Order Code RL31664
CRS Report for Congress
Received through the CRS Web
The Military Survivor Benefit Plan:
A Description of Its Provisions
Updated December 9, 2004
David F. Burrelli
Specialist in National Defense
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress

---

The Military Survivor Benefit Plan:
A Description of Its Provisions
Summary
The military Survivor Benefit Plan (SBP) was created in 1972. Since its
creation, it has been subjected to a number of substantial legislative changes. This
report describes the basic provisions of the military Survivor Benefit Plan and all
relevant changes or modifications that have occurred.
Specifically, the military Survivor Benefit Plan is described and explained in
terms of its eligibility provisions, costs, benefits, and its integration with other federal
programs (including social security and Veterans’ Administration Dependency and
Indemnity Compensation) for members and retirees of active duty military service
and the Reserve Components (both the reserves and National Guard). In addition,
tables and work sheets are provided to assist the reader in computing the costs and
benefits available under this program.
Nearly every Congress since 1972 has, in some way, modified the provisions of
the military Survivor Benefit Plan. These modifications have had a significant effect
on current and prospective participants and beneficiaries. In nearly every instance,
these changes have made the SBP more generous. Furthermore, these modifications
involve complex issues and processes, and are, therefore, a source of numerous
requests for information from constituents to their congressional representatives.

---

Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Major Provisions of the Survivor Benefit Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Coverage for Military Members Retired
from an Active Duty Career . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Spouse Only Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Computational Formulas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Original Computational Formula . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Flat-Rate Formula . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Remarriage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
“Paid-Up” Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Spouse and Child(ren) Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Child(ren) Only Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Persons with an Insurable Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Former Spouse Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Former Spouse and Child(ren) Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Coverage for Military Members Retired from the
Reserve Components . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
“Forgotten Widow” Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Coverage for Military Members Serving on Active Duty . . . . . . . . . . . . . . 12
Survivor Benefit Plan and Social Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Social Security Coverage for Military Personnel . . . . . . . . . . . . . . . . . . . . . 13
Integration of the Survivor Benefit Plan and
Social Security Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Two-Tier Survivor Benefit Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Comparison of the Social Security Offset and Two-Tier SBP . . . . . . . . . . 18
Supplemental Survivor Benefit Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Costs and Benefits of Supplemental Coverage . . . . . . . . . . . . . . . . . . . . . . 21
Elimination of the Two-Tier and Social Security Offset Computational
Formulas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Survivor Benefit Plan and Veterans’ Affairs Dependency and
Indemnity Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
“Concurrent Receipt” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Retiree and Government Contributions to SBP . . . . . . . . . . . . . . . . . . . . . . . . . . 26
List of Tables
Table 1. Computation of Survivor Benefit Plan Costs to a Hypothetical Retiree
for Spouse Only Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Table 2. Computation of SBP Costs under Persons with
an Insurable Interest Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

---

Table 3. Breakdown of Pre-Integration Monthly Benefits of a Hypothetical
SBP Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Table 4. Comparison of Monthly SBP and Social Security Benefits Computed
Using the Two-Tier and Offset Formulas . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Table 5. SBP Supplemental Benefits and Costs by Age . . . . . . . . . . . . . . . . . . . 22
Table 6A. Computation of Original Survivor Benefit Plan Cost to the Retiree
for Spouse Only Coverage (Work Sheet) . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Table 6B. Computation of Flat-Rate Survivor Benefit Plan Cost to the Retiree
for Spouse Only Coverage (Work Sheet) . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Table 7. Computation of SBP Costs under Persons with an Insurable
Interest Coverage (Work Sheet) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

---

The Military Survivor Benefit Plan:
A Description of Its Provisions
Introduction
This report outlines the purpose and legislative background of providing
benefits to the surviving dependents of a deceased member/retiree of the uniformed
services. In certain cases, individuals other than dependents can be designated
recipients of survivor benefits. This report describes the categories of beneficiaries
eligible for survivor benefits under the military Survivor Benefit Plan (SBP), the
formulas used in computing the income level (including the integration of SBP
benefits with other federal benefits), and the costs of SBP participation incurred by
the retiree and/or the beneficiary.1
Under the SBP, a military retiree can have a portion of his or her monthly retired
pay withheld in order to provide, after his or her death, a monthly survivor benefit
(55% of base2 amount of military retired pay at the time of the retiree’s death) to a
surviving spouse or other eligible recipient(s). The cost of this protection is shared
by the retiree (in the form of reductions from monthly military retired pay after
retirement), the government, and possibly the beneficiary (under certain types of
coverage). The original intended purpose of the SBP (and its antecedents) is to
“insure that the surviving dependents of military personnel who die in retirement or
after becoming eligible for retirement will continue to have a reasonable level of
income.”3 Coverage was later expanded to active duty personnel as well.
1 Retirees of the uniformed services (Army, Navy, Marine Corps, Air Force and Coast
Guard), as well as retirees of the Public Health Service (PHS) and the National Oceanic and
Atmospheric Administration (NOAA) are eligible to participate in the Survivor Benefit
Plan. This report emphasizes the provisions of the SBP as they relate to members or retirees
of the Armed Forces.
2 Base retired pay is that amount of retired pay that the retiree selects to be used in
determining the SBP benefit and cost. This amount may not be greater than total monthly
retired pay and may not be less than (1) $595 monthly as of January 1, 2004, or (2) total
retired pay, if smaller than $595 monthly. This 55% maximum may include amounts
received from other federal sources.
3 U.S. Department of Defense, Office of the Secretary of Defense, Military Compensation
Background Papers. Compensation Elements and Related Manpower Cost Items: Their
Purposes and Legislative Backgrounds, 5th Edition, November 1996: 683.

---

CRS-2
The Survivor Benefit Plan was created by legislation enacted on September 21,
1972,4 and has been modified by later legislation. The SBP replaced the Retired
Serviceman’s Family Protection Plan (RSFPP).5 The RSFPP was replaced because
it had a number of unpopular features which made it unattractive. The RSFPP could
be expensive for the retiree; the cost was approximately $0.23 of deducted retired pay
per dollar of survivor benefits for a retired member age 45 who elected to provide
coverage for a spouse who was 5 full years younger. The RSFPP was intended to be
actuarially neutral in terms of costs — in other words, the cost of this program was
fully paid for by its participants. The decision to elect RSFPP coverage had to be
made by the prospective military retiree before his or her 18th year of military
service. Furthermore, the methods used in computing the RSFPP’s cost and benefit
could change between the time at which the servicemember elected to provide
coverage and the time at which the member actually retired. Thus, the costs and
benefits remained an unknown quantity, limiting the ability of the retiree to make
future financial plans. During its 19-year history, participation in the RSFPP never
exceeded more than 15% of eligible military retirees. It was expected — and has
largely been proven — that the SBP would be a significant improvement over the
RSFPP, in terms of participation rates, costs to the retiree, and benefits for the
survivors. It also entails higher costs to taxpayers because the SBP costs are shared
with the government in most cases.
Major Provisions of the Survivor Benefit Plan
Coverage for Military Members Retired
from an Active Duty Career
Six separate types of coverage are available under the SBP for military members
retired from an active duty military career, characterized according to the relationship
of the beneficiary or beneficiaries to the military retiree:6
1.
Spouse Only;
2.
Spouse and Child(ren);
3.
Child(ren) Only;
4.
Persons with an Insurable Interest;
5.
Former Spouse;
6.
Former Spouse and Child(ren).
The type of coverage and the amount of coverage provided are factors used in
determining the cost to the military retiree. Generally, a retiree is automatically
enrolled in the SBP upon retirement at the maximum level of coverage to his or her
respective surviving spouse and surviving dependent children, unless the retiree
4 P.L. 92-425, 10 U.S.C. 1447 et seq.
5 Originally known as the Uniformed Services Contingency Option Plan of 1953, P.L. 83-
239, 67 Stat. 501, 1953; name changed by P.L. 87-381, 75 Stat. 810, 1961.
6 In certain instances, the annuity may be paid to the representative of a legally incompetent
survivor (P.L. 102-190; 105 Stat. 1389; December 5, 1991).

