Sbp Survivor Benefit Plan - During active duty, if you have a spouse and/or dependent children, they will automatically be covered by a top-tier Survivor Benefit Plan (SBP) at no cost to you. Before your retirement date, you must decide whether you want to continue SBP coverage until retirement. If you opt for SBP coverage, you have to pay premiums after you retire. SBP premiums are collected by reducing your retired pay, and are not counted against your taxable income. This means lower taxes and lower out-of-pocket cost of SBP. Also, the comprehensive plan is government funded (subsidized), so the average premiums are much lower than the cost.
If you choose SBP coverage, you must select the level of coverage or the "principal amount." The base amount is used to calculate both the cost and annuity for survivors. Full coverage means that your gross salary in retirement is your base amount, but the base amount can be any dollar amount between your gross monthly salary in retirement, up to less than $300. When retired pay receives a cost of living adjustment (COLA), the principal amount also applies and, as a result, the premiums and annuity payable.
Sbp Survivor Benefit Plan
If you choose SBP coverage, you must also choose a class of beneficiaries (for example, spouse only, child only, spouse and child, ex-spouse, ex-spouse and child, or person with an insurable interest). After retirement, your choice cannot be arbitrarily changed.
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If you choose spousal coverage, you cover the spouse you were married to at the time of your death. After your death, the benefits will be paid during your spouse's lifetime and are not interrupted if he/she remarries after age 55. However, they are suspended upon remarriage before age 55, and resumed if that remarriage ends. in death or divorce.
The annual SBP premiums to be paid to the spouse is 55 percent of the principal amount of your choice. If your spouse dies, you divorce, or if you remarry, you must notify the Defense, Financial and Accounting Service (DFAS) immediately. This ensures that SBP awards are properly suspended or resumed. Otherwise, you can end up with a huge debt for unpaid payments.
If you do not have a spouse in your retirement and later remarry, you can opt for SBP coverage for the new spouse. To determine coverage, you must notify DFAS in writing before your first wedding anniversary. The new spouse becomes an eligible beneficiary on the first wedding anniversary or on the birth of a child to the marriage if it is before the first anniversary. You do not pay the premiums until the new spouse becomes an eligible beneficiary.
A member with an ex-spouse may choose to provide SBP coverage for the ex-spouse after retirement. The choice of the ex-spouse prevents the payment of the pension to the spouse. This option can be chosen by a retired member either voluntarily or pursuant to a divorce agreement. The annual SBP premiums payable to the covered ex-spouse is 55 percent of the principal amount specified.
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The husband loses his eligibility as a "spousal" beneficiary after the divorce. If you want to continue to cover your ex-spouse either voluntarily or as a condition of the divorce agreement, you must transfer your SBP election from spouse to ex-spouse coverage within one year of the date of the divorce. To convert marital coverage to ex-spouse coverage, you must submit a properly completed DD Form 2656-1, SBP-Election Statement for Ex-Spouse Coverage, to DFAS along with a copy of the divorce decree to include the settlement. If DFAS is not notified within the first year of the divorce, the ex-spouse is not eligible for annuity payments even if you continue to pay SBP premiums.
When you convert to divorce coverage, you may not change your SBP principal amount. Choosing to cover the former spouse will prevent you from covering the new spouse at the same time if you remarry.
You can choose to cover only your eligible children (Child Only Cover) or you can include them with coverage for your ex-spouse (Spousal and Child Coverage or Ex-Spousal and Child Coverage). There is only one annual salary. In later options, the pension is paid to eligible children only if your ex-spouse dies or remarries before the age of 55.
Eligible children may include adopted children, stepchildren, adopted children, grandchildren and recognized natural children living with you in a regular parent-child relationship. To qualify as a dependent child, a grandchild must be in your court care and custody and meet dependency requirements. To qualify as a dependent child, the adopted child must receive more than half of the support from you and that support must not be provided under a social agency contract.
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When you combine child coverage with an ex-spouse (ex-spouse and child coverage) only your children from the marriage to that ex-spouse are covered. Benefits will not be paid to any other children under this option. In the child-only option or when you include children who have coverage for a spouse (not an ex-spouse), all of your eligible children are covered.
Monthly premiums to include children with spousal coverage are based on the ages of the member, spouse and younger children at the time the coverage takes effect. In the case of child-only coverage, the premium is based on the age of the member and younger when the coverage takes effect.
Eligible children equally split the annuity, which is 55 percent of the principal amount. For example, if five children qualify, they each receive one-fifth of the annuity. When the first child reaches the age of 18 without a disability, and if he is no longer in school, each of the remaining four children receives a quarter of the annuity. This process continues until the youngest child is no longer eligible for benefits.
If you are not married and have no dependent children, you may be able to elect coverage for "insurable interest." This must be a natural person (not a corporation, organization, fraternity, etc.) with a financial interest in your life. It could be a relative or business partner. If the person is close to their cousin, proof of insurance is not required. If you are not married and have only one dependent child, you can choose insurable coverage for that child. An insurable interest pension is paid during the life of the beneficiary.
Survivors Benefit Plan (sbp) Coverage
Choosing insurable interest coverage requires full retirement pay as the principal amount. The insurable interest premium is 10 percent of full retirement wages, plus 5 percent for every five full years the beneficiary is older. However, the total costs cannot exceed 40 percent of your fully retired pay. Insurable interest benefits are equal to 55 percent of the remaining retired pay after deducting the credit guarantee premium.
You are entitled to a period of one year between the second and third anniversary of receiving your retirement payment during which you can deregister from the SBP. This allows members who may experience a financial crisis or simply decide they no longer need SBP survivorship protection to permanently exit the plan. This requires the consent of a spouse, there is no refund of insurance premiums, and you will be banned forever from re-entry. Once the window is closed, the selection is essentially irreversible.
Public Law 105-261 was signed into law on October 17, 98. It states that on October 1, 2008, retired members who are 70 years of age or older and who have paid into SBP for at least 30 years (360 full payments) will be considered “ “fully paid.” No further premiums will be deducted from their retired pay, but the eligible beneficiary will still receive an SBP membership upon their death.
Before your retirement date, retired AF members must attend a one-on-one personal SBP briefing with an AF SBP counselor. If you are married, your spouse must also attend the briefing. The law requires that you and your spouse be fully informed about the options and effects of SBP so that you can make an informed decision and that your spouse understands the implications of your decision.
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Do not go on PCS or terminal leave until you have received a face-to-face SBP briefing and completed DD Form 2656. If you are married, you may not elect reduced spousal coverage or decline spousal coverage without your spouse's written consent in DD shape 2656 after the election. The choice can be changed at any time before your retirement date if you change your mind. If you do not complete a DD Form 2656 with a valid SBP election before your retirement date, DFAS will automatically create full spouse and child SBP coverage.
For more information about SBP, please contact SBP counselors at the Scott AFB Military & Family Readiness Center or by calling (618) 256-6508.
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