Some service members may become eligible to receive pension benefits from the military after they leave or retire from the service. However, the military also operates the Survivor Benefit Plan, which can provide a veteran’s eligible dependents with continued pension benefits. But when a couple with a spouse who has served in the military divorces, who pays the plan premium after the divorce?
What Is the Survivor Benefit Plan?
The Survivor Benefit Plan provides a financial benefit called an “annuity” to an eligible beneficiary upon a service member’s death. Service members can elect coverage upon retirement from the military (with reservists eligible after 20 years of qualifying service), paying a premium deducted from their monthly pay. The SBP provides an annuity to an eligible beneficiary up to 55 percent of the service member’s retired pay.
A service member who has elected SBP coverage can continue that coverage for a former spouse (if required by a divorce settlement or court judgment) by switching coverage to “former spouse” status within one year of the divorce decree.
The Default Rule
By default, the DoD deducts SBP premiums from a retired service member’s monthly pay. As a result, the veteran spouse typically pays the SBP premium after divorce. This remains the case unless and until a divorce settlement or a court order directs otherwise.
How Courts May Allocate Premium Costs
Because federal regulations do not specifically limit who must pay SBP premiums or limit who can pay or contribute to premiums, state court judges have discretion in allocating SBP premium costs during a divorce proceeding. In most cases, a state court will direct the veteran spouse to continue paying the SBP premium from their monthly retirement pay. Courts may factor the SBP premium into the property division or spousal support award if they intend for the non-military spouse to bear a share of the premium cost. This arrangement ensures payment of the premiums and avoids future disputes or litigation. Alternatively, a court may direct the non-military spouse to reimburse the veteran spouse for a portion of the SBP premium.
Former Spouse Coverage Elections
The SBP has different beneficiary designations for a veteran’s spouse or former spouse. As a result, when a service member divorces and must continue coverage for their former spouse, they must contact the Defense Financial Accounting Service, which operates the SBP, to change their beneficiary designation to a “former spouse” within one year of the final divorce decree. Failing to change the beneficiary election could result in a former spouse losing their right to an SBP annuity after a veteran’s death.
What Happens If a Retiree Fails to Elect?
When a veteran fails to submit a former spouse election as required by a divorce settlement or decree, the former spouse can ensure their continued coverage by submitting a “deemed election” along with a divorce decree ordering continued coverage for the former spouse. However, a former spouse must submit their deemed election within the one-year window after the divorce decree or risk losing coverage.
Practical Tips for Divorcing Military Couples
Divorcing military couples who have SBP coverage should follow certain best practices to avoid inadvertently losing this important asset:
- Address the continuation or discontinuation of coverage explicitly in the divorce settlement or decree; couples should not assume that coverage continues automatically after divorce.
- Confirm financial responsibility for SBP premiums in the settlement or decree, including whether the non-military spouse shall pay a portion of the premium and whether their portion comes from a reimbursement or a credit against spousal support.
- Keep track of the one-year deadline for electing former spouse coverage.
Contact Our Military Family Law Attorneys Today
Even after a military couple divorces, a non-military spouse can retain eligibility for the Survivor Benefit Plan. Contact Patriots Law Group today for a confidential case evaluation with a military family law attorney to learn more about rights, options, and obligations regarding Survivor Benefit Plan benefits after your divorce, including how federal regulations and state divorce laws handle the obligations to pay premiums for plan benefits.