---

CRS-3
elects not to participate, to participate at a lesser level of coverage, elects other than
spouse coverage, or is ordered by a court to provide such benefits to a former spouse.
To participate at a reduced level of coverage, the retiree elects to have his or her base
amount of retired pay — that amount of monthly retired pay the retiree selects to be
used in determining the SBP benefit and cost — be less than his or her total retired
pay subject to a $300 minimum. The maximum SBP benefit is 55% of base amount
of military retired pay, when the base amount and total retired pay are the same.
Reduced coverage consists of 55% of the base amount of retired pay when the retiree
elects a base amount that is less than total retired pay.7
If a retiree elects not to participate, or to participate at a reduced level of
coverage, the retiree’s spouse must be notified, and in the case of such an election
made on or after March 1, 1986, the spouse must concur with the election for it to be
effective.8 Any decision not to participate or to participate at a reduced level is
usually irrevocable. However, under certain circumstances, a retiree who is
unmarried at the time of his or her retirement and who elects not to participate in the
SBP, but who marries after his or her retirement, may elect within one year of
marriage to provide SBP benefits for the new spouse. This election takes effect only
after a one-year waiting period. With the enactment of P.L. 99-145 (November 8,
1985, effective March 1, 1986), the spouse of a post-military-retirement marriage
must be notified if the retiree does not elect to provide an SBP benefit, or elects to
provide an SBP benefit at a reduced level.
Spouse Only Coverage
In order to be eligible for Spouse Only coverage, the intended SBP beneficiary
must be a widow or widower who was (1) married to the retiree at the time of
retirement, (2) married to the deceased retiree for at least one year prior to the
retiree’s death, or (3) the parent of a child born of a post-retirement marriage. The
benefit (considering income from all federal sources — including social security and
veterans’ benefits — attributable to military service) was intended to be at least 55%
of the base amount of retired pay the retiree was receiving at the time of death —
which, for maximum coverage, is the same as total retired pay.
Computational Formulas. The computational formula for determining the
amount of retired pay withheld is based on the date the member entered the service
and/or the type of retirement the service member is entitled to receive. The formulas
are discussed below as the “Original Computational Formula” and the “Flat-Rate
Formula.” Military personnel who entered the service on or after March 1, 1990, and
who are not entitled to retired pay under either Chapter 61 of title 10 U.S. Code
(Retirement or Separation for Physical Disability), or Chapter 67 (Retired Pay for
Non-Regular Service), i.e., “Disability Retired Pay” or “Reserve Retired Pay,” will
7 The maximum coverage of 55% of base retired pay is subject to a reduction when certain
survivors reach age 62. An explanation of these reductions is provided in the sections below
entitled “The Integration of the Survivor Benefit Plan and Social Security Benefits” and
“The Two-Tier Survivor Benefit Plan.” Use of the “55% maximum coverage” in this report
applies to those survivors discussed in the sections below who have not reached age 62.
8 Public Law 99-145; November 8, 1985; 99 Stat. 676, 677.

---

CRS-4
have their withholdings computed under the “Flat-Rate” method. Those military
personnel who first became a member before March 1, 1990, or those who have their
retired pay computed under either Chapter 61 or 67 (regardless of the date of
retirement) will have their SBP withholdings computed under whichever alternative
(Original or Flat-Rate) is more financially advantageous.9 The reduction in retired
pay does not apply during any month in which there is no eligible spouse (or former
spouse) beneficiary. (Reductions to retired pay are not considered taxable income.)
Original Computational Formula. Under this method, the retiree’s
contribution to the total cost of providing the SBP benefit is computed as 2.5% of the
first $595 of the base amount of retired pay plus 10% of the remaining base amount
of retired pay. This contribution is withheld from the retiree’s total monthly retired
pay.10 For example, a hypothetical retiree (E-5, with 20 years of service in 2004)
receives a monthly base amount of military retired pay of $1,183 (see Table 1). The
cost of providing survivor protection for this retiree is $73.67. In other words,
$73.67 is deducted from this hypothetical retiree’s base amount of monthly retired
pay of $1,183 to insure that upon the retiree’s death, his or her surviving spouse will
receive a monthly survivor benefit of 55% of his or her base amount of retired pay,
or $650 per month, if the retiree dies while receiving the $1,183 amount. If the
retiree received more than $1,183 per month in total military retired pay — say as an
E-8 with 20 years of service, or $1,907 — but elected to provide less than the
maximum coverage (by using $1,183, rather than total retired pay, as the base
amount), the computation of costs and benefits would remain the same. If an
individual’s retired pay increases as the result of cost-of-living adjustments (COLAs),
the amount deducted from his or her retired pay, and the potential SBP benefit to his
or her designated survivor (in this case, his or her spouse), usually will increase
proportionately as well. The costs of SBP protection and benefits are computed on
the basis of retired pay rates at the time of retirement [including any adjustments
made to the base ($595) amount]. All subsequent post-retirement changes are a
result of cost-of-living adjustments to retired pay.11
9 Members with base amounts of $1,275 or more who retire on or after January 1, 2004, will
have their contributions determined using the “Flat-Rate” method.
10 If total retired pay is less than $595 per month — i.e., $7,140 per year — the base amount
must be equal to total retired pay. As of September 30, 2003, only 6.5% of military retirees
received less than $7,000 gross yearly (FY2003 DOD Statistical Report on the Military
Retirement System, Office of the Actuary, Defense Manpower Data Center: 177-178). Sec.
714 of P.L. 99-145, the FY1986 DOD Authorization Act, provided that the then-$300 base
shall be increased by the same percentage amount and at the same time as across-the-board
increases in military basic pay after October 1, 1985. The basic pay index will apply only
to retirees whose retired pay is computed on the basis of basic pay rates in effect on or after
the date of the basic pay increase. As of January 1, 2004, the base amount had been indexed
to $595.
11 The Omnibus Budget Reconciliation Act (OBRA) of 1993 delayed nondisability retirees’
COLA until April 1, 1994. The OBRA did not delay the increase in SBP costs to each
nondisability retiree enrolled in the SBP. Therefore, SBP premiums were increased for the
three months of retired pay payable on January 1, February 1 and March 1, 1994. Because
DOD could not reprogram its retired pay computers to accommodate the new law by January
1, 1994, the three months’ of increased SBP premiums were taken out of the retired pay
(continued...)

---

CRS-5
Table 1. Computation of Survivor Benefit Plan Costs to a
Hypothetical Retiree for Spouse Only Coverage
1.
Enter base amount of retired pay.
$1,183.00
2.
Enter $595, or total retired pay if less than
$595 (see footnote 10).
$595.00
3.
Multiply the figure in line two by 2.5%.
$14.87
4.
Subtract $595 from line one.
If line one is less than $595 enter zero.
$588.00
5.
Multiply line four by 10%.
$58.80
6.
Add lines three and five.
$ 73.67
Line six is the cost of survivor protection under the Spouse Only
coverage. The payment to the beneficiary is 55% of base amount military
retired pay, or $650. Note: The base $595 is indexed for inflation.
Worksheets are available at the end of this report.
Flat-Rate Formula. P.L. 101-189 (November 29, 1989, 103 Stat. 1577 et
seq.) revised and simplified the computational formula for determining SBP
withholdings.12 Under this new formula, SBP withholdings are computed to be 6.5%
of the base amount of retired pay. A retiree who used $1,670 (E-7, 20 years of
service) as the amount of the base amount of retired pay would have $108.55 ($1,670
x 0.065) withheld in order to provide the same level of protection under the Flat-Rate
method.
The basic benefit is not affected by the type of computational formula used.
(See Computational Formulas section on prior page for an explanation of who is
eligible to use the Flat-Rate method.)13
Remarriage. Regardless of which formula is used, a surviving spouse (or
eligible former spouse) may become ineligible to receive SBP benefits if he or she
remarries. Eligibility for SBP benefits when remarriage occurs is dependent upon the
11 (...continued)
received on April 1, 1994.
12 This legislation also provided for the recomputation of survivor annuities in the case of
a member who dies on active duty while qualified to apply for retired pay, or who serves at
least 20 years, but is not eligible to receive retired pay as a commissioned officer because
he/she has not served at least 10 years as a commissioned officer. Under this language,
effective March 1, 1990, the survivor annuity would be computed based on the grade in
which the member was serving at the time of death, unless he/she would have been entitled
to be retired in a higher grade.
13 For those individuals retiring on or after January 1, 2004 with base amounts of $1,275 or
greater, their premiums are computed using the more generous 6.5% method, regardless of
when they entered the service.

---

CRS-6
age at remarriage and the date that such a remarriage occurs. A surviving spouse (or
eligible former spouse) becomes ineligible to receive SBP benefits if he or she
remarries prior to reaching age 60, if such a remarriage took place prior to
November 14, 1986 (remarriage after age 60 does not affect receipt of an SBP
benefit). A surviving spouse (or eligible former spouse) becomes ineligible to
receive SBP benefits if he or she remarries prior to reaching age 55 if such a
remarriage took place on or after November 14, 1986 (remarriage after age 55 for
these beneficiaries does not affect receipt of SBP payments). If the second marriage
is terminated (by death, annulment, or divorce), the original SBP benefit can be
reinstated (subject to certain restrictions). The surviving spouse of two or more
deceased military retirees (each a participant in the SBP) may select and receive the
more financially advantageous benefit.
“Paid-Up” Provisions. In 1999, Congress further expanded the generosity
of the SBP by enacting the so-called “paid-up” provision. Under this language,
reductions in retired pay made to cover the retiree’s share cease when two conditions
are met: (1) the retiree reaches age 70, and (2) the retiree has participated in the SBP
for 360 months. As enacted, these provisions become effective October 1, 2008.14
Spouse and Child(ren) Coverage15
Under Spouse and Child(ren) coverage, upon the retiree’s death, SBP benefits
are first paid to the surviving spouse. If the surviving spouse predeceases the retiree,
dies after becoming eligible to receive SBP benefits, or becomes ineligible to receive
SBP benefits (through remarriage, for example), the SBP benefits will then be paid
directly to the designated child or children. If there is more than one child, the SBP
benefits are paid in equal shares to each child for as long as he or she remains
eligible.
14 P.L. 105-261, 112 Stat. 2045 October 17, 1998. P.L. 106-65; 113 Stat. 667; October 5,
1999; This law extended this provision to participants in the RSFPP. Furthermore, P.L.
105-261; 112 Stat. 2045, October 17, 1998, created an open enrollment that allowed persons
not currently participating in the SBP to enroll subject to certain restrictions. P.L. 106-65
extended the paid-up provision to these “late” enrollees, provided they paid the total
premiums that would have been withheld from their retired pay, had they been participating
since they first became eligible. In addition, from April 1, 1992 through March 31, 1993,
retirees who initially rejected coverage were afforded a one-year opportunity to enroll. This
late enrollment required greater withholdings on retired pay. (See P.L. 102-190; 105
Stat.1388; December 5, 1991) Lastly, P.L. 105-85; 111 Stat. 1797; November 18, 1997,
created a one-year opportunity for participants to discontinue SBP coverage, subject to
certain restrictions.
15 The term “child” includes an adopted child, a stepchild, foster child, or recognized natural
child who lived with the participant in a regular parent-child relationship. It may be
necessary for the child to prove dependency in order to be eligible to receive an SBP
annuity.

