IN THE CASE OF:
BOARD DATE: 3 March 2011
DOCKET NUMBER: AR20100020828
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 his records be corrected to show he elected spouse only coverage under the Survivor Benefit Plan (SBP) instead of spouse and children.
2. The applicant states his daughter is disabled. He adds during transition at Fort Knox he elected spouse and child SBP coverage and explained that any SBP distributions made to his daughter must go to her trust. He further states, in effect, he was never informed by anyone prior to his retirement that SBP distributions cannot go to a trust. He adds if his daughter would ever receive distributions from his SBP, it would be income and would adversely impact receipt of supplemental security income (SSI), Medicaid, and state benefits for the disabled.
3. The applicant provides his DD Form 214 (Certificate of Release or Discharge from Active Duty), a DD Form 2656 (Data for Payment of Retired Personnel), and a Defense Finance and Accounting Service (DFAS)-CL 7220/148 (Retiree Account Statement).
CONSIDERATION OF EVIDENCE:
1. The applicant was separated for sufficient service for retirement on 30 June 2010 after completing more than 27 years of total active service. He was placed on the Retired List on the following day in the rank of colonel.
2. The applicant provided a copy of a DD Form 2656, dated 2 April 2010, which shows election of spouse and child beneficiary coverage based on full gross pay.
3. Public Law 92-425, the SBP, enacted 21 September 1972, established the SBP. It provided that military members could elect to have their retired pay reduced to provide for an annuity after death to surviving dependents. Elections are made by category, not by name. An election, once made, is permanent and irrevocable except as provided for by law.
4. An Air Force Retiree Services fact sheet found on the internet stated there is no provision in the law that allows annuity payments to be paid directly to a trust. For income tax purposes, annuity payments must be made payable using the annuitant's social security number. This fact sheet further stated that an SBP counselor should advise parents of a disabled child that, in addition to becoming well-informed on SBP's basics (costs and benefits), they would be wise to contact the state in which they plan to reside to inquire about whether receipt of an SBP annuity by the child could negatively impact SSI or related government benefits. Then, they should make their SBP decision accordingly.
5. The Department of Defense Financial Management Regulation states in the case of a representative payee receiving an annuity payment on behalf of an annuitant, the income is attributable to the annuitant and an Internal Revenue Service (IRS) Form 1099 will be issued in the annuitants name.
DISCUSSION AND CONCLUSIONS:
1. The applicant made a valid SBP election to enroll in the SBP for spouse and child coverage, full base amount at the time of his application for retired pay. His election was an irrevocable election except under circumstances prescribed by law, such as an open season or an event such as gaining a dependent.
2. In this case, it appears the SBP counselor was unaware of some of the complexities of SBP, especially with respect to disabled children, and the law's interplay with other disability based entitlement programs. It is reasonable to presume the applicant would not have made the election to include his disabled child as a beneficiary had he been properly counseled. As such, it would be in the interest of justice to show the applicant made a spouse only SBP election at the time of his application for retired pay.
BOARD VOTE:
____X___ ___X____ ___X____ GRANT FULL RELIEF
________ ________ ________ GRANT PARTIAL RELIEF
________ ________ ________ GRANT FORMAL HEARING
________ ________ ________ DENY APPLICATION
BOARD DETERMINATION/RECOMMENDATION:
The Board determined that the evidence presented was sufficient to warrant a recommendation for relief. As a result, the Board recommends that all Department of the Army records of the individual concerned be corrected by showing he elected to enroll in SBP for spouse coverage (not to include children), full base amount at the time of his application for retired pay.
_______ _ 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) AR20100020828
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