NRA News, March 2009

by LCDR David M. Bradley, USNR (Ret), National VP for Retired Personnel

Last month, we spoke about the basics of the plan and ended with six categories of beneficiaries for SBP. This month, we discuss some of the mechanics involved in those elections. Next month, we will continue with SBP premiums and close the topic.

Elections are generally permanent and irrevocable. However, since 17 May 1998, a member has been able to disenroll during the one-year period between the 25th and 36th month following start of retired pay. Spouse concurrence is required, no costs are refunded, and no future enrollment is allowed. Premiums continue as long as there is an eligible beneficiary. Costs are suspended if a spouse is lost to death or divorce. If a subsequent spouse is acquired, coverage resumes automatically at the first anniversary unless the retiree makes a written request to decline resumption before that date. Child costs stop when the youngest child exceeds 18 (or 22).

These elections are made by category, so the choices you make for your eligible beneficiaries at retirement are critical. For example, if you are married at retirement, and decline coverage for your spouse, then later remarry; you may not enroll your new spouse. Likewise, if you have eligible children you decline to enroll, you may not enroll future children.

If you cover less than full retired pay, cover children only, or decline coverage, the spouse’s written concurrence is required prior to retirement, or the election becomes full automatic coverage. This is rooted in the assumption of benefits a spouse has during your active service.

If you divorce after retirement, the spouse coverage will be suspended when the DFAS Retired Pay Center is notified of your divorce. (Notify them immediately; a copy of the final decree is necessary.) You then have one year from the date of divorce to make a written request to change your election from spouse to former spouse, voluntarily or in compliance with a court order or written agreement. The former spouse has the same one-year period to request that a former spouse election be deemed.

If you are unmarried, you can elect “insurable interest” coverage or decline coverage. If you gain a spouse or child in the future, you may enroll them within one year of the marriage or birth.

You may voluntarily elect to discontinue participation in the SBP only during the 25th through the 36th month after commencement of payment of retired pay. If you qualify to discontinue participation in the plan, you must complete the DD Form 2656-2. Spousal concurrence is required, except in limited circumstances when your spouse is unavailable. The termination form is only valid if a service-designated SBP Counselor or Notary Public witnesses your spouse’s concurrence. There are no provisions available to you to terminate SBP if you have been retired for more than 36 months, except under special circumstances (see the Defense Finance and Accounting System (DFAS) Retired and Annuitant Pay home page for details).

SPB should be important to you if your continued retired pay is important to your family’s financial health. If yes, consider SBP’s cost-of-living adjusted, governmentsubsidized, and tax-free features, which make it a good buy for most male retirees. SBP alone is not a complete estate plan. Life insurance and other investments are important factors in meeting the needs of your family beyond the scope of the SBP. For example, the SBP does not offer lump sum cash payments, which some survivors may need to meet immediate expenses upon a retiree’s death.

More detailed information may be found at the Defense Finance and Accounting System (DFAS) Retired and Annuitant Pay home page.

Write your Congressman and Senator.

There have recently been a number of House and Senate bills introduced that are of vital interest to you. As AC, RC, or retired, they all have or will have a bearing on your retirement plans. Our Director of Legislation, CAPT Ike Puzon, and his legislative interns have done a masterful job in keeping us abreast of these bills and discussing them with the important folks on the “Hill.” That, however, won’t be enough. We need your support by contacting your Representatives. We have a nice e-mail program that will let you communicate your thoughts to them, but a personal letter carries far more weight. Spend a moment of time and a stamp and tell them what you think.