B-179465, JUL 19, 1974

B-179465: Jul 19, 1974

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A MILITARY MEMBER WHO IS UNMARRIED AT THE TIME HE BECOMES ENTITLED TO RETIRED OR RETAINER PAY MAY ELECT AN "INSURABLE INTEREST" ANNUNITY UNDER SURVIVOR BENEFIT PLAN FOR HIS CHILD WHO ALSO QUALIFIES AS A "DEPENDENT CHILD" UNDER 10 U.S.C. 1447(5). NOTWITHSTANDING 10 U.S.C. 1448(B) WHICH PROVIDES THAT A MEMBER WHO "DOES NOT HAVE A DEPENDENT CHILD" MAY MAKE AN INSURABLE INTEREST ELECTION. SINCE IT APPEARS THAT THE PURPOSE OF THAT PROVISION WAS TO PREVENT A DEPENDENT CHILD FROM BEING EXCLUDED FROM COVERAGE UNDER THE PLAN AND NOT TO PREVENT SUCH CHILD FROM BEING COVERED UNDER THE INSURABLE INTEREST PROVISION. TO SECRETARY OF DEFENSE: THIS ACTION IS IN RESPONSE TO LETTER DATED AUGUST 13. THE QUESTIONS PRESENTED IN THE COMMITTEE ACTION ARE: "1.

B-179465, JUL 19, 1974

A MILITARY MEMBER WHO IS UNMARRIED AT THE TIME HE BECOMES ENTITLED TO RETIRED OR RETAINER PAY MAY ELECT AN "INSURABLE INTEREST" ANNUNITY UNDER SURVIVOR BENEFIT PLAN FOR HIS CHILD WHO ALSO QUALIFIES AS A "DEPENDENT CHILD" UNDER 10 U.S.C. 1447(5), NOTWITHSTANDING 10 U.S.C. 1448(B) WHICH PROVIDES THAT A MEMBER WHO "DOES NOT HAVE A DEPENDENT CHILD" MAY MAKE AN INSURABLE INTEREST ELECTION, SINCE IT APPEARS THAT THE PURPOSE OF THAT PROVISION WAS TO PREVENT A DEPENDENT CHILD FROM BEING EXCLUDED FROM COVERAGE UNDER THE PLAN AND NOT TO PREVENT SUCH CHILD FROM BEING COVERED UNDER THE INSURABLE INTEREST PROVISION; HOWEVER, SINCE ALL ELECTIONS, IN ORDER TO BE VALID, MUST BE MADE PRIOR TO THE MEMBER BECOMING ENTITLED TO RETIRED OR RETAINER PAY, THE COST OF SUCH COVERAGE MUST BE AT THE HIGHER INSURABLE INTEREST RATE PER 10 U.S.C. 1452(C), BEGINNING AT THE TIME THE MEMBER FIRST BECOMES ENTITLED TO SUCH PAY.

TO SECRETARY OF DEFENSE:

THIS ACTION IS IN RESPONSE TO LETTER DATED AUGUST 13, 1973, FROM THE ASSISTANT SECRETARY OF DEFENSE (COMPTROLLER), REQUESTING DECISION ON TWO QUESTIONS PRESENTED IN MILITARY PAY AND ALLOWANCE COMMITTEE ACTION NO. 490, ENCLOSED WITH THE LETTER, CONCERNING "INSURABLE INTEREST" COVERAGE FOR A MEMBER'S DEPENDENT CHILD UNDER THE SURVIVOR BENEFIT PLAN (10 U.S.C. 1447- 1455).

THE QUESTIONS PRESENTED IN THE COMMITTEE ACTION ARE:

"1. MAY A MEMBER, AT THE TIME OF HIS RETIREMENT, DESIGNATE HIS DEPENDENT CHILD FOR 'INSURABLE INTEREST' COVERAGE UNDER THE PROVISIONS OF 10 U.S.C. 1448(B).

