Pentagon to launch rare open season for survivor benefits

Military and reservist retirees who chose not to sign up for survivor benefit coverage will have an unusual second opportunity to do so, the Defense Department has announced.

Because military retirement pay stops upon the death of the retiree, the Pentagon offers the Survivor Benefit Plan as an insurance policy to make up the loss of income. The plan provides an annuity of up to 55 percent of military retired pay to spouses or children left behind when a retiree passes away.

Normally, retirees must opt into the Survivor Benefit Plan upon retiring. However, the Defense Department is offering a one-year open enrollment for the plan from Oct. 1, 2005 to Sept. 30, 2006.

According to the Web site of the Undersecretary of Defense for Personnel and Readiness, in the 25 years of the Survivor Benefit Plan, this is only the fourth time an open enrollment period has been made available.

The reason for the open enrollment is a major change in compensation available under the plan. Until recently, survivors left behind by military retirees who are over age 62 only received 35 percent of their spouse's military retiree pay, instead of the full 55 percent. The reduction was intended to factor in Social Security benefits that survivors receive.

The 2005 National Defense Authorization Act gradually phases out the reduction. Every year for the next four years, survivors over 62 will receive five percent more of military retiree pay, until April 2008, when they will reach the full 55 percent offered.

There is a substantial catch, however, for retirees wishing to join the Survivor Benefit Plan during the open enrollment period. They must pay a lump-sum buy-in premium equal to the amount of all back premiums from the date of original eligibility, plus interest. The lump-sum premium can be paid over a period of two years.

In addition, retirees who have been out of active service less than seven years must pay an extra penalty.

According to Steve Strobridge, director of government relations for the Military Officers Association of America, military members who are only a year out of service will have to pay about four years worth of premiums.

No matter how long military members and reservists have been retired, "tt's going to require a substantial amount, several thousand dollars, to get in" to the program, Strobridge said. "We're concerned about the effect of that because this is a great program, and it's just been improved."

Survivors of retirees who die less than two years after they enroll in the program will not receive benefits. In these cases, premiums will be refunded to the survivors. According the department's Web site, this clause will prevent an excess of "people joining with short life expectations."

Elections into the program become effective on the first day of the month after the election is received. The earliest start date is Oct. 1.

To opt into the program, retirees need to print out an enrollment form and send it to the address included on the form.