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SBP-DIC Offset Phased Elimination News

 

Congress enacted changes to the Survivor Benefit Plan (SBP) that in 2023 will eliminate the offset (reduction) to SBP annuity payments for surviving spouses who are also receiving Dependency and Indemnity Compensation (DIC) from the Department of Veterans Affairs (VA). 
 

**Please note the change in the law does NOT affect the amount of DIC you receive from the VA. You should continue to receive your full DIC amount from the VA. **
 


Surviving Spouses Entitled to Both SBP and DIC in 2022: Watch Your Mailbox for Your Individual Estimate Letter


On January 1, 2022, Phase Two of the SBP-DIC Offset Phased Elimination will begin.

To help surviving spouses entitled to both SBP and DIC in 2022 understand the effect of this change, DFAS will mail letters in early December with individual estimates of 2022 SBP payments. Click here to download an example of the letter and the Explainer that provides additional information about the estimate categories in the letters.

As a reminder, the SBP-DIC Offset Phased Elimination only affects SBP payments issued by DFAS. The changes do NOT affect Dependency and Indemnity Compensation (DIC) payments from the VA. Eligible surviving spouses will continue to receive the full amount of DIC from the VA.

Please do not call our Customer Care Center to ask for your estimates. They will not be available to view in your account until late January of 2022.
 



What Happens in 2022 – Phase Two of the SBP-DIC Offset Phased Elimination


January 1, 2022 marks the start of the second phase of the SBP-DIC Offset Phased Elimination.

In Phase Two of the SBP-DIC Offset Phased Elimination the amount that is offset (deducted) from the spouse’s SBP annuity payment will be one-third of the amount of the DIC payment.

January 2022 benefits will be paid on February 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.

As a reminder, the SBP-DIC Offset Phased Elimination only affects SBP payments issued by DFAS. The changes do NOT affect Dependency and Indemnity Compensation (DIC) payments from the VA. Eligible surviving spouses will continue to receive the full amount of DIC from the VA.


Your Gross SBP Benefit is Now Shown on Your Annuitant Account Statement


Annuitant Account Statements for spouses now show their current gross SBP benefit at the bottom of the statement.

Annuitant Account Statements are available in your myPay account: https://mypay.dfas.mil
 

How to Estimate Your 2022 SBP Payment


You can estimate your net SBP payment for 2022 using the current gross SBP benefit amount that is on your Annuitant Account Statement and your current DIC payment.

The formula is: 2022 Gross SBP estimate minus 1/3 of 2022 DIC estimate = 2022 Net SBP Payment estimate
Step 1: Multiply your current gross SBP benefit amount by 1.059 (the 2022 Cost of Living Adjustment is 5.9%) = 2022 Gross SBP estimate
Step 2: Multiply your current DIC payment amount by 1.059 = 2022 DIC estimate
Step 3: Divide the number in Step 2 (2022 DIC) by three = 2022 Offset Amount estimate
Step 4: Subtract the number in Step 3 (2022 Offset Amount estimate) from your 2022 Gross SBP in Step 1 = 2022 Net SBP Payment estimate


The Special Survivors Indemnity Allowance (SSIA)


Eligible survivors will also continue to receive the Special Survivors Indemnity Allowance (SSIA) in 2022, up to the maximum amount of $346 per month (for 2022), or up to the amount of SBP reduced (if the amount of the SBP reduction is less than $346).


What Happens in 2023


The SBP-DIC offset will be fully eliminated as of January 1, 2023. That means you will begin to receive your full SBP payments with no offset (reduction) on February 1, 2023.

You will also continue to receive your full DIC payments from the VA.

SSIA will no longer be paid.


See the Frequently Asked Questions below


We post news here regarding the status of the implementation of the "Phase-Out of Reduction of Survivor Benefit Plan Survivor Annuities by Amount of Dependency and Indemnity Compensation," as directed by the National Defense Authorization Act (NDAA) for Fiscal Year 2020. 

