Military retiree spouses and the Survivor Benefit Plan.

By Mark E. Sullivan (North Carolina)


There’s no doubt that Mrs. Jarvis missed out on important part of the division of her husband’s military pension. But it was probably a self-inflicted wound.

After a marriage of about 16 years, Diana Jarvis filed a complaint in divorce on May 6, 2004 and then promptly left the state. She moved to New Jersey where, the Common Pleas Court for Berks County notes, she “continues to live.” Her first attorney withdrew after 11 months on the job, and it took only about 5 months for her second lawyer to leave. Appearing pro se for most of the proceedings, she hired her third attorney upon entry of the Decree in Divorce (May 4, 2006), containing the terms for distribution of marital assets and liabilities.

She had a long-term marriage (June of 1986 till January 2003, with the divorce 3½ years later). Her ex-husband, Aaron Jarvis, was a military retiree, and she received about $900 a month as her share of his retired pay. She also received alimony.

But she missed out on the Survivor Benefit Plan, as is made clear in the 2006 reported decision in Jarvis v. Jarvis from the Common Pleas Court of Berks County.[1] The Common Pleas Court found that:

  • Mrs. Jarvis claimed that the Court erred in refusing to grant her coverage as defendant’s surviving spouse beneficiary for his military pension;
  • Such coverage was needed for her to get military medical benefits;
  • The issue of coverage was not raised at the Master’s hearing;
  • Mr. Jarvis appeared through counsel at the DRO hearing, but Mrs. Jarvis “decided not to proceed with the action”; and
  • The financial impact on the parties of survivor annuity coverage is unknown.[2]

It is not know how long the parties were married during the husband’s military service, but it is a good guess that the period was substantial in light of the almost $900 a month pension share that Mrs. Jarvis received. There is no doubt that she was “the military spouse,” that is, the one who usually moves from base to base with her husband every three or four years, and whose mobility makes it close to impossible to land and retain a job that provides good earnings and a retirement plan. All the more reason then, for the Survivor Benefit Plan to be a part of the pension division at retirement.

This article, and the subsequent two installments, will explore what SBP is, how much it costs, who pays for it, how to protect the non-military spouse, and how to adjust the benefit amount. Also covered will be deadlines for elections, how to use a court-ordered election when the SM or retiree will not cooperate, dealing with deadlines, where to send the documents, and how Mrs. Jarvis should have argued her case to convince the Master that she should have received SBP former-spouse coverage. Finally, we’ll also touch on the argument that Mrs. Jarvis made regarding SBP as a basis for military medical benefits.

What is the Survivor Benefit Plan?

Since death terminates pension payments, practitioners should be familiar with the Survivor Benefit Plan (SBP).[3] SBP is an annuity program that allows retired (or retirement-eligible) active-duty service members (SMs) to provide continued income to specified beneficiaries at the time of the participant’s death. The retiree’s paycheck is the source of monthly premium payments for SBP coverage, and this is partly subsidized by the government. There is a modest tax break for the retiree because the SBP premium is excluded from the taxable portion of his or her retired pay. The SM decides what benefit amount shall apply and to whom the benefit is paid. The designated survivor will receive a lifetime annuity for fifty-five percent of the designated base amount.[4] The SM may select spouse coverage, coverage for the spouse and qualifying children, or coverage for qualifying children only.

The cost for SBP varies depending on the type of coverage selected and the base amount chosen. In general, the premium rate for spouse or former spouse coverage is 6.5 percent of the selected base amount for those who entered military service after March 1, 1990; there is an alternative rate structure for those who entered military service on or before that date.[5] The benefit is 55% of the base amount.

Thus, for example, assume that the total military retired pay for John Doe (before pension division) is $3,000 a month and that he selected the full amount of his retired pay as the base amount for Mrs. Doe’s benefit. The maximum SBP payment for Mary Doe would be $1,650 a month (fifty-five percent of retired pay). The premium would be about $195 (6.5 percent of total retired pay), which is deducted from his retired pay.

Any election other than spouse-only at the full-retired-pay base amount requires spousal concurrence. Whenever counsel or the court is using deferred division for the military pension (i.e., amost 100% of the time), the attorney for the SM’s spouse should seriously consider SBP coverage. This benefit allows continued payments if the spouse survives the SM. Without this valuable tool in planning for continued income for the nonmilitary spouse, the stream of income ends with the death of the pensioner.

