The SBP-DIC Offset Phased Elimination: What Surviving Spouses Need to Know About Phase Two and Phase Three

September 12, 2022

On January 1, 2022, Phase Two of the SBP-DIC Offset Phased Elimination began. 

To help surviving spouses who are entitled to both SBP and DIC in 2022 understand the effect of this change, DFAS mailed letters in early December with individual estimates of 2022 SBP payments. 

As a reminder, the SBP-DIC Offset Phased Elimination only affects SBP payments issued by DFAS. The changes do NOT affect Dependency and Indemnity Compensation (DIC) payments from the VA. Eligible surviving spouses will continue to receive the full amount of DIC from the VA. 

Check out our new Quick Reference Guide on the special focus webpage: https://www.dfas.mil/sbpdicnews

What Happens in 2022 – Phase Two of the SBP-DIC Offset Phased Elimination

January 1, 2022 marked the start of the second phase of the SBP-DIC Offset Phased Elimination.

The changes affect surviving spouses who are, or who will become in the future, eligible for both Survivor Benefit Plan (SBP) payments and Dependency and Indemnity Compensation (DIC) payments, and who were subject to a full or partial SBP-DIC Offset.

In Phase Two of the SBP-DIC Offset Phased Elimination the amount that is offset (deducted) from the spouse’s SBP annuity payment is one-third of the amount of the DIC payment.

DIC payments are not affected.

The SBP monthly payment is reduced by the amount of the offset (1/3 of the amount of the DIC payment).

If a spouse’s gross SBP benefit is less than one-third of the amount of the DIC they receive from the VA, the spouse will not receive an SBP payment. About 12 percent of spouses (approximately 7,600) will not see a change in their SBP payment in 2022 because their gross SBP benefit is less than one-third of their DIC payment from the VA.

Spouses who have their SBP offset by DIC will continue to receive the Special Survivors Indemnity Allowance (SSIA) in 2022, up to the maximum amount of $346 per month, or up to gross amount of SBP (if the gross amount of SBP is less than $346).
 
Summary – Phase Two

VA will pay:
• 100% of the DIC payment

DoD/DFAS will pay:
• The remainder of the SBP benefit after deducting an amount equal to 1/3 of the spouse’s DIC payment from the SBP gross annuity amount (SBP gross – 1/3 of DIC = SBP net)
• Plus the appropriate amount of SSIA up to the maximum allowable ($346).

The effective date of Phase Two was January 1, 2022. January 2022 benefits were paid on February 1, 2022. The last payment of Phase Two is for December of 2022, which will be paid on January 3, 2023.

Phase Three: Starting January 1, 2023

In the third and final phase that begins January 1, 2023, the SBP-DIC offset will be fully eliminated. That means spouses will begin to receive their full SBP monthly payments with no offset (reduction) on February 1, 2023.

DIC payments will not be affected.

The SBP benefit will be paid in full (no offset).

SSIA will NOT be paid.

Additional Notes

Spouses should have received a January 2022 Annuitant Account Statement (AAS) near the time of their February 1, 2022 payment that showed changes to the SBP and/or SSIA payment because of the second phase of the SBP-DIC Offset Phased Elimination

Annuitant Account Statements are available in your myPay account: https://mypay.dfas.mil

Reminder: if a spouse previously received a refund of SBP premiums paid due to the SBP-DIC offset, they will NOT need to pay back that refund because of this change in the law.

Questions?

Check out the full range of Frequently Asked Questions and download our new Quick Reference Guide on the SBP-DIC News webpage: https://www.dfas.mil/sbpdicnews

We also have a webpage explaining SBP, DIC and SSIA: https://www.dfas.mil/sbpdicssia

Article Source: https://www.dfas.mil/RetiredMilitary/newsevents/newsletter/June-2022-SBP-DIC-Offset-Phased-Elimination-Update/