Please plan to check this webpage for updates.
 

Here are a few key points to keep in mind:
 
  • Most spouse SBP annuitants will see a change in the SBP annuity payment they will receive on February 1, 2022. A small number of spouse annuitants will NOT see a change in Phase Two because one-third of their DIC payment is more than their gross SBP benefit.

  • ​Based on the NDAA, spouse SBP annuitants who are subject to the DIC offset may have seen the first change in the SBP annuity payment they received on February 1, 2021. Some annuitants did not see a change in phase one.

  • The most important action SBP annuitants can take 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’re not using myPay, set up a profile now  and add your email address. Please note: only annuitants who are currently receiving an SBP or SSIA payment from DFAS can access myPay. 

  • 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. 

  • The "Repeal of Authority for Optional Annuity for Dependent Children" and "Restoration of Eligibility for Previously Eligible Spouses" (effective January 1, 2023) in the NDAA only affects those spouses and children of service members who died on active duty or inactive duty when the surviving spouse previously requested to transfer the SBP annuity to a child or children. They do not affect previous or future SBP elections by retirees or SBP annuities for a retiree's beneficiaries. Please see this special webpage for news and information on the Survivor Benefit Plan 2023 Active Duty/Line of Duty Optional Annuity for Dependent Children Elimination/Reversion of SBP Annuity to Surviving Spouses.

  • The changes in the law do NOT affect the amount of DIC you receive from the VA. You should continue to receive your normal DIC amount from the VA. 

 

Phase-Out of the SBP-DIC Offset - Frequently Asked Questions

The National Defense Authorization Act for Fiscal Year 2020 modified the law that requires an offset of Survivor Benefit Plan (SBP) payments for surviving spouses who are also entitled to Dependency and Indemnity Compensation (DIC) from the Department of Veterans Affairs (VA). Under the previous law, a surviving spouse who receives DIC is subject to a dollar-for-dollar reduction of SBP payments, which could result in SBP being either partially or fully offset. The repeal phases-in the reduction of this offset beginning on January 1, 2021, and culminates with elimination of the offset in its entirety on January 1, 2023. Many surviving beneficiaries, current service members, and retirees have questions about the impact of this change. The most frequently asked questions are answered below.

Click on the question in one of the bulleted lists below to jump to that specific FAQ or scroll down the page to see all of the frequently asked questions. 

Impacted Beneficiaries

Timing

Premiums and Annuities

Child Annuitants

Resources

 

IMPACTED BENEFICIARIES

Q1.1: Who will be impacted by the repeal of the SBP-DIC offset?

A1.1: This change affects 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.  The law also impacts the 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.  It does not impact surviving spouses who receive only SBP but not DIC.  It also does not impact spouses who are in receipt of DIC-only, either because SBP was declined by the service member at retirement or because the service member was a disabled veteran who was not also a retiree.  It is important to note that this change does not impact any retirees or surviving spouses if SBP coverage was previously declined, and does not create opportunities for new enrollment in SBP for retirees who previously declined coverage.

Q1.2: Does every widow/widower of a service member who dies in the line of duty get SBP?

A1.2: In most cases, a surviving widow or widower whose spouse dies on active or inactive duty in the line of duty on or after September 10, 2001, and who remains unmarried prior to age 55 (see question 1.4) qualifies for a Survivor Benefit Plan (SBP) annuity.  The only exception would be in situations in which a former spouse of the service member had been awarded SBP as a result of a divorce court order and the necessary former spouse SBP election was registered prior to the death of the service member.  Survivors of members who died in the line of duty prior to September 10, 2001, are not eligible to receive SBP.  Certain surviving spouses of members who died in the line of duty on or after October 7, 2001, were eligible to transfer the SBP annuity to a dependent child, which is referred to as an “Optional Child Annuity.” . Please see this special webpage for news and information on the The Survivor Benefit Plan 2023 Active Duty/Line of Duty Optional Child Annuity Reversion.

