washingtonscene
SBP Cash Flow
pay raise, concurrent receipt, SBP, MGIB, For servicemembers retiring after 20
SBP is heavily subsidized by
and many other improvements in this or more years of active duty, the govern-
the government, and premiums year’s Defense Authorization Act; and ment expects the average retiree’s lifetime
are set to cover only 60 percent
■ Rep. Tom Davis (R-Va.) for championing SBP premiums will cover only about 60
of expected benefits. That
improvements for the National Guard and percent of the average benefi ts that will be
means annual benefit payouts
grow much faster than annual
legislation that would allow active duty paid to the retiree’s survivor.
premiums. In 2006, SBP an-
and retired servicemembers to deduct That means three things:
nuities totalled $2.5 billion,
their health and dental premiums from ■ SBP benefi ts are 40-percent subsidized
versus $1.2 billion in premiums federal income taxes. by the government to help recognize
paid in.
The coalition also presented awards the value of your service (much differ-
to Debra Wada, senior staff member for ent than the negative subsidy of civilian
former chair Snyder on the House Armed insurance, for which premiums must
75 53 68 48 Services Military Personnel Subcommit- cover 100 percent of benefi t costs, as well
tee, and Grace Washbourne, senior staff as company overhead, salaries, commis-
1985 2000
member for Davis, ranking member on the sions, and profi t).
House Oversight and Government Reform ■ Much like Social Security, every dollar
Committee. Both were honored for their you pay in SBP premiums goes toward
behind-the-scenes efforts in supporting a paying part of the benefi t for someone
wide variety of initiatives in support of the else’s survivor, just as other retirees’ pre-
military community. miums will help fund your survivor’s ben-
efi ts in the event of your death.
SBP: Show Me
■ Any civilian insurance that provides
2005 2006
“cash back” if you don’t die is going to cost
the Money
you a much bigger premium per death
■ Retiree Premiums
benefi t dollar. (MOAA is unaware of any
■ Survivor Benefits Paid
Payouts far exceed premiums.
civilian insurance that provides a fully in-
fl ation-protected annuity like SBP does.)
That’s not to say older servicemem-
A
question MOAA frequently bers haven’t already paid more than their
hears from its older members is, share. Thousands who enrolled when
“I’ve been paying into SBP for de- SBP began in 1972 already have paid pre-
cades. The government has made a lot of miums for 35 years — fi ve years longer
money on me. Why can’t I get some of that than servicemembers who retired after
money back after all these years?” 1978 will have to. And most offi cer retir-
On the fl ip side, those younger mem- ees paid signifi cantly larger premiums
bers who are nearing military retirement between 1972 and 1990.
want to know, “Is SBP really worth it? It So we’re not saying there are no prob-
seems awfully expensive — how much lems that need fi xing. What we’re point-
bang for my buck am I going to get?” ing out is the government defi nitely is not
Anyone who thinks the government making any money off retirees’ SBP pre-
is making money on SBP is way off base. miums. On the contrary, it’s heavily subsi-
As shown in the chart above, the govern- dizing this important benefi t program. MO
ment currently pays out more than twice
as much in SBP benefi ts to survivors than
— Contributors are Col. Steve Strobridge,
it collects in retiree premiums. And that
USAF-Ret., direc tor; Col. Mike Hayden, USAF-
Ret.; Col. Bob Norton, USA-Ret.; Cmdr. René Cam-
difference will continue to grow, because
pos, USN-Ret.; Cmdr. John Class, USN-Ret.; Col.
MOAA recently won a large benefi t in-
Phil Odom, USAF-Ret.; Cass Vreeland; and Bret
crease for survivors age 62 and older. Shea, MOAA’s Government Relations Department.
40 MILITARY OFFICER DECEMBER 2007
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