^roll^m^eⁿ^t^{, t}^h^e^m^o^s^t^c^u^rren^t
^on^{e bei}ⁿ^g^d^u^ri^ng^fi^s^cal^y^{ear 2006. A}^l^t^h^o^u^gh^t^h^{e t}^o^t^a^l^eff^ect^s^of^t^h^e^S^B^{P open}^s^eas^on^cann^o^t
^b^e^f^u^ll^y^esti^m^a^b^l^e^f^o^r^{at lea}^s^{t 2}^y^ear^{s, t}^h^{e e}^s^ti^m^a^tedⁱⁿ^cr^{ease i}ⁿ^t^h^{e SB}^P^liab^ilit^y^wⁱ^{ll li}^k^e^l^y
^ran^g^e^f^r^o^m^{$31 m}^illion^{to $86}^m^illioⁿ^.

⁶⁴²⁰^{06 Re}^ti^re^{d Mi}^lita^ry^A^l^m^a^na^c^,^(Fa^{lls Churc}^h^,^Vⁱ^rg^inia^:^Unif^orm^e^{d Se}^rv^ic^e^s^A^l^m^a^na^c^,^Inc^{., 20}⁰⁴⁾^{p. 2}¹⁸^.
⁶⁵^P^.^L^.¹⁰^9-¹⁶³^,¹¹⁹^Sta^t^.³¹³⁶^{, J}^aⁿ^u^a^r^y^{6, 200}^{6, s}^e^c^.⁶⁶^6.
⁶⁶^U.^S^.^G^A^O^,^A^c^tu^{arial S}^o^uⁿ^dⁿ^e^ss^o^f^th^{e DOD S}^u^rviv^o^r^Ben^e^f^it^P^l^an^,^G^AO-0⁶^-⁸³⁷^R^,^J^u^ly²⁶^,²⁰⁰⁶^.
⁶⁷^T^h^{e DOD OO}^A^esti^m^a^t^e^{s th}^{e co}^{st o}^f^each^sign^if^ican^{t S}^B^P^p^r^o^g^ra^m^ch^an^ge^{as o}^f^{a sp}^eci^fⁱ^{c v}^a^lu^ation^d^a^te.
^S^u^b^s^equ^eⁿ^t^t^o^t^h^at^d^a^t^e^,^t^h^{e co}^st^s^o^f^each^S^B^P^p^r^o^g^ram^ch^an^{ge b}^e^c^o^m^e^p^a^rt^o^f^t^h^{e b}^a^selⁱⁿ^{e act}^u^a^ri^al^m^o^d^e^l^an^d^{are n}^o^t
^sep^a^ratel^y^id^en^tif^ied^.^A^cco^rdⁱⁿ^{g to}^th^{e DOD OOA}^,^th^{ere h}^a^ve^b^{een n}^o^signifⁱ^can^{t co}^{st reestimates a}^f^t^e^{r th}^{e valu}^atioⁿ
^d^a^t^e^f^o^{r t}^h^{e t}^h^ree^p^r^o^g^ram^ch^an^ge^{s w}^e^re^vi^e^w^ed^.

^{– El}ⁱ^mⁱⁿ^atⁱⁿ^g^fu^rt^h^e^{r S}^B^{P pre}^mⁱ^u^m^s^t^o^{be pai}^d^by^retⁱ^r^ees^w^h^{o are ag}^{ed 70}^or^o^l^d^e^r^aⁿ^d^w^h^o
^h^a^v^e^p^a^id^s^u^c^h^p^r^e^mⁱ^u^m^s^f^o^r³⁰^y^ear^{s i}ⁿ^cr^eased^t^h^{e SB}^P^liab^ilit^y^b^y^aⁿ^es^ti^m^a^ted^$²^.⁵⁶⁸
^b^illioⁿ^.^Of^thⁱ^s^a^m^o^uⁿ^{t, T}^r^easu^r^y^w^{ill b}^e^r^e^sp^oⁿ^sib^l^{e f}^o^r^an^esti^m^a^ted^$²^.⁴^b^illioⁿ^,^an^d
^DOD^w^ill^b^e^resp^oⁿ^sib^l^e^f^o^r^$⁰^.¹^b^illioⁿⁱⁿⁿ^o^r^m^al^co^sts^related^to^cu^rren^t^fu^ll^-^tⁱ^m^e
^e^m^plo^y^ees^.
