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The SBP-DIC Offset Phased Elimination: What to Expect in the Upcoming Phases


We are almost halfway through Phase One of the SBP-DIC Offset Phased Elimination and now we are looking toward 2022, when the second phase of the offset elimination will start.
     
As a reminder, the changes will happen in three phases and only affect SBP and SSIA payments issued by DFAS. The changes do NOT affect Dependency and Indemnity Compensation (DIC) payments from the Department of Veterans Affairs (VA). Eligible surviving spouses will continue to receive the full amount of DIC from the Department of Veterans Affairs.
 
The changes in all three phases affect surviving spouses who are, or who will become in the future, eligible for both Survivor Benefit Plan (SBP) payments and Dependency and Indemnity Compensation (DIC) payments, and who were previously subject to a full or partial SBP-DIC Offset.
 
Beginning in 2023, the law also affects the surviving spouses and children of service members who died while on active duty or inactive duty, in the line of duty, who are currently receiving SBP payments because the surviving spouse chose the optional child annuity (see the Active Duty/Line of Duty Survivors Spotlight article in this issue for an explanation).
 
Below is an outline of how each of the phases of the SBP-DIC Offset Phased Elimination will unfold for spouses who are impacted by the SBP-DIC offset.


Prior to the Effective Date of the Law: Before January 1, 2021
 

Prior to January of this year, Survivor Benefit Plan monthly annuity payments (paid by the DoD/DFAS) to spouses were required to be offset (reduced) by an amount that was equal to 100% of the DIC payment the spouse received from the VA.
 
DIC payments were not affected.
 
The SBP payment was reduced by the offset (100% of DIC).
 
If a spouse’s gross SBP benefit was less than the amount of the DIC they received, the spouse did not receive an SBP payment.
 
Spouses who had part or all of their SBP annuity payment offset received the Special Survivors Indemnity Allowance (SSIA), up to the maximum amount authorized per month, OR up to the amount of SBP reduced by DIC if the amount of the reduction was less than the maximum amount.

Summary - Before January 1, 2021


VA paid:

  • 100% of the DIC payment

DoD/DFAS paid:

  • The remainder of the SBP benefit (if any) after deducting an amount equal to 100% of the spouse’s DIC payment FROM the SBP gross annuity amount (SBP gross – 100% of DIC = SBP net).

  • Plus the appropriate amount of SSIA up to the maximum allowable. 


Phase One: Starting January 1, 2021
 

In this first phase that began January 1, 2021, the amount that is offset (deducted) from the spouse’s SBP annuity payment is 2/3 of the amount of the DIC payment, instead of 100%.
 
DIC payments are not affected.
 
The SBP payment is reduced by the amount of the offset (2/3).
 
If a spouse’s gross SBP benefit is less than 2/3 of the amount of the DIC they receive from the VA, the spouse does not receive an SBP payment. Some spouses saw no change because their gross SBP benefit is less than 2/3 of the amount of their DIC payment from the VA.
 
Spouses who have their SBP offset by DIC continue to receive the Special Survivors Indemnity Allowance (SSIA), up to the maximum amount of $327 per month (for 2021), or up to the amount of SBP reduced by DIC if the amount of the reduction is less than $327.

Summary - Phase One (2021)

VA pays:

  • 100% of the DIC payment

DoD/DFAS pays:

  • The remainder of the SBP benefit (if any) after deducting an amount equal to 2/3 of the spouse’s DIC payment FROM the SBP gross annuity amount (SBP gross – 2/3 of DIC = SBP net)

  • Plus the appropriate amount of SSIA up to the maximum allowable.

Reminder: SBP Benefits Paid the Following Month
 
January 2021 benefits were paid on February 1, 2021, which is the first date that spouses saw a change in their SBP payment, if their SBP benefit is more than 2/3 of their DIC payment.

 
Phase Two: Starting January 1, 2022
 

In the second phase that begins January 1, 2022, the amount that is offset (deducted) from the spouse’s SBP annuity payment will be 1/3 of the amount of the DIC payment.
 
