B-191524, JUN 30, 1978

B-191524, JUN 30, 1978

DIGEST: 1. A WIDOW RECEIVING DEPENDENCY AND INDEMNITY COMPENSATION (DIC) UNDER 38 U.S.C. 411(A) IN AN AMOUNT EQUAL TO OR GREATER THAN A SURVIVOR BENEFIT PLAN (SBP) ANNUITY, AND IS THEREFORE PRECLUDED FROM PARTICIPATING IN THE SBP BECAUSE OF 10 U.S.C. 1450(C), IS NOT CONSIDERED AS BEING OTHERWISE INELIGIBLE UNDER 10 U.S.C. 1450(A)(1) FOR THE PURPOSE OF HAVING THE ANNUITY IMMEDIATELY SUCCEED TO THE CHILD UNDER 10 U.S.C. 1450(A)(2). 2. THE PHRASE "OTHERWISE BECOME INELIGIBLE UNDER THIS SECTION" USED IN 10 U.S.C. 1450(A)(2) RELATING TO THE SUCCESSION OF AN SBP ANNUITY FROM AN INELIGIBLE WIDOW OR WIDOWER TO A CHILD OR CHILDREN REFERS TO THE LIMITATION ON ELIGIBILITY IMPOSED BY 10 U.S.C. 1450(B) CONCERNING REMARRIAGE PRIOR TO AGE 60. 3. WHEN A MEMBER ELECTS COVERAGE UNDER THE SBP FOR HIS SPOUSE AND CHILD, THE CHILD MAY NOT RECEIVE THE ANNUITY UNTIL THE WIDOW OR WIDOWER DIES OR REMARRIES PRIOR TO AGE 60, EVEN THOUGH SHE IS NOT RECEIVING BENEFITS AS A RESULT OF SBP COVERAGE PURSUANT TO 10 U.S.C. 1450(C) DUE TO HER ENTITLEMENT TO DIC.

SERGEANT PEARLOW HOWARD, USMC, RETIRED, DECEASED:

THIS ACTION IS IN RESPONSE TO A LETTER DATED FEBRUARY 10, 1978, FROM LIEUTENANT COLONEL W. S. MORIARTY, UNITED STATES MARINE CORPS, DISBURSING OFFICER, CENTRALIZED PAY DIVISION, MARINE CORPS FINANCE CENTER, IN WHICH HE REQUESTS AN ADVANCE DECISION CONCERNING THE PROPRIETY OF PAYMENT OF AN ANNUITY UNDER THE SURVIVOR BENEFIT PLAN (SBP), 10 U.S.C. 1447, ET SEQ., IN THE CASE OF SERGEANT PEARLOW HOWARD, XXX-XX-XXXX, USMC, RETIRED, DECEASED. THE REQUEST HAS BEEN ASSIGNED CONTROL NO. DO-MC-1288, BY THE DEPARTMENT OF DEFENSE MILITARY PAY AND ALLOWANCE COMMITTEE.

THE QUESTION PRESENTED IS WHETHER THE SURVIVING DEPENDENT CHILD OF A DECEASED RETIRED MILITARY MEMBER WHO HAD SPOUSE AND CHILD PROTECTION UNDER THE SBP IS ENTITLED TO AN SBP ANNUITY IF THE SPOUSE IS BEING PAID NO SBP BENEFITS BECAUSE OF ENTITLEMENT TO DEPENDENCY AND INDEMNITY COMPENSATION (DIC) AT LEAST EQUAL TO THE SBP ENTITLEMENT.

WE ARE ADVISED THAT SERGEANT HOWARD WAS TRANSFERRED ON FEBRUARY 16, 1976, TO THE RETIRED LIST WITH A PERMANENT DISABILITY. HE WAS ENROLLED IN THE SBP WITH AN ELECTION PROVIDING AN ANNUITY FOR HIS SPOUSE, ARMIDA, AND HIS SON, JAMES. SERGEANT HOWARD DIED ON MAY 7, 1976.

PURSUANT TO 10 U.S.C. 1450(A)(1), HIS SURVIVING SPOUSE BECAME ENTITLED TO AN SBP ANNUITY ON MAY 8, 1976. HOWEVER, SHE ALSO BECAME ENTITLED TO DIC UNDER 38 U.S.C. 411(A) IN EXCESS OF HER SBP ANNUITY AT THE SAME TIME. THIS REGARD, IT IS NOTED IN THE SUBMISSION THAT SECTION 301.C OF DEPARTMENT OF DEFENSE (DOD) DIRECTIVE 1332.27, DATED JANUARY 4, 1974, STATES IN PART THAT "ENTITLEMENT UNDER THIS PLAN TERMINATES PERMANENTLY WHEN DIC EXCEEDS THE AMOUNT THAT WOULD HAVE BEEN PAID AS AN ANNUITY UNDER THE SBP". IN VIEW OF THIS, MRS. HOWARD'S ENTITLEMENT TO AN SBP ANNUITY WAS TERMINATED ON MAY 8, 1976, AND THE COST OF PROVIDING COVERAGE FOR HER WAS FULLY REFUNDED, BUT THE COST OF PROVIDING COVERAGE FOR THE CHILD, JAMES, WAS NOT REFUNDED.

