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Command Career 
Counselor Regional Training 
Survivor Benefit Plan 
1
Survivor Benefit Plan 
Enabling Objectives 
Upon successful completion of this topic, 
the trainee will be able to: 
IDEN...
Survivor Benefit Plan 
Enabling Objectives (cont.) 
IDENTIFY the features of each category 
of SBP coverage. 
IDENTIFY t...
Survivor Benefit Plan 
Enabling Objectives (cont.) 
STATE the advantages of COLA 
adjustments to the SBP annuity. 
STATE...
Survivor Benefit Plan 
Reference Publications 
OPNAVINST 1750.5, Survivor Benefit Plan 
(SBP) 
5
Survivor Benefit Plan 
Purpose of SBP 
When a military retiree dies, 
retirement pay stops. 
The Survivor Benefit Plan (...
Survivor Benefit Plan 
Benefits of SBP 
SBP is the only means by which a 
portion of retired pay can be 
continued for el...
Survivor Benefit Plan 
Benefits of SBP (cont.) 
There are no hidden costs or extra 
fees. 
The annuity continues for the...
Survivor Benefit Plan 
Basic Mechanics of SBP 
The “base amount,” which is the 
dollar amount upon which the 
annuity wil...
Survivor Benefit Plan 
Service Member Eligibility 
Upon retirement 
Upon transfer to Fleet Reserve 
Sailor placed on Te...
Survivor Benefit Plan 
Categories of Coverage 
Spouse Only 
Spouse and Child(ren) 
Former Spouse 
Former Spouse and Ch...
Survivor Benefit Plan 
Spouse Only Coverage 
Must be married at time of retirement. 
If married after retirement, must h...
Survivor Benefit Plan 
Former Spouse Coverage 
Retiree’s may voluntarily elect SBP 
coverage for former spouses. 
State ...
Survivor Benefit Plan 
Children Only Coverage 
Annuity goes to eligible child(ren) if 
elected. If married, spouse 
concu...
Survivor Benefit Plan 
Children Only Coverage (cont.) 
Annuities are 55% of retiree’s “base 
amount” as long as eligible:...
Survivor Benefit Plan 
Spouse/Former Spouse and Children 
Coverage 
Eligibility requirements are the 
same as spouse/form...
Survivor Benefit Plan 
Spouse/Former Spouse and Children 
Coverage (cont.) 
SBP premiums calculated by 
adding the spouse...
Survivor Benefit Plan 
Natural Person with Insurable Interest 
(NIP) 
Allows retirees without a spouse or 
dependent chil...
Survivor Benefit Plan 
Premium Calculation 
Automatically deducted from retirement pay 
Basic formula BA x .065 = Premium...
Survivor Benefit Plan 
Insurable Interest Premiums 
Premiums are 10% of the retiree’s 
gross retired pay, plus an additio...
Survivor Benefit Plan 
Cost of Living (COLA) Adjustments 
SBP annuities and premiums are 
adjusted at the same time and t...
Survivor Benefit Plan 
Tax Implications 
SBP premiums are not taxable 
income. This factor makes the 
actual cost for SBP...
SBP’s Real Cost 
NO SBP* SBP 
Retired Pay $2,000 $2,000 
SBP Cost $ 0 $ 130 
Taxable Pay $2,000 $1,870 
Tax Paid (28%) $ 5...
Survivor Benefit Plan 
SBP Elections 
Use DD Form 2656. 
Spousal concurrence required if 
election is anything less than...
 A ““JJOOIINNTT”” Decision For 
Married Sailors Who . . . . 
 Decline coverage 
 Cover less than full retired pay 
 El...
Survivor Benefit Plan 
SBP Recent Changes 
DFAS Release 0308-002: 
Retirees who are at least 70 years old 
and have paid ...
Remember : 
THE BOTTOM LINE 
RETIRED PAY 
STOPS 
WHEN THE RETIREE DIES! 
27
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Survivor Benefit Plan Sbp

