The Department of Defense has announced that military retirees who opted out of some or all their Survivor Benefit Plan (SBP) coverage will have another opportunity to elect coverage during a one-year open enrollment period from Oct. 1, 2005 through Sept. 30, 2006.
Upon a retiree's death, SBP provides an annuity of up to 55 percent of the military retired pay. Until recently, the annuity for a surviving spouse age 62 or older was reduced to 35 percent to reflect the availability of Social Security benefits. This reduction will phase out by April 2008, and the full 55 percent benefit will be paid regardless of the spouse's age in accordance with the Fiscal 2005 National Defense Authorization Act.
Current non-participants will be able to elect any coverage they could have elected previously upon retiring from active service or upon receiving notification of eligibility for reserve retired pay at age 60.
If they have a reduced election, they may increase their coverage. A participant with child only coverage may add a spouse or former spouse to their coverage, and a member may add child coverage to spouse or former spouse coverage.
Those who took SBP coverage and later elected to terminate that coverage arbitrarily under the provisions of Public Law 105-85 (effective 17 May 98) are not eligible to make an open enrollment election.
Open enrollment elections require a lump sum buy-in premium as well as future monthly premiums. The lump sum equates to all back premiums, plus interest, from the date of original eligibility to make an election plus any amount needed to protect the Military Retirement Fund. The latter amount applies almost exclusively to those paying fewer than seven years of back payments.
The lump sum buy-in premium can be paid over a two-year period. Monthly premiums for spouse or former spouse coverage will be 6.5 percent of the coverage elected, the same premium paid by those currently enrolled. Reserve component members under age 60 and not yet eligible for retired pay do not pay back premiums or interest, but must pay a monthly SBP premium “add-on” once their retired pay starts.
Elections are effective the first day of the month after the election is received, but no earlier than Oct. 1, 2005. An election is void if the retiree dies in the two years following an election and all premiums are refunded to the designated survivor.
To make an open enrollment election, a retiree must complete and submit a DD Form 2656-9, “Survivor Benefit Plan (SBP) and Reserve Component Survivor Benefit Plan (RCSBP) Open Enrollment Election.” The form is available electronically HERE.