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SBP-DIC Offset Phase Out

SBP-DIC Offset Phase Out

Congress included a phased elimination of the Survivor’s Benefit Plan-Dependency Indemnity Compensation (SBP-DIC) offset in the 2020 National Defense Authorization Act. The first adjustment to the offset formula will be for January 2021 (paid on February 1, 2021). The offset will be eliminated entirely beginning on January 1, 2023. 

Who this change affects

  • This change affects surviving spouses who are, or who will become in the future, eligible for both Survivor Benefit Plan (SBP) payments and Dependency and Indemnity Compensation (DIC) payments, and who are subject to the SBP-DIC offset.
  • The law also affects the spouses and children of service members who died while on active duty or inactive duty, in the line of duty, if the children are currently receiving SBP payments because the surviving spouse chose the optional child annuity.
  • This change does not affect surviving spouses who receive only SBP (but do not receive DIC). It also does not affect spouses who receive DIC only, either because SBP was declined by the service member at retirement or because the service member was a disabled veteran who was not also a retiree. 
  • It is important to note that this change does not impact any retirees or surviving spouses if SBP spouse coverage was previously declined or if a retiree elected child-only coverage at retirement. The change also does not create opportunities for new enrollment in SBP for retirees who previously declined coverage. 

What you need to know

  • Surviving spouses who are subject to the SBP-DIC offset will potentially see the first change in their January 2021 SBP payment that is paid on February 1, 2021.
  • 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 won’t need to pay back that refund because of this change in the law.
  • Eligible survivors will continue to receive SSIA, up to the prescribed maximum amount ($323 per month for 2020) or the amount of SBP that is offset due to DIC, whichever is less. SSIA will no longer be paid once the SBP-DIC offset is fully eliminated in 2023.
  • Please keep in mind that there are many different situations for individuals, and you may have individual questions we cannot answer yet. We are continuing to develop full implementation guidance for this change.

What you need to do

  • 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.
  • If you are a surviving spouse who previously chose the Survivor Benefit Plan (SBP) child annuity when your spouse died on active duty or inactive duty, you do not need to take any action at this time. You will be contacted by the appropriate military service prior to the annuity reverting to you as the surviving spouse on January 1, 2023. 

When you can expect changes

Based on the NDAA, the phases of the SBP-DIC offset elimination are:  

  • In 2020, surviving spouses will continue to have their SBP offset by the full amount of Dependency and Indemnity Compensation (DIC) they receive from the Department of Veterans Affairs. 
  • In 2021, SBP will be reduced by no more than two-thirds of the amount of DIC rather than by the entire amount of DIC, even though eligible surviving spouses will continue to receive the full amount of DIC.

Please note that not all surviving spouses will see an increase in their SBP payment in 2021. It is possible that if a spouse’s SBP monthly payments are less than two-thirds of the amount of monthly Dependency Indemnity Compensation (DIC), they may not see an increase in 2021.

  • In 2022, SBP will be reduced by no more than one-third of the amount of DIC received. 
  • In 2023, the SBP-DIC offset will be totally eliminated, so that surviving spouses eligible for both programs will receive both SBP and DIC in full, effective January 1 (paid on February 1, 2023). 

For more information on VA & State Benefits contact Montgomery County Veterans Service at 936-539-7842 or via email at [email protected], and like us on Facebook – Montgomery County Veterans Service.

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