SECTION 1450 OF TITLE 10, U.S.C. PROVIDES IN PART AS FOLLOWS:

"(A) EFFECTIVE AS OF THE FIRST DAY AFTER THE DEATH OF A PERSON TO WHOM SECTION 1448 OF THIS TITLE APPLIES, A MONTHLY ANNUITY UNDER SECTION 1451 OF THIS TITLE SHALL BE PAID TO -

"(1) THE ELIGIBLE WIDOW OR WIDOWER;

"(2) THE SURVIVING DEPENDENT CHILDREN IN EQUAL SHARES, IF THE ELIGIBLE WIDOW OR WIDOWER IS DEAD, DIES, OR OTHERWISE BECOMES INELIGIBLE UNDER THIS SECTION; OR"

SUBSECTION 1447(3) OF TITLE 10 PROVIDES THAT "WIDOW" IS DEFINED AS THE SURVIVING WIFE OF A PERSON WHO, IF NOT MARRIED TO THE PERSON AT THE TIME HE BECAME ELIGIBLE FOR RETIRED OR RETAINER PAY WAS MARRIED TO HIM FOR AT LEAST 1 YEAR IMMEDIATELY BEFORE HIS DEATH OR IS THE MOTHER OF ISSUE OF THAT MARRIAGE. UNDER THE FOREGOING PROVISIONS, MRS. HOWARD CLEARLY QUALIFIES AS THE ELIGIBLE WIDOW.

SUBSECTION (B) OF 10 U.S.C. 1450 PROVIDES AS FOLLOWS:

"(B) AN ANNUITY PAYABLE TO THE BENEFICIARY TERMINATES EFFECTIVE THE FIRST DAY OF THE MONTH IN WHICH ELIGIBILITY IS LOST. AN ANNUITY FOR A WIDOW OR WIDOWER SHALL BE PAID TO THE WIDOW OR WIDOWER WHILE THE WIDOW OR WIDOWER IS LIVING OR, IF THE WIDOW OR WIDOWER REMARRIES BEFORE REACHING AGE 60, UNTIL THE WIDOW OR WIDOWER REMARRIES. IF THE WIDOW OR WIDOWER REMARRIES BEFORE REACHING AGE 60 AND THAT MARRIAGE IS TERMINATED BY DEATH, ANNULMENT, OR DIVORCE, PAYMENT OF THE ANNUITY WILL BE RESUMED EFFECTIVE AS OF THE FIRST DAY OF THE MONTH IN WHICH THE MARRIAGE IS SO TERMINATED. HOWEVER, IF THE WIDOW OR WIDOWER IS ALSO ENTITLED TO AN ANNUITY UNDER THIS SECTION BASED UPON THE MARRIAGE SO TERMINATED, THE WIDOW OR WIDOWER MAY NOT RECEIVE BOTH ANNUITIES BUT MUST ELECT WHICH TO RECEIVE."

FROM THE FOREGOING, IT IS APPARENT THAT THE PHRASE "OTHERWISE BECOMES INELIGIBLE" AS USED IN 10 U.S.C. 1450(A)(2) REFERS TO THE LIMITATIONS IMPOSED BY 10 U.S.C. 1450(B), THAT REMARRIAGE PRIOR TO AGE 60 RENDERS THE BENEFICIARY INELIGIBLE FOR THE ANNUITY.

SUBSECTION (C) OF 10 U.S.C. 1450 PROVIDES THAT WHEN A WIDOW OR WIDOWER WHO IS ELIGIBLE TO RECEIVE AN SBP ANNUITY BUT IS ALSO ENTITLED TO DIC UNDER 38 U.S.C. 411(A), THE ANNUITY MAY BE PAID ONLY IN THE AMOUNT THAT IT EXCEEDS THE COMPENSATION UNDER 38 U.S.C. 411(A). SUBSECTION (E) OF 10 U.S.C. 1450 PROVIDES FOR THE REFUND OF AMOUNTS PAID FOR COVERAGE WHEN NO ANNUITY IS PAYABLE, AND RECALCULATION OF THE COST OF COVERAGE AND REFUND WHEN THE FULL ANNUITY IS NOT PAYABLE BECAUSE OF 10 U.S.C. 1450(C).