---

CRS-7
The cost of this coverage is additive to that of Spouse Only coverage, and is
determined on an actuarial16 basis, taking into account the age of the retiree, the
spouse, and the youngest child. For example, a retiree who is 45 years old, with a
spouse who is 40 years old (i.e., 5 full years younger than the retiree) and a child age
10, would have to pay an additional 0.10% of the base amount of retired pay in order
to cover a child or children in addition to the amount paid for Spouse Only coverage.
The hypothetical retiree mentioned above under Spouse Only coverage who has
$108.55 per month withheld from his or her retired pay (see Flat-Rate formula, p. 5)
to provide an SBP benefit for his or her spouse, would thus have an additional $1.67
($1,670 x 0.10%) withheld per month in order to provide Spouse and Child(ren)
coverage.17 The reduction in retired pay that represents the cost of child protection
continues only for as long as there is at least one eligible child.
A child becomes ineligible for an SBP benefit upon reaching age 18 (or 22, if
a full-time student).18 A child who marries becomes ineligible to receive SBP
benefits regardless of age.19 An eligible child who becomes incapacitated (either
physically or mentally) may continue to receive SBP benefits for the duration of the
incapacitation if the condition existed prior to the child’s 18th birthday.
Child(ren) Only Coverage
Under Child(ren) Only coverage, SBP benefits are paid directly to the surviving
child(ren) of a deceased military retiree regardless of whether or not there is a
surviving spouse. Eligibility under this coverage is subject to the same restrictions
as a child is, or children are, under Spouse and Child(ren) coverage. (Under certain
circumstances, spouse coverage can be restored if a spouse later becomes eligible.)
The cost of this coverage is also computed on an actuarial basis (and therefore
subject to modification). For example, a military retiree who is 45 years old, has a
child age 10, and elects maximum coverage, would have approximately 2.5% of his
or her base amount of retired pay withheld in order to provide, at the time of his or
her death, an SBP survivor benefit for the surviving child. In other words, in the
example mentioned above under Spouse Only coverage, $41.75 ($1,670 x 2.5%)
would be withheld from a retiree’s retired pay in order to provide his or her surviving
child(ren) with a benefit of $918 per month. (Child Only coverage is less expensive
due to the limitation on the number of years — until age 18 or 22 under most
circumstances — a beneficiary remains eligible to receive SBP benefits.)
16 Costs that are actuarially determined are based on probabilities of known life expectancy
rates, as well as interest and inflation assumptions.
17 Since the cost of coverage is computed on an actuarial basis, the cost used in this example
is subject to change. Actuarial figures provided by L. Giesecke, Office of the Actuary,
Defense Manpower Data Center, March 31, 1992.
18 A child who becomes ineligible because he or she reaches age 18 and then later becomes
a full-time student prior to reaching age 22 may become eligible to receive SBP benefits
while a full-time student.
19 A married child who, prior to being married, was eligible to receive SBP benefits will not
become eligible to receive these benefits anew if the marriage ends by divorce. If, however,
the marriage is terminated as the result of an annulment, SBP eligibility may be reinstated.

---

CRS-8
Persons with an Insurable Interest
Insurable Interest coverage may be selected only if there is neither a spouse nor
a dependent child at the time of retirement. Under this coverage a beneficiary is
defined as “a natural person with an insurable interest”20 in the retiree. Included in
this category are relatives of the retiree, such as a parent, sibling, or a child who may
not qualify for SBP beneficiary status under Spouse Only, Spouse and Child(ren), or
Child(ren) Only provisions. Non-relatives, such as a business partner, may also be
covered. Unlike other SBP options, Insurable Interest must be elected at the
maximum level.
The cost of Insurable Interest coverage is (1) 10% of the base amount of military
retired pay plus (2) 5% of total base amount of retired pay for each full 5 years that
the named beneficiary is younger than the retiree. Insurable Interest coverage is thus
more expensive than other types of coverage. However, the total cost to the retiree
of this coverage cannot exceed 40% of total military retired pay. In other words, a
retiree who wishes to provide Insurable Interest coverage to a person 30 or more
years younger would have the maximum of 40% of the base amount of military
retired pay withheld.
For example, a retiree who is 50 years old and receives $1,670 per month as the
base amount of military retired pay, elects to provide protection to a person 10 full
years younger. This retiree would have the cost of this protection computed as
follows: 10% of the base amount of retired pay (or $167) plus 5% for each full 5
years the beneficiary is younger (in this case the beneficiary is age 40) than the
retiree. The SBP costs would thus be $334 (see Table 2).
Table 2. Computation of SBP Costs under Persons with
an Insurable Interest Coverage
1. The amount of base military retired pay.
$1,670.00
2. Multiply line one by 10%.
$167.00
3. Age of the retiree at his/her last birthday.
50
4. Age of prospective beneficiary as of the date
40
of the retiree’s last birthday.
5. Subtract line three from line four.(If line 3 is less than line 4,
enter zero.)
10
6. Divide the sum in line five by the number 5 and round the
quotient to the lower whole number.
2
7. Multiply 5% by line six.
10%
8. Multiply line one by line seven.
$167.00
9. Add line two and line eight.
$334.00
10. Multiply line one by 40%.
$668.00
11. Compare lines nine and ten:
enter the lesser.
$334.20
20 10 U.S.C. 1448(b)(1).

---

CRS-9
Line eleven is the cost of survivor protection under the Persons with an
Insurable Interest category of coverage. The payment to the beneficiary is 55% of the
base amount of military retired pay less the premium, or ($1,670-334) x 55%=$734.
Worksheets are available at the end of this report.
According to language contained in the National Defense Authorization Act for
FY1995, Insurable Interest coverage could be voluntarily discontinued (except in
those cases where a former spouse is being covered). Retirees discontinuing this
coverage, who later remarry or acquire dependents, may again participate in the SBP
under another allowable beneficiary category.21
Former Spouse Coverage22
A military member may choose, or may be required by a court order, to provide
SBP coverage for a former spouse, depending on when the divorce occurred. This
election can occur as part of or incident to a divorce-related property settlement. For
divorces occurring before November 14, 1986, federal law explicitly states that no
court was authorized to order a member or retiree to provide SBP protection to a
former spouse. If a retiree voluntarily decides, in writing, to provide benefits to a
former spouse, this decision must be honored by the retiree. The retiree who elected
Spouse Only or Spouse and Child(ren) coverage, and was subsequently divorced
before November 14, 1986, may switch to Former Spouse coverage for the (now) ex-
spouse. This latter change in coverage must be elected within one year of the date
the divorce decree becomes final.
If a divorce occurs on or after November 14, 1986, however, a court may
order a member or retiree to provide SBP protection as part of or incident to a
divorce. According to changes in law implemented by the FY1987 DOD
Authorization Act (P.L. 99-661, November 14, 1986), “A court order may require a
person to elect (or to enter into an agreement to elect) ... to provide an annuity to a
former spouse (or to both a former spouse and child).”23 This language does not
require courts to make such an order but gives them the freedom to do so.
The FY1986 DOD Authorization Act (P.L. 99-145, November 8, 1985)
included a change in Former Spouse coverage which provided that military retirees
and “former spouses ... covered under the insurable interest category (could) ... elect
jointly to switch to spouse coverage at the maximum level within one year (and it
provided) current participants who had the option of electing Former Spouse
coverage in the past and chose not to do so, the option of electing Former Spouse
21 U.S. Congress. House. Conference Committee, National Defense Authorization Act for
Fiscal Year 1995, H.Rept. 103-701, 103d Cong., 2d Sess., S. 2182, August 12, 1994: 132-
133. (P.L. 103-336) It is expected that this change will affect approximately 3,000 of the
more that SBP 900,000 participants. Maze, Rick, Survivor Benefit Plan ..., Air Force Times,
September 12, 1994: 20.
22 For more information on issues affecting former spouses, see CRS Report RL31663,
Military Benefits for Former Spouse: Legislation and Policy Issues, by David F. Burrelli.
23 10 U.S.C. 1550(f)(4).