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Survivor Benefit Plan Sbp

  1. 1. Command Career Counselor Regional Training Survivor Benefit Plan 1
  2. 2. Survivor Benefit Plan Enabling Objectives Upon successful completion of this topic, the trainee will be able to: IDENTIFY the purposes of the Survivor Benefit Plan (SBP). IDENTIFY the benefits of the SBP. IDENTIFY the SBP basic mechanics. LIST the SBP eligibility requirements. LIST the categories of SBP coverage. 2
  3. 3. Survivor Benefit Plan Enabling Objectives (cont.) IDENTIFY the features of each category of SBP coverage. IDENTIFY the steps to calculate the SBP premium. IDENTIFY the steps to calculate the SBP annuity. LIST the online source that estimates the SBP annuity. IDENTIFY the Dependency and Indemnity Compensation (DIC) offset process. 3
  4. 4. Survivor Benefit Plan Enabling Objectives (cont.) STATE the advantages of COLA adjustments to the SBP annuity. STATE the tax implications of the SBP premiums and annuities. IDENTIFY the SBP election procedure. 4
  5. 5. Survivor Benefit Plan Reference Publications OPNAVINST 1750.5, Survivor Benefit Plan (SBP) 5
  6. 6. Survivor Benefit Plan Purpose of SBP When a military retiree dies, retirement pay stops. The Survivor Benefit Plan (SBP) is a voluntary program that allows a military retiree to provide an annuity of up to 55% of gross retired pay to eligible designated beneficiaries. 6
  7. 7. Survivor Benefit Plan Benefits of SBP SBP is the only means by which a portion of retired pay can be continued for eligible survivors. The premiums are tax-free and the annuity is COLA-adjusted to protect future buying power. Eligibility is not dependent on risk factors such as age or health. 7
  8. 8. Survivor Benefit Plan Benefits of SBP (cont.) There are no hidden costs or extra fees. The annuity continues for the life of the beneficiary as long as they remain eligible. 8
  9. 9. Survivor Benefit Plan Basic Mechanics of SBP The “base amount,” which is the dollar amount upon which the annuity will be based, is elected by the retiree at retirement. This amount may range from $300 up to retiree’s full gross retired pay. The monthly payable annuity and premiums are 9
  10. 10. Survivor Benefit Plan Service Member Eligibility Upon retirement Upon transfer to Fleet Reserve Sailor placed on Temporary Disability Retirement List (TDRL) or Permanent Disability Retirement List (PDRL) Death of Sailor on active duty (NAVADMIN 065/03) 10
  11. 11. Survivor Benefit Plan Categories of Coverage Spouse Only Spouse and Child(ren) Former Spouse Former Spouse and Child(ren) Child(ren) Only Natural Person with Insurable Interest (NIP) 11
  12. 12. Survivor Benefit Plan Spouse Only Coverage Must be married at time of retirement. If married after retirement, must have been married for one year. Receives annuity for life or until remarriage, if prior to age 55. If remarriage later ends (i.e. death, or divorce), entitlement may be restored. Remarriage after 55 does not terminate entitlement. 12
  13. 13. Survivor Benefit Plan Former Spouse Coverage Retiree’s may voluntarily elect SBP coverage for former spouses. State courts are permitted to order Sailors to provide former spouse coverage for court orders issued on or after 14 November 1986. Former spouses are also ineligible if they remarry prior to age 55. 13
  14. 14. Survivor Benefit Plan Children Only Coverage Annuity goes to eligible child(ren) if elected. If married, spouse concurrence with the “child(ren) only” election is required. Child(ren) remain eligible until age 18, or 22 if full-time unmarried students. Child(ren) incapable of support are eligible as long as incapacitation exists or until marriage. 14
  15. 15. Survivor Benefit Plan Children Only Coverage (cont.) Annuities are 55% of retiree’s “base amount” as long as eligible: Is not reduced because of concurrent government benefits. Is equally divided among eligible children. Is paid to parent or guardian until age 18 or age of maturity. 15
  16. 16. Survivor Benefit Plan Spouse/Former Spouse and Children Coverage Eligibility requirements are the same as spouse/former spouse. Children coverage same as child(ren) only coverage with one exception: Only children acquired during marriage to former spouse can be covered. Children cannot be added after the divorce. 16
  17. 17. Survivor Benefit Plan Spouse/Former Spouse and Children Coverage (cont.) SBP premiums calculated by adding the spouse/former spouse premium and a small charge based on the age of Sailor, spouse, and youngest child. Children only receive benefit if spouse loses eligibility or dies. 17
  18. 18. Survivor Benefit Plan Natural Person with Insurable Interest (NIP) Allows retirees without a spouse or dependent child(ren) to elect coverage for a person who has a bona fide financial interest: Need not be a dependent. May be a close relative, a child, or a close business associate. 18
  19. 19. Survivor Benefit Plan Premium Calculation Automatically deducted from retirement pay Basic formula BA x .065 = Premium Sailors who entered active duty on or after 1 March 1990: The premium is 6.5% of the elected base amount. Sailors who entered active duty before 1 March 1990: The premium is either: 6.5% of the elected base amount OR 2.5% of the first $725 of the base amount, plus 10% of the remaining base amount, if the base amount is less than $1,554. 19
  20. 20. Survivor Benefit Plan Insurable Interest Premiums Premiums are 10% of the retiree’s gross retired pay, plus an additional 5% for each five full years the annuitant is younger than the retiree. Premium costs cannot exceed 40% of the Sailor’s gross retired pay. 20
  21. 21. Survivor Benefit Plan Cost of Living (COLA) Adjustments SBP annuities and premiums are adjusted at the same time and the same percentage as retired pay. This benefit protects the purchasing power of the survivor’s annuity. 21
  22. 22. Survivor Benefit Plan Tax Implications SBP premiums are not taxable income. This factor makes the actual cost for SBP even less expensive. The SBP annuity is taxable income for federal tax purposes, though some states exempt SBP annuities in whole or in part. 22
  23. 23. SBP’s Real Cost NO SBP* SBP Retired Pay $2,000 $2,000 SBP Cost $ 0 $ 130 Taxable Pay $2,000 $1,870 Tax Paid (28%) $ 560 $ 524 Annuity $ 0 $1,100 * This non-participant actually “pays” $36/mo in the form of unrealized tax savings—survivor gets $0. 23
  24. 24. Survivor Benefit Plan SBP Elections Use DD Form 2656. Spousal concurrence required if election is anything less than full base amount. Witnessed by notary public. Completed NLT 45 days prior to date eligible to receive retainer/retirement pay. If no election made, automatically enrolled at full coverage. 24
  25. 25.  A ““JJOOIINNTT”” Decision For Married Sailors Who . . . .  Decline coverage  Cover less than full retired pay  Elect “child only”  It is the Sailor’s election:  The spouse can only concur or not concur. 25
  26. 26. Survivor Benefit Plan SBP Recent Changes DFAS Release 0308-002: Retirees who are at least 70 years old and have paid at least 360 months of premiums on 1 October 2008, will have their monthly payments terminated. If a retiree does not meet both of the above criteria, the premiums will stop when the retiree has met both criteria: Reaches age 70. Pays SBP premiums for 360 months. 26
  27. 27. Remember : THE BOTTOM LINE RETIRED PAY STOPS WHEN THE RETIREE DIES! 27

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