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:
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.
Spouse SBP Coverage
Please see our SBP-DIC News webpage for details and Frequently Asked Questions about the SBP-DIC Offset Phased Elimination.
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.
Spouse SBP annuitants, except for those who remarry after age 57 (or in other specific circumstances), cannot receive full SBP and DIC at the same time before 2023.
Beginning in 2021, there will be significant changes to the SBP-DIC offset.
In 2021, when DFAS is informed by the VA that a spouse annuitant is receiving DIC, the law requires that DFAS deduct two-thirds* of the amount of DIC received from the amount of SBP payable and pay the remaining amount of the SBP to the annuitant. This is called the SBP/DIC offset.
*The reduction of the SBP-DIC offset from the full amount of DIC to two-thirds of DIC is effective January 1, 2021.
For example, in 2021, if an annuitant receives a monthly SBP annuity of $1200 from DFAS and becomes eligible to receive a monthly DIC award of $1500 from the VA, DFAS will deduct two-thirds of the amount of DIC ($1000) from the $1200 SBP and pay the remaining $200 to the annuitant. The annuitant will continue receive the full amount of DIC from the VA (in this example $1500).
On January 1, 2022, the offset will be further reduced to one-third of DIC.
On January 1, 2023, the offset will be completely eliminated. Eligible surviving spouses will receive their full SBP payments AND their full DIC payments.
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. Please see our SBP-DIC news webpage for details and FAQs.
Please note: DIC payments made directly to children, or to a guardian on behalf of children, do not affect SBP child annuity payments.
The Special Survivor Indemnity Allowance (SSIA)
When a spouse is eligible to receive SBP and DIC, and is not receiving the full amount of SBP due to the SBP/DIC offset, the spouse may also receive the Special Survivor Indemnity Allowance (SSIA). SSIA is a separate fixed monthly entitlement which may not exceed the amount of the SBP annuity in any month that it is subject to the SBP/DIC offset. SSIA is increased by the same cost of living adjustments as SBP and military retired pay. SSIA is not authorized for your surviving spouse if you have discontinued participation in the SBP.
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 will restart from the date the marriage ends, once DFAS is notified.
Remarriage after age 55 but prior to age 57
When a surviving spouse remarries after age 55, but prior to age 57, DIC payments stop. If the spouse's SBP payment was previously reduced or eliminated because of DIC, the full SBP payment may resume.
Remarriage after age 57
Spouse annuitants who remarry after age 57 are entitled to receive full SBP and DIC benefits at the same time. This is the result of a 2009 court decision. According to the ruling, DFAS is not required to deduct DIC payments from a monthly SBP annuity if a spouse is entitled to both benefits and has remarried after age 57.
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, DIC, and SSIA.
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.
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 March 26, 2021