SBP Explained, Part 5: The DIC Offset Repeal and Open Season — Advanced Topics for Retirees and Surviving Spouses
Patrick Kulakowski, CAPT USN (Ret.) | NavyRetirementGuide.com
Survivor Benefit Plan Series
1. What Is the Survivor Benefit Plan?
2. How SBP Premiums Are Calculated
3. The SBP Decision: What to Know Before Signing
4. SBP vs Life Insurance
5. The SBP-DIC Offset Repeal and Open Season
The first four posts in this series walked through SBP from the ground up — what it is, what it costs, how to make the election, and how it compares to life insurance.
This final post covers two topics that affect smaller but important groups: surviving spouses navigating the repeal of the SBP-DIC offset, and retirees who regret their original SBP election and want to understand what options may still exist.
---
Topic One: The SBP-DIC Offset — What It Was and What Changed
The problem it created. For decades, surviving spouses faced a policy widely viewed as deeply unfair. If a surviving spouse qualified for both SBP and Dependency and Indemnity Compensation (DIC), their SBP payment was reduced dollar-for-dollar by the amount of DIC they received. DIC is a benefit administered by the U.S. Department of Veterans Affairs and paid when a service member or veteran dies from a service-connected condition.
In practice, this meant that a spouse receiving $1,500 per month in SBP who also qualified for $1,500 in DIC received only the DIC payment. The two benefits effectively canceled each other out. Survivors whose loved ones died from service-connected causes often received less total support than survivors whose spouse died from unrelated causes.
What changed — and when. Congress repealed the offset in the National Defense Authorization Act for Fiscal Year 2020. The change was phased in from 2021 to 2023. As of January 1, 2023, eligible surviving spouses now receive both full SBP and full DIC simultaneously, with no reduction to either benefit. For many surviving spouses, this change resulted in a significant increase in monthly income.
Who benefits. The repeal applies to surviving spouses who receive SBP and whose service member or retiree died from a service-connected condition. This includes survivors of veterans from Vietnam, Gulf War, and post-9/11 conflicts, as well as spouses of retirees whose service-connected conditions contributed to their death.
What you need to do. Because SBP and DIC are administered by two different agencies, one benefit does not automatically trigger the other. Surviving spouses must apply for each separately.
If your spouse recently passed away from a service-connected condition and you are not yet receiving DIC, you must apply directly through the VA. Applications can be submitted:
* Through VA.gov
* Through a Veterans Service Organization
* At a VA Regional Office
* Using VA Form 21-534
If you apply within one year of the veteran's death, DIC benefits can generally be paid retroactively to the date of death. Applications submitted after the one-year mark are still accepted — they simply may not qualify for retroactive payment back to the date of death, so applying as early as possible matters.
If you are already receiving DIC and believe you should also be receiving SBP, contact DFAS directly to verify your account status. Most eligible accounts were adjusted automatically when the offset was repealed, but it is worth confirming that your payments were corrected properly.
---
Topic Two: SBP Open Season — What to Do If You Regret Your Election
What open season is. SBP Open Season is a limited period, authorized by Congress, during which military retirees who previously declined or reduced SBP coverage can elect to enroll or increase their coverage. Changes that are normally impossible after retirement become available during an open season.
Open seasons are rare and have occurred only a handful of times in the history of the SBP program — in 1981, 1992, 1999, and 2005. There is no open season currently scheduled, and there is no guarantee that one will occur in any particular timeframe.
What this means in practice. If you declined SBP at retirement and are now reconsidering, an open season may be your only opportunity to correct that decision — unless you later gain a new eligible spouse or child. Waiting for an open season is not a strategy. It is simply a possibility that depends entirely on future congressional action. This is one of the reasons earlier posts in this series emphasized making the SBP decision carefully at retirement.
What changes are available. The options available during any open season depend on the legislation that authorizes it. Typically, retirees may be able to:
* Enroll in SBP if previously declined
* Increase coverage level
* Change beneficiary categories
When an open season is announced, DFAS publishes detailed guidance explaining exactly what changes are allowed.
The cost of late enrollment. Enrolling during an open season is not free. Late enrollees typically must pay both retroactive premiums and a surcharge for the years they declined coverage. For retirees who declined SBP at retirement and attempt to enroll many years later, the total cost can be significant. Whether paying that cost makes sense depends on factors like your spouse's age, health, other income sources, and what alternative coverage you currently carry. DFAS can provide estimates if a future open season is announced.
How to stay informed. To ensure you receive updates about potential benefit changes:
* Keep your contact information current with DFAS
* Monitor military retirement news sources such as Military.com
* Consider joining a Veterans Service Organization, which often alerts members to major policy changes affecting retirees
---
Closing the Series
SBP is one of the most important financial decisions a Navy retiree makes — and one of the least understood. This series covered the full picture: what the program is, what it costs, how to make a deliberate election, how it compares to life insurance, and what options exist for retirees and surviving spouses navigating more complex situations.
The retirees and surviving spouses who come out ahead are almost always the ones who took the time to understand the program, asked hard questions, and made a deliberate choice. If you still have questions, your installation's personal financial counselor is a free resource. A qualified military financial advisor can also help you run the numbers for your specific situation.
This is Part 5 of a five-part series. Start from the beginning with Part 1 — What Is the Survivor Benefit Plan and Why Does It Exist?
Want the full picture in one place? Download my Navy Retirement Guide — a comprehensive resource for anyone navigating military retirement, whether you're still in uniform or already on the other side.
Disclosure: I'm a retired Navy Captain, not a certified financial planner. Everything presented here is based on my research and personal experience navigating military retirement. Rules and numbers can change, so always verify current policies with DFAS, your installation's personal financial counselor, or a qualified military financial advisor before making any decisions.