Survivor Benefit Plan Paid-Up Cost Information

In the last issue of the Retired Pay Newsletter, an article concerning Survivor Benefit Plan (SBP) “Paid-Up” Cost Information was published.  We apologize for our word choice of “coverage” rather than “premium” that may have caused confusion.  To clarify, once the retiree attains “paid-up” status, it is the SBP premium that stops not the coverage.  Thank you to those who brought this to our attention.

In October 1998, Public Law 105-261, Section 642 added a “Paid-Up” provision to 10 U.S.C. 1452 (j) concerning SBP.  This provision sets forth the requirements that qualified participants shall no longer be required to have SBP premiums deducted from their Retired Pay while continuing to receive SBP coverage effective October 1, 2008, and beyond.

A qualified participant is a retired member of the uniformed services age 70 or older, and whose retired pay has been reduced by SBP costs for 360 months or more.  Direct remittance by a participant under 10 U.S.C. 1452 (d) shall be deemed as SBP costs from military retired pay for the purposes of determining the number of months of SBP costs paid. 

In other words, for SBP costs to be considered “paid-up”, a retired military member must be a minimum of 70 years old by October 1, 2008, and have paid SBP premiums for a minimum of 360 months for the SBP to be “paid-in-full” and the member is still enrolled in SBP.  For example, a military retiree born in 1936 requested spousal SBP coverage during the first SBP enrollment period September 21, 1972.  In December 1987, the retiree requested that SBP be suspended due to the loss of the spouse.   The retiree remarried in January 1992 and requested SBP coverage for the new spouse.   In October 2008, the member’s SBP costs are “paid-in-full” due to the retiree being 71 years old and having paid 380 total monthly premiums for spousal SBP coverage.  Please note: enrollment in the RSFPP (the previous annuity program sponsored by the military) is not counted in determining the qualifying period.  Only SBP participation, which began September 21, 1972, can be used.

Please check future DFAS Retired Pay Newsletters for more information on the SBP “Paid-Up” provision as the effective date of October 1, 2008 nears.