A surprising bit of news slipped under the radar. For the first time in more than 15 years, the military is having open enrollment (also known as “Open Season”) for the Survivor Benefit Plan (SBP). This gives retirees who did not select SBP at retirement the ability to change their mind, and select it now, and vice versa.
The open season enrollment began on December 23, 2022 with the signing of the 2023 National Defense Authorization Act (NDAA), and it ends on January 1, 2024. So effectively retirees have the rest of 2023 to take advantage of this open SBP enrollment.
For those of you not familiar with SBP, it is tantamount to an “insurance policy” on military retirement. Without SBP, should a retiree die, the retirement payments cease. But with SBP, the member pays a monthly premium, and if the member dies, their beneficiary will receive monthly payments instead. This is somewhat of a simplification, but for complete details as to how the military survivor benefit plan works in the family law context, see our SBP article in the Military Divorce Guide.
DFAS Announcement on SBP Open Enrollment
DFAS announced the SBP open season enrollment in its December 2022 newsletter on the DFAS website. In short, it allows the following SBP election changes:
- Retirees or reservists who did not enroll in SBP can change their election, and now enroll.
- Retirees who did enroll in SBP can elect to permanently discontinue coverage.
Requirements to Enroll in SBP
Nothing is free – in addition to paying the premiums going forward, a retiree who takes advantage of open season enrollment to add SBP coverage has to pay all retroactive premiums, plus interest, that would have been deducted, going back to the date the member declined SBP.
So, for example, a married member who retired 8 years previously elects coverage which costs $200/mo, that member would owe 96 months of retroactive premiums – which comes to a whopping $19,200 or so in catch-up premiums to enroll now in SBP.
Disenrolling from the Survivor Benefit Plan
A member who is already enrolled in SBP can discontinue coverage, but the law requires that any covered beneficiaries consent in writing to the disenrollment – this is logical – after all, the law requires a married member to obtain spousal consent to opt out of SBP at the time of retirement, so allowing disenrollment during the open season w/o that same consent would be inconsistent.
And similarly, a member covering his/her former spouse with SBP (typically pursuant to a court order) cannot unilaterally yank the SBP coverage. And the sample SBP disenrollment form linked to below requires not just former spouse concurrence, but an amended court order to allow the disenrollment.
Finally, note that a retiree who disenrolls from SBP during open season is not entitled to a refund of any past premiums paid.
SBP DISENROLLMENT FORM – here is a link to the SBP open season disenrollment form.
What Does “Open Season” SBP Not Permit?
As indicated above, the SBP election is somewhat all or nothing – the retiree can add coverage if not previously selected, or discontinue it if already in place. There is no provision in the law to:
- Change SBP beneficiary. For example, if the retiree is covering his current spouse, the open season does not provide a way to change that coverage to former spouse coverage instead.
- Change SBP coverage amount. A retiree who is already enrolled in the Survivor Benefit Plan can discontinue coverage, but not otherwise increase or decrease the coverage amount previously selected.
Court Cannot Order Open Season Change
Another significant limitation on the SBP Open Season is that the election must be truly voluntary on the part of the member. So a former spouse who failed to request SBP coverage at divorce cannot rectify that now, as civil courts have no authority to order a retiree to change coverage during the Open Season:
“(3) Election must be voluntary.–An election under subsection (a) or (b) is not effective unless the person making the election declares the election to be voluntary. An election under subsection (a) or (b) to participate or not to participate in the Survivor Benefit Plan may not be required by any court. An election by a person under subsection (a) to participate in the Survivor Benefit Plan is not subject to the concurrence of a spouse or former spouse of the person.”Section 643(c)(3), Public Law 117-263.
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