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Spouse Coverage

Spouse coverage is the primary option of SBP. It is designed to give you a way to continue part of your retired pay to your surviving spouse after you die. The key aspects of this SBP option are below:

Benefit Payments

The SBP annuity is determined by the base amount you elect. The base amount may range from a minimum of $300 up to a maximum of full retired pay. The annuity is 55 percent of the base amount. Also, the base amount and the payments to the surviving spouse will generally increase at the same time and by the same percentage that cost-of-living adjustments (COLAs) are made to retired pay.

Spouse Remarriage

Your surviving spouse may remarry after age 55 and continue to receive SBP payments for life. If remarried before age 55, SBP payments will stop, but may be resumed if the marriage later ends due to death or divorce.

SBP Costs (Premiums)

The SBP premiums for spouse coverage are:

    (1) 6.5% of your chosen base amount, or if less,
    (2) 2.5% of the first $635.00 of your elected base amount (referred to hereafter as the "threshold amount"), plus 10% of the remaining base amount.

The threshold amount was $635.00 as of January 1, 2006. The threshold amount will increase at the same time and by the same percentage as future active duty basic pay.

If you became a member of a uniformed service on or after March 1, 1990, and you are retiring for length of service (not for disability), SBP costs will be calculated only under the formula in (1) above.

The following table shows the costs associated with several "base amount" options and the benefits your spouse will receive based on these options.

Base Amount
SBP Costs *
SBP Benefits
Before Age 62
(55% of Base Amount)

* The SBP costs used in column 2 are calculated using the formula that provides the least cost. If the base amount was greater than or equal to $1,091, the formula in (1) was used. For base amounts less than $1,091, the formula in (2) was used.

The next table shows what can happen after retirement when inflation is a modest 4 percent per year. Retired pay is increased annually to keep pace with inflation. Survivor payments are generally increased at the same time, by the same percentage. These increases are made even after the member dies.

Your Age
Spouse's Age
Retired Pay Cost of SBP Benefit *

In this example, the annuity at age 90 would be nearly four times the covered retired pay at age 40. This demonstrates two very favorable features of SBP:

    a. Payments can never run out.
    b. Payments keep increasing along with the increased cost-of-living.

If you die shortly after retirement, your surviving spouse could receive cost-of-living adjusted payments for 50 years or more. Lifetime payments from an original election to cover $1,000 of retired pay could total more than one million dollars.

Tax Savings

Monthly SBP costs are not included in your taxable Federal income. The true cost for SBP is thus less than the amount deducted from retired pay because less Federal tax will be paid. This also applies to most state income taxes. SBP payments to survivors are taxable, but spouses usually receive benefits when their total income is less and the extra tax exemption for being over age 65 is applicable. The surviving spouse's tax rate should be lower and a long-run significant tax savings should result.

Loss of Spouse

If your spouse dies first or you get divorced, SBP costs will stop (once you notify the pay center). In divorce cases, spouse coverage may be converted to former spouse coverage.

In some instances of divorce, conversion of the coverage to provide for the former spouse may be required by court order.

Special Note

P.L. 106-65, 5 Oct 99, provides that a participant is considered "paid-up" after completing 30 years (360 payments) in the Plan. This applies to a specific category of beneficiary (i.e., spouse), at a specific base amount (i.e., full retired pay). Contact your personnel counselor for details on this feature, which is not effective until Oct. 1, 2008.

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