---

CRS-10
coverage.”24 Those electing Former Spouse coverage after March 1, 1986, have the
cost of this coverage and benefit amount computed in the same manner as in the case
of Spouse Only coverage.
Because a retiree may provide only one type of SBP coverage for one category
of beneficiary, election of coverage for a former spouse can have the effect of
denying SBP protection to a second or future spouse. However, it is not clear
whether courts have the authority to divide SBP benefits between a former spouse
and current/subsequent spouse. In other words, although the services will provide
SBP benefits to only one category of beneficiary (former spouse, for example), it is
not clear whether or not a court, as part of an equitable divorce property settlement,
has the authority to divide SBP benefits between a former spouse (designated to
receive them in this example) and a current/subsequent spouse.
The FY2000 National Defense Authorization Act provided for the “effectuation
of intended SBP annuity for [a] former spouse when not elected by reason of [the]
untimely death of [the] retiree.”25 This language pertains to any retiree who, on or
after August 21, 1983, agreed to (or was required by a court to) provide SBP
coverage to a former spouse, but who died within 21 days of making such an
agreement (or being so required). Under this language, the former spouse of such a
retiree is deemed to have been covered effective November 5, 1999.
Former Spouse and Child(ren) Coverage
Coverage for a former spouse and child(ren) became available on March 1,
1986.26 This coverage is provided on the same terms as Spouse and Child(ren)
coverage described above.
Coverage for Military Members Retired from the
Reserve Components
As with the Survivor Benefit Plan for active duty retirees, retirement eligible
members of the reserves (Army Reserve, Naval Reserve, Marine Corps Reserve, Air
Force Reserve and Coast Guard Reserve) and National Guard (Army National Guard
and Air National Guard) may elect to provide SBP protection for their survivors.
However, because members of the Reserve Components27 are not eligible to receive
Reserve Component retired pay until age 60, regardless of the age at which they
actually retire, the structure of the Reserve Component SBP (RCSBP) is different
from that applicable to active duty members.
24 U.S. Congress. House. Conference Committee. Department of Defense Authorization Act,
1986. S.Rept. 99-235, S. 1160. 99th Cong., 1st Sess., July 29, 1985: 443. (Hereafter cited as
Conference Committee, DOD 1986 Authorization.)
25 P.L. 106-65; 113 Stat. 668; November 5, 1999.
26 Conference Committee, DOD 1986 Authorization: 96.
27 “Reserve Components” refers to both Reserve and National Guard personnel.

---

CRS-11
Prior to 1978, Reserve Component personnel could not provide survivor
protection for an eligible beneficiary until they were eligible to draw retired pay at
age 60. Legislation passed in 197828 allows Reserve Component members to decide
whether or how they will participate in the RCSBP when they are notified of
retirement eligibility (not yet eligible to receive retired pay) — in almost all cases,
many years before reaching age 60.
Reserve Component members who are not yet 60 years old and who are
retirement eligible may elect to provide SBP protection under one of three options.
The costs and amount of coverage available depend on the option selected and the
category of beneficiary. A prospective Reserve Component retiree must select one
of the following RCSBP options within 90 days of being notified of retirement
eligibility:
Option A - The retiree may decline RCSBP protection. Should the
retiree die before reaching age 60, no RCSBP benefit will be paid. The
retiree will again be offered the opportunity to participate in the SBP
upon reaching age 60.
Option B - The retiree may elect RCSBP coverage such that survivor
payments will begin on (1) the date of the retiree’s death of (2) the date
the retiree would have turned 60, whichever is later.
Option C - The retiree may elect, under this option, to provide an
RCSBP benefit that would begin immediately following the death of the
retiree, regardless of the retiree’s age at the time of death.
Under option A, the costs and types of coverage available once the retiree
reaches age 60 are the same as under the active duty SBP. Under options B and C,
the cost of RCSBP protection is shared by the retiree, the Government, and the
beneficiary. The retiree’s portion is paid through deductions in retired pay beginning
at age 60. The beneficiary’s or beneficiaries’ share is paid through benefit
reductions. The costs under options B and C are dependent upon the type of
coverage (see active duty retirees), as well as the age of the retiree and selected
beneficiary(ies).
Under certain circumstance, an RCSBP benefit may be paid to the eligible
surviving spouse, dependent child(ren), or former spouse of a member of the Reserve
Components who dies
(1) before being notified that he or she had completed the years of service
required to be eligible for Reserve Component retired pay; or
(2) during the 90-day period beginning on the date of notification that the
member had completed the years of service required for eligibility for Reserve
Component retired pay, if he or she had not already rejected participation in the
RCSBP.
28 P.L. 95-397, 92 Stat. 843, September 30, 1978.

---

CRS-12
The income payable is equal to 55% of retired pay which the member would
have been entitled to receive had the service member been retired and at least age 60
at the time of death (less any Veterans’ Administration Dependency and Indemnity
Compensation payable, see below).
“Forgotten Widow” Coverage
In 1997, Congress created a special annuity of then-$165, now $197.51,
(subject to cost of living adjustments) payable monthly to certain surviving spouses.
These widows were married to certain retired or retirement-eligible members who
died without electing SBP coverage. Subject to certain restrictions on remarriage and
the receipt of certain other government-sponsored compensation, the eligible
surviving spouse must have been married to a member who
(A) became entitled to retired or retainer pay before September 21,
1972, died before March 21, 1974, and was entitled to retired or
retainer pay on the date of death; or
(B) died before October 1, 1978, and at the time of his death would
have been entitled to retired pay under chapter 67 [Retired Pay for
Non-Regular Service] of title 10, United States Code (as in effect
before December 1, 1994), but for the fact that he was under 60 years
of age.29
Coverage for Military Members Serving on Active Duty
Under the original SBP, an SBP benefit may be paid to an eligible spouse,
dependent child(ren), eligible former spouse, or eligible former spouse and dependent
child(ren) following the death of an active duty member. This benefit will be paid
if the deceased active duty service member, at the time of death,
(1) was eligible to receive retired pay; or
(2) was a commissioned officer, had completed 20 years of service, but was
not yet eligible to retire as a commissioned officer.30
The SBP benefit payable to the survivor of such a deceased active duty member
is equal to 55% of the amount of retired pay (less any amount received on the basis
of Department of Veterans’ Affairs (VA) Dependency and Indemnity Compensation
or DIC; see section below on VA DIC) that the deceased service member would have
been eligible for had he or she elected maximum coverage and retired on the day of
his or her death.
29 P.L. 105-85; 111 Stat. 1800; November 18, 1997 as amended by P.L. 106-65; 113 Stat.
668; November 5, 1999 as amended by P.L. 107-314; sec. 634; December 2, 2002.
30 Former enlisted personnel or warrant officers who are commissioned must complete at
least 10 years of active duty as commissioned officers before they are allowed to retire as
commissioned officers. Section 523, P.L. 101-510, November 5, 1990, reduced the ten-year
minimum to eight years, through October 1, 1995, to assist in the drawdown of the Armed
Forces.

---

CRS-13
Recent legislation31 has expanded the coverage to the survivors of individuals
who die while on active duty and who are not retirement-eligible, effective
September 10, 2001. Under these provisions, the surviving spouses of active duty
personnel who die are provided an annuity. This annuity for an active duty (non-
retirement-eligible member) is determined by assuming the individual would have
been eligible to retire under Sec. 1201, Title 10 USC,32 with a total disability. The
surviving spouse’s annuity is based on the amount of disability retired pay the
servicemember would have received under Sec. 1201. The spouse’s share is 55% of
that amount of the member’s disability retired pay if the surviving spouse is under
age 62, and 35% if age 62 or over. Depending on when the individual entered the
service, the amount used may be either the terminal monthly basic pay (for those who
entered service on or before September 7, 1980) or the average basic pay for the 36-
month period (i.e. “high three” years) the member earned the highest rate of basic pay
(for those who entered the service after September 7, 1980).33 The amount of
monthly disability pay is computed either by multiplying the determined amount of
basic pay by the percentage disability or by computing 2.5% of basic pay times the
member’s years of service up to 75%, whichever is higher. Since the legislation
assumes the level of disability is 100%, the amount of basic pay (or “high three”)
used would be multiplied by 75%.
Survivor Benefit Plan and Social Security
The relationship between benefits received from the Survivor Benefit Plan and
social security is complicated and has been subjected to periodic changes. For this
reason, the following three sections describe how military personnel are covered
under social security, the relationship between SBP and social security benefits
(integration) that existed before enactment of the FY1986 DOD Authorization Act,34
and the changes in the SBP which affected the interaction of the two benefit systems
that were made by this latter act and others.
Social Security Coverage for Military Personnel
Active duty military personnel have been fully covered by social security and
have paid social security taxes since January 1, 1957. In addition to providing
monthly benefits to civilian retirees and retired military personnel age 62 or older,
social security provides benefits to the widows or widowers of deceased military and
civilian retirees.
31 P.L. 107-107, 115 Stat. 1151 et seq.; December 28, 2001.
32 Under these provisions, the member’s disability may not be the result of intentional
neglect of misconduct.
33 P.L. 108-375, sec. 641, October 28, 2004 modified the computation of retired pay for
reservist who die on active duty “by calculating the average monthly basic pay for purposes
of ... annuity payments as if they had been entitled to basic pay for the 36 months preceding
their retirement [or active duty death] regardless of whether the member served the entire
period on active duty.” Congressional Record, October 8, 2004: H9544.
34 P.L. 99-145; 99 Stat. 666 et seq.; November 8, 1985.

