Military Update | House eyes giving widows more relief from 'SBP-DIC offset'

By Tom Philpott | | Published: December 30, 2015

In a hopeful sign for 60,000 military widows and widowers who lost spouses to service-connected illnesses or injuries, a key House subcommittee is taking a fresh look at how Congress might allow a further easing the “SBP-DIC offset” to provide heartier and fairer survivor benefit packages.

Rep. Joe Heck (R-Nev.), chairman of the House armed services subcommittee on military personnel, isn’t promising yet specific relief from the offset, which surviving spouses prefer to call the military widows’ tax.

But Heck and colleagues did gather anew complaints about the offset during a special December hearing, and vowed to look for ways to end it, or at least to continue to dull its effect on the widows’ financial health.

Heck understands, as do organizations advocating for the widows, that partial offset relief through a Special Survivor Indemnity Allowance (SSIA) is set to expire in fall of 2017.  So unless Congress acts by then to end the offset, or more likely to continue or even to bolster the SSIA, then surviving spouses again would feel the full brunt of the SBP-DIC offset.

The Department of Veterans Affairs pays Dependency and Indemnity Compensation (DIC) to surviving spouses of members who die of service-connected causes.  This includes deaths while on active duty, or in retirement if due to injuries suffered or diseases contracted during active service.

The Department of Defense separately provides a government subsidized Survivor Benefit Plan. SBP coverage now is automatic for deaths on active duty.  Retiring members must opt in, agreeing to pay a premium of 6.5 percent of retired pay to ensure surviving spouses get an annuity upon the member’s death equal to 55 percent of covered retired pay.

Under the SBP offset law, which has existed for four decades, surviving spouses cannot receive both DIC and full SBP.  Survivor annuities must be reduced dollar for dollar by DIC.  With basic DIC now set at $1254.19 a month, it usually will wipe out or vastly reduce any SBP annuity.

Widows do get a refund of premiums their spouses paid, perhaps over many years, for that annuity coverage, but the government adds no interest to the refunds no matter how long ago it received the premium payments.

More importantly, argue widows and long-time advocates for SBP reform like Edith Smith of Springfield, Va., their spouses paid for that annuity protection as if they bought an insurance policy, expecting that it would be paid.  It should not be reduced by compensation for a service-related death.

“These are two different survivor programs and paid for two very different purposes,” explained Vivianne Cisneros Wersel in written testimony for the subcommittee.  Her late husband, a Marine Corps lieutenant colonel, died in February 2005, a week after returning from a second tour in Iraq.

The creaky logic behind the offset is that widows, though rightly compensated for loss of a spouse from service-related injury or ailment, shouldn’t also get a government-subsidized annuity. That logic collapsed a decade ago when Congress ended a similar ban on “concurrent receipt” for military retirees who qualify both for longevity retirement and VA compensation for serious service-connected disabilities or combat-related injuries or ailments.  Previously, military retired pay always was reduced, dollar for dollar, by VA disability pay.  In fact the ban on concurrent receipt still holds for retirees with non-combat disabilities below 50 percent.

Widows argue they should be allowed concurrent receipt of SBP and DIC.  Most members of Congress agree but so far leaders refuse to remove the offset, citing costs.  Ending the offset would add $7 billion to U.S. annuity obligations over the first decade, the Congressional Budget Office estimates.

Congress effectively acknowledged that the widow’s offset is unfair when it began to soften its impact by creating SSIA in 2008.  The allowance began as $50 extra a month and climbed steadily on a schedule set in law.  It reached $275 last October and will rise to $310 next October, which would be enough to replace about a quarter of SBP lost to the DIC offset.

SSIA is set to end Oct. 1, 2017.

Current budget rules, said Rep. Susan Davis of California, ranking Democrat on the subcommittee, require cuts to other mandatory spending accounts to free up the right kind of dollars to allow more SBP offset relief.

“Unfortunately the mandatory offsets required to address this issue have become extremely difficult to find now, especially in the amounts required.  And of course, we look to you to help us do that,” Davis told association representatives who testified at the December hearing.

Steve Strobridge, director of government relations for Military Officers Association of America, took an immediate step in that direction. Ideally Congress should eliminate the offset, he said.  At a minimum it needs to extend SSIA so that widows aren’t “made to forfeit the $310 monthly allowance this committee worked so hard to win for them.”

But on the mandatory spending issue that Davis raised, Strobridge noted that twice before the armed services committee was able to convince House and Senate leaders to use outside budget offsets to fund the SSIA.

“And when leadership recently managed to find far larger offsets to provide Medicare premium relief to millions of wealthier beneficiaries, it’s hard to explain to SBP-DIC widows who suffered five-digit annual losses for decades, why their situation should have a lower priority,” Strobridge said.

Other representatives piled on the arguments for offset relief.

“How many people in this country could live on $1254 a month, and for our military widows to [have to] survive on that is horrible, just horrible,” said Chris Kinnard, representing Gold Star Wives of America.

DIC is survivor compensation for when “a member’s service caused his or her premature death,” said Jon Ostrowski with Non-Commissioned Officers Association.  It “should be added to the SBP annuity…not substituted for it.”

The offset “exists only to save the government money,” said Joe Davis, public affairs director for Veterans of Foreign Wars, “which is perhaps the ultimate insult our government can inflict on” surviving spouses.

Given the funding challenge, no lawmaker that day could promise offset relief.  But at the panel’s invitation, a coalition of associations are now studying alternatives to reduce the offset, and will share those ideas with the committee early in 2016.

Send comments to Military Update, P.O. Box 231111, Centreville, VA, 20120, email milupdate@aol.com or twitter: Tom Philpott @Military_Update


comments Join the conversation and share your voice!  

from around the web