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Discontinuing (Withdrawing from) SBP Coverage Due to Qualifying VA Disability


Retirees who meet one of the following two criteria are eligible to discontinue participation in the Survivor Benefit Plan:

A) The retiree has had a service-connected disability rated by the VA as totally disabled for a continuous period of 10 or more years; or
B) The retiree has had a total disability rating from the VA for at least five continuous years immediately following the last date of discharge or release from active duty.

In making your decision about discontinuing participation in the Survivor Benefit Plan (SBP), you should consider both the potential VA award of Dependency and Indemnity Compensation (DIC) and the amount of the SBP annuity. In addition, you should consider your legal obligations, such as a court order or divorce decree requiring you to maintain SBP coverage, before making your decision.

Discontinuing SBP coverage due to qualifying VA disability (also referred to as withdrawing from SBP coverage due to VA disability) is different than terminating SBP coverage between the 25th and 36th month of retirement.

A request to discontinue SBP participation requires the written consent of the beneficiary or beneficiaries. Consent for a dependent child may be given by a parent, step-parent, foster parent or guardian.

For assistance in making your decision about withdrawing, please contact your branch of service retiree services organization:  
https://www.dfas.mil/retiredmilitary/provide/Branch-Contact-information.


Dependency and Indemnity Compensation (DIC)

Dependency and Indemnity Compensation (DIC) is a tax free monetary benefit paid by the VA under 38 U.S.C. § 1311(a) to eligible survivors of military service members who die in the line of duty or eligible survivors of veterans whose death resulted from a service-related injury or disease.

Survivor Benefit Plan (SBP)

SBP provides up to 55 percent of a service member's retired pay as an annuity to an eligible beneficiary upon the death of a member serving in the line of duty on active or inactive duty, or upon the death of a retiree. The amount of the SBP annuity is a percentage of retired pay. The percentage depends upon whether the member chooses full or reduced coverage at the time of election (generally at retirement or at 20-year qualification). The annuity is paid monthly. The SBP annuity may be increased by cost-of-living adjustments (COLAs) after the member’s death.

Discontinuing participation in SBP will result in no SBP annuity monthly payments after the member’s death, even if there is no DIC benefit.


Please see our SBP-DIC News webpage for details and Frequently Asked Questions about the SBP-DIC Offset Elimination


Spouse SBP Coverage

The amount of the SBP annuity and the DIC benefit that would be paid to a surviving spouse should be carefully considered before requesting discontinuation.

Historically, withdrawing from the Survivor Benefit Plan because of the DIC offset made some sense for retirees once their disability rating rose to 100%. However, the tradeoffs involved changed significantly when Public Law 116-92, the National Defense Authorization Act (NDAA) for Fiscal Year 2020 was passed, creating a phased elimination of the offset to the Survivor Benefit Plan due to receipt of DIC. 

Now, beginning in 2023, surviving spouses are able to receive the full SBP annuity without any offset due to receipt of DIC.

Please note the change in the law DOES NOT affect DIC payments, it only affects SBP payments when the surviving spouse is also receiving DIC. Also, DIC payments made directly to children, or to a guardian on behalf of children, do not affect SBP child annuity payments.

How Remarriage May Impact a Spouse SBP Annuity

Remarriage before age 55

Surviving spouses maintain their eligibility for an SBP annuity until death, as long as they do not remarry before the age of 55. If the annuitant remarries before age 55, annuity payments will stop. However, if the annuitant's marriage later ends for any reason, even after age 55, the annuity payment can restart from the date the marriage ends, once DFAS is notified.

In making your decision about discontinuing participation, you should also consider that Congress could make additional changes in the future to the laws described above regarding SBP and DIC.

Spouse AND Child SBP Coverage

With SBP Spouse and Child coverage, the annuity is payable first to the surviving spouse. If the surviving spouse dies or otherwise becomes ineligible for the annuity (such as when the spouse remarries before age 55), eligible children equally divide the monthly annuity.

A child is generally eligible for the SBP annuity through age 18, if unmarried; or through age 22 if unmarried and attending school full-time. Incapacitated or disabled children are eligible under special rules.

A child’s annuity is not reduced by any DIC benefit that may be awarded to the child.

Child ONLY Coverage

The cost for child only coverage is, in most cases, a minimal amount.

The child may be awarded a DIC benefit in his or her own right and, as stated above, the payments are not reduced by the amount of the DIC.

It is especially important to consider continued participation in the Plan when spouse and child or child only coverage includes an incapacitated child.

Submitting your request to discontinue participation in SBP

If you believe you are eligible and want to discontinue your participation in the SBP due to VA disability, please download the “SBP Withdrawal Due to VA Disability Packet” and follow the instructions in the letter and on the form.

A request for discontinuation requires the written consent of the beneficiary.

IMPORTANT NOTE: Once a qualified retiree elects to discontinue participation in the SBP, participation may not be resumed unless:
(a) The VA reduces the disability rating to a rating of less than total; and
(b) within one year of the new rating, the retiree requests to resume participation.

 

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Note: The information on this website is provided to explain typical situations regarding retiree and annuitant benefits. For details and exceptions, please see applicable laws, financial management regulations, and instructions.

Page updated February 14, 2023