---

CRS-14
The surviving spouse or former spouse of a military retiree is entitled to receive
social security survivor benefits based on the deceased retiree’s active duty basic
military pay.35 Persons eligible for social security survivor benefits may also be
entitled to social security retirement benefits based on their own employment.
However, this “dual entitlement” is prohibited under social security law. People
always receive social security benefits that they themselves earned as a result of their
own employment. If those benefits exceed the amount of social security survivor
benefits, the latter are not payable. However, if the survivor’s own social security
retirement benefits are less than the social security survivor benefits, the difference
between the two is paid in addition to the survivor’s own social security retirement
benefits.
For example, assume that A and B are both surviving spouses of military
retirees and are both entitled to social security benefits — based on the military
service of their deceased spouses — of $400 per month.36 Assume further that both
surviving spouses have been employed and are entitled to their own social security
retirement benefits based on that employment. Survivor A is entitled to $450 per
month in social security retirement benefits based on his or her own employment.
Because survivor A’s own social security retirement benefit of $450 per month
exceeds the social security survivor entitlement of $400 per month, only the $450
retirement benefit is payable. Survivor B, on the other hand, is entitled to $350 per
month in social security retirement benefits based on his or her own employment.
Because B’s social security retirement benefit ($350) is less than the social security
survivor benefit ($400), the full $350 retirement benefit is payable, plus the $50
difference between the two, for a total of $400 per month in social security benefits.
Social security survivor benefits based on a spouse’s or former spouse’s
employment (including military service) are first payable at age 60 (at age 50, if the
surviving spouse is totally disabled, or at any age if and as long as there are children
under the age of 16), and social security retirement benefits based on one’s own
employment are first payable at age 62.
Integration of the Survivor Benefit Plan and
Social Security Benefits
The SBP was (and for certain beneficiaries, is) “integrated” with social security:
SBP benefits are reduced or “offset” when the survivor reaches age 62. The
rationale for this integration was (1) the SBP was intended to provide a specific
portion of a deceased military retiree’s retired pay to the retiree’s surviving
spouse or former spouse, and (2) to recognize the government’s employer
contribution under both social security and SBP. It was, therefore, considered
appropriate by the Congress that all sources of survivor benefits attributable to
35 The surviving spouse might also be entitled to additional social security benefits based on
any civilian employment of the deceased retiree. For ease of explanation, however, this
report only discusses the entitlement to survivor benefits based on the retiree’s military
service.
36 All amounts are hypothetical and used only for purposes of example.

---

CRS-15
military service — DOD and non-DOD — be considered in the computation of this
specific portion of a deceased retiree’s retired pay. The cost of the SBP as well as the
benefit received by the survivor(s), therefore, reflect this offset.37 The offset occurs
at age 62 regardless of when the survivor actually begins to draw social security
benefits.38
The 1972 legislation which established the SBP provided that those social
security survivor benefits which a surviving spouse or former spouse of a deceased
retiree is eligible to receive, based solely on the military service of the retiree, are
subtracted from the survivor’s SBP payment. The legislative history of the SBP
statute indicates that the sum of (1) the reduced SBP payments, plus (2) social
security benefits earned as a result of the retiree’s military service (computed
assuming the retiree lived to age 65 and the surviving spouse begins to draw social
security survivor benefits at age 62), and other sources as well, would provide the
desired 55% of the base amount of retired pay. The aggregate of these integrated
benefits are used in determining the 55%. In other words, this plan was designed to
provide coverage at a rate no less than what the survivor was entitled to on the basis
of social security survivor benefits earned as a result of military service. However,
the eligible survivor may be too young to receive social security survivor benefits at
the time the member or retiree dies. Therefore, the SBP provides a larger benefit
until the eligible survivor reaches age 62 (in recognition of eligibility for social
security benefits regardless of the age when a survivor begins to draw such benefits).
The Comptroller General has noted that it was the intention of Congress that
the combined total of the offset SBP benefit and the social security survivor benefit
would not be less than the pre-offset SBP benefit. The Comptroller General, noting
congressional intention, stated that:
The method of computing the offset was intended to be a “most generous
formula ... to assure that a widow will receive at least 55 percent of the man’s
military retired pay.” H.Rept. 92-481, 92d Cong., 1st Sess., September 16,
1971, accompanying H.R. 1067, at page 14. Similar statements appear on pages
30, 31 and 53 of S.Rept. 92-1089, 92d Cong., 2d Sess., September 6, 1972.
It is clear, therefore, that Congress did not intend to authorize an offset which
would amount to more than the comparable social security benefit. We do not
find that the statutory language of the Survivor Benefit Plan requires or permits
that result.39
37 In the legislative history of P.L. 92-425, (S.Rept. 92-1089), it was noted that “Adding a
survivor benefit plan, similar to the one available to civil service retirees, on top of the
survivor benefits available from social security would provide a plan superior to plans
available to other government employees . . . [T]he proposed benefit program is designed
to build upon the income-maintenance foundation of the social security system.”
38 A surviving spouse or former spouse who is the parent of a child of the deceased may also
receive social security mother’s or father’s benefits at any age, as long as the child is under
age 16. The SBP offset also applies to these mother’s or father’s benefits if there is only one
such child, but does not apply if there are two or more children under age 16.
39 Office of the Comptroller General of the United States. Vol. 62, B-203393, Matter of:
(continued...)

---

CRS-16
Thus, it was the intent of Congress that (1) the SBP benefit alone, or (2) the offset
SBP benefit and social security survivor benefit combined, would be at least equal
to 55% of the base amount of retired pay.
However, the amount of social security survivor benefits can vary based on a
variety of factors. These include (1) the survivor’s age when he or she begins to
receive benefits, (2) the age of the military retiree at the time of death, and (3)
whether or not the retiree had begun to receive social security benefits before death.
The actual social security benefit due to some or all of these factors may therefore be
less than the hypothetical benefit computed under the assumptions of the SBP statute,
and on which the SBP offset is based.
As an example of the integration of the SBP and social security, assume a
survivor is receiving an SBP income of $600 per month. The survivor is also entitled
to social security survivor benefits of $100 (based on the military service of his or her
deceased spouse or former spouse). Because of the survivor’s own employment, this
same survivor is eligible to receive social security retirement benefits of $150 per
month (see Table 3). Because the social security survivor benefit is less than the
social security retirement benefit (and therefore not payable) the survivor only
receives his or her own earned social security retirement benefit of $150. However,
because the survivor was entitled to a social security survivor benefit of $100 based
on the military service of the deceased spouse, the SBP payment is reduced or offset
by $100 when the survivor reaches age 62. Thus, the survivor’s final monthly
income is computed as follows:
Table 3. Breakdown of Pre-Integration Monthly Benefits of a
Hypothetical SBP Beneficiary
SBP benefit
$600
Social Security Survivor Benefits
$100
Social Security Benefits based on the Survivor’s own employment
$150
(The SBP benefit minus the social security survivor benefit) plus the social security
retirement benefit equals the total sum received from both social security and the SBP,
or
($600 - $100) + $150 = $650.
In 1980, legislation was enacted that limited the reduction of SBP income due
to social security benefits to 40%.40 For example, assume a survivor receives a
monthly SBP benefit of $600 and becomes entitled to social security survivor
payments (based on the member’s military service) of $300 per month. The social
security survivor benefit is therefore 50% of the SBP income. However, because the
39 (...continued)
Dora M. Lambert, June 15, 1983: 472-473.
40 P.L. 96-402, Oct. 9, 1980. See U.S. Congress. Senate. Uniformed Services Survivor
Benefits Amendment of 1980. S.Rept. 96-748, 96th Cong., 2d Sess., Sept. 29, 1980.

