BOARD DATE: 18 June 2014 DOCKET NUMBER: AR20140008614 THE BOARD CONSIDERED THE FOLLOWING EVIDENCE: 1. Application for correction of military records (with supporting documents provided, if any). 2. Military Personnel Records and advisory opinions (if any). THE APPLICANT'S REQUEST, STATEMENT, AND EVIDENCE: 1. The applicant requests the reversal of the denial decision by the Defense Finance and Accounting Service (DFAS) to waive his debt that resulted from non-payment of Survivor Benefit Plan (SBP) premiums from 1 June 1994 to 30 September 1998. 2. The applicant states: a. He retired from the Army in November 1990 by reason of permanent disability. In 1994, the Department of Veterans Affairs (VA) declared him totally disabled and awarded him 100 percent disability compensation. He called DFAS to cancel his SBP but he was told to wait 5 years. He did so. In 1998, he submitted a DD Form 2656 (Data for Payment of Retired Personnel) to terminate his SBP. b. He was never informed that if you stop the SBP you would incur interest on a debt. It was unjust for DFAS because he was not informed about this debt. He tried to take care of it several times to no avail. He did not get a response from DFAS and he is now being charged interest on his debt. 3. The applicant provides: * Letter from DFAS, dated 10 February 2014 * Letter from DFAS, dated 23 July 2013 * Breakdown of premiums by month * Two notarized statements from former spouse CONSIDERATION OF EVIDENCE: 1. The applicant enlisted in the Regular Army on 19 August 1976. He held military occupational specialty 94B (Food Service Specialist). 2. He served through multiple reenlistments in a variety of assignments and he attained the rank/grade of staff sergeant (SSG)/E-6. 3. In August 1990, he was considered by a medical evaluation board that referred him to a physical evaluation board (PEB). The PEB rated his disabilities at 30 percent and recommended his placement on the temporary disability retired list (TDRL). He concurred. 4. His DFAS pay records show he elected SBP spouse coverage in connection with his retirement. 5. He retired on 8 November 1990 and he was placed on the TDRL in his retired rank/grade of SSG/E-6 on 9 November 1990. 6. He was considered by a TDRL PEB in May 1992. The TDRL PEB recommended his permanent retirement with a 50 percent disability rating. Accordingly, he was removed from the TDRL on 3 June 1992 and permanently retired the next day. 7. On 23 May 1996, and then later on 11 February 1999 and on 26 May 2000, the VA awarded him a 100 percent disability rating for his mental/physical condition. 8. On 14 September 1998, he submitted a DD Form 2656-2 (SBP Termination Request). He requested to discontinue participation in the SBP. His spouse concurred with him. 9. On 28 June 2004, the VA certified that he was totally disabled by the VA and had been on a continuous basis since 1 December 2003. 10. On 23 July 2013, by letter, DFAS notified him that an audit of his SBP account was completed. As of the date of this letter, he owed a balance of $6,744.98 consisting of SBP premiums of $2,583.68 that were never paid and interest of $4,161.30. 11. With this letter, an account computation audit sheet was attached. It shows SBP premiums began on 1 June 1995 and terminated on 23 September 1998, but were never paid by him. Interest began accruing shortly after he missed his second premium payment, continued to the present date, and added to the total debt. 12. On 6 August 2013, the VA certified that he was totally disabled by the VA and had been on a continuous basis effective 9 November 1990. 13. On 10 February 2014, by letter, DFAS notified him: a. He applied for a waiver consideration of $6,877.34 indebtedness resulting from non-payment of SBP premiums during the period 1 June 1994 through 30 September 1998. Following his retirement, he elected spouse SBP coverage. He opted to suspend his retired pay in order to receive VA compensation as the monthly pay, since it was greater than his retired pay. Because he elected enrollment in the SBP, a direct remittance account was established so he could easily mail his SBP premiums. No SBP premiums were paid; yet, his spouse had the benefit of SBP coverage. b. On 23 September 1998, he submitted a request to terminate his SBP election. This election (to terminate) was effective on 1 October 1998. Just as SBP premiums are non-refundable to those who elect to terminate their SBP, since he had unpaid premiums prior to his termination date, he was indebted for those premiums. His request to cancel this debt is ineligible for a waiver. c. The Comptroller General ruled that any payment that is legal and proper when paid may not be considered for a waiver. Non-deduction of premiums is not an erroneous payment subject to a waiver. Therefore, his debt is ineligible for a waiver. Furthermore, if he had died during the time his premiums were not remitted, his beneficiary would have received an SBP annuity minus the unpaid premiums. Accordingly, DFAS determined his debt is ineligible for a waiver. 