DIC payments will not be affected.
 
The SBP payment will be reduced by the amount of the offset (1/3).
 
If a spouse’s gross SBP benefit is less than 1/3 of the amount of the DIC they receive from the VA, the spouse will not receive an SBP payment. A small number of spouses will not see a change in their SBP payment in 2022 because their gross SBP benefit is less than 1/3 of their DIC payment from the VA.
 
Spouses who have their SBP offset by DIC will continue to receive the Special Survivors Indemnity Allowance (SSIA), up to the maximum amount authorized per month, or up to the amount of SBP reduced by DIC if the amount of the reduction is less than the maximum.
 
Summary - Phase Two (2022)
 
VA will pay:

  • 100% of the DIC payment

DoD/DFAS will pay:

  • The remainder of the SBP benefit after deducting an amount equal to 1/3 of the spouse’s DIC payment from the SBP gross annuity amount (SBP gross – 1/3 of DIC = SBP net)

  • Plus the appropriate amount of SSIA up to the maximum allowable.

The effective date of Phase Two is January 1, 2022. January 2022 benefits will be paid on February 1, 2022.

 
Phase Three: Starting January 1, 2023
 

In the third and final phase that begins January 1, 2023, there will be NO offset deducted from SBP payments.
 
DIC payments will not be affected.
 
The SBP benefit will be paid in full (no offset).
 
SSIA will NOT be paid.
 
Summary - Phase Three (2023)
 
VA will pay:

  • 100% of the DIC payment

DoD/DFAS will pay:

  • The full amount of the SBP benefit.

The effective date of Phase Three is January 1, 2023. January 2023 benefits will be paid on February 1, 2023.

 
Additional Notes
 

Reminder: if you previously received a refund of SBP premiums paid due to the SBP-DIC offset, you will NOT need to pay back that refund because of this change in the law.
 
You do not need to contact DFAS to notify us that you are impacted by the SBP-DIC Offset Phased Elimination or its changes.
 
Estimating Your 2022 SBP and SSIA Payments
 
Beginning in the fall of 2021, Annuitant Account Statements for spouses will show their current gross SBP benefit at the bottom of the statement.
 
You can estimate your net SBP payment for 2022 using the current gross SBP benefit amount. Subtract an amount that is equal to 1/3 of your current DIC payment FROM the amount of your current gross SBP benefit. The result is approximately what your SBP payment will be in the second phase. Keep in mind that if there is a Cost of Living Adjustment (COLA) for 2022, it will increase the amount of your DIC payment and your gross SBP payment.

Add your SSIA payment, if applicable. For 2021, the maximum amount payable per month is $327. A Cost of Living Adjustment for 2022 (if any) may increase the maximum amount payable for 2022. If your offset amount (1/3 of DIC in 2022) is equal to or more than the maximum amount of SSIA payable, you will receive the maximum SSIA payment. If your offset amount (1/3 of DIC in 2022) is less than the maximum amount of SSIA payable, you will receive an SSIA payment that is equal to your offset amount
 
Annuitant Account Statements are available in your myPay account: https://mypay.dfas.mil
 
We will send you a pre-estimate letter in December of 2021 for the second phase of the offset elimination that begins on January 1, 2022. You will also receive a January 2022 Annuitant Account Statement (AAS) near the time of your February 1, 2022 payment that will show changes to your SBP and/or SSIA payment because of the second phase of the SBP-DIC Offset Phased Elimination.

 
Questions?
 

Check out the full range of Frequently Asked Questions on our SBP-DIC News webpage: https://www.dfas.mil/sbpdicnews

We also have a webpage explaining SBP, DIC and SSIA: https://www.dfas.mil/sbpdicssia

We also have a new, special focus webpage for Active Duty/Line of Duty survivors who chose the SBP optional child annuity: https://www.dfas.mil/sbp2023childoptrev
 

Page updated June 9, 2021