When You Die, Will Your Spouse Be OK?
About the Author

Merry, a native of Southern California, enlisted in the Air Force in 1982 as a Personnel Specialist. He was commissioned through AFROTC in 1989, earning his degree in Marketing from Northern Arizona University in Flagstaff Arizona. He holds a master's degrees in Human Resources Management and Military Arts & Science.

After his commissioning, Merry returned to the Personnel career field and served at every level of the Air Force. He was the Career Field Manager for Personnel, Manpower and Services, and was selected as the Air Force's Chief of Compensation and member of the 10th Quadrennial Review of Military Compensation. He has deployments to Iraq, Saudi Arabia, Turkey, and other locations throughout the Middle East.

Merry is a graduate of Air Command and Staff College at Maxwell AFB, Alabama; and was the Senior Air Force Fellow at the RAND Corporation in Santa Monica, California. At the time of his retirement he was the Commander of Air Force Mortuary Affairs Operations (AFMAO) responsible for DoD's sole Port Mortuary at Dover AFB, Delaware.

 “When you die, will your spouse be ok financially?” If you haven’t really thought this through, you need to. The difference to your surviving spouse is likely significant. There are two key aspects of the government’s role in answering this question:

SBP is the Survivor Benefit Plan, a DoD life insurance annuity military retirees may buy to protect their family in case of their death. It can provide a survivor with a taxable annuity equal to 55 percent of a servicemember’s military retired pay. If a servicemember dies on active duty, SBP payments are automatic, and the surviving spouse receives 55 percent of what the member’s retirement pay would be. SBP annuities are subject to taxation.

DIC is Dependency and Indemnity Compensation, a tax-free, monthly stipend paid by the VA to surviving spouses when a servicemember is killed in the line of duty, or when a former servicemember dies from service-connected causes. The current DIC rate is $1,258 per month.

When you die, the government will help your surviving spouse if you fall into one of these categories:

  • You are a retiree and you purchased SBP
  • You are a retiree or veteran and your death is service-connected – VA pays DIC
  • You die on active duty – automatic SBP and DIC for death in line of duty

Most active duty servicemembers are not aware of the programs discussed above; the same is probably true for veterans who are not retirees. Retirees, however, are more likely to understand the basics because they had to make a deliberate election to purchase or decline SBP. Still, the complexities of SBP and DIC and who pays what baffle most — until a death. For many, this is where the lessons from the loss of a loved one begin.

Even though it is complicated, it is imperative you and your spouse understand SBP and DIC now — don’t put this lesson off for your spouse to learn later. It’s most important to understand that current legislation does not allow survivors to receive both SBP and DIC in full — even though Congress acknowledges these are two separate programs, paid out for two separate reasons. 

This dilemma only applies to the survivors of retirees who purchased SBP or of servicemembers who die on active duty. For every $1 of DIC, your spouse will need to surrender $1 of SBP, up to the total amount of DIC (currently $15,095 per year). In some cases, they might lose their entire SBP benefit, if the amount is lower than the DIC benefit. For example:

Survivor annuity

The scope of the problem is disturbing. Nearly 64,000 widows, spanning from their 20s to their 90s, are waiting for this inequity to be resolved. MOAA and others are working ardently to pass legislation to repeal this offset.

Congress has acknowledged this offset is not fair. Leaders have been vocal about their support, and they even approved the Special Survivor Indemnity Allowance (SSIA), currently $310 a month, to partially mitigate the offset. The Veterans’ Disability Benefits Commission also concurs with MOAA that DIC should be paid in addition to SBP, not subtracted from it. 

MOAA appreciates the support — but this is not enough. Working as hard as we can, with dedicated people like you and members of Congress, we remain fenced by roadblocks solely because of funding.

We need every retiree who purchased SBP, and every active duty member, to act now. Do this for the 64,000 surviving spouses — and do it for your own spouse. We need Congress to find the funding to repeal this. Your spouse will appreciate not having to learn this particular lesson. 

Please send these messages to your members of congress. 

Forward this column article to your retired and active duty friends, and save a copy with your important papers. 

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There are 4 Comment(s)
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  1. majormdw@aol.com majormdw@aol.com on 11 Aug 2017 at 4:23 PM

    When I retired in '92, we checked into life insurance. I found that for a little less than I would pay for SBP, I could buy permanent whole life insurance with an inflation rider. It would not only replace 100% (instead of 55%) of my retired pay at 8% return on the life insurance proceeds, but would not require touching the principal. And if I was the widower, it would have cash value I could use. SBP, at least as it was then, is for the uninsurable.

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  2. rbigmac@bellsouth.net rbigmac@bellsouth.net on 16 Jul 2017 at 7:39 PM

    Col Dan, your figures are goofed up. SBP is 55% of what the retired pay is/would be the day a soldier died. At 14 years figure 35% of high 3, at 10 years figure 25% of high 3, at 22 years figure 55% of high 3, then the SBP is 55% of that figure. Your chart shows SBP as 55% of 100% pay. You get 100% by serving 40 years, not 10 or 14 years..........Maj Ron

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    • dante6067@hotmail.com dante6067@hotmail.com on 17 Jul 2017 at 7:52 PM

      Hey Ron... for active duty deaths the member's "retirement" calculation is 75% of base pay at time of death. The example is an E4 just over 4 years of service. Their annual base pay is $29,185.20; 75% puts it at $21,888.90; then, 55% of that is $12,038.90. Given this amount is below DIC, the widow forfeits the entire SBP and only gets DIC. We think they should both be paid as they were created for two different purposes: 1) protect a portion of retired pay (rank and time based), and 2)recompense for service-connected death. Hope this clarifies -- thank you for chiming in. Dan

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  3. gincoombs1@yahoo.com gincoombs1@yahoo.com on 16 Jul 2017 at 5:56 PM

    I am the widow of a service member who served for 21.5 years. His death in 1992, was determined to be service connected. My husband had purchased the SBP insurance. I receive the DIC of $15,000, not the offset from the SBP. I do not understand why the SBP-DIC off-set is used, since the SBP was paid for and the DIC was for the service member's death in service to this country. While my husband was ill, my employer was billed by the VA for his medical costs at the VA and at other medical facilities.

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  4. drengr drengr on 16 Jul 2017 at 2:47 PM

    COL Merry, I think your information is somewhat misleading. I believe survivors of active duty service members did not receive SBP until after 9-11. Prior to that survivors only received DIC. Therefore the only "widows in their 90s" that might face an offset of SBP with DIC are those whose husbands died after retirement of service-connected causes. MOAA has been completely silent on the situation of those of us who are survivors of active duty members who died prior to 9-11. The statement made to me was "There aren't enough of you to matter". However, your article to at least acknowledge that there are a few of us who would love to have the "problem" of an SBP/DIC offset.

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    • dante6067@hotmail.com dante6067@hotmail.com on 17 Jul 2017 at 8:00 PM

      Ma'am... never my intention to mislead anyone. And if I ever found anyone to say there are not enough of you to matter, well, I'd love to have a word with them in private or public--their choice. There are many widows at various ages who are impacted by this as long as their service member had SBP and died of a service-connected cause thus deserving DIC. To me, and to MOAA, every spouse who is affected by this deserves our most earnest effort to end the offset...this is my personal goal. Thank you for your membership and continued trust. Respectfully, Col Dan Merry, USAF (retired)

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