---

CRS-17
offset can be no more than 40% of the SBP income, the SBP benefit will be offset or
reduced, at age 62, by the maximum of 40% ($600 x 40% = $240) and not by the
entire $300 from social security. The total amount the survivor will receive is $660,
or (1) $300 of social security benefits plus (2) $600-$240=$360 of the reduced SBP
income.
Two-Tier Survivor Benefit Plan
In title VII of the FY1986 DOD Authorization Act (P.L. 99-145, November 8,
1985),41 Congress modified the Survivor Benefit Plan so that retirees and their
prospective spouse survivors would know the exact amount of the SBP benefit that
would be paid upon the retiree’s death. Congress did this by eliminating the
integration with social security. The House Armed Services Committee report on the
legislation stated the rationale for such a change regarding the social security offset:
The principal problems associated with the social security offsets are twofold:
(1) the offset is not calculated until the time of death; hence military members
cannot predict the impact of the offset at the time of retirement when the
decision to participate in the plan is made;
(2) the provision is difficult to explain and to understand; hence many perceive
that an earned benefit is unfairly taken away.42
The new plan was labeled the “two-tier” SBP. Under the two-tier SBP, a
surviving spouse of a deceased military retiree will receive 55% of the base amount
of military retired pay as a survivor benefit (as was the case under the original plan).
Upon reaching age 62, the SBP benefit will be reduced automatically to 35% of the
base amount of military retired pay for any surviving spouse or former spouse
covered under the two-tier SBP. Since it is expected that benefits for those eligible
for the two-tier plan would have been subjected to the full 40% social security offset
(i.e., a reduction from 55% to 33% in SBP benefits at age 62), 35% was considered
an appropriate approximation. Under the two-tier SBP, a spouse or former spouse
who becomes a widow or widower after age 62 will receive an SBP payment equal
to 35% of the base amount of military retired pay. For example, assume a military
retiree receives $1,183 per month in military retired pay at the time of his or her
death and has elected to provide the maximum SBP coverage of 55% of total — and
base — retired pay (see Table 1). The retiree’s surviving spouse or former spouse
will receive a $650 per month SBP payment if under age 62 at the time the retiree
dies, as was the case before enactment of the two-tier system. When the surviving
spouse or former spouse reaches age 62, the SBP payment will be reduced to $414
per month (or 35% of the original base amount military retired pay of $1,183 per
month). This reduction from 55% to 35% occurs at age 62 and is not affected by the
receipt of social security benefits.43 The two-tier plan thus allowed retirees and their
41 See Conference Committee, DOD 1986 Authorization: 88-100.
42 U.S. Congress. House. Committee on Armed Service. Department of Defense
Authorization Act, 1986. H.Rept. 99-81, H.R. 1872. 99th Cong., 1st Sess., May 10, 1985:
251.
43 Under the social security offset the benefit of a spouse or former spouse in this example
(continued...)

---

CRS-18
prospective surviving spouses or former spouses to predict what their survivors’
future SBP payments will be upon a retiree’s death and/or when the survivors reach
age 62.
Two selected groups will have their SBP payments calculated under either the
pre-two-tier plan (including the social security offset) or the two-tier plan, depending
upon which is more financially advantageous to the survivor. The first group
includes those beneficiaries (widow or widowers) who were receiving an SBP benefit
on October 1, 1985. The second group includes the spouses or former spouses of
military personnel who were qualified for or were already receiving military retired
pay on October 1, 1985.44 The spouses or former spouses of military personnel who
were not qualified to receive military retired pay on October 1, 1985 (i.e., those who
had not been on active duty with 20 or more years of service or completed 20 or more
years of creditable Reserve Component service as of October 1, 1985) will have their
SBP payments computed using the two-tier method.
Participation rates have increased since the introduction of the two-tier plan.
Of those retiring in FY1984, 54% elected to participate in the SBP. Of those retiring
in FY1990 and FY1993, 60 and 58% elected to participate, respectively. (Some of
those retiring in FY1990 may be eligible to have the benefits for there survivors
calculated under either the two-tier or social security offset method.)45 In other
words, the change to the two-tier benefit has been associated with an increase in
participation over the social security offset method.
Comparison of the Social Security Offset and Two-Tier SBP
The complicated nature of the social security offset was not fully understood
by many servicemembers, retirees, or widow(er)s. Thus, when the two-tier SBP was
introduced, with its straight forward reduction of benefits at age 62, many felt that
the two-tier SBP represented a reduction in their benefits or potential benefit over
what was available under the social security offset SBP. Table 4 provides a
comparison of both plans computed for an active duty service member (E-7) who
retires from the military at age 42 with 20 years of service. Upon retirement from the
military, the retiree is enrolled in the SBP at the maximum level of coverage (i.e.,
base pay equals $1,076). This retiree then accepts civilian employment (including
social security deductions) for another 15 years. In this case, the above noted retiree
has SBP withholdings computed under the Flat-Rate formula, $1,670 x
6.5%=$108.55. (For the purposes of this example, cost of living adjustments are not
used. All numbers represent reasonable approximations.)
43 (...continued)
could be reduced from $650 per month to $690 per month at age 62 (i.e., a 40% offset).
44 “Retirement qualified” includes those members of the Reserve Components who are
qualified to receive military retired pay except for the fact that they are under age 60 and,
therefore, may not begin to draw reserve retired pay.
45 Department of Defense, Office of the Actuary, RCS No. DDM (A) 1375, DOD Statistical
Report on the Military Retirement System, FY1984: 215 and RCS No. DD-FM&P (Q) 1375,
FY1990: 233; DOD Statistical Report, FY1993: 247.

---

CRS-19
At age 59, the retiree dies. The surviving spouse begins receiving a military
Survivor Benefit equal to 55% of base military retired pay or $1,670 x 55%=$918 per
month.
In addition, the retiree’s spouse was employed and earned social security
benefits of $500 per month from this employment. Since the military retiree made
social security payments both in the service and in the subsequent civilian
employment, the surviving spouse is eligible to receive social security survivor
benefits of $631 per month based on the retiree’s entire career. For the sake of this
example, $378 of the $631 are attributed to the social security contributions made
during military service. (It is this $378 per month that will be taken into account
under the offset plan.)
Table 4. Comparison of Monthly SBP and Social Security
Benefits Computed Using the Two-Tier and Offset Formulas
Social
Two-Tier
Security
Offset
Base retired pay (1994, E-7, with 20 years of service)
$1,670
$1,670
SBP monthly withholdings (Flat-Rate or 6.5% of base pay)
$108.55
$108.55
SBP benefit for a spouse under age 62 (55% of base pay)
$918
$918
Social security benefits of the surviving spouse
Based on the surviving spouse’s career
$500
$500
Based on the retiree’s civilian and military career
$631
$631
($378 attributable to military
service only)
Total social security benefit (spouse’s $500 plus $131
[631-500] from the member’s career
$631
$631
SBP benefits at age 62
$550
$584
($918 less (35% or base
$378 or 40%,
whichever is
less)
Total survivor income from both SBP and social security
$1,181 $1,215
($550 + $631) ($584 + $631)
As described above, a person (in this case the surviving spouse) receives his/her
own earned social security benefits first. Thus, this spouse will receive $500 per
month in social security benefits. In addition, since the social security survivor
benefit is greater ($631) than the spouse’s earned benefit ($500), the spouse will also
receive the difference ($631 - $500=$131) added to his/her own earned benefit ($131

---

CRS-20
+ $500) for a total social security benefit of $631 per month. In this example, the
spouse begins receiving these benefits at age 62.
Under the two-tier formula, the military SBP amount is reduced from 55 to
35% of base military retired pay or from $918 to ($1,670 x 35%=) $584 per month
at age 62. When the social security benefit is added, the surviving spouse’s income
is ($584 + $631=) $1,215 per month. In other words, prior to age 62, the surviving
spouse receives $918 per month from the military Survivor Benefit Plan. Assuming
the spouse begins receiving social security benefits at age 62, total income for the
spouse (from both the reduced military SBP and social security) increases to $1,215
per month.
Turning to SBP benefits computed under the offset method, prior to age 62, this
spouse receives the same SBP benefit of 55% of base military retired pay ($918 per
month). At age 62, however, the SBP is offset — reduced — by social security
benefits attributable to the member’s military service, ($378), subject to the 40%
limit on the offset. Under law, this offset occurs regardless of whether or not the
spouse is actually receiving these benefits. Since the $378 of social security benefits
based on the service member’s career is greater than 40% of the SBP (40% of $918
is rounded to $367), the SBP is offset by 40% or $367 rather than by entire social
security benefit attributable to the member’s military service (i.e., $918 - $367=
$551). Thus, at age 62, the surviving spouse’s SBP benefit is reduced from $918 to
$551 per month. When the total social security benefit is added in, the surviving
spouse’s total income is $551 + $631 for a total of $1,182 per month.
In other words, prior to age 62, a spouse receives the same SBP benefit under
either the two-tier or original offset formula SBP ($918). However, as this example
shows, at age 62, monthly benefits from both SBP and social security are greater
under the two-tier method ($1,215) than under the offset formula ($1,182).
This example can only allude to some of the possible effects and interactions
of the SBP and social security. The amount of SBP benefits and the final income of
the surviving spouse are dependent upon a number of factors including, but not
limited to, the retiree’s years of service, rank at retirement, year in which the
retirement occurred, social security payments made by the retiree, the work history
of the surviving spouse and the eligibility for VA benefits (as described below).
Supplemental Survivor Benefit Plan
Established under Public Law 101-189,46 the Supplemental Survivor Benefit
Plan provides SBP participants an opportunity to avoid or limit any reductions in
SBP benefits that would occur at age 62 for a spouse or former spouse. This
legislation also created an open season that would allow certain retirees to enroll in
the SBP, increase SBP coverage, and opt to participate in the new Supplemental SBP.
46 103 Stat. 1577, et seq., November 29, 1989; as amended by Public Law 101-510, 104 Stat.
1580, November 5, 1990.

