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By a 94-to-2 vote, the Senate for a fourth straight year has agreed to repeal a law that bans “concurrent receipt” for military surviving spouses.

The intent is to end reduced annuities under the military Survivor Benefit Plan (SBP) when a surviving spouse opts to draw Dependency and Indemnity Compensation (DIC) from the Department of Veterans Affairs.

DIC, which is tax free, only is available to a surviving spouse if their service member has died while on active duty or as a result of a service-connected injury or ailment.

Sen. Bill Nelson (D-Fla.), lead sponsor of an amendment to the defense authorization bill (S 3001) to repeal the SBP-DIC offset, argued that “widows and orphans” simply seek the same sort of relief from a ban on concurrent receipt of dual benefits that Congress has delivered in recent years to seriously disabled military retirees through a series of initiatives.

“We have acted to get rid of these unjust offsets. But there is one offset that still remains…the one that affects survivors,” Nelson said. It is unfair, he said, that DIC, earned because loved ones died of service-connected causes, is used to reduce SBP, an insurance annuity retirees bought to give surviving spouses or children financial protection.

“In my previous life as the elected insurance commissioner of the state of Florida,” Nelson said, “I want you to know I never heard of any other purchased insurance annuity program that [refuses] to pay the insured benefits that the insured purchased by saying, ‘Oh, by the way, [I see] you are getting a different benefit somewhere else.’ ”

His amendment, Nelson told colleagues, “is going to end that injustice and completely remove this offset to take care of the widows, widowers and orphans who have lost a loved one to combat or service connected injury.”

Since 2005, the Senate has voted annually to end the offset but always failed to fund the change. That’s true again this year. Repeal of the offset would cost $480 million in fiscal 2009 and $6.9 billion over 10 years, says the Congressional Budget Office.

The House has not supported repeal of the offset in its version the defense authorization bill. House members cite the cost and tougher budget rules. Because senators set no money aside for offset repeal, a House-Senate conference committee tasked to negotiate a final authorization bill behind closed doors, quietly has removed the Senate language each year. Participants then are barred from discussing conference actions.

Last year, in rejecting elimination of the offset, conferees agreed to a modest alternative. They approved a Special Survivor Indemnity Allowance (SSIA) scheduled to start Oct. 1. It will pay $50 a month to surviving spouses hit by the SBP-DIC offset. The SSIA is to rise annually, by $10 a month, until it reaches $100 monthly in 2014. Then it would go away.

Nelson told colleagues Sept. 10, “We need a big vote so we can tell the conference committee not to gut” the Senate’s support for full repeal from the bill again this year. He got it. Only Republican Sens. Jim Bunning (Ky.) and George Voinovich (Ohio) voted against the Nelson amendment.

Advocates for 57,000 surviving spouses hit by the offset are more hopeful this year that a House-Senate conference committee will accept the Senate language, in part because of the lopsided Senate vote in favor.

“I feel much more confident this time around,” said Kay Witt, an Army widow now in charge of government relations for Gold Star Wives of America. Witt receives $1324 a month in DIC because her husband, Sgt. Maj. Keith Witt, died in 2001 after being fully disabled for years by ailments resulting from his exposure to Agent Orange during the Vietnam War.

When DIC payments began, Kay Witt’s SBP annuity was reduced an equal amount. SBP premiums paid by her husband since 1993, for the portion of SBP coverage eliminated, were returned to her in a lump sum.

Witt and Edie Smith, a prominent advocate for military widows, said Nelson made a strong case for repeal of the offset again this year. Also commenting in support of his amendment were Sens. James Inhofe (R-Okla.) and John Warner (R-Va.), former chairman of the armed service committee.

“With this amendment we rectify a long-standing injustice to widows, dependents and spouses,” Inhofe said.

Warner cautioned colleagues that the amendment is “very expensive” but added it “deserves the recognition it’s been given by our colleague and further consideration in a conference between the House and the Senate.”

Smith, who lost her own husband, Vince, a retired Marine Corps officer, to service-related ailments, conceded that it has been tough in recent years to watch the Senate vote for repeal of the SBP-DIC offset but without having earmarked funds to pay for it.

“Of course it frustrates me,” Smith said. “But it’s better to have them consider it then to wait until it is funded. One Senate office I went to declined to co-sponsor Senator Nelson’s bill [because] it wasn’t funded. Well, if he doesn’t offer his support, then how does it compete for funding?...So we’re please that they consider it enough to do it.”

Smith is more confident of passage this year, she said, in part because a Capitol Hill source, whom she declined to name, indicated there’s “headroom” in the budget to fund the SBP-DIC offset. If that is true, senators on the conference committee would be better armed to protect the SBP-DIC offset provision during deliberations with House members.

If the provision is tossed again,SSIA will begin automatically Oct. 1. For a time it seemed the $50 a monthwould not be paid to 4000 spouses of members who died while on active duty, givenawkward phrasing in last year’s law. But a Defense official told the Defense Finance and Accounting Servicelast April to pay SSIA to any surviving spouse impacted by the offset.

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