Fact Sheet: SBP/DIC Offset, and Paid up premiums. BACKGROUND SBP/DIC OFFSET A top goals in 2005 is to end the deduction of VA survivor benefits from Survivor Benefit Plan (SBP) annuities. For all active duty deaths, the surviving spouse is entitled to Dependency and Indemnity Compensation (DIC) — currently $993 a month paid by the VA. The spouse also is entitled to benefits from SBP. But the law requires dollar-for-dollar deduction of DIC payments from SBP benefits. For survivors of members below the E-6 grade, this offset wipes out most or all of the SBP entitlement, leaving survivors with only the $993 a month from the VA. For more senior members, the survivor receives some residual SBP — but loses almost $12,000 a year in benefits. Survivors of retirees who die as the result of a service-connected cause also are entitled to DIC. If SBP-eligible, they also suffer a dollar-for-dollar offset, even if the retiree paid years of SBP premiums. The surviving spouse receives a partial SBP premium refund, but with no interest. Substituting DIC for SBP is inappropriate. For members killed on active duty, a surviving spouse can avoid the dollar-for-dollar offset only by assigning SBP to children. PAID UP PREMIUMS The FY 1999 Defense Authorization Act lets retired SBP enrollees who have attained age 70 and paid SBP premiums for 30 years stop paying premiums, while retaining coverage for their survivors, but delayed the effective date until Oct. 1, 2008. This effective date forces thousands of “greatest generation” retirees who signed up for SBP between 1972 to 1978 to pay more than decades of higher premiums for some up to 36 years. DISCUSSION > SBP-DIC offset actually takes away a dollar from one benefit for every dollar they get in the other. > This has been called the "widows tax", as survivor finance one benefit out of the other. > Congress corrected this for disabled career retirees with the passage of concurrent receipt. > DIC is what its name implies — a special indemnity payable when military service causes the servicemember’s premature death. > SBP is retiree-purchased insurance. The survivor should receive both when military service caused the death. > Federal civilians have their own SBP program, and federal civilian SBP is not subject to offset by DIC if the civilian is a veteran and dies from a service-connected cause. ALSO: PAID UP PREMIUMS > About 135,000 retirees who would benefit from the paid-up SBP acceleration. > If the current paid-up date of October 1, 2008 stands, those who enrolled in the program at its inception in 1972 will have unfairly paid for an additional six years. ROA RECOMMENDATION ROA recommends that you contact your representative to: End the SPB/DIC offset Allow those service members who have paid premiums for over SPB years to be paid-up. Back to Position Papers/Fact Sheets Listing Back to Top