SBP and DIC: The 2023 Change That Surviving Spouses Need to Know

For decades, surviving spouses of military retirees faced a painful choice. If they received Dependency and Indemnity Compensation (DIC) from the VA, their Survivor Benefit Plan (SBP) annuity from the Department of Defense was reduced dollar for dollar. In many cases, the two benefits effectively canceled each other out.

That changed on January 1, 2023. The SBP-DIC offset was fully eliminated. Surviving spouses who qualify for both benefits now receive the full amount of each, with no reduction.

This is one of the most significant changes in military survivor benefits in decades, and a substantial number of surviving spouses either do not know about it or have not yet taken action to claim what they are owed.

What SBP and DIC Are

Survivor Benefit Plan (SBP) is a monthly annuity paid by the Department of Defense to the surviving spouse of a military retiree. The retiree elects SBP coverage during retirement, paying premiums from their retired pay. The maximum annuity is 55% of the retiree's elected base amount, and it is inflation-adjusted annually.

Dependency and Indemnity Compensation (DIC) is a separate tax-free benefit paid by the VA to the surviving spouse of a veteran who died from a service-connected condition, or who was rated at 100% for a certain period before death. DIC rates are set annually by Congress and are paid regardless of the survivor's income or assets.

Before 2023, receiving DIC reduced SBP payments by the same dollar amount. The surviving spouse effectively received only the higher of the two, not both. This offset was widely criticized as a financial penalty on military families.

What Changed and When

Congress phased out the offset over three years:

• In 2021, surviving spouses kept one-third of their SBP along with full DIC.
• In 2022, surviving spouses kept two-thirds of their SBP along with full DIC.
• On January 1, 2023, the offset was fully eliminated. Full SBP and full DIC are now paid simultaneously.

The elimination is permanent. It applies to all qualifying surviving spouses, not just new cases.

Who This Affects

This change matters most to surviving spouses who were already receiving both SBP and DIC before 2023 and had their SBP reduced. Those individuals should have seen their SBP payments increase automatically as the phase-out progressed, reaching full payment in January 2023.

It also matters to surviving spouses who declined SBP enrollment because the offset made it seem not worthwhile. That calculation no longer applies, though open enrollment periods for SBP are limited.

A third group worth noting: surviving spouses who were receiving DIC but had waived SBP, or who had SBP payments stopped because DIC exceeded the SBP amount. The restoration of full SBP payments required action in some cases, and not every eligible person was notified clearly.

Remarriage Rules Still Apply

The elimination of the offset does not change the remarriage rules. A surviving spouse who remarries before age 55 loses SBP payments. If that remarriage later ends for any reason, eligibility can be restored, but the spouse must contact DFAS to reinstate it.

DIC has its own remarriage rules. A surviving spouse who remarried on or after December 16, 2003, and was 57 or older at the time of remarriage keeps DIC. For remarriages on or after January 5, 2021, the age threshold dropped to 55. Remarriages before those dates and ages result in loss of DIC unless the remarriage ends.

Special Survivor Indemnity Allowance

During the phase-out period, surviving spouses received a partial offset called the Special Survivor Indemnity Allowance (SSIA). This was a transitional payment to partially compensate for the offset while it was being eliminated. SSIA ended on February 1, 2023, when the full offset elimination took effect. Surviving spouses should no longer see SSIA as a separate line item and should instead see their full SBP restored.

If you are still seeing a reduced SBP or a separate SSIA payment after February 2023, contact DFAS directly to verify your payment is calculated correctly.

What to Do If You Think You Were Missed

If you are a surviving spouse who qualifies for both SBP and DIC and your payments do not reflect the full amounts of both, the first step is to contact DFAS (Defense Finance and Accounting Service) at 1-800-321-1080. DFAS handles SBP payments. The VA handles DIC separately.

If you believe you are eligible for DIC but have not applied, or if a previous DIC application was denied for a condition that is now presumptive under the PACT Act, you should file or refile. A VSO can help determine whether you have grounds to reapply, particularly if the veteran's death involved a condition related to toxic exposure.

The Bigger Picture for Survivors

The elimination of the SBP-DIC offset was a long-overdue correction. For surviving spouses navigating the complexity of both military retirement and VA benefits systems, the change means that working with a VSO or accredited VA claims agent to maximize all available benefits is more important than ever. The two systems interact in ways that are not always obvious, and the rules around remarriage, income limits for VA Pension, and aid and attendance eligibility add additional layers that are worth understanding fully.

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Ready to take action?

The Survivor Benefits Explainer can help you understand which benefits you may be eligible for and what steps to take.

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Bill Advantage is a document literacy tool. Nothing in this article constitutes legal or medical advice.