Thinking About The Unthinkable
By Kathleen Moakler
Summer 2005
One can never truly be prepared for the devastating news that a loved one has died in the line of duty. But it is important to understand the benefits available in the event of such a tragedy.
When a death occurs, the next of kin is assigned a liaison - a casualty assistance officer (CAO) for the Army, casualty assistance representative (CAR) for the Air Force, or casualty assistance calls officer (CACO) for the Navy or Marine Corps - to help with arrangements and entitlement paperwork. The liaison is there to help, but family members make all the final decisions.
Don't wait until a pre-deployment brief to make sure important documents are current and in order, especially in the event of a change of family status. For example,
- If the servicemember has recently married or divorced, appropriate legal documents must be available.
- If the member has changed the primary next of kin or added or changed beneficiaries of the Servicemembers Group Life Insurance, documentation is essential.
- If the family has a will, it must be up-to-date and should designate guardians for minor children.
This is an overview of the benefits available to the survivors of those killed on active duty. Unless otherwise stated, these benefits are available regardless of duty station at the time of death.
Benefits Paid By The Department Of Defense
Death gratuity: A basic benefit of $12,420, increased annually to correspond with increases in basic pay, is designed to aid survivors in meeting immediate expenses. It is paid to the designated next of kin and is not taxable. The benefit is supposed to be paid within 24 hours of notification of death.
Burial benefits: The Department of Defense (DoD) will process, transport and inter remains. A casket, vault and headstone are provided. Up to $6,900 may be reimbursed if the family elects to make private arrangements. Transportation costs for the immediate family are reimbursed if they must travel for the funeral.
Military health and dental care benefits: Spouses and children remain eligible for military health care coverage. For three years from the date of death, TRICARE benefits, including co-payments, remain the same as active duty family benefits. After three years, the cost of TRICARE and TRICARE co-pays rise to retiree levels. In most cases, survivors receive dental insurance without premiums for three years before becoming eligible for the premium-based retiree dental program. If the spouse remarries, these benefits may not be reinstated. Children receive benefits until age 18 (or age 23 if enrolled in college).
Survivor Benefit Plan (SBP): Surviving spouses of servicemembers who die on active duty are entitled to SBP benefits. SBP payments equal 55 percent of the member's would-be retired pay based on 100-percent disability. SBP automatically is adjusted annually for cost-of-living increases. Payments are subject to federal income taxes. A spouse may decide to waive his or her benefit and have payments made to children until they reach age 18 (or age 23 if enrolled in school). If the spouse remarries before age 55, SBP payments cease. If the subsequent marriage ends in death, divorce or annulment, SBP may be reinstated. If the spouse remarries after age 55, payments continue. SBP payments are offset by dependency and indemnity compensation (DIC) payments.
Housing benefit: Surviving families may occupy government quarters or receive housing allowances for 180 days. These allowances vary according to rank and geographic location. In addition, the family is eligible for one move, paid for by the DoD.
Servicemember's Group Life Insurance (SGLI): All servicemembers automatically are enrolled for $250,000 of coverage unless they explicitly decline the insurance or purchase lower levels of coverage. SGLI will be paid to the individual designated on the SGLI election and certificate form. If no beneficiary is elected by the member, the proceeds are paid first to the surviving spouse; if none, to the children (natural, adopted or illegitimate) in equal shares; if none, to the parents (natural or adopted).
Other DoD benefits: Spouses are eligible for commissary, exchange and Morale, Welfare and Recreation privileges indefinitely unless they remarry. Children maintain eligibility until age 18 (age 23 if enrolled in college).
Benefits Paid By The Department of Veterans Affairs
Transition Assistance: Monthly payments of $250 are paid to a surviving spouse with children for two years from the date of the servicemember's death to ease the transition period.
Dependency and Indemnity Compensation (DIC): Surviving spouses and children (and some dependent parents) are eligible for non-taxable DIC payments. The 2005 spouse DIC rate is $993 per month, adjusted annually for cost-of-living increases. Additional amounts, also adjusted annually, are authorized for a surviving spouse with minor children. The current monthly benefit is $247 for each child. Unmarried children remain eligible for the benefit until age 18 (19 if still in secondary school), between 18 and 23 if attending an institution of higher learning approved by the Department of Veterans Affairs, or for life if disabled while still eligible for the benefit. If the spouse remarries before age 57, payment of the spouse's DIC ends. If the subsequent marriage ends in death, divorce or annulment, DIC will be reinstated. DIC payments to a child continue as long as the child is eligible.
