8 September 2005
SUBJECT: Survivor Benefit Plan (SBP) and Reserve Component SBP (RCSBP) Open Enrollment Period 1 Oct 05 – 30 Sep 06.
1. Purpose. To provide information on the SBP and RCSBP open enrollment period conducted 1 Oct 05 – 30 Sep 06.
2. Background. Public Law 108-375, 28 Oct 04, eliminates the two tier SBP annuity by incrementally increasing the post age-62 spouse and former spouse annuity from 35 percent to a single tier 55 percent benefit effective 1 Apr 08. Because of this significant improvement in the SBP benefit, the law also provides retirees who previously elected not to enroll fully in SBP an opportunity to now enroll during the SBP and RCSBP open enrollment period.
a. Eligibility. Those eligible are: Retirees currently receiving retired pay who previously declined coverage for an eligible beneficiary category or if participating in SBP selected a reduced base amount; Reserve retirees, commonly referred to as “gray area retirees” who will be entitled to retired pay at age 60, who previously declined to participate in RCSBP (Option A), elected deferred coverage (Option B), or immediate coverage (Option C) at less than maximum coverage. Ineligible are retirees who terminated SBP coverage between the 25th and 36th months following receipt of retired pay or during the 17 May 98 to 16 May 99 Open Season for SBP termination.
b. Requirement for Retiree to Live Two Years from Effective Date of Open Enrollment Election. A retiree must live two years from the effective date of the open enrollment SBP or RCSBP election for an annuity to be paid to survivors. For retirees who die within two years of the effective date of the open enrollment election, the open enrollment premiums will be refunded in a lump sum to the named beneficiary.
c. Elections. Retirees making an election during the open enrollment period must complete and submit a Survivor Benefit Plan (SBP) and Reserve Component Survivor Benefit Plan (RCSBP) Open Enrollment Election (DD Form 2656-9). Open enrollment SBP elections are generally voluntary and may not be court-ordered or deemed, and do not require spouse concurrence. Elections are effective the first day of the first month following the date a valid election is logged into the Defense Finance and Accounting Service – Cleveland (DFAS-CL) or Human Resources Command – St. Louis (HRC-St. Louis) systems.
SUBJECT: 1 October 2005 – 30 September 2006 SBP and Reserve Component (RC) SBP Open Enrollment Period.
d. Notification of Election Receipt. DFAS-CL will notify the retiree in writing of the open enrollment SBP cost and effective date of the election. HRC-St. Louis will notify the Reserve retiree in writing that the open enrollment RCSBP election was received.
e. Cancellation of Open Enrollment Elections. Retirees may cancel SBP open enrollment elections in writing after receipt of the DFAS-CL or HRC-St. Louis letter of notification. DFAS-CL or HRC-St. Louis must receive the cancellation request within 30 days of the date of their notification letter.
f. Open Enrollment Premiums. Open enrollment elections require payment of two separate premiums, the Prospective Monthly Premium (PMP) and the Open Enrollment Lump Sum Buy-in Premium (OEBIP). The PMP includes the monthly premium for the open enrollment period election and any previous coverage if increasing or adding to existing SBP coverage. For Spouse or Former Spouse open enrollment elections, the 6.5 percent of base amount cost method will be used. The OEBIP is a one-time payment required by law and is not part of the monthly SBP premium. The OEBIP may be paid as follows: a lump sum payment submitted with the DD Form 2656-9: deducted from retired pay over 24 months; or as a combination of a lump sum payment and deductions from retired pay over 24 months. If OEBIP is deducted from retired pay over 24 months, the deduction cannot exceed the retiree’s net retired pay. There is no OEBIP for RCSBP open enrollment elections.
g. Paid-up Coverage. Reference Section 641, Public Law 105-261, 17 Oct 98. Effective 1 Oct 08, retirees will be considered “paid up” upon completing 30 years of premium payment and reaching age 70. Once the total OEBIP has been paid, the coverage will be considered for the purposes of determining the date the retiree reaches “paid-up” status.
4. Conclusion. Installation Retirement Services Officers are prepared to assist retirees with open enrollment information, forms, and cost estimates. Information on the open enrollment period will be published in the “Army Echoes”. A dedicated SBP Open Enrollment Section of the Army G-1 homepage includes information and a DOD Open Enrollment Calculator, http://www.armyg1.army.mil/.