SBP Former Spouse Coverage

The Survivor Benefits Plan allows selection of coverage for former spouses. Costs and benefits under this option are identical to those for spouse coverage. This web page highlights key aspects of former spouse coverage.

When former spouse coverage is elected, the current spouse must be informed. Only one SBP election may be made. If there is more than one former spouse, the member must specify which one will be covered.

Procedures

When electing the former spouse option, a member must give the finance center a written statement signed by both the member and the former spouse. It must state:

a. Whether the election is made in order to comply with a court order; or,

b. Whether the election is made to comply with a voluntary written agreement related to a divorce action, and if so, whether that voluntary agreement is part of a court order for divorce, dissolution, or annulment.

Benefit Payments

The SBP annuity is determined by the base amount you elect. The base amount may range from a minimum of $300 up to a maximum of full retired pay. The annuity is 55 percent of the base amount until age 62 and is 35 percent of the base amount if age 62 or older. Also, the base amount and the payments to the beneficiary will generally increase at the same time and by the same percentage that cost-of-living adjustments (COLAs) are made to retired pay.

SBP Costs (Premiums)

The SBP premiums for spouse coverage are:

(1) 6.5% of your chosen base amount, or if less,
(2) 2.5% of the first $595.00 of your elected base amount (referred to hereafter as the "threshold amount"), plus 10% of the remaining base amount.

The threshold amount was $595.00 as of January 1, 2004. The threshold amount will increase at the same time and by the same percentage as future active duty basic pay.

If you became a member of a uniformed service on or after March 1, 1990, and you are retiring for length of service (not for disability), SBP costs will be calculated only under the formula in (1) above.

The following table shows the estimated costs associated with several "base amount" options and the benefits your spouse will receive based on these options.

Base Amount
SBP Premium Cost*
SBP Annuity Payment
Before 62nd Birthday**
(55% of Base Amount)
$300
$7.50
$165
$595
$14.87
$300
$800
$35.38
$440
$1,000
$55.38
$600
$1,275
$82.88
$770
$1,800
$117.00
$990
$2,200.00
$143.00
$1,210

* The SBP costs used in column 2 are calculated using the formula that provides the least cost. If the base amount was greater than or equal to $1,275, the formula in (1) was used. For base amounts less than $1,275, the formula in (2) was used.

** Note: A surviving spouse's SBP annuity is reduced when they reach age 62 and become eligible for Social Security. This is called the Social Security offset. In the past the offset reduced the SBP annuity to 35 percent of the base amount. The offset created a need for members to purchase a Supplemental Survivor Benefit Plan (SSBP) policy. Fortunately the National Defense Authorization Act of 2005 established a phase out of the offset by 2008. Thus eliminating the need for the SSBP.

The phase out will increase the SBP percentage as follows:

  • 40 percent in October 2005
  • 45 percent in April 2006
  • 50 percent in April 2007
  • 55 percent in April 2008

Inflation Protection

Like your retirement pay the SBP annuity is protected from inflation. Each year when retired pay gets a Cost-of-Living Adjustment - adjustments for inflation, known as 'COLA' -, so does the base amount, and as a result, so do premiums and annuity payments. Meaning that your premiums and annuity payments will increase with the COLA. These increases are determined by the previous year's Consumer Price Index and averages approximately 2.5 percent.

Tax Savings

Monthly SBP costs are not included in your taxable Federal income. The true cost for SBP is thus less than the amount deducted from retired pay because less Federal tax will be paid. This also applies to most state income taxes. SBP payments to survivors are taxable, but spouses usually receive benefits when their total income is less and the extra tax exemption for being over age 65 is applicable. The surviving spouse's tax rate should be lower and a long-run significant tax savings should result.

Former Spouse Remarriage

Your surviving former spouse may remarry after age 55 and continue to receive SBP payments for life. If remarried before age 55, SBP payments will stop, but may be resumed if the marriage later ends due to death, divorce or annulment.

Children

Former spouse and children coverage may also be elected. The children covered are the eligible children from the marriage of the member to the covered former spouse. The children will only receive SBP payments if the former spouse dies or remarries before age 55. Eligible children will divide 55 percent of the covered retired pay in equal shares.

Special Note: Public Law provides that a participant is considered "paid-up" after completing 30 years (360 payments) in the Plan. This applies to a specific category of beneficiary (i.e., spouse), at a specific base amount (i.e., full retired pay). Contact your personnel counselor for details on this feature, which is not effective until Oct. 1, 2008.

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