IN THE CASE OF:	  

		BOARD DATE:	  18 January 2011

		DOCKET NUMBER:  AR20100009371 


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, the widow of a deceased former service member (FSM), requests correction of the FSM's records to show he paid Survivor Benefit Plan (SBP) premiums during the period April 1998 to September 2005.

2.  The applicant states, in effect, payment was made by personal check to the Defense Finance and Accounting Service (DFAS) in May 1998, after which the Department of Veterans Affairs (DVA) agreed to withhold premiums from the FSM's disability payments.  She further continues that a letter from DFAS, dated 
19 May 2008, and a DFAS Retiree Account Statement, dated 24 September 2008, indicate SBP premiums had been paid for 360 months, the FSM had attained the age of 70, and the SBP coverage cost had been terminated but coverage had remained active.

3.  The applicant further states that after the FSM died on 14 October 2009 she submitted the required documents to DFAS for receipt of the SBP annuity.  However, DFAS informed her that the FSM owed $12,608.14 for nonpayment of SBP premiums and that the SBP annuity would not be paid until the debt was satisfied.  She was further informed by DFAS that for the period April 1998 to September 2005, the FSM had received pay for Civil Service; however, the FSM did not work for the Civil Service.





4.  The applicant provides:

* the FSM's DD Form 214 (Report of Separation from Active Duty) for the period ending 31 January 1977
* a copy of a personal check from the FSM, dated 18 May 1998
* a memorandum from DFAS, dated 21 October 2005
* a memorandum from DFAS, dated 19 May 2008
* the FSM's DFAS Retiree Account Statement, dated 24 September 2008
* a State of Florida Certificate of Death, dated 28 October 2009
* a Chronological Event List

CONSIDERATION OF EVIDENCE:

1.  The FSM was born on 1 December 1930.  He had prior service in the U.S. Navy Reserve and the U.S. Army Reserve.  He enlisted in the Regular Army on 
8 October 1959.  His military service records show he attained the rank/grade of master sergeant (MSG)/E-8.

2.  On an unknown date, the FSM and the applicant were married.

3.  On 27 January 1977, the FSM completed a DA Form 4240 (Data for Payment of Retired Army Personnel).  On this form he indicated that he elected spouse SBP coverage, full base amount.

4.  The FSM retired on 31 January 1977.

5.  In April 1998, the FSM began to draw 100 percent (%) disability pay from the DVA.

6.  On 18 May 1998, the FSM wrote a personal check to DFAS for $205.84 to make an SBP premium payment.

7.  The applicant provided a Chronological Event List.  The applicant states DFAS informed the FSM by letter, dated 16 December 2005, that SBP payments were not made.

8.  By letter, dated 19 December 2005, DFAS informed the FSM of changes in pay of those who had been receiving Concurrent Retirement and Disability Payment (CRDP).  For those who had been receiving three payments from the DVA, CRDP, and regular retired pay, the letter indicated that in the future retirees would be receiving two payments instead of three by combining retired pay and 

CRDP into one payment, which would come from DFAS.  The other payment would be a regular DVA payment issued by the DVA.  The letter further indicated another change affecting some retirees involved deduction for SBP premiums for those whose DVA waiver minimized their retired pay.  "The VA had previously agreed to withhold the premium from the VA disability payment.  With additional funds provided by CRDP, your SBP premium will now again be deducted from your retired pay."

9.  By letter dated 19 May 2008, DFAS informed the FSM that under the law premiums for the SBP would be terminated effective 1 October 2008 for all members who were at least 70 years old and had paid SBP premiums for 
360 months or 30 years.  The letter indicated that effective 1 October 2008, the FSM's premiums would be terminated because he was at least 70 years old and had paid at least 360 months of premiums. 

10.  A DFAS Retiree Account Statement, dated 24 September 2008, indicates that the FSM had paid at least 360 months towards SBP coverage and had reached the age of 70.  His SBP coverage costs were terminated but his coverage remained active. 

11.  On 14 October 2009, the FSM died.

12.  In the processing of this case, coordination was made by email with an analyst from the DFAS Retired Pay Branch, dated 12 August 2010, in order to verify information relevant to the FSM's SBP payments.  This email confirmed that the FSM was being fully paid by the DVA from April 1998 through September 2005 and he was supposed to have been remitting SBP payments to DFAS.  The FSM did not do so; hence, the large debt.  The DFAS analyst stated, "When the paid-up provisions on SBP went into effect October 2008, it was a very new "horse for us to saddle," so to speak.  We found that there was no way that our system could keep track of each SBP remittance payment/account, and the most efficient way to handle those accounts was to have our system "assume" that each month was paid and allow any balances due to be handled separately. In this case, even though there was a balance due, a letter was sent indicating the account was paid-up."  The DFAS analyst further stated that there was no letter in the FSM's records that indicated the he was in receipt of Civil Service pay.

13.  Public Law 92-425, the SBP, enacted 21 September 1972, provided that military members could elect to have their retired pay reduced to provide for an annuity after death to surviving dependents.  


14.  Until certain provisions of the law were changed in fiscal year 2004, a common misconception was that veterans could receive both a military retirement for physical unfitness and a DVA disability pension.  Under the law prior to 2004, a veteran could only be compensated once for a disability.

15.  The Fiscal Year 2004 National Defense Authorization Act (NDAA) provided for phased-in restoration of the retired pay deducted from the accounts of military retirees because of their receipt of DVA compensation.  CRDP applies to all retirees with DVA-rated, service-connected disability of 50% or higher but does not apply to disability retirees with less than 20 years of service.  The phased-in restoration began 1 January 2004.

DISCUSSION AND CONCLUSIONS:

1.  The applicant’s request for correction of the FSM's records to show he paid SBP premiums during the period April 1998 to September 2005, along with the supporting documents she provided, was carefully considered.

2.  The evidence of record shows the FSM elected SBP coverage for spouse, full base amount on 27 January 1977 and stopped paying SBP spouse costs from April 1998 to September 2005, after receiving 100% disability payment from the DVA.  He would have had to waive his military retired pay to receive his DVA disability pay.  Because he was no longer receiving military retired pay, SBP premiums could no longer be taken from his military retired pay and he had to pay through other means.

3.  The applicant contends a DFAS letter, dated 21 October 2005, indicates the DVA had previously agreed to withhold SBP premiums from DVA disability payments for those whose DVA waiver offset minimized retired payment.  However, there is no evidence and the applicant has not provided any evidence to show the DVA paid remittance for SBP premiums to DFAS for the period April 1998 through September 2005.  The letter indicated the SBP payments would be taken from his retired pay in the future.

4.  The FSM died on 14 October 2009, and DFAS informed the applicant that the FSM owed $12,608.14 for nonpayment of SBP premiums for the period April 1998 through September 2005.

5.  The applicant indicated in the Chronological Event List that DFAS informed the FSM by a letter, dated 19 December 2005, of deficiencies.  However she has not provided the letter.  As a matter of prudence in the course of doing business, 

it would seem logical that the government would verify that the FSM paid SBP premiums for the period April 1998 through September 2005.  However, as a practical matter, the FSM should have been aware of the SBP premiums not being paid.  Since he did not do so, this resulted in his failure to pay any spouse premiums from April 1998 through September 2005.

6.  Unfortunately, there is no legal or equitable basis for granting the applicant relief from what is a justified debt.  If the applicant can provide evidence showing that the DVA in fact did pay his SBP premiums she may apply for reconsideration.

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)                                         AR20100009371



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ARMY BOARD FOR CORRECTION OF MILITARY RECORDS

 RECORD OF PROCEEDINGS


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ABCMR Record of Proceedings (cont)