Q1.3: If I was not subject to the DIC-SBP offset before, does this change affect me?

A1.3: Most likely not. The change only impacts those surviving spouses who were previously subject to the SBP-DIC offset, and those surviving spouses and children of members who died in the line of duty if the spouse chose to transfer the SBP benefit to a child or children. This law does not create new beneficiaries nor change the eligibility criteria for SBP or DIC.

Q1.4: What if I got remarried, will I still get the SBP benefit?

A1.4: Section 622 of the National Defense Authorization Act for Fiscal Year 2020 did not change the eligibility requirements for the Survivor Benefit Plan (SBP).  If a surviving spouse remarries prior to age 55, he or she is ineligible to continue receiving SBP.  If he or she remarries after turning age 55, that spouse does remain eligible to continue receiving the SBP annuity.  

Q1.5: Will I lose Survivor Benefit Plan (SBP) at a certain age?

A1.5: No, SBP is a life-long benefit for spouses.  Eligibility does not depend on the age of surviving spouse.  Unless the surviving spouse re-marries before the age of 55, he or she will not lose eligibility.  Re-marrying after turning age 55 will not cause the survivor to lose eligibility for SBP.

Q1.6: When I retired my spouse and I declined coverage because I’m totally disabled and we knew my spouse would get Dependency and Indemnity Compensation (DIC) when I died and Survivor Benefit Plan (SBP) would be offset.  Will she now be eligible for SBP?

A1.6: No, an election to decline or reduce coverage at retirement is irrevocable, regardless of rationale.  Section 622 of the National Defense Authorization Act for Fiscal Year 2020 does not authorize retirees who previously declined or elected reduced coverage (such as electing child-only coverage at retirement) to re-enroll or change their level of coverage.

Q1.7: I used to participate in the Survivor Benefit Plan (SBP) but I withdrew when I was rated as totally disabled by the Department of Veterans Affairs.  How does this change affect me?

A1.7: Section 622 of the National Defense Authorization Act for Fiscal Year 2020 does not restore Survivor Benefit Plan (SBP) enrollment for any retiree who previously voluntarily withdrew.  Withdrawal from SBP remains in effect as long as the retiree who withdrew is rated totally disabled.  If the retiree’s rating is later reduced below “totally disabled,” SBP coverage can be reinstated, but only if the retiree requests it within one year of the effective date of the reduction of the VA disability rating. 

Q1.8: My spouse declined Survivor Benefit Plan (SBP) when he retired.  I am receiving Dependency and Indemnity Compensation (DIC) from VA now because he died of a service-connected issue.  Will I now receive SBP also?

A1.8: No, declining SBP at retirement is an irrevocable decision.  Section 622 of the National Defense Authorization Act for Fiscal Year 2020 does not grant the authority to reinstate SBP coverage if it was previously declined at retirement.
 

TIMING

Q2.1: When will the change go into effect?

A2.2: Section 622 of the National Defense Authorization Act for Fiscal Year 2020 was signed into law on December 20, 2019; however, the actual adjustments to Survivor Benefit Plan (SBP) payments for those affected by the change began in 2021. The legislation phases in the repeal of the SBP-DIC offset from 2021 to 2023.  

Q2.2: When will I see an increase in my Survivor Benefit Plan (SBP) payments?

A2.2: Section 622 of the National Defense Authorization Act for Fiscal Year 2020 phases in the elimination of the SBP-DIC offset in the following way: 

In 2020, surviving spouses continued to have their SBP offset by the full amount of Dependency and Indemnity Compensation (DIC) they receive from the Department of Veterans Affairs. 

In 2021, SBP is reduced by no more than two-thirds of the amount of DIC rather than by the entire amount of DIC, even though eligible surviving spouses will continue to receive the full amount of DIC.

