Tampa Military Divorce Mediator

Wednesday, September 25, 2013

Changing Your SBP Coverage and Election

People are accustomed to routinely changing their election of benefits.  Most companies provide employees an opportunity to change their benefits at least once a year.  Employees also frequently have an opportunity to change your elections based on certain major life events, such as marriage, the birth of a child, or divorce.

If you are a military servicemember who is at or near retirement, you should be very careful when you make your election concerning coverage under the Survivor Benefits Plan ("SBP").  SBP is an annuity payable to certain eligible beneficiaries in the event the servicemember dies and is thus no longer eligible to receive military retired pay.  SBP has many advantages and disadvantages, which may or may not be right for everyone.  SBP allows eligible beneficiaries to receive up to 55% of the servicemember's retired pay.  SBP also comes at a cost:  SBP premiums may be as high as 6.5% of the Servicemember's retired pay for up to 30 years.

The SBP election is irrevocable, except as specifically provided by statute.  See 10 U.S.C. § 1448(a)(4)(D).  Retirees who waive SBP or elect coverage at less than the maximum amount typically have no right or ability to change that election.  This is true even if you go through a divorce.  For example, if you waived SBP at retirement, neither your spouse nor the divorce court can force you (or DFAS) to change that election.   This is somewhat fair, of course, because spousal consent is required for any waiver or reduced election.   See 10 U.S.C. § 1448(a)(3)(A).

Congress did provide some exceptions to the general rule that the SBP election is irrevocable.  If the beneficiary dies, coverage automatically terminates.  If you marry for the first time or have a first child after retirement, you can add the new family member as a beneficiary.  See 10 U.S.C. § 1448(a)(5)(A).  To make this election, submit DoD Form 2656-6 and supporting documentation to DFAS Retired and Annuitant Pay within one year of the qualifying event.  If you were married and elected coverage for your spouse at retirement, unless there is a court order to the contrary, you can notify DFAS at any time of your remarriage and a new spousal election will automatically begin effective one year after that marriage date.  See 10 U.S.C. § 1448(a)(5).  Spousal concurrence must be obtained to begin coverage at any level lower than the original spousal election.  If you were married at retirement and elected not to cover your spouse, you cannot ever cover a subsequent spouse.

During the third year of retirement (i.e., between months 25 and 36), a retiree may elect to cancel SBP coverage.  See 10 U.S.C. § 1448a(a).  To make this election, submit DoD Form 2656-2 to DFAS Retired and Annuitant Pay with spousal consent (if applicable).  In the event of a divorce, you are free to terminate your coverage unless the final judgment or decree requires you to maintain SBP coverage.  If you are already participating in the SBP and you agree to continue SBP coverage for you former spouse or the court directs you to do so, you or your former spouse must make the election within one year from the date of the final judgment or divorce decree.   See 10 U.S.C. § 1448(b)(3)(A).  To do so, you or your former spouse must submit DoD Form 2656-1.

If you do not qualify for any of the aforementioned exceptions and you would like to change your SBP election, your only hope is that Congress declares an "Open Season" for changing your SBP election.  The DFAS website indicates that the last time Congress authorized an Open Season was 2005.

If you have questions about dividing military retired pay in a divorce or other questions concerning military divorce, please contact a military divorce attorney.