^–^E^x^t^eⁿ^dⁱⁿ^g^S^B^{P su}^r^v^ivⁱⁿ^g^s^p^o^u^s^e^o^r^chⁱ^l^d^b^eⁿ^e^fⁱ^ts^f^o^r^a^l^l^p^e^r^s^oⁿⁿ^e^l^w^h^o^a^r^e^kⁱ^l^l^e^dⁱⁿ^th^e
^lin^{e o}^f^d^u^t^y^an^d^ar^eⁿ^o^{t e}^lig^ib^{le f}^o^r^r^e^tir^e^m^en^t^{at t}^h^e^ti^m^e^{of t}^h^{eir deaths}ⁱⁿ^creas^{ed t}^h^e^SB^P
^liabilit^y^b^y^aⁿ^es^ti^m^a^{ted $72 m}^illion^as^of^Septe^m^{ber 30, 200}¹^.^O^f^t^hⁱ^s^am^o^uⁿ^t^,^Tr^e^a^s^u^r^y^wⁱ^l^l
^{be res}^pon^sⁱ^{ble f}^o^{r a}ⁿ^es^ti^m^a^{ted $28 m}ⁱ^llion^,^aⁿ^{d DOD}^w^ill^{be res}^pon^sⁱ^ble^f^o^{r $44 m}ⁱ^{llion i}ⁿ
ⁿ^o^r^m^{al cos}^t^s^{related to cu}^rren^t^f^u^l^l^-^tⁱ^m^{e e}^m^plo^y^ee^s^.
^T^h^e^t^w^o^p^o^t^eⁿ^tⁱ^a^l^c^h^aⁿ^ge^{s t}^o^S^B^P^b^e^ne^fi^t^s^meⁿ^tⁱ^o^ne^dⁱⁿ^Sectⁱ^oⁿ⁶⁶⁶^of^t^h^e^N^a^tⁱ^oⁿ^a^l^D^e^f^e^ns^e
^Au^t^h^o^r^izatioⁿ^A^c^{t f}^o^{r Fiscal}^{Year 2}⁰⁰⁶^w^o^u^l^d^lik^e^l^y^also^resu^{lt i}ⁿⁱⁿ^crease^s^to^th^{e DOD}
ⁿ^o^r^m^{al cos}^t^pa^y^m^ents^aⁿ^{d t}^h^{e an}^nu^{al T}^r^eas^u^r^y^a^m^ortiza^tⁱ^oⁿ^pa^y^m^en^t^s^{to t}^h^{e F}^uⁿ^d^as
^f^o^llo^w^s^.
^–^C^u^rren^t^l^y^{, an}^uⁿ^m^arried^{DOD retiree w}^ith^o^u^{t d}^e^p^eⁿ^d^eⁿ^t^c^hⁱ^l^d^r^eⁿ^m^a^y^e^l^e^c^t^t^o^h^a^v^e^aⁿ^o^t^h^e^r
^pers^on^wⁱ^t^h^anⁱⁿ^s^u^{rable in}^ter^e^s^t^as^th^{e SB}^P^ben^e^fⁱ^ciar^y^;^h^o^w^e^v^e^{r, if}^t^h^{at ben}^e^fⁱ^ciar^y^dies^,
^d^e^sigⁿ^atioⁿ^o^f^aⁿ^o^t^h^e^rⁱⁿ^su^r^a^b^l^{e in}^ter^e^{st is n}^o^{t allo}^w^e^d^.^Usiⁿ^g^coⁿ^s^e^r^v^a^tⁱ^v^e^a^s^s^u^m^p^tⁱ^oⁿ^s^,^t^h^e
^{DOD OO}^A^calc^u^lated^t^h^{at t}^h^e^SB^P^liab^ilit^y^w^o^u^l^dⁱⁿ^{crease b}^y^an^e^s^ti^m^a^ted^$²^.²^m^illioⁿⁱ^f
^r^e^tir^ees^w^e^r^e^allo^w^e^d^th^e^o^p^tioⁿ^o^f^c^h^o^o^sⁱⁿ^g^a^secoⁿ^dⁱⁿ^s^u^r^a^b^l^{e in}^ter^e^st.^Of^th^{is i}ⁿ^cr^ease,
^T^r^eas^u^r^y^w^o^u^l^{d be res}^pon^sⁱ^ble^f^o^{r $2}^m^illioⁿ^an^{d D}^OD^f^o^{r $231,00}^{0. Of}^DOD^’^s^$231,000^,
^$211,^{000 w}^o^u^l^{d be}^f^o^{r n}^o^r^m^al^cos^t^s^rel^a^t^e^{d t}^o^c^u^rren^t^fu^l^l^-^tⁱ^m^{e e}^m^pl^o^y^{ees an}^{d $20,000 f}^o^r
ⁿ^o^r^m^{al cos}^t^s^{related to cu}^rren^t^part-^tⁱ^m^{e e}^m^plo^y^ee^s^.
