| Mr. Carl W. S. Chun | Director | |
| Mrs. Nancy Amos | Analyst |
| Ms. Irene N. Wheelwright | Chairperson | |
| Mr. Hubert O. Fry, Jr. | Member | |
| Mr. Donald P. Hupman, Jr. | Member |
2. The applicant requests that she be determined to be the Reserve Component Survivor Benefit Plan (RCSBP) beneficiary of her deceased brother, a former service member (FSM).
3. The applicant states that the FSM did elect her as his RCSBP beneficiary. It appears when he turned age 60 he elected not to participate in the standard SBP because she was identified as the beneficiary for unpaid retired pay and so was misled into believing she was still his SBP beneficiary.
4. The FSM’s military records show that he was born on 21 May 1936. After having had prior service, he enlisted in the Army National Guard on 15 March 1978. His notification of eligibility for retired pay at age 60 (his 20-year letter) is dated 29 October 1986 and was sent by the National Guard Bureau through The Adjutant General, Arizona to the FSM. It cannot be determined when he received the 20-year letter. On 10 March 1987, the FSM was counseled concerning the RCSBP and on that date completed a Survivor Benefit Plan Election Certificate, DD Form 1883. He was not married at the time and had no children and elected insurable interest coverage for his sister, the applicant, option C, full base amount.
5. The FSM applied for retired pay by completing a Data for Payment of Retired Personnel, DD Form 2656, on 13 September 1995. On this form he designated the applicant to be his beneficiary for unpaid retired pay but in item 28 checked that he elected not to participate in the SBP.
6. The FSM apparently had insurance with the National Guard Association of Arizona. On 1 August 1997, he paid a premium to the Association for the “Survival Benefit Program.”
7. The FSM died on 8 June 2001. The death certificate shows he never married.
8. Public Law 92-425, the SBP, enacted 21 September 1972, 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. A person who is not married and does not have a dependent child upon becoming eligible to participate in the SBP may elect to provide an annuity to a natural person with an insurable interest in the member. Premiums for insurable interest coverage are generally higher than for any other category of coverage. Normally, an election once made is permanent and irrevocable. However, insurable interest coverage can be terminated at any time upon the request of the member to discontinue participation in the SBP.
9. Public Law 95-397, the RCSBP, enacted 30 September 1978, provided a way for those who had qualified for reserve retirement but were not yet age 60 to provide an annuity for their survivors should they die before reaching age 60. Three options are available: (A) elect to decline enrollment and choose at age 60 whether to start SBP participation; (B) elect that a beneficiary receive an annuity if they die before age 60 but delay payment of it until the date of the member’s 60th birthday; (C) elect that a beneficiary receive an annuity immediately upon their death if before age 60. If death does not occur before age 60, the RCSBP costs for options B and C are deducted from the member’s retired pay (costs for option C being the more expensive). A member must make the election within 90 days of receiving the notification of eligibility to receive retired pay at age 60 or else wait until he/she applies for retired pay and elect to participate in the standard SBP. Once a member elects either options B or C in any category of coverage, that election is irrevocable. Option B and C participants do not make a new SBP election at age 60. They cannot cancel SBP participation or change options they had in RCSBP – it automatically rolls into SBP coverage. If RCSBP option B or C is elected, there is a Reservist Portion cost added to the basic cost of the SBP to cover the additional benefit and assured protection should the member have died prior to age 60.
10. Records at the Defense Finance and Accounting Service – Cleveland Center (DFAS-CL) indicate that the DD Form 1883 was not on file and presumably was not forwarded to DFAS by the U. S. Army Reserve Personnel Command when the FSM applied for retired pay.
CONCLUSIONS:
1. The Board presumes that the FSM completed the DD Form 1883 within 90 days of his receiving his 20-year letter but for an unknown reason it appears it was not forwarded for processing.
2. The Board notes that insurable interest coverage can be terminated at any time. However, the DD Form 2656 is not the medium used to request termination. The DD Form 2656 provides an option not to participate; it does not provide an option to terminate an election already made.
3. Since the FSM’s RCSBP election was irrevocable, he should not have completed item 28 of the DD Form 2656. His RCSBP election of insurable interest coverage for the applicant would then have remained in effect.
4. The FSM apparently never paid RCSBP/SBP premiums. He may have confused the premiums he was paying for the National Guard Association of Arizona’s “Survival Benefit Program” with RCSBP/SBP premiums. It would be appropriate for any due RCSBP/SBP premiums to be paid prior to providing the annuity to the applicant.
5. In view of the foregoing, the FSM’s records should be corrected as recommended below.
RECOMMENDATION:
1. That all of the Department of the Army records related to this case be corrected by showing:
a. that the FSM completed the DD Form 1883 and it was accepted for processing within 90 days of his receipt of his 20-year letter; and
b. that the FSM did not complete item 28 of the DD Form 2656 on 13 September 1995.
2. That the applicant be advised that the Defense Finance and Accounting Service will be instructed to collect any RCSBP/SBP costs due.
3. That the applicant be paid the SBP annuity when the premiums are paid up.
BOARD VOTE:
__inw___ __hof___ __dph___ GRANT AS STATED IN RECOMMENDATION
________ ________ ________ GRANT FORMAL HEARING
________ ________ ________ DENY APPLICATION
Irene N. Wheelwright
______________________
CHAIRPERSON
| CASE ID | AR2001062788 |
| SUFFIX | |
| RECON | |
| DATE BOARDED | 20020115 |
| TYPE OF DISCHARGE | |
| DATE OF DISCHARGE | |
| DISCHARGE AUTHORITY | |
| DISCHARGE REASON | |
| BOARD DECISION | (GRANT) |
| REVIEW AUTHORITY | |
| ISSUES 1. | 137.01 |
| 2. | |
| 3. | |
| 4. | |
| 5. | |
| 6. |
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