Survivor Benefit Plan
If an active duty member has a spouse and/or dependent children, they are automatically covered by the Survivor Benefit Plan (SBP) at the highest level at no cost to you. Prior to your retirement date, one-on-one counseling will be provided to make an election concerning the program. This includes medically retirements.
If you elect SBP coverage, you must pay premiums once you retire. SBP premiums are collected by reducing your retired pay, and they are not counted in your taxable income. This means less tax and less out-of-pocket cost for SBP. Also, the overall Plan is funded by the Government (subsidized), so the average premiums are well below cost.
If you elect SBP coverage, you must elect a level of coverage or “base amount.” The base amount is used to calculate both your cost and your survivor’s annuity. Full coverage means your gross retired pay is your base amount, but the base amount can be any dollar figure between your gross monthly retired pay, down to as little as $300. When retired pay gets a cost-of-living adjustment (COLA), so does the base amount, and as a result, so do the premiums and the annuity payable.
If you elect SBP coverage, you must also elect a category of beneficiary (ie., spouse only, child only, spouse and child, former spouse, former spouse and child, or insurable interest person). After retirement, your election cannot arbitrarily be changed.
Military pay stops when a member dies. SBP is the only way to partially replace it. The SBP was structured so that a surviving spouse cannot outlive the annuity, and it has Cost-of-Living Adjustments (COLAs) incorporated so the annuity increases with inflation.
An active duty member who has eligible dependents is automatically covered by SBP at the maximum level at no cost to the member while he/she remains on active duty.
Prior to retiring, each member must complete a DD Form 2656 and decide whether to continue SBP coverage into retirement. This form provides DFAS data required to properly establish your retired pay account. If DFAS does not receive a valid DD Form 2656 prior to retirement, the law requires them to establish maximum “automatic” SBP coverage and premiums will be deducted from your retired pay. Those members who elect to participate will pay monthly premiums. The SBP is a unique plan: Government-subsidized premiums are deducted from a participating member’s retired pay before taxes. The SBP is the sole means for a member to continue a portion of their military retired pay to their eligible survivors.
Have an SBP Question?
Contact the SBP Counselor at (575) 572-7754.
One-on-one SBP counseling is available to all members.