In 2022, SBP will be reduced by no more than one-third of the amount of DIC received. 

In 2023, the SBP-DIC offset will be eliminated in total, so that surviving spouses eligible for both programs will receive both SBP and DIC in full, effective January 1 (paid on February 1).

Q2.3: Why can’t I receive the full Survivor Benefit Plan (SBP) benefit starting this year?

A2.3: Section 622 of the National Defense Authorization Act for Fiscal Year 2020 does not authorize the elimination of the SBP-DIC offset prior to January 1, 2023.

Q2.4: When will I start receiving benefits in full?

A2.4: Eligible survivors will start receiving Survivor Benefit Plan (SBP) payments in full, without offset, beginning with their January 2023 entitlement, which will be paid on February 1, 2023.

Q2.5: Does any form, document, or supporting statement need to be submitted to take advantage of these increased Survivor Benefit Plan (SBP) payments?  If yes, when is the cutoff date?

A2.5: No, the increase in benefits will occur automatically for surviving spouses subject to the SBP-DIC offset.  All surviving spouses subject to the offset will have their benefit recalculated for the month of January 2022, which they will receive on February 1, 2022.  We encourage you to ensure your contact and bank account information is updated through the Defense Finance and Accounting Service’s self-service portal, myPay.

Q2.6: If a person becomes a surviving spouse this year, would that person automatically start to receive both Survivor Benefit Plan (SBP) and Dependency and Indemnity Compensation (DIC) benefits?

A2.6: First, in order to be eligible for both benefits the current or former military member must either have retired – and elected to participate in SBP – or died in the line of duty.  If retired, he or she must also have died of a service-connected disability for the surviving spouse to be eligible for Dependency and Indemnity Compensation (DIC).  Less than 10 percent of surviving spouses qualify under both programs. In 2022, all new surviving spouses remain subject to the SBP-DIC offset if eligible under both programs. 
 

PREMIUMS AND ANNUITIES

Q3.1: How much will the average survivor get?

A3.1: Survivor Benefit Plan (SBP) annuity payments can vary for each beneficiary because they are based on a number of factors such as retirement date, length of service, pay grade, and disability rating of the sponsor.  There is no set amount, so each surviving spouse’s current and future SBP payments could be quite different.  We recommend reaching out to a financial counselor or retirement services office on your local installation to discuss individual amounts.

Q3.2: I am currently subject to the SBP-DIC offset.  Will I definitely get an increase?

A3.2: Yes, eventually, although not all survivors will see an increase in the first or second year.  It is possible that if your Survivor Benefit Plan (SBP) payments are currently less than one-third of the amount of Dependency Indemnity Compensation (DIC), you may not see an increase in 2022.  For example, if you currently receive $1,400 from VA for DIC, but your gross SBP before offset is only $800, you would not see an increase in 2021 other than the normal annual cost of living adjustment (COLA).  This is because your SBP amount, $800, is still less than the amount of DIC that would be subject to offset, which in this example would be $1,000 (i.e., $1,000 is two-thirds of the $1,500 DIC).  Eventually, though, you will see an increase as the SBP-DIC offset is completely eliminated in 2023. 

Q3.3: Now that the offset is being eliminated, will there be any back pay for the years we didn't get Survivor Benefit Plan (SBP) payments we paid for?

A3.3: No, Section 622 of the National Defense Authorization Act for Fiscal Year 2020 does not authorize back payments.  Surviving spouses of retirees who were subject to the SBP-DIC offset received either a partial or full refund of premiums to account for the reduced SBP payments.

Q3.4: I received a Survivor Benefit Plan (SBP) premium refund once I started getting both SBP and Dependency and Indemnity Compensation (DIC), will I have to pay it back?

A3.4: No, if you previously received a refund of SBP premiums due to the SBP-DIC offset, you will not have to pay back that refund because of this change in the law.

Q3.5: What is the Special Survivor Indemnity Allowance (SSIA)?