Benefits and Disadvantages of SBP

When counseling Mrs. Doe, the nonmilitary spouse, the attorney should know that there is no simple answer as to whether she should ask her ­husband or the court for SBP coverage. Too much depends on conditions, facts, issues, and limitations that are unique to the parties’ marriage. For example, if Mrs. Doe has a well-paid job and little need for immediate security upon the death of her husband or ex-husband, then she might choose no death benefit at all, or perhaps life insurance only. Should she have no job outside the home and small children to raise, her needs for immediate security upon the death of the family’s main provider are obvious. It is essential to know the pro’s and cons for SBP.

The advantages of SBP coverage for Mrs. Does are numerous. The first is security. Unlike commercial life insurance, SBP does not require a person to “qualify” for coverage, and neither party must undergo a physical examination. Coverage cannot be refused or lapse while premiums are being paid. The SM generally cannot terminate coverage (except with the spouse’s consent). Mrs. Doe will receive payments for the rest of her life upon her husband’s death.

Another reason for choosing SBP is cost. Deductions from Mr. Doe’s retired pay for SBP premiums are from the total gross retired pay. This reduces his pension income (and her share of it) for tax purposes. Payments are increased regularly by cost-of-living adjustments to keep up with inflation. There are no expenses for commissions, advertising, or profit, which commercial life insurance premiums include, and costs are not based on age or financial forecasts.

While cost might be an advantage in one sense, it also is among the disadvantages of SBP. Even though the premium payments are tax-free and are shared by the parties, the coverage is relatively expensive as compared to term life insurance, and premiums increase over time.

Another disadvantage is inflexibility; as a general rule, once SBP is chosen it cannot be canceled. In addition, there is no equity build-up and no cash surrender value, which would be present in a policy of whole life or variable life insurance. There is also no return of premiums paid if Mrs. Doe dies before her husband.

Payments are suspended for a widow, widower, or former spouse beneficiary who remarries before age fifty-five.[6] No such age or remarriage limitation occurs when one purchases a life insurance policy.

Checklist for SBP: Pro’s and Cons
Advantages of Survivor Benefit Plan

  • Security: There is no “qualification” required; unlike commercial health insurance, no physical exam is required for the military member and coverage cannot be refused or lapse while premiums are being paid. The member/retiree cannot terminate coverage if established by court order sent to DFAS.
  • Life Payments: Mrs. Doe, the beneficiary, will receive payments for the rest of her life upon the retiree’s death (unless she remarries before age 55, which stops benefits so long as she is married).
  • Tax-Free: Deductions from the retiree’s pay for SBP premiums are from his gross retired pay and thus reduce his pension income (and her share of it) for tax purposes.
  • Inflation-Proof: Payments are increased regularly by cost-of-living adjustments to keep up with inflation.

Disadvantages of Survivor Benefit Plan

  • Expense: Even though the premium payments are tax-free and are shared by the parties, the coverage is relatively expensive (as compared to term life insurance) and premiums do go up.
  • Inflexible: As a general rule, once SBP is chosen, it cannot be canceled.
  • No Cash Value: Unlike whole life or variable life insurance, there is no equity build-up and no cash value for SBP. And there is no return of premiums paid if Mrs. Roberts dies before her husband.
  • Not Divisible: SBP is a unitary benefit, cannot be divided between current spouse and former spouse.

[1] Jarvis v. Jarvis, 2006 Pa. Dist. & Cnty. Dec. LEXIS 452, 81 Pa. D. & C. 4th 527 (2006); aff’d. 2007 Pa. Super. LEXIS 1987, 928 A. 2d 1134 (Pa. Super. 2007).
[2] Id., 2006 Pa. Dist. & Cnty. Dec. LEXIS 452 at *10-12, 81 Pa. D. & C. 4th at **534-535.
[3] 10 U.S.C. 1447-1455.
[4] 10 U.S.C. § 1451(a)(1)(A).
[5] 10 U.S.C. § 1452(a)(1)(A)(iii)–(iv); see also TJAGSA Practice Note, Survivor Benefits: Congress Changes the Survivor Benefit Plan, Army Law., Feb. 1990, at 75.
[6] 10 U.S.C. § 1450(b).

Mr. Sullivan, a retired Army Reserve JAG colonel, practices family law in Raleigh, NC and is the author of The Military Divorce Handbook (ABA May 2006), from which portions of this article are adapted. He is a fellow of the American Academy of Matrimonial Lawyers and has been a board-certified specialist in family law since 1989. He works with attorneys nationwide as a consultant on military divorce issues and to draft military pension division orders.

Continued in Part 2
Part 2 will be posted Dec. 1, 2011 and Part 3 will be posted Jan. 2, 2012
(If you can’t wait that long, email and we will email you the entire article.)