^–^T^h^{e s}^u^rvⁱ^v^ors^of^v^e^terans^w^{ho die becau}^s^e^of^com^p^licat^ion^s^res^u^l^ting^f^r^o^m^{a s}^e^r^v^ice^-
^coⁿⁿ^ected^dⁱ^{sease o}^rⁱⁿ^j^u^r^y^ar^{e en}^titled^to^DI^{C b}^eⁿ^e^f^its^f^r^o^m^th^{e Dep}^a^r^t^m^eⁿ^t^o^f^Veter^aⁿ^s⁶⁹
^Aff^a^{irs (V}^A⁾^.^Un^d^e^r^c^u^r^r^en^t^la^w^,^SB^P^b^eⁿ^e^fⁱ^ts^f^o^r^s^u^r^v^iv^o^r^s^o^f^r^e^tir^ed^v^e^ter^aⁿ^s^ar^{e o}^f^f^s^et
^by^aⁿ^y^DIC^pa^y^m^eⁿ^{ts recei}^v^e^d.^T^h^{e DOD OOA}^calc^u^{lated tha}^t^e^l^imⁱⁿ^a^tⁱⁿ^g^th^e^c^u^r^r^eⁿ^t^o^f^f^s^et
^requ^ire^m^ent^w^o^u^l^{d i}ⁿ^creas^{e t}^h^{e SB}^P^liability^b^y^an^e^s^ti^m^a^ted^$12.^{9 billion}^.^Of^t^h^is^a^m^oun^t,
^T^r^eas^u^r^y^an^{d DOD}^w^{ould be r}^e^s^pon^sⁱ^{ble f}^o^{r $12.}³^billion^an^{d $}^{645 m}^illion^,^res^p^ecti^v^el^y^.^O^f
^DOD’s^$645^mⁱ^l^lion^,^$617^mⁱ^llion^w^o^u^l^{d be}^f^o^{r n}^o^r^m^{al cos}^t^s^{related to c}^u^rren^t^f^u^l^l^-^tⁱ^m^e
^e^m^pl^o^y^ees^aⁿ^{d $28 m}ⁱ^l^lⁱ^oⁿ^f^o^{r n}^o^r^m^al^cos^t^s^rel^a^t^e^{d t}^o^cu^rrent^part^-^tⁱ^m^{e e}^m^pl^o^y^ee^s^.
^En^act^m^eⁿ^t^of^th^e^s^{e le}^gⁱ^s^l^ativ^e^ch^ang^e^s^w^o^u^l^{d require t}^h^{e B}^o^{ard of}^A^c^tu^arie^s^aⁿ^{d t}^h^{e DOD}
^OO^A^to^ad^j^u^{st DOD an}^d^T^r^ea^su^r^y^p^a^y^m^en^t^s^{, s}^u^b^j^{ect to}^f^u^tu^{re ap}^p^r^o^p^r^iatioⁿ^s^{, b}^y^a^m^o^uⁿ^t^s
ⁿ^eces^s^a^r^y^{to off}^s^{et a}ⁿ^yⁱⁿ^cre^a^s^e^{d cos}^t^s^{related to ex}^pan^d^{ed ben}^e^f^its^;^f^o^{r th}ⁱ^s^reas^on^,
^en^act^m^eⁿ^t^of^t^h^es^{e c}^h^ang^e^s^s^hou^{ld n}^o^{t n}^e^g^a^tⁱ^v^e^l^y^aff^{ect t}^h^{e actu}^a^{rial s}^oun^dn^e^s^s^o^f^th^e^F^uⁿ^d^.
^In^resp^oⁿ^dⁱⁿ^g^to^{a d}^r^af^{t o}^f^t^h^{is rep}^o^r^{t, DOD d}ⁱ^dⁿ^o^{t h}^a^v^e^an^y^o^b^j^ectioⁿ^s^o^r^su^b^s^taⁿ^tⁱ^v^e
^co^m^m^eⁿ^t^{s. DOD sep}^a^ratel^y^p^r^o^v^id^ed^so^m^e^tec^hⁿⁱ^{cal su}^g^g^estⁱ^oⁿ^s,^w^h^ic^h^w^eⁱⁿ^co^r^p^o^r^a^t^e^d^a^s
^appro^p^riate.
