SBP Open Season Benefits Certain Remarried Retirees

Open Season Allows Retirees To Enroll Current Spouse in SBP

The Fiscal Year 2016 National Defense Authorization Act (NDAA) contained an important change to the Survivor Benefit Plan (SBP), specifically changing the rules about retirees who initially purchased former spouse coverage, but the former spouse has died and they would like to cover their current spouse.  In conjunction with this change, the Defense Finance and Accounting Service (DFAS) is holding an open season for eligible retirees to retroactively enroll their current spouse in the Survivor Benefit Plan.  This open season runs until 24 November 2016

Transfers to a current spouse after the death of a covered former spous.e were permitted from the time SBP was created in 1972 until 2013.  Since 2013, retirees who purchased former spouse coverage could not cover new spouses even if the former spouse was no longer alive.  This was because of a change in the way that the law was interpreted.  As a result of the displeasure with this change in interpretation, Congress included the right to transfer former spouse coverage to new spouses in the NDAA.

Who Is Eligible?

Retirees who previously held SBP former spouse coverage that was terminated by the death of the former spouse, and are remarried, are eligible to take part in this open season.  The former spouse must have died prior to 25 November 2015, and the retiree must have been married to the new spouse prior to 25 November 2015.  For deaths after 25 November 2015 or marriages after 25 November 2015, the retiree is still within the window to do a regular enrollment that does not require the retroactive activity that required the open season.

What Do You Need To Do?

Affected retirees should have received a notice in the mail that explains the process for enrolling a current spouse in SBP.  If they did not, they can contact DFAS via their customer service webpage for more information.  DFAS will ask for certain documentation, that may include the death certificate for the former spouse, the birth certificate for the current spouse, the marriage certificate for the current spouse, and an Expression of Interest form.  After receiving these items,  DFAS will review eligibility for this open season, and determine any retroactive payments that may be required, and send this information to the retiree along with a Final Election form.

The retiree will be responsible for all premiums that would have been paid if they had made the transfer at the time If the retiree determines that they are still interest after learning the amount of the retroactive premiums, they can sign the Final Election form and send it, along with the payment for the retroactive premiums, to DFAS for processing.  This open season ends on 24 November 2016 and all applications for retroactive transfer must be made at this time.

How Will It Work In The Future?

For retirees who become eligible for this transfer of SBP benefits in the future, there is a one year window of opportunity to make the change.  If the retiree is married at the time of the former spouse’s death, the request to transfer benefits must occur within one year of the former spouse’s death.  If the retiree marries after the former spouse’s death, the request to transfer benefits must occur within one year of the marriage.  As with other changes related to remarriage, the coverage will become effective on the first anniversary of the marriage.

This change will benefit the many retirees who have paid into the SBP on behalf of a former spouse, and found themselves unable to transfer coverage to a current spouse after the former spouse’s death.  It makes the policies more uniform between retirees who were covering now deceased spouses and now deceased former spouses, and it does not negatively affect anyone.

If you are eligible for this open season, be sure to complete the process of enrolling your current spouse before the open season ends on 24 November 2016.  After that date, you will lose the option to transfer those SBP benefits.

About the Author

Kate Horrell
Kate Horrell is a military financial coach, mom of four teens, and Navy spouse. She has a background in taxes and mortgage banking, and a trove of experience helping other military families with their money. Follow her on twitter @realKateHorrell.