---

CRS-21
Participation in the new Supplemental SBP is voluntary and not automatic. In
order to be eligible, retirees must be participants in the two-tier SBP. Those eligible
to have their benefits computed under either the Social Security offset method or the
two-tier method had an opportunity to make an irrevocable switch to the two-tier
method in order to participate in the Supplemental SBP. (Such a shift may not be a
wise change for all retirees — particularly for those who retired before or around
1957 or who may also be civil service retirees. In certain instances, the social
security offset would be less than that which would occur under the two-tier plan.
Such a limited reduction may negate the need for purchasing supplemental benefits.)
Members who are retirement-eligible may elect to participate in the Supplemental
SBP prior to actually retiring. Should the member die while retirement-eligible (but
before actually retiring) that member’s designated spouse or former spouse would be
provided benefits under SBP without the Supplemental. Actual eligibility for
Supplemental benefits begins only after retired pay is withheld. Should a retirement-
eligible member elect to participate in the Supplemental before retiring and later
refuse SBP participation at retirement, the Supplemental SBP would be voided.
Those members who are participants without an eligible spouse and who remarry,
may elect to participate in the Supplemental SBP. Such an election is irrevocable and
must be made within one year of the remarriage.
An eligible participant may voluntarily elect to provide Supplemental coverage
for a former spouse. The service secretary concerned must be provided with a
statement (in a manner prescribed by the secretary) setting forth whether such an
agreement is part of or incident to a divorce settlement and, if so, whether it has been
voluntarily incorporated in the court order. This documentation must be provided to
the secretary within one year of the date of the court order or filing invoice. With the
receipt of the appropriate documentation, such an election is deemed to have been
made.
Costs and Benefits of Supplemental Coverage
Under current two-tier SBP rules, 6.5% of pre-tax base amount retired pay is
withheld (as described above under “Flat-Rate”). A surviving spouse or former
spouse is eligible to receive 55% of the base amount of retired pay until reaching age
62 when benefits are reduced to 35%. Under the Supplemental SBP, the change that
occurs at age 62 can be reduced or eliminated. The cost of this coverage depends on
the age of the retiree at sign-up time, as well as the amount of coverage to be
provided to the survivor at age 62.
Table 5 provides a breakdown of costs by level of coverage. According to this
breakdown, a retiree who enrolls in the SBP under the two-tier option (benefits of
55% of the base amount of retired pay until age 62, then reduced to 35%) will have
6.5% of the base amount of retired pay withheld regardless of the retiree’s age at the
time of enrollment. Should this same retiree enroll at age 46 and opt to limit the age-
62-reduction to 45% of the base amount of retired pay, 9.48% of the base amount of
retired pay will be withheld. Conversely, a retiree who enrolls at age 45 and opts to

---

CRS-22
Table 5. SBP Supplemental Benefits and Costs by Age
Percentage Coverage at Age 62
Sign Up Age
35%
40%
45%
50%
55%
37
6.5
7.62
8.74
9.86
10.98
38
6.5
7.63
8.76
9.89
11.02
39
6.5
7.67
8.84
10.01
11.18
40
6.5
7.72
8.94
10.16
11.38
41
6.5
7.77
9.04
10.31
11.58
42
6.5
7.78
9.06
10.34
11.62
43
6.5
7.81
9.12
10.43
11.74
44
6.5
7.87
9.24
10.61
11.98
45
6.5
7.93
9.36
10.79
12.22
46
6.5
7.99
9.48
10.97
12.46
47
6.5
8.06
9.62
11.18
12.74
48
6.5
8.12
9.74
11.36
12.98
49
6.5
8.17
9.84
11.51
13.18
50
6.5
8.24
9.98
11.72
13.46
51
6.5
8.30
10.10
11.90
13.70
52
6.5
8.38
10.26
12.14
14.02
53
6.5
8.47
10.44
12.41
14.38
54
6.5
8.57
10.64
12.71
14.78
55
6.5
8.67
10.84
13.01
15.18
56
6.5
8.77
11.04
13.31
15.58
57
6.5
8.87
11.24
13.61
15.98
58
6.5
8.98
11.46
13.94
16.42
59
6.5
9.10
11.70
14.30
16.90
60
6.5
9.12
11.74
14.36
16.98
61
6.5
9.37
12.24
15.11
17.98
62
6.5
9.52
12.54
15.56
18.68
63
6.5
9.66
12.82
15.98
19.14
64
6.5
9.81
13.12
16.43
19.74
65
6.5
9.96
13.42
16.88
20.34
66
6.5
10.12
13.74
17.36
20.98
67
6.5
10.30
14.10
17.90
21.70
68
6.5
10.45
14.40
18.35
22.30
69
6.5
10.63
14.76
18.89
23.02
70
6.5
10.80
15.10
19.40
23.70
71
6.5
11.00
15.50
20.00
24.50
72
6.5
11.24
15.98
20.72
25.46
73
6.5
11.45
16.40
21.35
26.30
74
6.5
11.68
16.86
22.04
27.22
75
6.5
11.88
17.26
22.64
28.02
76
6.5
12.14
17.78
23.42
29.06
77
6.5
12.40
18.30
24.20
30.10
78
6.5
12.63
18.76
24.89
31.02
79
6.5
12.92
19.34
25.76
32.18
80
6.5
13.18
19.86
26.54
33.22

---

CRS-23
eliminate entirely the age-62-reduction will have 12.22% of the base amount of
retired pay withheld.47
Elimination of the Two-Tier and Social Security
Offset Computational Formulas
The FY2005 National Defense Authorization Act48 contained language that
would make a substantial change in the computation of the SBP benefit for those age
62 and over. Simply stated, this law phases out the two-tier and Social Security
offset formulas discussed above. The actual mechanics of this process will vary
depending on various scenarios.
Generally speaking, this language raises the minimum SBP benefit for those
age 62 and over as follows: On October 1, 2005, the minimum SBP benefit for those
survivors age 62 and older will be 40%. This amount will increase to 45% on April
1, 2006, 50% on April 1, 2007, and 55% on April 1, 2008. In other words, a survivor
who is age 62 or over and receiving 35% of base retired pay under the two-tier
method will see the benefit increase over the next few years to 55%. This increase
occurs without any additional cost to the retiree or the survivor and therefore
represents a substantial increase for many.
A survivor who turns 62 during the scheduled increase will have the benefit
computed to the amount that is applicable in the above schedule. For example,
consider a covered widow receiving 55% of base retired pay prior to reaching age 62.
If this widow turns 62 on April 30, 2007, the benefit will be reduced to 50% of base
retired pay. On April 1, 2008, according to the schedule, the SBP benefit will be
returned to the 55% level.
For those individuals who purchased Supplemental SBP coverage prior to the
enactment of this law, they will see their benefits increase as well after reaching age
62. For example, a 62 year old widow who is receiving 45% of base retired pay (i.e.
35% under the two-tier computation plus 10% in supplemental coverage), will have
the benefit increase to 50% on October 1, 2005 and finally to 55% on April 1, 2006.
(Note: Effective October 28, 2004, reductions in retired pay used to cover the
supplemental benefit are terminated; however, the supplemental coverage remains
in effect.)
As noted, certain individuals had the opportunity to remain under the Social
Security offset computational formula. These individuals will likewise see their
benefits increase under the above schedule, ultimately reaching 55% on April 1,
2008. The increase in these benefits will occur when the scheduled increases pass
their current benefit level. For example, a widow receiving say 48% of base retired
pay (as computed under the Social Security offset method) will see no change in
benefits until April 1, 2007 when the benefit will increase in 50%, and again to 55%
47 Maze, Rick, Face-lift yields five SBP options, Army Times, October 28, 1991: 10.
48 P.L. 108-375; 118 Stat. 1811; Secs. 644-645; October 28, 2004.

---

CRS-24
on April 1, 2008. In other words, these beneficiaries will have their benefits
computed either under the Social Security offset method or according to the above
schedule, depending on which is more financially advantageous.
In enacting the above language, Congress also created an open-enrollment
period or “open season” to allow certain retirees to begin SBP participation or to
increase their current level of coverage. The open season begins on October 1, 2005
and lasts one year. Those who take advantage of the open season must participate for
at least two years from the date of making such an election in order to qualify their
survivors for these new benefits. If the retiree dies before the end of this two-year
period, amounts deducted from retired pay to effectuate the benefits resulting from
the open season will be returned to the designated survivor. Premiums charged
“would be calculated based on the total amount of the premium, plus interest, by
which the members’ retired pay would have been reduced if they had elected to
participate in the SBP at the first opportunity that they had been afforded.”49
In addition, those opting for supplemental coverage during the open season will
see the supplemental premiums phased out by April 1, 2008. Critics have raised
doubts about the wisdom of participating in this open season supplemental coverage
given the two-year participation minimum imposed under law. Critics note that a
retiree who signs up for supplemental coverage on the first day of the open season
(October 1, 2005) must contribute to the supplemental for two years. Should the
retiree die two years after making the election (on October 1, 2007), the SBP benefit
will already be increased to 50% under the above schedule for those survivors over
age 62, and will reach the 55% level 6 months later. In other words, a retiree will
make 2 or more years worth of supplemental payments in order to effectuate a 6-
month or less benefit. Furthermore, a retiree who waits until April 1, 2006 of the
open season (or later) to sign up for supplemental coverage, or one whose survivor
will not turn 62 until after April 1, 2008, will see no benefit in electing the
supplemental coverage during the open season. For these reasons, it has been
suggested that retirees consider the limited benefits and additional costs of such an
election before deciding to participate in the supplemental SBP during the open
season and for the same reasons, DOD may elect not to offer supplemental coverage
during this period.
Survivor Benefit Plan and Veterans’ Affairs
Dependency and Indemnity Compensation
Department of Veterans’ Affairs (VA) Dependency and Indemnity
Compensation (DIC) was established in 1956 by the Servicemen’s and Veteran’s
Survivor Benefit Act.50 “Under this Act, as amended, DIC is paid to the survivors
... of servicemen or veterans who died on or after January 1, 1957, from: (1) a
disease or injury incurred or aggravated in line of duty while on active duty or active
49 Congressional Record, October 8, 2004: H9544.
50 P.L. 84-881, 70 Stat. 862, 867.

