By: Lila Quintiliani

While the deadline for a rare Survivor Benefit Plan (SBP) open season remains Jan. 1, 2024, the practical deadline for beneficiaries who want an estimate of what the coverage would cost has moved up a month.

Initial messaging from the Defense Finance and Accounting Service (DFAS) said normal processing time for a Letter of Intent – a document DFAS uses to make a cost estimate – would be 30 days, meaning interested enrollees would have until about Dec. 1 to send in the paperwork. But an update to the DFAS open season website now lists Nov. 1 as the Letter of Intent deadline. Those who don’t send a Letter of Intent by that date may not receive a premium estimate before the Jan 1 enrollment deadline.

The timeline does not alter the four-step enrollment process:

1. Submit the Letter of Intent, which can be found at this link.
    
2. Receive a DFAS estimate of future monthly premium costs as well as a one-time “buy-in premium” figure.
    
3. Submit an enrollment form and choose a payment method – a lump sum, 12 equal monthly payments, or a combination of the two.
    
4. Receive enrollment confirmation from DFAS, along with instructions on how to submit payments. Enrollees have 30 days from the date of enrollment to cancel; the cancellation must be in writing and must be received by DFAS within the 30-day window. 

Why Send a Letter of Intent?

While beneficiaries can enroll in SBP using the enrollment form without requesting a cost estimate, they may benefit from a fuller financial picture, as the one-time buy-in premium will vary by retiree.

It’s based on several factors: The first is the amount by which a beneficiary’s pay would have been reduced had they elected to participate in the SBP at the first opportunity. That amount is 6.5% of whatever portion of pay is to be covered: Survivors receive 55% of whatever “base amount” of your pay is chosen.

Then there is a buy-in “factor” covering back interest payments and an “additional amount” added to preserve the actuarial soundness of the Military Retiree Fund. The amount differs based on the number of months it’s been since retirement.

 For example, someone who retired in June 2018 and wanted to enroll would have a buy-in factor of 57.25. If they wanted to cover their entire retired monthly pay of $4,750, the calculation for their buy-in premium would be: $4,750 x 6.5% x 57.25 = $17,675.94.

Going forward, the monthly SBP premium would be $308.75 ($4,750 x 6.5%). A survivor would get $2,612.50 per month, which is equal to 55% of the base amount. 

The Coast Guard’s Pay and Personnel Center, which processes retiree and survivor payments for the commissioned corps of both the U.S. Public Health Service and NOAA, has a similar enrollment process and has not updated its online guidance. Currently serving Guard and Reserve members should contact their branch of service for information.

The update does not affect deadlines for those seeking to discontinue SBP coverage, which involves only the submission of a discontinuance form to the proper pay agency.

While the forms can be submitted by mail, it is undoubtedly going to be quicker to fax your materials (800-469-6559) or use the askDFAS online upload tool.