ARMY BOARD FOR CORRECTION OF MILITARY RECORDS RECORD OF PROCEEDINGS BOARD DATE: 27 August 2019 DOCKET NUMBER: AR20170011105 APPLICANT REQUESTS: termination of her “insurable interest” Reserve Component Survivor Benefit Plan (RCSBP) election. APPLICANT'S SUPPORTING DOCUMENTS CONSIDERED BY THE BOARD: * DD Form 149 (Application for Correction of Military Record) * DD Form 2656-5 (RCSBP Election Certificate) FACTS: 1. The applicant did not file within the three year time frame provided in Title 10, United States Code (USC), section 1552 (b); however, the Army Board for Correction of Military Records conducted a substantive review of this case and determined it is in the interest of justice to excuse the applicant's failure to timely file. 2. The applicant states it is her understanding that the insurable interest coverage has a premium. During her counseling of the SBP, she was not advised about the premium if this option was elected. Because she was not advised when counseled in 2004 about the rates for premiums, she would like have her election of her sister Bo__ J. cancelled. It seems that she would be penalized for error that was out of her control. She took the word of SBP Counselor at the time. It was presented to her at time she needed to put someone down seeing that she was single. If the SBP counselor was properly trained providing detailed information about the cost of premiums she would not have chosen one. She is sure today that the SBP counselor have a better understanding to advice about premiums. 3. Review of the applicant’s service records shows: a. The applicant was born in February 1962. b. Having had prior enlisted service, she was appointed as a Reserve warrant officer of the North Carolina Army National Guard (NCARNG) and executed an oath of office on 16 October 1998. c. On 15 August 2003, the NCARNG issued the applicant a Notification of Eligibility for Retired Pay at Age 60 (20-Year Letter). d. On 16 August 2004, she submitted a DD Form 2656-5 (RCSBP Election Certificate). She indicated she was single and had no dependent children. She elected “insurable interest” RCSBP coverage under Option C (immediate annuity), based on full retired pay. She named her sister as the insurable interest beneficiary. This form stated: A decision to participate, that is to select either Option B or C, is permanent and cannot be changed unless authorized by law, such as the opportunity to terminate your participation during the period that is between your 62nd birthday and the day before you reach age 63 at which time you may elect to discontinue participation. e. The applicant continues to serve in the NCARNG today. She will turn 60 in February 2022 4. By law, Reserve Component members who qualified for Reserve retirement, but were not yet age 60 and eligible to participate in the SBP, to provide an annuity for their survivors should they die before reaching age 60. 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 a. Once a member elects either option B or option C in any category of coverage, that election is irrevocable. Option B & C participants do not make a new SBP election at age 60. They cannot cancel SBP participation or change options they had in RCSBP - the options automatically roll into SBP coverage. If RCSBP Option B or C is elected, there is a Reservist Portion cost 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. b. A member must elect maximum (full) coverage when electing insurable interest coverage. SBP costs for insurable interest coverage are considerably higher than the other SBP beneficiary categories. c. Insurable interest coverage for a beneficiary who is not a former spouse may be arbitrarily discontinued and voluntarily terminated at any time by making a signed written request to do so that identifies a member by name and social security number. Requests to terminate insurable interest may be addressed to the Defense Finance and Accounting Service (DFAS) at any time. BOARD DISCUSSION: After reviewing the application and all supporting documents, the Board found relief was not warranted. The applicant’s contentions were carefully considered. The Board agreed the applicant’s election is irrevocable at this time, as there was no evidence of an error or injustice. However, the Board did wish to inform the applicant that she has the option to terminate coverage when applying for retired pay upon reaching the age of 60. BOARD VOTE: Mbr 1 Mbr 2 Mbr 3 : : : 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 the overall merits of this case are insufficient as a basis for correction of the records of the individual concerned. 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. REFERENCES: 1. Title 10, USC, section 1552(b), provides that applications for correction of military records must be filed within three years after discovery of the alleged error or injustice. This provision of law also allows the Army Board for Correction of Military Records (ABCMR) to excuse an applicant's failure to timely file within the three-year statute of limitations if the ABCMR determines it would be in the interest of justice to do so. 2. 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. An election, once made, was irrevocable except in certain circumstances. Since its creation, it has been subjected to a number of substantial legislative changes. 3. Public Law 95-397, enacted 30 September 1978, provided a way for RC members who qualified for Reserve retirement, but were not yet age 60 and eligible to participate in the SBP, to provide an annuity for their survivors should they die before reaching age 60. 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 4. Once a member elects either option B or option C in any category of coverage, that election is irrevocable. Option B and C participants do not make a new SBP election at age 60. They cannot cancel SBP participation or change options they had in RCSBP - the options automatically roll into SBP coverage. If RCSBP Option B or C is elected, there is a Reservist Portion cost 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. 5. A member must elect maximum (full) coverage when electing insurable interest coverage (the base amount has to be the member's gross retired pay). SBP costs for insurable interest coverage are considerably higher than the other SBP beneficiary categories. Costs are 10 percent of the member's gross retired pay plus an additional five percent for each full five years the beneficiary is younger than the retiree; however, total costs cannot exceed 40 percent of the retired pay. 6. Since 5 October 1994, insurable interest coverage for a beneficiary who is not a former spouse may be arbitrarily discontinued and voluntarily terminated at any time by making a signed written request to do so that identifies a member by name and social security number. Requests to terminate insurable interest may be addressed to the Defense Finance and Accounting Service (DFAS) at any time. A member cannot name another insurable interest beneficiary. 7. Effective 17 October 2006, a member may name another insurable interest beneficiary within 180 days following the death of the previous beneficiary by submitting a written request to DFAS. Such an election would become effective the first day of the month following the date DFAS receives the request. The insurable interest coverage will be vitiated (voided) if the member dies before the end of the two-year period beginning on the effective date of the election. All premiums paid on the new insurable interest beneficiary's behalf will be refunded in a lump-sum payment to the person who would have been the beneficiary had the member lived the required two years. 8. Army Regulation 15-185 (ABCMR), the regulation under which this Board operates, states in paragraph 2-5 that the ABCMR will not consider an application until the applicant has exhausted all administrative remedies to correct the alleged error or injustice. //NOTHING FOLLOWS// ABCMR Record of Proceedings (cont) AR20170011105 5 1