Readers of Tom Philpott's Military Update column sound off.

How SBP ‘Paid-Up' Rule Impacts ‘Open Season' Enrollees

I'm uncertain what the wording "Paid into the system for 30 years" means in describing how the Paid-Up Premium rule for the military's Survivor Benefit Plan (SBP) will affect me when it takes effect in October 2008.

I signed up for SBP late and so paid the Open Season Cost some time after retiring. As a consequence, my SBP premiums have been approximately 32 percent higher than if I had signed up at retirement.

Am I correct in assuming that by paying the higher premiums my SBP start date is the same as those who signed-up at retirement?

Put another way: Does having paid the Open Season Cost mean I will have paid into the system for 30 years on the 30th anniversary of my retirement?

I'm sure that I am not the only one concerned about this.

RICHARD WEHLE
Master Chief Fire Control Technician, USN-Ret.
Mt. Pleasant, S.C.

As you suggest, paying the Open Season Cost means that you will have paid SBP premiums for the equivalent of 30 years when you reach the 30th anniversary of your retirement.

According to an SBP expert in the Defense Department's office of military personnel policy, during two SBP open enrollment periods - 1999-2000 and 2005-2006 - late SBP entrants were required to pay a lump-sum amount equal to the amount that would have been paid in total premiums had they elected coverage at the first available opportunity, plus interest. Then retirees would pay the normal 6.5 percent premium prospectively.

For these open enrollments, retirees are given credit toward paid-up SBP from the month they first had an opportunity to participate.

But in an earlier open enrollment period -- 1992-1993 -- retirees not required to pay a lump-sum, buy-in premium equal to retroactive premiums from the date the member was first eligible to participate in SBP. Instead, members simply were charged a higher premium (up to an additional 4.5 percent of retired pay) than the standard monthly premium. For participants in this open enrollment, no credit towards paid-up SBP is given for the months when retirees were not participants. - Tom Philpott

Effective Date

I would like to know if Congress has changed the start date for the SBP ‘Paid-Up' provision to Oct. 1, 2007. 

DAVID M. BUTCHER
Chief Master Sergeant
Via e-mail

The start date remains Oct. 1, 2008, after House-Senate conferees, negotiating differences between their two versions of the defense authorization bill in December, rejected Senate language that would have made the SBP Paid-Up rule effective back to Oct. 1 last year. - T.P.

SBP and Remarriage

I am planning to marry a widow who is drawing an SBP pension. Will she lose her pension if we wed? I am retired military.

ANTHONY L.

That depends on her age. If the widow remarries after age 55, SBP benefit payments are not affected. But benefits paid to a widow are suspended if the widow remarries before age 55.

Suspended SBP benefits can be resumed, upon application to the Defense Finance and Accounting Service, if the remarriage ends through death, divorce or annulment.

Also, if the spouse remarries before age 55 and there are eligible children, the children will receive the SBP annuity payments until they are no longer eligible. - T.P.

TRICARE Fees and Shared Retirement

Just a comment on the plan endorsed by the Task Force on the Future of Military Health Care to raise TRICARE fees for working-age military retirees  Although we are not opposed totally to raising fees slightly, we are opposed to "tiering" of fees based on gross retainer pay.

Those of us affected by the Uniformed Services Former Spouses Protection Act (USFSPA) do not receive our full retainer pay. A portion goes to a former spouse. Therefore, we should not have to pay TRICARE fees based on money we never see.

Alimony and child support should be treated differently than the monthly USFSPA payment to a former spouse.

DOUG JOYNER
STEPHANIE JOYNER
Via e-mail

The indexed TRICARE fee structure proposed by the task force seems out of balance. A retiree drawing $20,000 in 2011 would pay $1190 to enroll in TRICARE Prime, or roughly six percent of retired pay. A retiree drawing $40,000 would pay $1750, or 4.4 percent.

Assuming a general officer retiree draws just $50,000, that officer l would only pay 3.5 percent. Even a retiree in the lowest bracket, drawing, let's say, $18,000 and paying $900 per year, would pay 5 percent.

Why such a biased fee plan?

I say set enrollment fees so every retiree pays the same percentage.  This would be consistent with the Survivor Benefit Plan.

KEITH ROSS
Lieutenant Colonel, USAF-Ret.
Via e-mail

The task force said that "for equity reasons, military retirees who earn more military retired pay should pay a higher enrollment fee than those who earn less."  But it said the tiers for fees should not be set to be proportional to retired pay but "half proportional."

Under this approach, the task force said, "a 100-percent difference in average retired pay would result in a 50-percent difference in the enrollment fee."

With SBP, higher premiums result in higher survivor benefits. With TRICARE, all retirees who enroll in TRICARE Prime presumably are buying the same level of health care coverage.  - T.P.

Letters may be edited for clarity or length. Write to Military Forum, P.O. Box 231111, Centreville, VA  20120-1111, send e-mail to militaryforum@aol.com or visit www.militaryupdate.com.

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