Table 6. Computation of Original Survivor Benefit Plan Cost to the Retiree for
Spouse Only Coverage (Work Sheet)
^1.^Enter^{base a}^{mount of}^{retired pay}^{. If base amo}^{unt is $}^1,27^{5 or mor}^{e, use}^{Table 7}^below.^$____^_

⁶⁸^T^h^e^lia^bility^e^s^ti^m^a^te^f^o^{r this le}^gⁱ^sla^tiv^e^c^h^aⁿ^g^e^w^a^{s de}^te^r^m^ine^d^a^s^of^Se^pte^m^be^{r 30, 2}⁰⁰¹^{, a}ⁿ^{d w}^{ill b}^e^e^ffe^c^tiv^e^on
^O^c^tobe^r^1,²⁰⁰⁸^.
⁶⁹^VA^’^s^D^I^C^w^a^s^e^s^ta^blis^he^{d in}¹⁹⁵⁶^by^the^Se^r^v^ic^em^eⁿ^’^s^a^{nd Ve}^te^r^a^ns^’^Sur^v^iv^or^B^e^ne^f^its^A^c^{t, P}^.^L^.⁸⁴^-⁸^81,⁷⁰^Sta^t^.
⁸⁵⁷^{, 8}⁶²⁽^A^ug^{. 1,}¹⁹⁵⁶⁾⁽^c^odifⁱ^e^d^{, as}^am^e^nde^d^,^at³⁸^U.^S.^C^.^ch^{. 13)}^.

^2.^Enter^$5⁹⁵^{or total retired pay if}^{less than}^$5^{95 (see}^fn^{10). Do n}^{ot enter less t}^han^$30^0.^$____^_
^3.^{Multiply the figu}^{re in line two b}^y^2.5%.^$____^_
^4.^Subtract^$5⁹⁵^{from line one. If line one is less t}^han^$5^{95, ente}^{r 0.}^$____^_
^5.^{Multiply line four}^{by 1}^0%.^$____^_
^6.^{Add line three and line five.}^$____^_
^Note:^{Line 6 is the cost of s}^urviv^{or protection u}^{nder Spouse}^Only^coverage.
Table 7. Computation of Flat-Rate Survivor Benefit Plan Cost to the Retiree for
Spouse Only Coverage (Work Sheet)
^1.^Enter^{base a}^{mount of}^{retired pay}^$____^_
^2.^{Multiply line one by}^6.5%.^x0.0⁶⁵
^3.^{Cost of Basic SBP protection.}^$____^_
^****T^{o compute su}^ppleme^{ntal coverage cost, please contin}^ue****
^4.^Enter^the^{factor that}^corres^{ponds to the retiree’s age a}^{nd level of coverage desired at age 6}²^(see^___^__
^{Table 5}^).
^5.^{Divide the factor from line four}^b^y¹⁰^0.^___^__
^6.^{Multiply line one by line}^five.^$____^_
^Note:^{Line 6 is the cost of s}^urviv^{or sup}^{plemental p}^{rotection unde}^{r Spouse O}^{nly coverage.}
Table 8. Computation of SBP Costs under Persons with an Insurable Interest
Coverage (Work Sheet)
^1.^{The amount of}^{base military retir}^{ed pay.}^$____^_
^2.^{Multiply line one by}¹⁰^%.^$____^_
^3.^{Age of the retiree}^{at his/he}^{r last}^birthday.^$____^_
^4.^{Age of prospec}^{tive be}^{neficiary as}^{of the date of the}^{retiree’s last bi}^rthday.^___^__
^5.^{Subtract line t}^{hree f}^{rom line four}^{. (If line three is less t}^{han line fou}^{r, enter}^0.)^___^__
^6.^{Divide the sum in line five b}^y^{5 a}^{nd round t}^he^{quotient to the low}^{er whole nu}^mbe^r.^___^__
^7.^{Multiply 5%}^{by line six.}^___^_%
^8.^{Multiply line one by line se}^ven.^$____^_
^9.^{Add line two and line eight.}^$____^_
^10.^{Multiply line one by}⁴⁰^%.^$____^_
^11.^{Compare lines nine a}^{nd ten: e}^nte^{r the lesser.}^$____^_
^Note:^{Line 11 is the}^{cost of sur}^v^{ivor protection under}^{the Per}^son^{s with an I}ⁿ^s^{urable I}^ntere^{st categ}^{ory of}
^coverage.

^Davⁱ^d^{F. B}^u^r^r^e^lli
^Sp^{ecialist i}ⁿ^Militar^y^Man^p^o^w^er^P^o^licy
^dbu^rrelli@^crs^.^loc.g^o^v^,^7-⁸⁰³³