Surviving Military Spouse Benefit Will Increase Slightly This Fall

A benefit that provides an extra financial cushion for some surviving military spouses will increase from $275 to $310 in October, although its long-term fate remains uncertain.

An allowance Congress created in 2008 to ease an offset imposed by the government to prevent benefit double-dipping, is set to expire on Sept. 30, 2017, the end of fiscal 2017. Lawmakers now are working on extending the Special Survivor Indemnity Allowance, but so far the House and Senate versions of the fiscal 2017 Defense authorization bill include different language affecting the program.

The House version would extend the SSIA through fiscal 2018, while the Senate bill would permanently extend the allowance. If the SSIA provisions in the two bills remain different, the House and Senate will have to settle on a solution in conference committee.

The House passed its fiscal 2017 NDAA May 19; the Senate has started debating its version. Under current law, SSIA payments continue through Sept. 30, 2017.

More than 60,000 families are affected by an offset triggered when surviving military spouses are eligible for two different benefits provided by the Defense Department and the Veterans Affairs Department. DoD administers the Survivor Benefit Plan, which allows retired service members to pay a portion of their monthly annuity to go to their surviving spouses if the service members dies first. It’s akin to an insurance plan.

If the enrollee contributes the maximum under SBP, then the payment to the surviving spouse works out to 55 percent of the retired service member’s full monthly pension. So, for example, if an enrollee’s full retired military pay is $2,500 a month, and he opts to contribute the maximum under SBP, the surviving spouse would receive $1,375 per month under the SBP if he dies.    

VA administers a separate benefit, known as Dependency Indemnity Compensation, which pays a monthly allowance of $1,254 to a surviving spouse of a service member who dies on active duty, or a veteran who dies from a service-related injury or illness. Surviving spouses of military personnel who paid into SBP and die as a result of service-connected cause are eligible for both benefits. But to avoid “overpaying” survivors, the government came up with an offset. So if someone is eligible for both payments, the government subtracts $1,254 (the current DIC monthly payment) from whatever the SBP monthly payment amounts to. For example, if the beneficiary receiving $1,375 per month from Defense under SBP is also eligible for DIC, that person (prior to SSIA) would receive just $121 under SBP.

Congress came up with the SSIA, which currently provides an allowance of $275 per month, to mitigate the effects of the SBP-DIC offset for those surviving spouses eligible for both benefits. But lawmakers scheduled the SSIA to expire at the end of fiscal 2017, and if Congress can’t agree on what to do about it by then, that extra cushion for affected beneficiaries evaporates. The allowance will increase to $310 on Oct. 1, 2016, when fiscal 2017 starts.

“I’m sure when they passed the law back, they concluded, ‘sure we’ll get this fixed in the next 10 years,’ and sure enough, 10 years later, Congress hasn’t done anything,” said Michael Meese, a retired Army Brigadier General and the chief operating officer of the American Armed Forces Mutual Aid Association. Meese pays into the SBP, and if he dies as a result of a service-connected disability (which in his case, is possible), then his surviving spouse would be affected by the SBP-DIC offset.

Meese said it’s important for lawmakers to tackle the issue in the fiscal 2017 legislation since Congress typically waits until the last minute to pass such bills, putting surviving spouses at risk of losing payments when the SSIA expires on Oct. 1, 2017. “Almost no budget bills get approved before the start of the fiscal year,” Meese said. “So if it is not fixed in this fiscal year, there will be widows in October 2017 who will lose the current SSIA.”

Dustin Walker, communications director for the majority on the Senate Armed Services Committee, said by email that since “SSIA payments do not terminate until Sept. 30, 2017, there is no immediate rush to avoid expiration.”

Some organizations, like the Military Officers Association of America, want to see the offset repealed, but in the meantime support extending and increasing the SSIA.

Meese suggested that a “graduated” SSIA tied to the amount of military retired pay could work, so that those who receive smaller SBP payments would receive a larger chunk of the allowance. “Frankly speaking, as a senior officer that has a pretty big retired pay, if my wife did not receive SSIA it would not be a huge impact on her if I died of a service-connected condition,” Meese said. “Again, I want the most for my wife, but frankly I can understand that from a budgetary perspective. I’ve got a son who is first lieutenant over in Germany now, and would rather have the budget dollars go to his readiness instead of my wife’s potential income.”

Still, everyone’s financial situation is different, “so that’s why a reasonable alternative would be perhaps to have the SSIA tied to the amount of the retired pay that the person is getting, so that above a certain amount of retired pay, the SSIA decreases or vanishes,” Meese said.