MOAA to Congress: Repeal “Widows’ Tax”

Steve Testifying SBP Dec

December 11, 2015

MOAA's Director of Government Relations, Col. Steve Strobridge, USAF (Ret.), testified before the House Armed Services military personnel subcommittee on Wednesday about the huge financial penalty imposed on 63,000 military survivors. Current law unfairly makes military survivors forfeit part or all of their military Survivor Benefit Plan (SBP) annuity when military service caused the member's death. 

SBP provides the survivor 55 percent of the servicemember's military retired pay. Enrollment is elected at the time of retirement, and the retired member pays 6.5 percent of retired pay as a premium. 

Dependency and Indemnity Compensation (DIC) is a VA program providing a $1,254 monthly annuity for survivors of veterans whose death is ruled service-connected. SBP payments are reduced dollar-for-dollar by DIC. This is often called the “widows' tax.” MOAA has been seeking repeal of this unfair law for decades. 

Rep. Joe Wilson (R-S.C.), whose proposed legislation to end the offset (H.R. 1594) has gathered 171 bipartisan cosponsors, reiterated his determination to see an end to the offset at the hearing. 

In 2008, Congress authorized a modest Special Survivor Indemnity Allowance (SSIA) for SBP-DIC widows as a first step toward phasing out the offset. 

“Because of budget issues, our hope has been Congress would do that by steadily increasing the SSIA amounts,” Strobridge said. “As of FY 2017, the $310 monthly SSIA will restore about 25 percent of the offset.” 

However, SSIA is set to expire Oct. 1, 2017, and Congress needs to extend the SSIA in the upcoming FY17 defense bill or survivors will forfeit the $310 monthly allowance. 

“You have [our] support because you have been so effective outside of this hearing in our offices… the argument that you've made in my opinion is incontrovertible, and you've made it on its merits, on the facts,” said Rep. Beto O'Rourke (D-Tex.) to the panel. 

Though committee members acknowledged the inequity of the offset, Ranking Member Susan Davis (D-Calif.) pointed out that a full repeal has a price tag approaching $7 billion, and securing funds will be difficult. 

“We're sensitive to the [funding] challenge,” said Strobridge. But he noted, “When congressional leaders recently managed to find far larger [funding] to provide Medicare premium relief to millions of wealthier beneficiaries, it's hard to explain to SBP-DIC widows - who have suffered five-digit annual losses for decades - why their situation gets lower priority.”

Even in a budget-constrained environment, fair treatment for survivors of servicemembers who gave their lives for their country shouldn't be last in line for funding. Congress needs to extend and increase the SSIA in the FY17 National Defense Authorization Act.

 

 

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