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The SBP-DIC Offset Phased Elimination

 
 

The National Defense Authorization Act (NDAA) for Fiscal Year 2020 includes a three-year phased elimination of the SBP-DIC offset.
 
We are working on plans for the implementation, and we post updates on our webpage at: www.dfas.mil/sbpdicnews
 
Please plan to check this webpage for updates and share it with other SBP annuitants.
 
Meanwhile, here are a few key points to keep in mind:
 
February 1, 2021 payment
 
Based on the NDAA, if you are a Spouse SBP annuitant who is subject to the DIC offset, you may see the first change in the SBP annuity payment you receive on February 1, 2021. You do not need to notify us that your SBP payment is affected by this change in the law.
 
It’s important to note that some spouse SBP annuitants will not see a change in their SBP paid in 2021, because their SBP annuity does not exceed two-thirds of their DIC amount. Some people have misunderstood the change in the calculation and believe that the net SBP amount paid will be increased by one-third, instead of having the DIC offset amount decreased by one-third.
 
The language in the NDAA says, “During the period beginning on January 1, 2021, and ending on December 31, 2021, the amount that the annuity otherwise payable under this section would exceed two thirds of such dependency and indemnity compensation.”
 
Individual estimates
 
DFAS is unable to provide individual estimates of the upcoming changes in spouse SBP annuity payments due to this change in the law. Please do not call our Customer Care Center to request an individual estimate.
 
We are working on an explanation of how you will be able to estimate the change in the SBP monthly payments you will receive beginning on February 1, 2021. We will post this explanation on the SBP-DIC News webpage: www.dfas.mil/sbpdicnews and send a myPay SmartDoc email to those who have a current email address in myPay. The directions to calculate your own estimate will be based on the information that appears on your Annuitant Account Statement.
 
You can view (and download) your Annuitant Account Statement in myPay, if you currently receive SBP or SSIA payments from DFAS.
 
Unless you have chosen to get your statements electronically via myPay, you should receive an Annuitant Account Statement in the mail in January of each year, along with your tax statement (1099-R), and also receive a statement during the year if your net pay changes.
 
Ensure your account information is updated
 
The most important action you can take as an SBP annuitant at this time is to ensure your annuity account information is up-to-date and includes your correct mailing address so we can contact you, if needed. Also, if you are receiving SBP or SSIA pay from DFAS and are not using myPay, set up a profile now and add your email address: https://mypay.dfas.mil. We can send information more frequently via myPay SmartDoc emails and will be sending additional updates this fall and next year to the spouse annuitants who have a current email address in myPay.
 
If you’ve never used myPay, it’s easy to get started. You can request an initial password on the myPay homepage at https://mypay.dfas.mil using the “Forgot or Need a Password” link. The password will be mailed to the address you have on file with DFAS and you will receive it in about 10 business days.
 
Once you receive your password in the mail, you can return to the myPay homepage and log in with your social security number and the password you received in the mail to create your myPay profile.
 
We have a downloadable step-by-step Get Started Guide to myPay on our website at: www.dfas.mil/retiredmilitary and a how-to video on the DFAS YouTube channel: www.youtube.com/DFAS
 
Repeal of Optional Annuity for Dependent Children
 
The "Repeal of Authority for Optional Annuity for Dependent Children" and "Restoration of Eligibility for Previously Eligible Spouses" in the NDAA only affect those spouses and children of service members who died on active duty or inactive duty when the surviving spouse previously elected to transfer the SBP annuity to a child or children. They do not affect previous or future SBP elections by retirees. They do not affect SBP annuities for a retiree's beneficiaries.
 
The reversion of the SBP annuity payment to the surviving spouse as of January 1, 2023 for those spouses of service members who died on active duty or inactive duty is not optional. It is required by the law, as long as the surviving spouse is still eligible at that time (if the surviving spouse has not passed away or re-married before age 55).
 
If the surviving spouse is not eligible, the SBP annuity will be paid to the eligible child annuitant(s). This is because SBP coverage for service members who died on active duty or inactive duty is “spouse and child.”
 
Spouse and child SBP coverage normally means that the spouse receives the annuity payment unless the spouse is ineligible. If the spouse becomes ineligible, the eligible child or children will receive the SBP annuity payment. However, for active duty or inactive duty deaths that occurred after October 7, 2001, the surviving spouse can/could elect to have the annuity paid to an eligible child or children instead of to the surviving spouse. This is referred to as the “Optional Annuity for Dependent Children.”
 
Special Survivor Indemnity Allowance (SSIA)
 
The Special Survivor Indemnity Allowance (SSIA) will continue to be paid through December 31, 2022, but only for those surviving spouses who still have a portion of their SBP annuity offset by DIC.
 
The amount of SSIA that is paid will be the maximum amount of SSIA, but only up to the amount of the SBP annuity that is offset. The amount of SSIA paid cannot exceed the amount the annuity is offset.
 
We will provide more information on the implementation of the phased elimination of the offset in the coming months. Please check our “SBP-DIC News” webpage for information:
www.dfas.mil/sbpdicnews


Page last updated on June 17, 2020