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about $15,000 a year. However, under cur- rent law, the amount of DIC awarded must be deducted from military SBP annuities — wiping out most, if not all, of the SBP an- nuity for the majority of survivors. (See the chart, facing page, for how the offset affects an E-6 with 10 years of service.) In multiple Congresses, lawmakers
acknowledged the inequity and cospon- sored corrective legislation to recognize SBP and DIC are paid for different rea- sons. SBP is a servicemember-purchased annuity, whereas DIC is an indemnity payment when military service causes a servicemember’s death. Further, service-disabled retirees have limited opportunities to purchase addi- tional life insurance, and available policies impose exorbitant premiums. No other federal surviving spouses are
required to forfeit their federal annuity because military service caused their spon- sor’s death. Additionally, the offset does not apply to surviving military children — only to spouses. Tasked by Congress to review the wid-
ows tax in October 2007, the Veterans’ Disability Benefits Commission agreed with MOAA and other veterans’ associa- tions that when military service causes the servicemember’s death, the VA indemnity compensation should be paid in addition to the SBP annuity, not subtracted from it. In 2008, Congress authorized a Special
Survivor Indemnity Allowance (SSIA) as partial recompense for the SBP/DIC inequi- ty. Then-House Armed Services Committee Chair Rep. Ike Skelton (D-Mo.) expressed the intent to continue increasing the SSIA and ultimately phase out the widows tax. SSIA is $275 a month in FY 2016 and will rise to $310 a month in FY 2017, covering about 25 percent of the SBP/DIC offset. However, the legal authority to pay
SSIA expires Oct. 1, 2017. Unless Congress repeals the SBP/DIC offset or extends the
SSIA authority this year, SBP/DIC survi- vors will suffer the additional loss of the SSIA, totaling $3,700 annually. MOAA believes the SBP/DIC offset should be repealed. Because of the current budget environment, securing sufficient funding for a total repeal — approximately $7 billion — will be difficult. If full and im- mediate repeal is not feasible, SSIA should be extended and increased to continue the path toward phasing out the offset.
Small Caps I
Equal Big Cuts Continued pay caps build long- term loss for servicemembers.
n times of budget crunches, the big cuts get the headlines. But small, repeated cuts also add up to big bucks
over time. For instance, the FY 2017 bud- get proposes capping military pay raises below the average American’s for the fourth year in a row. The 2017 basic allowance for housing
(BAH) increase for currently serving per- sonnel also will be shaved by 1 percent for the third consecutive year, with two more years of planned 1-percent cutbacks. For most servicemembers, the effect of these pay and allowance adjustments is masked. They still get a pay raise each year and
likely still get a BAH increase each year. The increases just aren’t as big as they would have been without the caps. But that doesn’t mean the cuts have no impact.
In fact, the cumulative effect com- pounds with each passing year, and it will follow some servicemembers (those who retire under the depressed pay rates) for the rest of their lives in the form of re- duced retired pay.
*on the web: Inim voluptat elit utpating ex etuerci eu feum eum aliquating ese feugait MAY 2016 MILITARY OFFICER 31
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