Phase Out of the SBP-DIC Offset for Surviving Spouses

The National Defense Authorization Act for Fiscal Year 2020 modified the law that requires an offset of Survivor Benefit Plan (SBP) payments for surviving spouses who are also entitled to Dependency and Indemnity Compensation (DIC) from the Department of Veterans Affairs (VA).  Under the previous law, a surviving spouse who receives DIC is subject to a dollar-for-dollar reduction of SBP payments, which can result in SBP being either partially or fully offset.  The repeal will phase-in the reduction of this offset beginning on January 1, 2021, and culminating with elimination of the offset in its entirety on January 1, 2023.  For the remainder of calendar year 2020, surviving spouses remain subject to the existing dollar-for-dollar offset of SBP payments by the amount of DIC paid by VA.  After January 1, 2021, survivors subject to the “SBP-DIC Offset” will potentially see a change in their SBP payments. Here are a few key points to keep in mind:
  • Based on the NDAA, Spouse SBP annuitants who are subject to the DIC offset may see the first change in the SBP annuity payment they receive on February 1, 2021. You do not need to notify us that your SBP payment is affected by this change in the law. 
  • The most important action SBP annuitants can take at this time is to ensure your annuity account information is up-to-date and includes your correct mailing address so we can contact you, if needed. Also, if you’re not using myPay, set up a profile now  and add your email address. Please note: only annuitants who are currently receiving an SBP or SSIA payment from DFAS can access myPay. 
  • We are unable to provide individual estimates of the upcoming changes in spouse SBP annuity payments due to this change in the law. Please do not call our Customer Care Center to request an individual estimate. 
  • If you previously received a refund of SBP premiums paid due to the SBP-DIC offset, you will not need to pay back that refund because of this change in the law. 
  • The "Repeal of Authority for Optional Annuity for Dependent Children" and "Restoration of Eligibility for Previously Eligible Spouses" in the NDAA only affect those spouses and children of service members who died on active duty or inactive duty when the surviving spouse previously elected to transfer the SBP annuity to a child or children. They do not affect previous or future SBP elections by retirees or SBP annuities for a retiree's beneficiaries.
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