---

CRS-25
duty training; or (2) an injury incurred or aggravated in line of duty while on inactive
duty training; or (3) a disability compensable under laws administered by the VA.”51
A service member can, for example, (1) contract a disease or incur an injury
during active duty or active duty training, (2) recover and return to active duty, (3)
retire from an active duty or Reserve Component military career and participate in
the SBP, and (4) subsequently die because of complications resulting from the
original service-related disease or injury. The surviving spouse or former spouse of
the retiree is then entitled to DIC payments from the VA. In this situation, however,
the surviving spouse or former spouse of the retiree is not entitled to receive the
combined total of full SBP and DIC benefits. Instead, the SBP benefit is offset by
the amount of DIC received (with certain limitations).52 This offset occurs regardless
of the retiree’s enrollment in the SBP Supplemental.
The total of DIC and offset SBP payments combined is, at least, equal to the
full SBP benefit. A surviving spouse or former spouse who remarries loses his or her
entitlement to Dependency and Indemnity Compensation payments. Upon losing
Dependency and Indemnity Compensation, however, the remarried spouse or former
spouse has his or her full SBP benefit restored, provided the remarriage — in
accordance with SBP restrictions — occurs after age 60 or age 55 if the remarriage
occurs after November 14, 1986. Also, if the DIC is paid to an SBP-eligible
surviving spouse or former spouse, a percentage of the deceased retiree’s original
contributions to the SBP offset by DIC will be returned to the surviving spouse or
former spouse. In other words, if the SBP is offset by DIC, that proportion of
deductions from the deceased retiree’s retired pay which financed the offset portion
of the SBP will be refunded to the surviving spouse or former spouse. SBP payments
can be restored, if the beneficiary becomes ineligible for DIC and remains eligible
for SBP, provided that the refunded SBP payments are returned.
“Concurrent Receipt”
In recent years, Congress has addressed an issue concerning the payment of
military retired pay to retirees who qualify for disability compensation from the
Department of Veteran’s Affairs (VA). In 1891, Congress passed language
prohibiting what it regarded as “dual compensation” for either past or current service
and a disability pension.53 As modified in 1941, the law prevented the concurrent
receipt of both military nondisability retired pay and VA disability compensation.
51 Military Compensation Background Papers: 457.
52 The amount of DIC payable to a surviving spouse is contained in one section of law —
title 38 U.S.C. 411(a). Under three other sections — 38 U.S.C. if, for example, the spouse
1) is supporting a dependent child or children, 2) is in a nursing home, blind or requiring aid
or assistance from another person, or, 3) is, because of a disability, housebound or
institutionalized in a ward or clinic. SBP annuities are only offset by the amount of DIC
received under 38 U.S.C. 411(a) and not by any increase to this amount as a result of
eligibility under 38 U.S.C. 411(b)-(d).
53 See CRS Report 95-469, Military Retirement and Veterans’ Compensation: Concurrent
Receipt Issues, by Robert L. Goldich and Carolyn L. Merck, April 7, 1995: 3-4.

---

CRS-26
For those eligible for both, military retired pay was offset or reduced, dollar for
dollar, by VA disability benefits.
Numerous attempts to address this issue over the past few years have resulted
in the creation of “Combat Related Special Compensation” for certain disabled
military retirees as well as a 10-year phase in allowing concurrent receipt (from 2004
to 2013) for those whose disability is rated at 50% or more. However, 100% disabled
retirees will be entitled to immediate concurrent receipt effective January 1, 2005.54
Although such a change would not affect the receipt of an SBP annuity, some
have claimed that if concurrent receipt or “special pays” for military retirees are
allowed, such should also be afforded their survivors. Under this reasoning, if a
military retiree is allowed to receive both military retired pay and VA disability
payments or other “special pay”, it is only fair that the surviving spouse also receive
both the SBP annuity and DIC benefits. Critics contend that concurrent receipt was
originally barred because Congress viewed it as “double dipping” or paying someone
twice for the same period of service. These critics reason that allowing concurrent
receipt to the retiree or the retiree’s survivor are forms of “double dipping” that are
inherently unfair to the taxpayer.
Retiree and Government Contributions to SBP
As noted above, the cost of the SBP is shared by the government and the
retirees. The amount paid by a particular retiree varies depending on level of
coverage, years of payments, years the survivor receives an annuity, etc. For active
duty personnel who make no contributions, the benefit is essentially free. Certain
retirees and organizations representing their interests have claimed that, as originally
structured, withholdings from retired pay for SBP were expected, on average, 40%
of the cost of this benefit. Further it is claimed that since retirees are living longer
and since the government has manipulated the withholdings formula, the retirees’
share has increased to more than 73%.55 These claims are made in an effort to
increase government payments into the SBP in hopes of increasing benefits
(particularly with regard to the apparently successful effort of eliminating the
reduction in benefits that occurs when the surviving spouse reaches age 62).
In reviewing these claims, a number of points may be considered. First, as
noted, there is no legal mandate for any ratio of retiree to government contributions.
Second, such claims of a shift in the retiree/government share appear to be based on
a selective use of retiree data. Third, the claim that retirees are living longer and
paying more ignores the obvious point that survivors, too, are living longer and
collecting more. Fourth, the above history of this benefit shows that Congress has
expanded eligibility (including ‘free’ benefits to “forgotten widows” and active duty
54 See CRS Issue Brief IB85159, Military Retirement: Major Legislative Issues, by Robert
L. Goldich, updated regularly.
55 Lazorchak, Mike, SBP still a good program, but ratio has changed, Navy Times, January
15, 2001: 18.

---

CRS-27
survivors), increased benefits, reduced costs, will eliminate withholdings under the
“paid-up provision” afforded supplemental coverage, etc. At no time did Congress
reduce the benefit. As such, the claims that the government’s contribution to SBP
have been reduced are unreliable. Nor do such claims rationalize the increase of
benefits at age 62 for surviving spouses (a change that arguably creates a superior
benefit relative to those available to the survivors of other federal employees).
It is noteworthy that after the SBP was introduced, the FY1973 cost to retirees
was $36,145,000 with a fiscal year payment to families of only $5,700,000. This is
due to the relatively small number of participants who died shortly after signing up.
Ten years later, as more retirees signed up and more died, the FY1983 cost to retirees
grew to $652,536,000 while the payment to families grew to $406,887,000. In
FY1993, as participant deaths increased, the cost to retirees was $822,955,000 with
payments to families reaching $1,177,185,000. Finally, in FY2003, costs to retirees
was reported to be $1,053,500,000 while payments to families surged to
$2,088,143,000. The cost to retiree/family payment gap will likely grow as the age
62 reduction is phased out and the “paid-up provision” is implemented.56
56 2004 Retired Military Almanac: 220.

---

CRS-28
Table 6A. Computation of Original Survivor Benefit Plan Cost to
the Retiree for Spouse Only Coverage
(Work Sheet)
1. Enter base amount of retired pay.
If base amount is $1,275 or more, use Table 6B below.
$
2. Enter $595 or total retired pay if less than $595 (see footnote
10). Do not enter less than $300.
$
3. Multiply the figure in line two by 2.5%.
$
4. Subtract $595 from line one.
If line one is less than $595, enter zero.
$
5. Multiply line four by 10%.
$
6. Add line three and line five.
$
Line six is the cost of survivor protection under Spouse Only coverage.

Table 6B. Computation of Flat-Rate Survivor Benefit Plan Cost
to the Retiree for Spouse Only Coverage
(Work Sheet)
1. Enter base amount of retired pay
$
2. Multiply line one by 6.5%.
x0.065
3. Cost of Basic SBP protection.
$
****To compute supplemental coverage cost, please continue****
4. Enter the factor that corresponds to the retiree’s age and level
of coverage desired at age 62 (see Table 5).

5. Divide the factor from line four by 100.

6. Multiply line one by line 5.
$
Line 6 is the cost of survivor supplemental protection under Spouse Only coverage.

---

CRS-29
Table 7. Computation of SBP Costs under Persons with an
Insurable Interest Coverage
(Work Sheet)
1. The amount of base military retired pay.
$
2. Multiply line one by 10%.
$
3. Age of the retiree at his/her last birthday.
$
4. Age of prospective beneficiary as of the date of the retiree’s
last birthday.

5. Subtract line three from line four.
(If line 3 is less than line 4, enter zero.)

6. Divide the sum in line five by 5 and round the quotient to the
lower whole number.

7. Multiply 5% by line six.
%
8. Multiply line one by line seven.
$
9. Add line two and line eight.
$
10. Multiply line one by 40%.
$
11. Compare lines nine and ten:
enter the lesser.
$
Line eleven is the cost of survivor protection under the Persons with an Insurable
Interest category of coverage.

---