Local: (303) 449-4773
Toll Free: (877) 629-1712
Send A Text

Is VA supposed to offset DIC award if widow was getting SBP?

Is the VA supposed to offset Dependency and Indemnity Compensation (DIC) if widow was getting his/her Survivor's Benefits Plan (SBP)?

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?
Join The Conversation
ChrissieD 01/24/2012 09:10 AM
A pay-of-your-pocket (military family)DoD annuity should never be offset. That's like buying/paying Met Life or Prudential every month for an annuity and when your spouse dies, Met Life saying Sorry, you're receiving a pension or another annuity from Prudential. We won't pay what you should receive and here's your offset. Why is the Department of Defense ripping off suvivors? Then what's really nuts, if the survivor remaries after the magical age of 57, oh...we can now pay you your annuity. That's like Met life saying, if you remarry after the age of 57, no offset. You can receive all of your annuities. So the DoD is making military suvivors get married after 57 to receive an annuity that they and their late spouse payed into out of their pockets. This is a scam by the Department of Defense that is at the level of the Enron scam. The ones who are getting hurt from all this are the military survivors and their kids who are grieving and not able to fight. Where are the morals of this country? Shame on the DoD!!! Congress, do your job we elect you to do, take this very wrong practice, and make it right for our military survivors!!!
Post A Reply
Post A Comment