Things You Should Know About SBP

Is SBP a Good Buy?

Given the current government contribution towards a portion of the premium, the answer for most retirees is yes! Whether SBP is a good buy for an individual depends on personal preferences, the member's age, sex, and health compared to their beneficiary's. Beyond this, the answer lies in three questions that should be asked.

First, is SBP a product I can use? Personal preferences may control the answer, but a subsidized lifetime inflation-protected income for the surviving family is very attractive to most people.

Second, how much SBP is needed? If you know when you'll die, how long your survivor will outlive you and the rate of inflation you have the answer. The unknown future is the problem, but SBP meets the need! Even if you die shortly after retirement and your spouse lives for 50 more years and inflation is higher than expected, SBP still pays. It will probably be paying a lot more than anyone ever expected because inflation has such a strong impact over a long period of time. In fact, survivors who began to get SBP benefits in the early 1970s have seen their benefits more than quadrupled through annual COLAs!

Third, how much SBP can I afford? The benefits do carry a price tag, but due to the government contribution, the plan should be attractive for most members. And remember: The tax advantage on premiums reduce the out-of-pocket costs.

Opting In and Out of SBP (non-Open Season)

Caution! If you are married and decline SBP at retirement, you will not be eligible to later cover that spouse, or cover a new spouse should this marriage end in death or divorce and you later remarry. You must elect SBP at retirement if you ever wish to provide SBP coverage for a later acquired spouse after a failed marriage.

If, however, you were NOT MARRIED at the time of retirement, you are still eligible to enroll and start SBP sometime in the future. Use DD Form 2656-6, Survivor Benefit Plan Election Change Certificate, and send to DFAS

DD Form 2656-6, Survivor Benefit Plan Election Change Certificate
https://www.esd.whs.mil/Portals/54/Documents/DD/forms/dd/dd2656-6.pdf

DD Form 2656-6, SBP Election Change Certificate

May 28, 2024 from DFAS

There is now a Form Wizard available to assist you in completing the DD Form 2656-6, Survivor Benefit Plan Election Change Certificate. The DD Form 2656-6 is used to make changes to your Survivor Benefit Plan (SBP) coverage, as you experience life-changing events throughout your retirement.

When you need to make changes to your SBP coverage, we strongly encourage you to take advantage of using the Form Wizard because the Form Wizards eliminate the guesswork and assist in ensuring the form is completed correctly the first time.

Form Wizards are located on the Forms Library webpage of the DFAS Retired and Annuitant website at https://www.dfas.mil/RetiredMilitary/forms/ under the section titled Survivor Benefit Plan - Forms for Retirees: The Form Wizard is positioned above the PDF version of the form on the website.

If you are using Chrome, Edge, Firefox, or Safari to access an Adobe Form Wizard, you may need to download or save the PDF (by clicking the download or save icon in the upper right-hand corner of the page). Then go to the saved location and open the form/Form Wizard. It is not recommended to save completed forms on a public or shared computer because they contain Personal Identifiable Information (PII).

After generating your completed DD Form 2656-6 using the Form Wizard, you can print, sign/witness and then upload your completed form using our askDFAS online upload tool. See more information about our convenient online upload tools at https://www.dfas.mil/RetiredMilitary/newsevents/newsletter/Additional-Forms-Available-askDFAS-Online-Upload-Tool/

Sincerely,
DFAS Retired & Annuitant Pay

Survivor Benefit Plan Election Change Certificate
DD Form 2656-6 Form Wizard
DD Form 2656-6 Printable PDF Form

'Paid Up' Status

After age 70 and making 30 years of payments you go into a paid up status.

Beginning Oct. 1, 2008, any retiree who has paid 360 months of SBP premiums and has reached the age of 70 is no longer be required to make monthly payments for their SBP coverage. If you meet these requirements, your SBP election and account will remain active, and benefits to annuitants will be uninterrupted, but there will be no further cost to you. To help you track your status, Retiree Account Statements (RAS) include a "premium counter" indicating the number of months of paid premiums credited to your account.

REF: https://www.dfas.mil/RetiredMilitary/provide/sbp/payment/

Military Retired Pay Stops Upon Retirees Death!

REF: https://www.dfas.mil/RetiredMilitary/provide/sbp/
REF: https://www.dfas.mil/RetiredMilitary/provide/sbp/payment/

The Survivor Benefit Plan (SBP) allows a retiree to ensure, after death, a continuous lifetime annuity for their dependents. The annuity which is based on a percentage of retired pay is called SBP and is paid to an eligible beneficiary. It pays your eligible survivors an inflation-adjusted monthly income.

A military retiree pays premiums for SBP coverage upon retiring. Premiums are paid from gross retired pay, so they don't count as income. This means less tax and less out-of-pocket costs for SBP. The premiums are partially funded by the government and the costs of operating the program are absorbed by the government, so the average premiums are well below the cost for a conventional insurance policy. For most retirees, SBP is a good choice, but the government contribution is based on assumptions in average cases and may not apply equally to every situation.

The maximum SBP annuity for a spouse is based on 55 percent of the member's retired pay (or in the case of a member who retires under REDUX, the retired pay the member would have received if under the high-three retirement system). However, a smaller amount may be elected.

Eligible children may also be SBP beneficiaries, either alone or added to spouse coverage. In the latter case, the children receive benefits only if the spouse dies or otherwise becomes ineligible to receive the annuity. Eligible children equally divide a benefit that is 55 percent of the member's elected base amount. Child coverage is relatively inexpensive because children get benefits only while they are considered eligible dependents.

Coverage is also available for a former spouse or, if the retiree has no spouse or children, for an "insurable interest" (such as a business partner or parent).

Enrolling after Retirement

Some service members choose not to enroll in the SBP plan because they have no eligible beneficiaries at the time of their retirement. Later, through marriage or the birth or acquisition of a child, they find themselves with eligible beneficiaries and want to change their earlier election.

If this happens to you, you have one year from the date of initial eligibility -- the date of marriage or the birth date of the child -- to declare your wishes to have the beneficiary covered. Please see the additional information below for more details.

To notify DFAS, please mail or fax the following items to DFAS Retired and Annuitant Pay within one year of the date of eligibility:

* Survivor Benefit Plan Election Change Certificate (DD 2656-6)
* Copy of any relevant legal document (e.g., marriage certificate or birth certificate)

If you have eligible beneficiaries at the time of your retirement and elect not to have them covered, you will not be able to change that election in the future. If you are married and decline spouse coverage, you cannot elect coverage for a later spouse. If you have eligible children at retirement and decline coverage, you cannot add coverage for a child born or acquired after retirement.

If Your Spouse Dies Before the Retiree Dies

Your SBP will become SUSPENDED until you unsuspend it and transfer it to a new spouse if you remarry. You DO NOT lose SBP.

Spouses Receiving Dependency & Indemnity Compensation (DIC)

Beginning January 1 of 2023, the DIC offset is eliminated. Spouses will receive their full DIC payment from the VA and the full SBP payment issued by DFAS (see our SBP-DIC News webpage). If the spouse remarries after the death of the sponsor before age 55, the spouse may not be eligible for the SBP annuity.