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The next phase of the SBP/DIC phase out is here!

By Patty Cruz, Army Survivor Benefit Plan Program Manager

If you are a surviving spouse eligible for both the Survivor Benefit Plan (SBP) Annuity and the Dependency and Indemnity Compensation (DIC) from the Department of Veterans Affairs (VA) this applies to you and you will want to pay close attention to what follows.

The National Defense Authorization Act for Fiscal Year 2020 phases out the SBP offset by DIC over a course of three years. Starting January 1, 2023, the offset will be eliminated. The first reduction of the offset has started and some surviving spouses should see an increased SBP annuity payment this month.

What does this really mean?

If you are a surviving spouse eligible for both SBP and DIC you will always get paid the full DIC amount from the VA. The SBP annuity amount however, is offset or reduced by the DIC amount. If the SBP annuity amount is greater than the DIC amount, then you will receive the difference from DFAS plus the Special Survivor Indemnity Allowance (SSIA). DFAS pays out SSIA to surviving spouses who have their SBP annuity offset by DIC. If your SBP annuity amount is less than the DIC amount, then you will only receive the SSIA from DFAS. The new law reduces the amount deducted from your SBP annuity, so depending on the SBP annuity you are eligible for, you may start seeing more of the SBP annuity starting now. Some surviving spouses will not see an increase until 2022 or even 2023 when the offset is eliminated.

What does the phase out of the offset look like?

Starting this year, the deduction to your SBP annuity is reduced and depending on how much SBP annuity you are eligible for it may mean more money in your pocket today. Again, for some, you will not see more money until next year or even 2023. How do you know which category you fall into? The Defense Finance and Accounting Service (DFAS) sent out letters in early December 2020 to each surviving spouse affected by this law change. The letter outlines your specific estimate. Remember, that your situation is different from others and the amounts will be different for everyone. For more information check out:

Elimination of the SBP-DIC Offset Video -


Military One Source:

 DoD Office of Financial Readiness:


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