A3.5: The Special Survivor Indemnity Allowance (SSIA) is a payment made to surviving spouses subject to the SBP-DIC offset that partially restores some of the Survivor Benefit Plan (SBP) amount that is offset.  SSIA is a set amount established by Congress and adjusted each year by a cost-of-living adjustment (COLA), if applicable.  The SSIA rate for 2022 is $346 per month.  Surviving spouses subject to the SBP-DIC offset will continue to receive SSIA, up to the amount that is reduced from their SBP payment (i.e., until the offset is fully-repealed in 2023).

Q3.6: Will the Special Survivor Indemnity Allowance (SSIA) be phased out?

A3.6: Eligible survivors will continue to receive SSIA, up to the prescribed maximum amount ($346 per month for 2022) or the amount of SBP that is offset due to DIC, whichever is less.  SSIA will no longer be paid once the SBP-DIC offset is fully eliminated in 2023 and surviving spouses receive the full amount of SBP and DIC concurrently, without offset.
 

CHILD ANNUITANTS AND SURVIVING SPOUSES WHO REQUESTED THE “OPTIONAL CHILD ANNUITY”

Please see this special webpage for news and information on the The Survivor Benefit Plan 2023 Active Duty/Line of Duty Optional Child Annuity Reversion.
 

CHILD ANNUITANTS

Q4.1: The National Defense Authorization Act for Fiscal Year 2020 repealed the authority for optional annuities for dependent children.  What does this mean?

A 4.1: When a currently-serving member dies in the line of duty on active or inactive duty, the surviving spouse has the option, in consultation with the Secretary of the Military Department, to choose to have the Survivor Benefit Plan (SBP) annuity paid directly to a dependent child rather than to receive the benefit for him or herself.  This allows the surviving spouse to receive Dependency and Indemnity Compensation (DIC) from the Department of VA in full without it affecting the SBP payments.  SBP paid to the child or children of the deceased service member is not offset by DIC.  This provision is only allowed in situations in which the member died on active or inactive duty, in the line of duty, after October 7, 2001.  While it remains in effect for now, on January 1, 2023, this option will go away in accordance with Section 622 of the National Defense Authorization Act for Fiscal Year 2020.  Further, those annuities that were directed to a child rather than a surviving spouse will revert to the surviving spouse, if he or she is eligible and submits documentation, on January 1, 2023.

Q4.2: When my spouse retired from the military, he elected child-only Survivor Benefit Plan (SBP).  Does this mean I will now get the SBP instead of my child?

A4.2: No, the child remains the designated beneficiary for SBP.  Section 622 of the National Defense Authorization Act for Fiscal Year 2020 does not impact SBP Child-Only or Special Needs Trust (SNT) elections made by retirees and their spouses at retirement.  Spouse eligibility is not restored because the election of child-only or SNT coverage at retirement was irrevocable.  The section of the National Defense Authorization Act for Fiscal Year 2020 that discusses restoring eligibility to spouses refers only to certain situations in which the surviving spouses chose to transfer the benefit to a child following the death of a military member on active or inactive duty, in the line of duty, after October 7, 2001. 

Q4.3: I am a retiree who elected spouse and child Survivor Benefit Plan (SBP) coverage? How will this change in the law affect that coverage?

A4.3: This change in the law does not affect spouse and child SBP elections made by retirees.  If the elected coverage was for spouse and child, the child (if under age 18 or age 22 if a full-time student) will only become eligible for SBP if the spouse loses eligibility, for example a surviving spouse remarries before age 55 or the spouse passes away.


RESOURCES

Q5.1: I would like to learn more, where can I go? 

A5.1: The Defense Finance and Accounting Service (DFAS) has created this webpage to share information about the elimination of the SBP-DIC offset:   Additionally, you can contact Military One Source at 800-342-9647 or find other counseling options through the Military One Source website

 

Page Updated Nov 12, 2021