Cancel Your Survivor Benefit Program (SBP) if Totally Disabled?

Sep 23 2009

Published by at 6:12 pm under Military Benefits

You mean there’s a way to cancel my SBP due to my VA rating? Yes, there is. But whether you should exercise this option is a whole ‘nother matter.

You have an irrevocable option to cancel your SBP due to your survivor’s eligibility for the VA’s Dependency and Indemnity Compensation (DIC) survivor annuity. A service-connected VA disability rating of totally disabling (100%) for 10 continuous years, or at least 5 years at 100% if from the date of Service separation, makes a survivor eligible for DIC. Spousal concurrence is required to cancel SBP.

This option was established because a survivor’s SBP annuity is reduced dollar-for-dollar if the survivor also receives DIC—the SBP-DIC offset. Cancelling SBP because of DIC allows a survivor to receive a refund of all SBP premiums linked to the denied SBP survivor payments.

Here’s the catch before you cancel. MOAA is working diligently to have the SBP-DIC offset eliminated. We’ve made headway the last few years as survivors now receive a portion of their SBP payments that were previously denied due to DIC. Should the SBP-DIC offset be totally eliminated, canceling your SBP now due to potential DIC payments denies your beneficiary the opportunity for full SBP and DIC payments in the future. Consider all the possibilities.

3 responses so far

3 Responses to “Cancel Your Survivor Benefit Program (SBP) if Totally Disabled?”

  1. David W Haggertyon 02 Feb 2011 at 10:26 pm

    My mom, Gloria Mae Haggerty Passed away 1-18-11. She was receiving surivor benifits from my dad, Wayne P Haggerty. I need to cancel all benifits to her. Please advise.

  2. Shane Ostrom, CFP®on 03 Feb 2011 at 11:49 am

    Not knowing what she was receiving, I’ll just give you the main agencies to contact:
    Social Security, find local office on line or 800 772-1213
    Defense Finance and Accounting Service: 800-321-1080
    Veterans Affairs: 800-827-1000
    Defense Enrollment Eligibilty Reporting Service: 800 538-9552
    IF they worked as civilian employees for the federal government, Office of Personeel Management: 888-767-6738

  3. Sergeant Adam David McElyea USA Retiredon 03 Oct 2012 at 2:41 pm

    I just got off the phone with DFAS regarding SBP, and I mention with DIC I would not need it, and DIC is nearly double the SBP not to mention the SBP buy in. I figured I would have to buy in for 43 years averaging about $38,000 and my wife could get $714 a month when I’ve passed away. So, she would need to at least draw SBP for 4.47 years to make it worthwhile. Now, she is Korean and four years younger than me, so I can see it probably benefitting her. But this offset is really ridiculous, it’s a double standard. I mean if I qualify for SBP, let me get SBP and it I qualify for DIC, let me get DIC. Since I am newly retired I will have to wait another 23 months before I can even cancel, and if the SBP-DIC offset isn’t eliminated I will have a hard time convincing my wife that it’s in her best interest. Her outlook is that the money paid in could be invested better with interest and options rather than locked away only to be offset with DIC anyway. And I agree with her, however I’ve also got my eye on this offset elimination. I suppose in 23-24 months we’ll know to keep it or not. Thanks for the article and God bless the MOAA for fighting this.