SBP Spouse Cost and Benefits

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The Survivor Benefit Plan (SBP) is an inflation-protected annuity feature of retired military pay that continues to pay a monthly benefit to your dependents after your death.

Unlike some other annuities, payments can never run out.

Payments keep increasing by Cost-of-Living Adjustments (COLA), thereby keeping future payments to survivors protected from inflation.

If you die shortly after retirement, your surviving spouse could receive a cost-of-living adjusted annuity for 50 or more years.  Lifetime payments to your spouse from an original election to cover $1,000 of your retired pay could total over $750,000. 

As an example, with continuing COLAs, the annuity paid to your spouse at age 90 would be roughly 2 and 1/2 times the covered retired pay at age 40.  This demonstrates two unmatchable features of SBP: 

SPB Spouse Coverage

One of two formulas may be used when computing spouse premiums for members who were on active duty on or before Feb. 28, 1990, and members who are retiring for disability (regardless of the date of entry on active duty)

The SBP premium for spouse coverage is the lower of either:

  1. 6.5 percent of the designated base amount Example of spouse coverage with base amount of $1,700 : 
    Enter Base Amount $1,700
    Multiply by 6.5 percent X .065
    Cost per month $110.50

If the elected base amount is $1,662 or less as of Jan.1, 2018, take 2.5 percent of the first $776* of the elected base amount plus 10 percent of the remaining base amount (see Notes, below).  Example of spouse coverage with base amount of $1,200 

 1.  Enter Base Amount  $1,200 
 2.  Subtract first $822  $822
 3.  Remainder  $378
 4.  Multiply $822 by .025  $20.55
 5.  Multiply $378 by .10  $37.80
 6.  Cost per month  $58.35

Note: This amount ($822) is referred to as the threshold amount.  This amount increases at the same time and by the same percentage as active-duty basic pay increases. As of Jan. 1, 2018, the threshold amount is $822.

As of Jan.1, 2018, if the base amount is $1,761 or more, the cost will be less under the formula in (1) above. If the base amount is $1,760 or less, the cost will be less under the formula in (2) above. A cost computation can be obtained by contacting an SBP counselor at the nearest military installation.

SBP 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. Also, the base amount and the payments to the surviving spouse will generally increase at the same time and by the same percentage that cost-of-living adjustments (COLAs) are made to retired pay.

Spouse Remarriage

Your surviving 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 or divorce.

SBP Costs (Premiums)

The SBP premiums for spouse coverage are 6.5% of your chosen base amount.

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.

Loss of Spouse

If your spouse dies first or you get divorced, SBP costs will stop (once you notify the pay center). In divorce cases, spouse coverage may be converted to former spouse coverage.

In some instances of divorce, conversion of the coverage to provide for the former spouse may be required by court order.

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).

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