Virginia Council of Chapters

Fact Sheet
SBP-DIC Offset for Survivors

Issue: Congress should repeal the law that reduces military Survivor Benefit Plan (SBP) annuities by the amount of any survivor benefits payable under the VA Dependency and Indemnity Compensation (DIC) program.

Background: Under current law, the surviving spouse of a retired member who dies of a service-connected cause is entitled to DIC from the Department of Veterans Affairs. If the military retiree was also enrolled in SBP, the surviving spouse's SBP benefits are reduced by the amount of DIC (currently $1067 per month). A pro-rated share of SBP premiums is refunded to the widow upon the member's death in a lump sum, but with no interest. The offset also affects all survivors of members who are killed on active duty. There are approximately 61,000 military widows/widowers affected by the DIC offset.
MOAA believes SBP and DIC payments are paid for different reasons. SBP is purchased by the retiree and is intended to provide a portion of retired pay to the survivor. DIC is a special indemnity compensation paid to the survivor when a member's service causes his or her premature death. In such cases, the VA indemnity compensation should be added to the SBP the retiree paid for, not substituted for it. It's also noteworthy as a matter of equity that surviving spouses of federal civilian retirees who are disabled veterans and die of military-service-connected causes can receive DIC without losing any of their purchased federal civilian SBP benefits.
In the case of members killed on active duty since October 7, 2001, a surviving spouse with children can avoid the dollar-for-dollar offset by assigning SBP to the children. But that forces the spouse to give up any SBP claim after the children attain their majority - leaving the spouse with less than $13000 annual annuity from the VA. Those who give their lives for their country deserve fairer compensation for their surviving spouses.
In each of the last two years, the Senate has passed Sen Bill Nelson's (D-FL) amendment to repeal the SBP-DIC offset in its version of the Defense Authorization Act, only to have the provision dropped in final negotiations with the House.
The estimated cost of this proposed legislation is $9.2 billion over 10 years.
Please click here for a brochure with more facts and figures on the SBP-DIC offset.

MOAA Position: MOAA strongly supports repeal of the DIC offset to SBP, because the two benefits are paid for different reasons and as a matter of equity with federal civil service practices. Enactment is a major MOAA goal for 2007.

Key Bills/Status:  Sen. Bill Nelson (D-FL) will be re-introducing his bill.  

MOAA Fact Sheet 14 March 2007