IN THE CASE OF: BOARD DATE: 26 January 2017 DOCKET NUMBER: AR20160013502 BOARD VOTE: ________ ________ ________ GRANT FULL RELIEF ___x____ ___x____ ___x____ GRANT PARTIAL RELIEF ________ ________ ________ GRANT FORMAL HEARING ________ ________ ________ DENY APPLICATION 2 Enclosures 1. Board Determination/Recommendation 2. Evidence and Consideration IN THE CASE OF: BOARD DATE: 26 January 2017 DOCKET NUMBER: AR20160013502 BOARD DETERMINATION/RECOMMENDATION: 1. The Board determined the evidence presented is 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 she cancelled the Survivor Benefit Plan (SBP) insurable interest coverage effective 29 June 2016, and by refunding any SBP premiums already paid due as a result of this correction. 2. The Board further determined 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 terminating, suspending, or refunding any premiums resulting from Reserve Component SBP (RCSBP) coverage. ___________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. IN THE CASE OF: BOARD DATE: 26 January 2017 DOCKET NUMBER: AR20160013502 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, in effect, termination of her participation in the Survivor Benefit Plan (SBP) and recoupment of SBP premiums paid since she began receiving retired pay. She also requests that any future deductions for the Reserve Component SBP (RCSBP) be suspended and she be refunded any deductions already taken out of her retired pay. 2. The applicant states: * she is retiring from the Army National Guard (ARNG) after 41 years of service * when she had completed 20 years of service, she signed a DD Form 1883 (Survivor Benefit Plan Election Certificate) * she was informed she could leave part of her pension to anyone and there would be no cost to her; that person would only get half of her pension and they would have to pay 10 percent (%) on top of what they received with no cost to her * she selected her sister 21 years ago and forgot about the form * when she recently reviewed her retirement benefits, she was informed that the 10% cost would come out of her pension to pay for the plan * she would not have put anyone down on her SBP election form if she was informed she would have to pay its costs; plus it does not make any financial sense for her to do it 3. The applicant provides: * DD Form 1883 (SBP Election Certificate), dated 1 September 1995 * a letter from Director, Case Management Division (CMD), Army Review Boards Agency (ARBA), dated 19 October 2016 * a letter from the applicant to Director, CMD, dated 27 October 2016, with a notarized statement from the applicant's sister, dated 1 November 2016 * two letters from the applicant to Director, CMD, dated 4 November and 22 November 2016 * DD Form 2656 (Data For Payment of Retired Personnel), dated 29 June 2016 CONSIDERATION OF EVIDENCE: 1. The applicant was born in August 1956 and enlisted in the Pennsylvania Army National Guard (PAARNG) on 7 July 1975. She served through multiple reenlistments and extensions, in a variety of assignments, and attained the rank/grade of sergeant major (SGM)/E-9. 2. She was issued a Notification of Eligibility for Retired Pay at Age 60 (Twenty Year Letter) on 7 July 1995. 3. She completed and authenticated a DD Form 1883 on 1 September 1995, wherein she indicated she was not married and she had no dependent children. She elected RCSBP coverage for a "natural person with insurable interest," Option C (immediate coverage), based on the full amount of her retired pay. She named her sister as the person who had an insurable interest in her. The "Monthly Cost and Annuity" section of the DD Form 1883 states: Natural interest person: Cost of coverage is 10 percent of full retired pay, plus an additional 5 percent of full retired pay for each full five years that your age exceeds that of the natural interest person [NIP]. The total cost may not exceed 40 percent of retired pay. 4. She completed a DD Form 2656 on 29 June 2016, wherein she elected not to participate in the SBP. Additionally, she did not elect a NIP, stated she was not married, and did not have any dependent children. This form was authenticated by herself and the PAARNG G-1. 5. She turned 60 years of age in August 2016. 6. She was honorably separated from the ARNG and transferred to the U.S. Army Reserve Control Group (Retired Reserve), effective 31 August 2016. 7. Orders C09-699268, issued by U.S. Army Human Resources Command (HRC) on 28 September 2016, ordered her placement on the Army of the United States Retired List, effective 1 September 2016. 8. The applicant provides the following that has not been previously discussed: a. A letter from the Director, CMD, requesting additional information. The applicant submitted a letter, dated 27 October 2016, wherein she requested the Army Board for Correction of Military Records (ABCMR)'s assistance with her issue: SBP and RCSBP monies were being deducted from her pension. She stated, "I do not understand what the RCSBP is. It was not properly explained to me how the process works." She included a notarized statement from her sister, the NIP, which indicates her sister was not correctly informed about the process and she is not interested now or ever in receiving monies from the SBP or RCSBP upon the death of her sister. b. Two letters from the applicant to the Director, CMD, dated 4 November and 22 November 2016 respectively, indicating in pertinent part the following: * she wants to stop the SBP costs from coming out of her pension * she filed out the form to stop SBP when she applied for retirement * she talked to someone at the Defense Finance and Accounting Service (DFAS) to stop SBP and to get a refund of monies already taken from her pension * she was told to complete a DD Form 2565-2 (SBP Termination Request – Notice to Persons Request to Discontinue Participation in the Uniformed Services SBP); however, the form is for a spouse * she had her sister submit a notarized statement to DFAS stating she does not want to receive the SBP * she received a retiree account statement that showed SBP cost of $216.90 and RCSBP cost of $81.99 was taken out of her retiree pay * she called DFAS and they stated the letters they received were confusing and they could not read the notarized statement from her sister * they instructed her to the apply to the ABCMR c. The DFAS letters and notarized letter from her sister to DFAS are not available for review. REFERENCES: 1. 