Military SBP ‘compares well’, irking widows still hit by offset

By Tom Philpott

Military retirees, their spouses and perhaps 80 percent of 320,000 survivors already able to draw benefits under the military’s Survivor Benefit Plan, can take comfort in a recent report on the program by the think tank RAND Corporation.

The 175-page “An Assessment of the Military Survivor Benefit Plan” was ordered by Congress and concludes that SBP is “well-structured to provide survivor benefits” and the benefits “compare well with those of public and private plans.”

RAND’s findings won’t spark the same enthusiasm from 64,000 surviving spouses who continue to see their SBP cut or eliminated because they also are eligible for Dependency and Indemnity Compensation (DIC) from the Department of Veterans Affairs because of how their service member or retiree died.

Survivors become eligible for tax-free DIC — triggering the SBP-DIC offset – if their service spouse died on active duty,active duty for training or during inactive duty training; or died as a retiree from a service-related condition; or died after being rated 100-percent disabled by the VA for at least 10 years.

Edith G. Smith, a citizen advocate for deceased military retirees and their survivors, has been battling to have Congress end the SBP-DIC offset since 1999, a year after the death of her husband, Vincent, a Marine Corps lieutenant colonel. Powerful military associations have joined the fight since then and there have been partial victories for impacted survivors, most of whom are widows.

The RAND report is a comprehensive look at SBP and so describes how SBP interacts with other programs including DIC. It also discusses the partial solution to the offset Congress has approved, for now, without judging in its report either the fairness of the offset or prospects of Congress approving more changes.

That current partial solution is a monthly Special Survivor Indemnity Allowance (SSIA) that restores to impacted survivors roughly a third, on average, of the value of lost SBP coverage. Indeed, DoD estimates that about 3000 of 64,000 survivors impacted — those who are older and saw sponsors opt for minimal SBP coverage — have been made whole by the SSIA.

Last year Congress made the expiring SSIA a permanent benefit and voted to adjust the $310-a-month payment annually, starting next year, using the same percentage cost-of-living adjustment (COLA) applied to military retirement and SBP. The worry among some survivor advocates is that permanent SSIA will satisfy congressional leaders, and perhaps too many widows, leaving full repeal of the offset forever out of reach.

“We won’t let them think that,” Smith insisted, arguing how unfair it is that many military retirees tasked with advising Congress and Pentagon policymakers on the treatment of military widows have themselves gotten legislative relief from dual compensation laws and the lifting of bans on concurrent receipt of both military retired pay and VA disability compensation over the past two decades.

Kelly Hruska, who monitors survivor issues for the National Military Family Association and The Military Coalition, an umbrella group of military associations and veteran organizations, said “we had the problem at the beginning of the year with certain members of Congress saying SBP-DIC was solved.”

When the coalition continued to list ending the SBP-DIC offset as a legislative priority, Hruska said, “I had several [Capitol Hill] staffers say to me ‘Why do you have that on there? It’s a problem solved.’

“I said, ‘The offset has not been eliminated. Why do you think it has?’

“In every case they pointed to SSIA,” Hruska recalled.

Dan Merry, vice president of government relations for Military Officers Association of America and co-chair of the coalition, said ending the offset remains one of MOAA’s highest priorities because most widow haven’t been made whole.

“Across the community of military service, however, there needs to be more effort put toward educating retirement-eligible members and their spouses” that they too could see their SBP benefit cut or eliminated one day, Merry said.

Across congressional leadership and advocacy groups there’s agreement that the barricade to ending the offset is finding budget dollars to cover the cost.

Edie Smith is angry that, in her view, Congress had a funding stream, tied to stricter enforcement of taxes on tobacco products, to at a minimum make SSIA permanent. Somehow those dollars got diverted, she said, so the House Armed Services Committee had to finance making SSIA permanent by raising co-payments on military beneficiary drug prescriptions filled off base or by mail order.

Congress, she contends, would have found a way to avoid a 30 percent cut in its own survivor benefits without raising their own health care costs.

Still, Smith is heartened by what she sees as a deepening commitment by some leaders, including Rep. Mac Thornberry (R-Texas), chairman of the House Armed Services Committee, to continue to press for an end to the offset.

Thornberry cited it as a priority in a March “views and estimates” letter to Rep. Steve Womack, chair of the House Budget Committee. The cost of full repeal is estimated by the Congressional Budget Office at $8 billion over 10 years.

“As you are aware,” Thornberry told Womack, “we have no flexibility to generate this amount of savings within the mandatory allocation of funds for National Defense, so we would like to work with you to increase direct spending levels for the committee to resolve this issue.”

Merry noted that the number of co-sponsors on legislation to end the SBP-DIC offset, titled the Military Surviving Spouses Equity Act, grew by 48 in the House alone since SSIA became permanent. Smith noted too that the co-sponsors of that bill, HR 846, now include the chairmen and ranking members of both the House budget and ways and means committees, another positive sign.

Rep. Mike Coffman, R-Colo., chairman of the House armed services subcommittee on personnel, is not a co-sponsor. He didn’t explain why this week but, in a written statement, Coffman did respond to other questions on this issue.

Congress, he said, needs “to find a way to take care of these survivors by completely eliminating the penalty that reduces their benefits.” With SSIA, he added, the committee “has fixed part of the problem, but it will take the full Congress to enact a full repeal, which I would support.”

That reflects a consensus emerging from widow advocates that more pressure needs to be applied to the most senior leaders in Congress to relax a pay-as-you-go budget law specifically to address the offset. Congress has done it before on other issues it deemed critical, including funding for the post-9/11 GI Bill.

“This is criminal in my opinion, “ Hruska said. “This is a benefit that service members paid for, either through monthly premiums or,” in the case of members who died on active duty, “with their lives. If any company were doing this, they would tie [its executives] up in the square and members of Congress would be the first ones lining up to throw stones.”

Some survivor advocates want Congress to have RAND do a fresh study on SBP, this time focusing on the unique nature of the DIC offset, which Sen. Bill Nelson (D-Fla.), an original co-sponsor of bill to end the offset, said is simply unfair.

Nelson has noted often that, in an earlier in his career, he was insurance commissioner for the state of Florida, yet knew of “no purchased annuity” like SBP “that would deny payment based on receipt of a different payment.”

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