IN OUR DECISION 54 COMP.GEN. 838 (1975), IT WAS HELD THAT WHERE THERE IS A REFUND OF AMOUNTS PAID FOR SBP COVERAGE THE SURVIVING SPOUSE IS PRECLUDED FROM FURTHER PARTICIPATION IN THE SBP TO THE EXTENT OF THE COSTS OF COVERAGE WHICH WERE REFUNDED, EVEN THOUGH ENTITLEMENT TO DIC IS SUBSEQUENTLY LOST. THIS RESULT WAS BASED ON THE FACT THAT IT APPEARED THAT THE CONGRESS DID NOT INTEND TO PROVIDE COST FREE COVERAGE UNDER THE SBP, WITH EXCEPTION OF 10 U.S.C. 1448(D) COVERAGE. WE ALSO HELD IN THAT DECISION THAT THERE WAS NO AUTHORITY FOR REPAYMENT OF THE AMOUNTS REFUNDED IN ORDER TO REINSTATE COVERAGE, SINCE THERE WAS NO SPECIFIC LANGUAGE AUTHORIZING THIS ACTION, SUCH AS 5 U.S.C. 8341(G)(2) WHICH AUTHORIZES REINSTATEMENT IN THE CIVIL SERVICE SURVIVOR PLAN.

HOWEVER, WHILE 10 U.S.C. 1450(C) PROVIDES A LIMITATION ON ENTITLEMENT TO SBP, WHICH IS PERMANENT IN NATURE BECAUSE OF THE REFUND PROVISIONS OF 10 U.S.C. 1450(E), IT HAS NO BEARING ON WHETHER THE BENEFICIARY IS STILL CONSIDERED TO BE THE "ELIGIBLE WIDOW OR WIDOWER" AS SPECIFIED IN 10 U.S.C. 1450(A)(1). IN FACT, 10 U.S.C. 1450(C) CLEARLY RECOGNIZES SUCH ELIGIBILITY CRITERIA SINCE THE LANGUAGE OF THAT SECTION AUTHORIZES PAYMENT OF THE SBP ANNUITY TO SUCH WIDOW, BUT ONLY TO THE EXTENT THAT IT EXCEEDS THE DIC ENTITLEMENT.

IT IS THE GENERAL PURPOSE OF SBP TO GUARANTEE A MINIMUM INCOME FOR THE SURVIVORS OF RETIRED MILITARY MEMBERS EQUAL TO 55 PERCENT OF THE MEMBER'S RETIRED PAY UNLESS THE MEMBER ELECTED LESSER COVERAGE. HOWEVER, IN ORDER TO KEEP THE COST OF THE PLAN AND THE REDUCTION IN RETIRED PAY TO A MINIMUM, THE SBP WAS INTEGRATED WITH DIC TO THE EXTENT THAT SBP PAYMENTS ARE REDUCED BY THE AMOUNT OF DIC ENTITLEMENT. THUS, THE PURPOSE OF SBP IS SERVED WHERE PAYMENTS OF SBP AND/OR DIC ARE MADE TO THE WIDOW OR WIDOWER TO THE EXTENT OF THE COVERAGE APPLICABLE. THE FACT THAT DIC EQUALS OR EXCEEDS SBP IN SOME CASES DOES NOT ALTER THE SITUATION SO AS TO PERMIT IMMEDIATE PAYMENT OF SBP TO CONTINGENT BENEFICIARIES (THE CHILDREN) IN THAT CIRCUMSTANCE.

AS NOTED ABOVE, IT IS OUR VIEW THAT A WIDOW OR WIDOWER DOES NOT BECOME OTHERWISE INELIGIBLE TO RECEIVE AN ANNUITY EVEN THOUGH HE OR SHE IS RECEIVING DIC. THE SPECIFIC PROVISIONS OF 10 U.S.C. 1450 (A) AND (B) INDICATE THAT WHILE ALIVE, A SURVIVING WIDOW OR WIDOWER BECOMES INELIGIBLE ONLY UPON REMARRIAGE PRIOR TO AGE 60. THUS, MRS. HOWARD CONTINUES TO BE CONSIDERED AN ELIGIBLE WIDOW FOR PURPOSES OF 10 U.S.C. 1450(A)(2) UNTIL SHE DIES OR SHE REMARRIES PRIOR TO AGE 60.

THEREFORE, UPON THE DEATH OF MRS. HOWARD, OR HER REMARRIAGE PRIOR TO AGE 60, HER SON, JAMES, WOULD BE ENTITLED TO THE FULL ANNUITY ELECTED SINCE THE COST OF COVERAGE FOR THE CHILD IS NOT REFUNDED, IF HE QUALIFIED AS A DEPENDENT CHILD UNDER 10 U.S.C. 1447(5) AT THAT TIME. SEE 55 COMP.GEN. 1409 (1976). THE QUESTIONS PRESENTED ARE ANSWERED ACCORDINGLY.