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 natural person with an insurable interest in the member. Premiums for insurable interest coverage are generally higher than for any other category of coverage. 2. Public Law 95-397 (RCSBP), enacted 30 September 1978, provided a way for Reserve Component members who qualified for non-regular retirement, but who were not yet age 60 [at which time they would be eligible to begin drawing retired pay, upon request, and to participate in the SBP], to provide an annuity for their survivors should they (the member) die before reaching age 60. a. Three options were available: * Option A – elect to decline enrollment and choose at age 60 whether to start SBP participation * Option 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 * Option C – elect that a beneficiary receive an annuity immediately upon their death if before age 60 b. If death does not occur before age 60, the RCSBP costs for options B and C are deducted from the member’s retired pay (costs for option C being the more expensive). c. Once a member elected either option B or option C, in any category of coverage, that election was considered irrevocable. Upon attaining age 60, Option B and C participants could not make a new SBP election, nor could they cancel SBP participation or change options they had in RCSBP – the options automatically rolled into SBP coverage. If RCSBP Option B or C was elected, the Reservist Portion cost was added to the basic cost of the SBP to cover the additional benefit and assured protection should the member have died prior to age 60 (emphasis added). 3. 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 to the Secretary concerned of a written request to discontinue participation in the SBP. 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. 4. 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., NIP 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. 5. Office of the Assistant Secretary of Defense (Force Management Policy) memorandum, 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), dated 17 March 1995, providing that SBP premiums will no longer apply as of the effective date of termination of NIP coverage except if the participant terminating NIP coverage is a participant of a Reserve Component annuity. In such case, the Reserve Component premium add-on will apply for life. DISCUSSION: 1. The applicant requests termination of her participation in the SBP with the recoupment of premiums paid, and to terminate her coverage under the RCSBP and be refunded any monies already taken out of her retired pay. 2. Shortly after receiving her 20-Year Letter in 1995, the applicant completed a DD Form 1883, wherein she elected to participate in the RSCBP. She elected to provide an annuity, in the event of her death, to her sister, a person with an insurable interest in her. 3. When applying for her retired pay shortly before her 60th birthday, she completed a DD Form 2656 on 29 June 2016, wherein she elected not to participate in the SBP. Insurable interest coverage for a beneficiary who is not a former spouse may be voluntarily terminated at any time by making a signed written request. 4. A request to decline SBP coverage, submitted in conjunction with the application for retired pay by non-regular retirees, demonstrates a clear intent to end insurable interest coverage, which the member is legally entitled to do. 5. It appears the applicant's intent to withdraw from the SBP, as communicated through her DD Form 2656, was not acknowledged or acted upon by DFAS. Consequently, SBP and RCSBP premiums were deducted from her retired pay account as an associated cost to her. In response, she stated she submitted a letter along with a notarized statement from her sister, wherein she requested to cancel her insurable interest (NIP) coverage in the SBP, coupled with her sister's notarized statement of declining any right to an annuity. This letter and notarized statement are not available for review. 6. However, it is apparent the applicant took action to cancel her SBP participation before she attained the age of 60, and before she began receiving retired pay. Therefore, it would be appropriate to correct her records to show she elected to discontinue her NIP coverage under the SBP, effective with her completing DD Form 2656, as certified by the PAARNG's G-1, on 29 June 2016. Additionally, any SBP premiums paid since she began receiving retired pay should be reimbursed by DFAS. 7. In accordance with federal law, she remains responsible for the RCSBP add-on premium costs for the financial benefits her sister would have received had she died prior to turning age 60. The RCSPB costs in this case cannot be waived by the Board. //NOTHING FOLLOWS// ABCMR Record of Proceedings AR20150000953 Enclosure 1 ARMY BOARD FOR CORRECTION OF MILITARY RECORDS RECORD OF PROCEEDINGS ABCMR Record of Proceedings (cont) AR20160013502 2 ARMY BOARD FOR CORRECTION OF MILITARY RECORDS RECORD OF PROCEEDINGS Enclosure 1 ABCMR Record of Proceedings (cont) AR20160013502 6 ARMY BOARD FOR CORRECTION OF MILITARY RECORDS RECORD OF PROCEEDINGS Enclosure 2