IN THE CASE OF:	 

		BOARD DATE:	  23 March 2010

		DOCKET NUMBER:  AR20090006835 


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 that his Survivor Benefit Plan (SBP) coverage be cancelled.  He also requests that any future deductions for the Reserve Component SBP (RCSBP) be suspended and he be refunded any deductions already taken out of his retired pay.

2.  The applicant states that his retirement pay is being reduced by nearly one-half due to the RCSBP and the SBP.  The applicant argues that what he wanted in 1992 and when he filed his retirement paperwork in 2008 was to receive his full retirement and any earned but unpaid residual was to go to his son as his beneficiary.  He adds that he was eligible for retirement in December 2006 and the reason for the delay in applying was illness.

3.  The applicant provides the documents which are indentified on an attached list of enclosures in support of this application.

CONSIDERATION OF EVIDENCE:

1.  The applicant was born on 28 December 1946.  After having prior enlisted service in the Army National Guard (ARNG), the applicant accepted a commission in the ARNG.  He served in the ARNG and in the U.S. Army Reserve through a series of appointments until his retirement in the rank of lieutenant colonel.

2.  The applicant's Notification of Eligibility for Retired Pay at Age 60 (20-year letter) is dated 17 March 1992.
3.  On 17 March 1992, the applicant completed a DD Form 1883 (SBP Election Certificate).  On this form, he indicated that he was not married and had no dependent children.  He elected RCSBP insurable interest coverage option C for his son, age 19, born on 16 February 1973.  The obverse of the DD Form 1883 states, "IMPORTANT:  The decision you make with respect to participation in the Survivor Benefit Plan is a permanent irrevocable decision.  Please consider your decision and its effect very carefully."  The reverse of the DD Form 1883 explains that the cost of insurable interest coverage would be 10 percent of full retired pay, plus an additional 5 percent of full retired pay for each full 5 years that his age exceeded that of the insurable interest beneficiary, total cost not to exceed 40 percent of retired pay.

4.  On 28 December 2006, the applicant completed a DD Form 2656 (Data for Payment of Retired Personnel).  On this form, he designated his son as the beneficiary for unpaid retired pay.  He also indicated that he did not have dependent children and did not have a spouse.

5.  The applicant applied for retired pay sometime in November 2008.  He was placed on the Retired List effective 28 December 2006.

6.  The applicant provided copies of three letters addressed to the Defense Finance and Accounting Service (DFAS) which show he attempted to stop his participation in the SBP.

7.  On 1 March 2010, DFAS informed a member of the Board staff that the applicant's SBP insurable interest was stopped effective 1 May 2009.

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 person with an insurable interest in the member.  Premiums for insurable interest coverage are generally higher than for any other category of coverage.

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; and (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.

10.  Public Law 103-337, enacted 5 October 1994, allowed SBP insurable interest participants whose beneficiary is not their former spouse to voluntarily terminate their participation in the SBP.  Any such termination shall be made by a participant by the submission of a written request to discontinue participation in the SBP to the Secretary concerned.  Such participation shall be discontinued effective on the first day of the first month following the month in which the request is received.  Once participation is discontinued, benefits may not be paid in conjunction with the earlier participation in the SBP and premiums paid may not be refunded.

11.  Title 10, U.S. Code, section 1452c(1), states the retired pay of a person who has elected to provide an annuity to a person under section 1450(a)(4) (i.e., insurable interest coverage) shall be reduced as follows:

Subsection 1452c(1)(B):  in the case of a person providing a Reserve Component annuity, the reduction shall be by an amount prescribed under regulations of the Secretary of Defense.

12.  Office of the Assistant Secretary of Defense (Force Management Policy) memorandum, dated 17 March 1995, subject:  Sections 637 and 638 of the National Defense Authorization Act for Fiscal Year 1995, Public Law 103-337, October 5, 1994, Changed Provisions of the Uniformed Services Survivor Benefit Plan (SBP), provided that SBP premiums will no longer apply as of the effective date of termination of NIP coverage except if the participant terminating insurable interest coverage is a participant of a Reserve Component annuity.  In such case, the Reserve Component premium add-on will apply for life.

DISCUSSION AND CONCLUSIONS:

1.  The applicant elected to participate in the RCSBP in March 1992 for insurable interest coverage for his 19-year old son.  The DD Form 1883 warned him to consider his decision and its effect very carefully.  The form also provided him information concerning the costs of the coverage.

2.  The applicant's SBP insurable interest coverage was terminated on 1 May 2009; however, given the fact that the applicant acted promptly when he discovered the RCSBP/SBP insurable interest deductions, it is reasonable to presume he would have cancelled the SBP insurable interest coverage effective on his 60th birthday.  Therefore, as a matter of equity, it would be appropriate to correct the applicant's records to show he cancelled the SBP insurable interest coverage effective 28 December 2006 and refunding any SBP premiums already paid.

3.  The applicant is advised that, in accordance with statute and Department of Defense authority, he is required to continue to pay the RCSBP add-on premium for the protection his son would have received had the applicant died prior to turning age 60.

BOARD VOTE:

_________  _______ ________  GRANT FULL RELIEF 

___X____  ____X__  ____X___  GRANT PARTIAL RELIEF 

________  ________  ________  GRANT FORMAL HEARING

_______  ______  _______  		DENY APPLICATION

BOARD DETERMINATION/RECOMMENDATION:

1.  The Board determined that the evidence presented was sufficient to warrant a recommendation for partial relief.  As a result, the Board recommends that all Department of the Army records of the individual concerned be corrected by showing that he cancelled the SBP insurable interest coverage effective 28 December 2006 and, refunding any SBP premiums already paid due as a result of this correction.

2.  The Board further determined that the evidence presented is insufficient to warrant a portion of the requested relief.  As a result, the Board recommends denial of so much of the application that pertains to suspending or refunding the RCSBP premiums.




      ___________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)                                         AR20090006835



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ABCMR Record of Proceedings (cont)                                         AR20090006835



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