Active Duty/Line of Duty Survivors Spotlight: The 2023 Changes to the SBP Optional Annuity for Dependent Children: What Surviving Children (or Parents/Guardians) Need to Know and Do


*Surviving Spouses: Please Read the Previous Article*
 
    
The DoD Survivor Benefit Plan (SBP) provides an ongoing monthly annuity payment to military spouses or dependent children when a military member dies while on active duty, on inactive duty in the line of duty, or after retirement (if the military retiree chooses to purchase coverage).
    
When a service member dies on active or inactive duty in the line of duty, the surviving spouse can request to have the SBP annuity paid directly to an eligible dependent child or children instead of to the spouse.
    
This is called the “Optional Annuity for Dependent Children” but is often referred to as the “Optional Child Annuity.”
    
The option is available because until recently, there was a requirement for a spouse’s SBP payments to be offset (reduced) by the full amount of the spouse’s Dependency and Indemnity Compensation (DIC) payment from the Department of Veterans Affairs (VA). Payments to the surviving child were considered a more favorable option because SBP paid to a child is not required to be offset (reduced) by the amount of the DIC payment.
    
The Optional Annuity for Dependent Children is only allowed when the service member died on active duty or inactive duty in the line of duty after October 7, 2001.
    
Changes to the Optional Annuity for Dependent Children do not impact the SBP coverage for families of a service member who retired prior to passing away or the SBP coverage for any current living retiree.
    
Check out our new Quick Reference Guide on our special focus webpage: https://www.dfas.mil/sbp2023childoptrev


What Happens in 2023
    
The National Defense Authorization Act (NDAA) for Fiscal Year 2020 directed that as of January 1, 2023, the “Optional Annuity for Dependent Children” will be eliminated and the SBP monthly annuity payment must revert to the surviving spouse (if the surviving spouse submits documentation confirming eligibility).
    
The last SBP monthly payment to a child under the Optional Annuity for Dependent Children will be the December 2022 entitlement that is paid on January 3, 2023 (unless the surviving spouse is documented as deceased or not eligible).
 

What You Need to Do If You Are the Surviving Child (or Parent or Guardian of a Surviving Child) of a Service Member Who Died on Active Duty or Inactive Duty in the Line of Duty After October 7, 2001 and You Are Currently Receiving the SBP Monthly Annuity Payment Because of the Optional Child Annuity:

You need to continue to provide eligibility certifications when required (e.g. School Certification, Certificate of Eligibility, Report of Existence).
    
If you receive a letter from us stating we have not received eligibility documentation from the surviving spouse:

 
If you are in contact with the surviving spouse, request they send us a completed SBP Spouse Eligibility Packet as soon as possible. If a surviving spouse did not receive a packet in the mail, they can download the full eligibility packet from the DFAS special focus webpage: https://www.dfas.mil/sbp2023childoptrev

If you are aware the surviving spouse has passed away, you can submit the death certificate to us so we can continue to pay the SBP monthly annuity payment to you (see the information below). 


Can an Eligible Child Continue to Receive the SBP Annuity? Can a Spouse Choose to Have the SBP Annuity Paid to the Child?
    
The elimination and reversion is in the law. It is not optional. A surviving spouse cannot refuse the annuity to have it continue to be paid to a surviving child. If we do not receive documentation for a surviving spouse, the annuity will be suspended. It cannot continue to be paid to a surviving child without documentation that the surviving spouse is not eligible.
    
SBP coverage for active duty or inactive duty in the line of duty deaths is for spouse and child. Since the SBP coverage is for spouse and child, the child can receive payment if the spouse is documented as not eligible.
    
There are three situations where an eligible child can continue to receive the SBP monthly payment after the elimination of the Optional Child Annuity in 2023:
     1-If DFAS receives documentation the service member was not married at the time of their death.
     2-If DFAS receives documentation the surviving spouse is deceased.
     3-If DFAS receives documentation the surviving spouse remarried prior to age 55.
    
If DFAS does not receive the documentation in the above situations, the annuity will be suspended until documentation is received.

Please note the documentation needed for a deceased spouse is a copy of the certified death certificate with contact information for the person submitting the documentation. If the parent/legal guardian of a minor child or a child over the age of majority who is currently receiving the SBP annuity is aware of the death of a surviving spouse, they can submit a copy of the death certificate with their contact information.
    
The death certificate must be certified by the government agency issuing the certificate. DFAS cannot accept a funeral notice or funeral booklet. It must be the government-certified death certificate. Death certificates are public records and can generally be obtained from the Office of Vital Records in the state where the event occurred, or from the applicable state’s Department of Health.


What Happens Between Now and 2023
    
If a child or children are currently the designated recipients of the SBP monthly annuity payment because the Optional Annuity for Dependent Children was requested, they will continue to receive the SBP payments (as long as they remain eligible) until the SBP-DIC offset is fully eliminated in 2023
.
  • If a child or children lose eligibility because they marry or reach age 18 (or age 22 if a full-time student) prior to January 1, 2023, the annuity will be suspended until January 1, 2023. On January 1, 2023, the annuity will revert to the surviving spouse (if the spouse is eligible and submits documentation) and the first payment to the eligible spouse based on these changes will be made on February 1, 2023.
  • If the annuity is already suspended because the child or children are no longer eligible, it will continue to be suspended until January 1, 2023. On January 1, 2023, the annuity will revert to the surviving spouse (if the spouse is eligible and submits documentation) and the first payment to the eligible spouse based on these changes will be made on February 1, 2023.
  • If the annuity is suspended because the child/children are no longer eligible and we do not receive eligibility documentation for the surviving spouse, the annuity will remain suspended until we receive the documentation.  
In late October, DFAS mailed letters to the children who are currently receiving an SBP annuity payment because of the Optional Annuity for Dependent Children. This letter provides information on the projected status of their SBP annuity payment after January 1, 2023.
 
The letters are based either on eligibility documentation we have received from the surviving spouse or based on the fact we have not received eligibility documentation:
 
  • If we have received eligibility documentation from the surviving spouse, and the spouse is eligible, the spouse will receive the SBP annuity payment beginning with the January 2023 payment made on February 1, 2023. The child/children’s last SBP payment will be the December entitlement, which will be paid on January 3, 2023.
  • If we have received eligibility documentation from the surviving spouse, and the spouse is not eligible, the child/children will continue to receive the SBP annuity payment, even after January 1, 2023, as long as they remain eligible.
  • If we have NOT received eligibility documentation from the surviving spouse, the annuity will be suspended beginning with the January 2023 entitlement which would have been paid on February 1, 2023 and remain suspended until we receive documentation. The child/children’s last SBP payment prior to suspension will be the December entitlement, which will be paid on January 3, 2023.
If the parent or guardian of a child annuitant who received an informational letter believes it may be based on incorrect information about the child’s situation, please contact DFAS’ Customer Care Center and notify us. We will research this information and send a postal letter with the results of our research. You do not need to take any further action until you receive the letter with the results of our research. At that time, we will let you know if we need additional information.

See Our Special Focus Webpage for Additional Information

See our special focus webpage for a downloadable Eligibility Packet and specific instructions for completing it and a helpful checklist for completing the documents. We also have a new Quick Reference Guide for the SBP 2023 Optional Child Annuity Reversion.
https://www.dfas.mil/sbp2023childoptrev

 
Page Updated October 26, 2022