14. Public Law 92-425, enacted 21 September 1972, established the SBP. The SBP provided that military members on active duty could elect to have their retired pay reduced to provide for an annuity after death to surviving dependents. An election, once made, was irrevocable except in certain circumstances. This law also provides that every member having a spouse and/or child(ren), who retired/transfers to the retired list on or after that date, is automatically covered under the SBP at the maximum rate unless he/she elected otherwise before retirement or transfer to the retired list. 15. According to the official DFAS website (dfas.mil), there are other methods of paying for SBP coverage and the member elects the method that is most convenient for them: deductions from retired pay, deductions from VA pay, direct remittance, or paid up status (retirees who reached 70 years of age and have paid 360 monthly payments) a. The normal method of paying for SBP coverage is by an automatic deduction from a retiree’s retirement pay. However, if a member has been ruled severely disabled by the VA and his/her VA compensation exceeds his/her retired pay, the member does not receive retired pay from DFAS. As a result, DFAS cannot automatically deduct SBP premiums from the member's monthly pay. In this case, the best way to pay for SBP coverage is to have payments deducted from the member's VA compensation and forwarded to DFAS Retired and Annuitant Pay by the VA. b. Direct remittance is only for those retired members who do not receive retired pay from DFAS or who do not receive enough retired pay to pay for SBP premiums. Direct remittance members who choose not to have their SBP payments deducted from their VA pay must remit SBP premium payments directly to DFAS. Any delinquent amounts carried over into a new billing month will accrue an interest fee calculated at 6 percent Annual Percentage Yield. 16. DOD Financial Management Regulation, Volume 7b, Chapter 45, paragraph 4507 covers delinquent SBP premiums. It states interest at the rate of 6 percent compounded annually is levied against delinquent SBP premiums. Upon the death of a retiree, any delinquency, plus interest, is collected from the annuitant’s benefits before payment of any annuity. 17. Title 10, U.S. Code, section 1452(g), Discontinuation of Participation by Participants Whose Surviving Spouses Will Be Entitled to Dependency and Indemnity Compensation (DIC), paragraph 1 (Discontinuation) states: a. Sub-paragraph (A) (Conditions): Notwithstanding any other provision of this subchapter but subject to paragraphs (2) and (3), a person who has elected to participate in the Plan and who is suffering from a service-connected disability rated by the Secretary of Veterans Affairs as totally disabling and has suffered from such disability while so rated for a continuous period of 10 or more years (or, if so rated for a lesser period, has suffered from such disability while so rated for a continuous period of not less than 5 years from the date of such person’s last discharge or release from active duty) may discontinue participation in the Plan by submitting to the Secretary concerned a request to discontinue participation in the Plan. b. Sub-paragraph (B) (Effective date): Participation in the Plan of a person who submits a request under subparagraph (A) shall be discontinued effective on the first day of the first month following the month in which the request under subparagraph (A) is received by the Secretary concerned. Effective on such date, the Secretary concerned shall discontinue the reduction being made in such person’s retired pay on account of participation in the Plan or, in the case of a person who has been required to make deposits in the Treasury on account of participation in the Plan, such person may discontinue making such deposits effective on such date. c. Sub-paragraph (C) (Form for request for discontinuation): Any request under this paragraph to discontinue participation in the Plan shall be in such form and shall contain such information as the Secretary concerned may require by regulation. DISCUSSION AND CONCLUSIONS: 1. Following the applicant's retirement, he elected spouse SBP coverage. He also opted to suspend his retired pay in order to receive VA compensation as the monthly pay, since it was greater than his retired pay. Because he elected enrollment in the SBP, a direct remittance account was established so he could easily mail his SBP premiums. He did not pay SBP premiums and despite his non-payment, his spouse had the benefit of SBP coverage. 2. In September 1998, he requested to terminate his SBP election, to be effective on 1 October 1998. The termination of coverage did not exempt him from paying the premiums that he owed. Since he had unpaid premiums prior to his termination date, he was indebted for those premiums. 3. Any delinquent amounts carried over into a new billing month will accrue an interest fee calculated at 6 percent. His debt was carried over from 1995 to the present. He received SBP coverage for his spouse but never paid for it. His debt is valid. He should not be allowed to gain from a military benefit without paying for it. Forgiving his debt is unjust to the thousands of veterans who receive the same SBP coverage at the same cost but faithfully pay their premiums on time. 4. The interest on delinquent amounts is set by law and DOD at 6 percent. A change to the law is not within the purview of this Board. BOARD VOTE: ________ ________ ________ GRANT FULL RELIEF ________ ________ ________ GRANT PARTIAL RELIEF ________ ________ ________ GRANT FORMAL HEARING ___x_____ __x______ _x____ DENY APPLICATION BOARD DETERMINATION/RECOMMENDATION: The evidence presented does not demonstrate the existence of a probable error or injustice. Therefore, the Board determined that the overall merits of this case are insufficient as a basis for correction of the records of the individual concerned. _______ _x _______ ___ CHAIRPERSON I certify that herein is recorded the true and complete record of the proceedings of the Army Board for Correction of Military Records in this case. ABCMR Record of Proceedings (cont) AR20140008614 3 ARMY BOARD FOR CORRECTION OF MILITARY RECORDS RECORD OF PROCEEDINGS 1 ABCMR Record of Proceedings (cont) AR20140008614 2 ARMY BOARD FOR CORRECTION OF MILITARY RECORDS RECORD OF PROCEEDINGS 1