Is the VA supposed to offset Dependency and Indemnity Compensation (DIC) if widow was getting his/her Survivor's Benefits Plan (SBP)?
I know, I should know the answer to this. But in light of the VA's decision to give a client a full back award for DIC, I wanted to make sure. I never bothered to check when I signed her up, but now she asks me if this award will affect her receipt of her SBP payments that she has been getting since the vet died. I told her I thought that amount would probably be offset by the new, higher monthly DIC payment.
The Department of Defense (DoD) decided not to appeal Sharp v. United States, 580 F3d 1234 (DC Cir, 2009). That case held that the statutory provision only precludes offset for a widowed spouse receiving SBP/DIC and remarried at age 57 or older. If remarriage didn't occur, then DFAS enacts an offset.
The widow is going to be subject to a reduction of his/her annuities in the amount of the monthly DIC, simply because they have not remarried. The Sharp decision turns on the 2003 revision to 38 USC 1311, at para (e). That's the section that eliminated the offset. However, it is limited to "the case of an individual who is eligible for DIC under this section by reason of section 103(d)(2)(B) of this title." Section 103(d)(2)(B) restored DIC eligiblity of widows who remarried after age 57. Therefore if the widow did not remarry, then the widow is not an "individual who is eligible for DIC" by reason of section 103(d)(2)(B). I checked the DoD website per Drew's reference, and that seems to be how DoD is construing Sharp -- very narrowly, applicable only to widows who remarried after age 57.
It is my understanding that the annuity is taxable income, so there is still a potentially greater benefit to the widow in receiving DIC in lieu of SBP annuity because of tax consequences.
However: does the retro DIC award create some kind of overpayment of the annuity, where the retro DIC covers the time period when the widow was receiving the annuity? I can't find any authority for that, and I don't know how DoD would collect it anyway, since DoD will already have reduced the annuity in an amount equal to the monthly DIC payment. Anybody have any ideas about this?
The widow is going to be subject to a reduction of his/her annuities in the amount of the monthly DIC, simply because they have not remarried. The Sharp decision turns on the 2003 revision to 38 USC 1311, at para (e). That's the section that eliminated the offset. However, it is limited to "the case of an individual who is eligible for DIC under this section by reason of section 103(d)(2)(B) of this title." Section 103(d)(2)(B) restored DIC eligiblity of widows who remarried after age 57. Therefore if the widow did not remarry, then the widow is not an "individual who is eligible for DIC" by reason of section 103(d)(2)(B). I checked the DoD website per Drew's reference, and that seems to be how DoD is construing Sharp -- very narrowly, applicable only to widows who remarried after age 57.
It is my understanding that the annuity is taxable income, so there is still a potentially greater benefit to the widow in receiving DIC in lieu of SBP annuity because of tax consequences.
However: does the retro DIC award create some kind of overpayment of the annuity, where the retro DIC covers the time period when the widow was receiving the annuity? I can't find any authority for that, and I don't know how DoD would collect it anyway, since DoD will already have reduced the annuity in an amount equal to the monthly DIC payment. Anybody have any ideas about this?
