PROCEEDINGS

	IN THE CASE OF:  

	BOARD DATE:            4 March 2003                  
	DOCKET NUMBER:   AR2002073592

	I certify that hereinafter is recorded the true and complete record of the proceedings of the Army Board for Correction of Military Records in the case of the above-named individual.  

	Mr. Carl W. S. Chun		Director	
	Mrs. Nancy Amos		Analyst	

  The following members, a quorum, were present:

	Mr. Raymond J. Wagner		Chairperson	
	Mr. William D. Powers		Member	
	Ms. Linda M. Barker		Member	

	The applicant and counsel if any, did not appear before the Board.

	The Board considered the following evidence:

	Exhibit A - Application for correction of military 
                records
	Exhibit B - Military Personnel Records (including
	            advisory opinion, if any)

FINDINGS:

1.  The applicant has exhausted or the Board has waived the requirement for exhaustion of all administrative remedies afforded by existing law or regulations.

2.  The applicant requests that his Survivor Benefit Plan (SBP) debt be cancelled.

3.  The applicant states that the debt is due to the Government not taking SBP premiums from his retired pay.  He was told by a Defense Finance and Accounting Service (DFAS) representative that he did not have to pay this debt as it would be taken from the beneficiary payments to his spouse but his spouse died in June 2000.  He is 70 years old and there will be no eligible beneficiary for the SBP.

4.  The applicant’s military records show that, after having had prior service, he entered active duty as a warrant officer on 9 December 1966.  He retired on        1 July 1971.

5.  Records at DFAS show the applicant enrolled in the SBP on 29 August 1973 for spouse and child coverage.

6.  The applicant apparently began receiving a Department of Veterans Affairs (VA) disability pension in lieu of retired pay effective 1 June 1987.  A DFAS – Cleveland Center document dated 14 January 2003 shows that a direct remittance SBP account should have been established at that time but was not established until 1 October 1996.  

7.  As of 1 October 1996, the applicant's SBP debt, with interest, was $7,356.20.

8.  As of 1 June 1998, the applicant's SBP debt, with interest, was $9,470.78.

9.  The applicant's spouse died on 21 June 2000.  He apparently notified DFAS of her death around January 2003.  By letter dated 14 January 2003, DFAS informed the applicant that action was taken to "terminate" his SBP account due to the ineligibility of his beneficiary effective 21 June 2000.  DFAS informed him that as of 14 January 2003 his SBP account had a balance due of $14,286.29.

10.  Public Law 92-425, enacted 21 September 1972, established the SBP.  The SBP 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. It declared a 12-month Open Season for those members who retired prior to enactment of the law.

11.  Public Law 94-496, enacted 14 October 1976 but effective 1 October 1976, provided that spouse costs would be suspended if marriage ends in death or divorce. 

12.  Public Law 105-85, enacted 18 November 1997, established the option to terminate SBP participation.  Retirees have a one-year period, beginning on the second anniversary of the date on which their retired pay started, to withdraw from SBP.  Members retired for more than two years as of 17 May 1998 were authorized a one-year opportunity (17 May 1998 through 16 May 1999) to disenroll.  

CONCLUSIONS:

1.  There is evidence of Government error in this case.

2.  It appears the applicant's SBP premiums were being properly deducted from his retired pay from on or about 1 September 1973 until on or about 1 June 1987, when he presumably began to receive VA disability in lieu of retired pay.  At that time, since he no longer received military retired pay from which SBP premiums could be deducted, a direct remittance account should have been established.  

3.  The Government failed to establish a direct remittance account for the applicant until 1 October 1996.  By that date, the applicant owed back due SBP premiums, with interest, in the amount of $7,356.20.

4.  The applicant may have received erroneous information from the Government concerning how the back due SBP premiums would be paid.  He states he was told the premiums would be taken from the annuity payments to his spouse.

5.  The applicant's spouse died on 21 June 2000.  Had he notified DFAS at that time that his spouse died, his SBP costs should have been suspended (not terminated, as DFAS informed him by letter dated 14 January 2003).

6.  It appears the applicant notified DFAS that his spouse died around January 2003.  By that time, he owed over $14,000 in back due SBP premiums (with interest).

7.  The soonest the applicant could have disenrolled from the SBP was 17 May 1998, when Public Law 105-85 was enacted.  However, even at that date the applicant would still have owed over $9,000 in back due SBP premiums.

8.  The applicant has not had an eligible SBP beneficiary since June 2000.  Although his spouse had the protection of the SBP from June 1987 until her death and that protection would normally have to be paid for, it was not paid for mainly due to Government error.  While not provided for by law, it would be equitable to show the applicant terminated his SBP effective 1 June 1987.  

9.  In view of the foregoing, the applicant’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 that the applicant terminated his SBP coverage, as an exception to policy, effective 1 June 1987.

2.  That so much of the application as is in excess of the foregoing be denied.

BOARD VOTE:  

__RJW__  __WDP__  __LMB__  GRANT AS STATED IN RECOMMENDATION

________  ________  ________  GRANT FORMAL HEARING

________  ________  ________  DENY APPLICATION

		______________________
		        CHAIRPERSON

INDEX

CASE ID	AR2002073592	
SUFFIX		
RECON		
DATE BOARDED	YYYYMMDD	
TYPE OF DISCHARGE		
DATE OF DISCHARGE		
DISCHARGE AUTHORITY		
DISCHARGE REASON		
BOARD DECISION	(NC, GRANT , DENY, GRANT PLUS)	
REVIEW AUTHORITY		
ISSUES         1.	137.03	
2.		
3.		
4.		
5.		
6.