Survivors' and Dependents' Educational Assistance Program: Surviving spouses and children are eligible for up to 45 months of education benefits. Beginning July 1, 2005, the surviving spouse of a servicemember killed on active duty has an extended eligibility for education benefits of up to 20 years after the date of the member's death. Children normally are eligible to receive the educational benefits between their 18th and 26th birthdays. The current monthly benefit is $803 per month, increasing to $824 on October 1, 2005.
Home Loan Guarantees: A surviving spouse who does not remarry is eligible for GI home loans; eligibility is retained if remarriage occurs after the 57th birthday.
Benefits Paid By The Social Security Administration
Social Security monthly benefits: These benefits are paid to a spouse or divorced spouse regardless of age if the children of the deceased servicemember are under age 16 or are disabled and meet Social Security requirements. Amounts are determined only by the Social Security Administration.
Social Security Lump Sum Death Benefit: Up to $255 is paid to the surviving spouse living with the member at the time of death or, in the absence of a spouse, to the oldest surviving child.
Other Benefits: The Veterans Administration's Office of Readjustment Counseling offers grief counseling to families of members who die on active duty. These services are available through offices at the 206 community-based veterans centers throughout the United States. For more information, call 202-273-9116 or e-mail vet.center@hq.med.va.gov.
Additionally, the military exchanges forgive debts on the Military STAR credit card for families of members killed in combat. Spouses of deceased military personnel may be entitled to a preference when applying for federal civilian jobs. And some states pay death benefits or provide other support, especially to survivors of National Guard or Reserve members killed on active duty. Benefits and eligibility vary by state.
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Kathleen Moakler is Deputy Director of Government Relations for the National Military Family Association (www.nmfa.org).
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Proposed Boost In Benefits
Lawmakers are actively considering legislation that would increase benefits for survivors of servicemembers killed on active duty. These changes could include:
- Raising the death gratuity to $100,000. Several bills limit this increase only to members killed in Operation Enduring Freedom or Operation Iraqi Freedom. Others offer the increase across the board to anyone killed in the line of duty.
- Increasing SGLI maximum amounts. Some bills increase coverage to $300,000 and others jump to $400,000. Several states have offered legislation that would enable the state to pay the SGLI premium for state members of the National Guard or Reserve.
- Eliminating the Dependency Indemnity Compensation (DIC) offset to the Survivor Benefit Plan so survivors would be eligible to receive both payments at the same time. Some legislation raises the DIC payment amount to surviving spouses and children.
- Extending the time from 180 days to 365 days that surviving families would be eligible for installation housing or basic allowance for housing.
- Increasing the education benefit for surviving spouses and children, and offering it in a lump sum.
For more information about this legislation, check the National Military Family Association website and search for "survivor benefits."
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Is SBP A Good Buy?
Given the expected subsidy, the answer to this question for most retirees is yes! Whether SBP is a good buy for you depends on personal preferences and your age, sex and health compared to your beneficiary's. Beyond this, the answer lies in three questions you should ask yourself.
First, is SBP a product I can use? Personal preferences may control your answer, but a subsidized lifetime inflation-protected income is very attractive to most people.
Second, how much SBP can I use? If you know when you'll die, how long your survivor will outlive you and how much inflation will occur, you have the answer. The unknown future is the problem, but SBP meets the need! Even if you die shortly after you retire and your spouse lives for 50 more years and if inflation is higher than expected, SBP will still be paying. It will probably be paying a lot more than anyone ever expected because inflation has such a strong impact over a long period of time. In fact, survivors who began to get SBP benefits in the early 1970s have seen their benefits more than tripled through annual COLAs!
Third, how much SBP can I afford? The benefits do carry a price tag, but due to the subsidy and lack of administrative costs and profit, the plan should be attractive for most members. And remember: The tax advantage on premiums reduces your out-of-pocket cost.
Caution! Some people think they can join SBP years after they retire, during a so-called "open season." In the 25-plus-year history of SBP, only three times have retirees had a second chance at SBP. Each time was after major plan improvements. The second time, premiums were raised for new joiners to help make up for the missed premiums. The third time, new joiners were required to pay all missed premiums with interest, plus an additional amount to protect the solvency of the Plan.
