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The Bottom Line - Time to End the SBP/DIC Offset

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August 6, 2014

By Col. Mike Hayden, USAF (Ret)

Recently, I helped a survivor, who had lost her retired military spouse, navigate the somewhat confusing benefits in DoD and the VA. 

Her husband had elected the Survivor Benefit Program (SBP), which provides the survivor up to 55 percent of the servicemember’s military retired pay, yet she also was entitled to Dependency and Indemnity Compensation (DIC) provided by the VA because her husband’s death was determined to have been the result of his military service.  

DIC provides a modest $1,233 a month ($14,796 a year), however, under current law, survivors who are eligible for both SBP and DIC must forfeit a dollar of their SBP annuity for every dollar of DIC received from the VA. Often, the offset completely eliminates the SBP annuity the military retiree paid for, as was the case for this survivor. This offset came as quite a financial shock. 

Fortunately, commissions and members of Congress already have called for an end to the offset. The October 2007 report of the Veterans’ Disability Benefits Commission recommended eliminating the offset for all SBP/DIC survivors, asserting that when military service causes a servicemember’s death, the indemnity compensation from the VA should be paid in addition to SBP coverage, not subtracted from it. 

Many members of Congress have acknowledged the inequity and cosponsored corrective legislation (H.R. 32 and S. 734) to recognize SBP and DIC are paid for different reasons — a premise MOAA whole-heartedly supports. SBP is a servicemember-purchased annuity (insurance plan), whereas DIC is an indemnity payment to a surviving spouse when military service causes a servicemember’s death. 

In 2008, Congress clearly acknowledged this inequity by authorizing for SBP/DIC survivors a modest Special Survivor Indemnity Allowance (SSIA) to begin phasing out the offset. In June 2009, Congress took a second step, increasing SSIA monthly payments to $150 beginning in FY 2014 and rising to $310 in FY 2017. Unfortunately, barring an additional law change, SSIA authority will expire Oct. 1, 2017, and the payments will stop. 

When SSIA was implemented, the accompanying House Armed Services Committee press release stated, “This legislation (SSIA) is the latest step in our continuing effort to eliminate the so-called ‘widow’s tax,’ which has long denied surviving family members the full payment of their Survivor Benefit Plan benefits… this bill does not completely end the offset … the House Committee …will continue to explore every opportunity to pursue legislation that brings us closer to eliminating the ‘widow’s tax’.” 

No other federal surviving spouses are required to forfeit their federal annuity because military service caused their sponsor’s death. 

The bottom line: Difficult budgetary times, such as those we are experiencing today, have led to inaction on ending this unfair offset. Fair treatment for survivors of servicemembers who gave their lives for their country must not be a low funding priority. Congress must, at the very least, take steps to extend and improve SSIA with full repeal of the offset remaining the goal.

Copyright Military Officers Association of America. All rights reserved.

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  • To require me to remarry to get this offset eliminated is both ludicrous and unjust! My husband served several tours in Vietnam and died from an Agent Orange related cancer. This is just another example of the government turning it's back on veterans and their spouses!!!

  • The only widow a Congressman is concerned about is the one he is dating! :>)

  • since no one chooses to become disabled because of service or combat connection, it seems very unfair to having been encouraged to choose to pay for an annuity only to have it lost. We would be better served to have been encouraged to invest the funds elsewhere for it to safely grow.

  • Thank you MOAA for continuing the effort to have this unfair tax removed. I don't understand how the co-joining of the two completely separate issues (SBP and DIC) came about in the first place. Neither did I understand how my husband had to "pay" for his 100% disability - a cost that was removed finally by Congress a few short years before his death. MOAA was instrumental in that change; I have faith that you will succeed again on behalf of military widows.

  • I am 100% disabled with Agent Orange related heart problems, and diagnosed with CLL (cancer). If I did from CLL there is a good chance it may be claimed that I "died of my service disability". However, if I have a heart attack or stroke and die, then it would be up to a lawyer to prove that the Agent Orange is presumed to be the initial cause of my death since I had no heart problems before returning from Vietnam. Good Luck finding such a persuasive lawyer. If I die in a car wreck, the VA is relieved of paying my pension. That is a "lose-lose" for me and my wife.

  • YES for the law to state that a surviving spouse has to remarry after age 57 in order to receive both benefits is ridiculous. When the widows went to court and won they even got retroactive payment back to 2004.

  • Also need to have the unfair VA Disability pension deducted from the retired person's own earned retirement pension. I have been retired for 36 years and getting over $1200 from VA each year. This means I have had to fund my own VA Disability at a cost over over $43,000 thus far. I'm only 10% disabled. Think what this cost amounts to for a larger Disabled vet. This is the MOST UNFAIR law of all that affects retired military.
    John Anderson,Major,USAF, ret. (Lifetime member) Keep up the good work and the pressure on these good for nothing Congressmen.

  • My husband died in 1976 and I have been denied his SSIA for 38 years. It's a disgrace and an insult to my husbands military service.

  • Immediate action should be taken to eliminate this unfair action.

  • Every widow whose husband dies of service connected conditions is impacted. It can leave a widow wondering how to live going forward. Unfortunately, widows are not large enough in number to have an impact on legislation and our cause is only sparsely supported by MOAA service members. Congress cares little that they have created 2 classes of widows; after all they save money by not correcting this situation. Frankly, there will always be active duty issues or procurement issues, health care or retirement issues to be dealt with and that leaves the SBP/DIC offset on the bottom on the list, always with "no money to be found to offset the expense." I do not expect this issue ever to be resolved.

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