"2. IF THE ANSWER TO QUESTION 1 IS NEGATIVE, MAY THE RETIREE ELECT 'INSURABLE INTEREST' COVERAGE AT THE TIME THE CHILD CEASES TO BE AN ELIGIBLE DEPENDENT."

THE COMMITTEE ACTION INDICATES THAT UNDER 10 U.S.C. 1448(A) THE SURVIVOR BENEFIT PLAN AUTOMATICALLY APPLIES TO A MEMBER WITH A DEPENDENT CHILD, UNLESS HE ELECTS NOT TO PARTICIPATE IN THE PLAN BEFORE THE FIRST DAY FOR WHICH HE IS ELIGIBLE FOR RETIRED OR RETAINER PAY. AND, UNDER 10 U.S.C. 1450(B) AN ANNUITY PAYABLE TO A BENEFICIARY TERMINATES EFFECTIVE AS OF THE FIRST DAY OF THE MONTH IN WHICH ELIGIBILITY IS LOST.

THE COMMITTEE ACTION POINTS OUT THAT MANY UNMARRIED RETIRING INDIVIDUALS WILL HAVE CHILDREN WHO, AT THE TIME OF RETIREMENT, ARE DEPENDENT CHILDREN AS DEFINED BY 10 U.S.C. 1447(5) BUT, WHO WILL SOON AFTER THE MEMBER'S RETIREMENT REACH THE AGE OR ATTAIN MARITAL STATUS WHICH WILL RENDER THEM INELIGIBLE TO RECEIVE AN ANNUITY. THE COMMITTEE ACTION INDICATES THAT POSSIBLE PERSONAL CIRCUMSTANCES CAN PREVAIL WHICH WOULD MAKE THE RETIRING MEMBER DESIRE TO PROVIDE CONTINUED PROTECTION TO HIS CHILD UNDER THE "INSURABLE INTEREST" PROVISION OF 10 U.S.C. 1447(B).

THE COMMITTEE ACTION FURTHER INDICATES THAT A STRICT INTERPRETATION OF 10 U.S.C. 1448(B) WOULD PREVENT A MEMBER FROM INCLUDING HIS DEPENDENT CHILD AS A NATURAL PERSON WITH AN INSURABLE INTEREST SINCE AT THE TIME OF RETIREMENT THE MEMBER WOULD HAVE A DEPENDENT CHILD. HOWEVER, THE COMMITTEE ACTION ALSO INDICATES THAT IT DOES NOT APPEAR APPROPRIATE TO BELIEVE THAT CONGRESS INTENDED THAT A RETIRING MEMBER COULD PROVIDE FOR A CHILD WHO HAD BECOME INELIGIBLE AS A DEPENDENT CHILD AT THE TIME OF RETIREMENT, WITH SURVIVOR PROTECTION AS A PERSON WITH AN INSURABLE INTEREST, YET COULD NOT PROVIDE SUCH PROTECTION TO A CHILD WHO WAS AN ELIGIBLE DEPENDENT AT THE TIME OF THE MEMBER'S RETIREMENT BUT LOSE THAT ELIGIBILITY THEREAFTER.

AS IS STATED ABOVE, UNDER 10 U.S.C. 1448(A), THE SURVIVOR BENEFIT PLAN APPLIES TO A MEMBER WHO "IS MARRIED OR HAS A DEPENDENT CHILD WHEN HE BECOMES ENTITLED TO RETIRED OR RETAINER PAY UNLESS HE ELECTS NOT TO PARTICIPATE IN THE PLAN BEFORE THE FIRST DAY FOR WHICH HE IS ELIGIBLE FOR THAT PAY." A DEPENDENT CHILD IS DEFINED BY 10 U.S.C. 1447(5) AS A PERSON WHO IS -

"(A) UNMARRIED;

"(B) (I) UNDER 18 YEARS OF AGE; (II) AT LEAST 18, BUT UNDER 22, YEARS OF AGE AND PURSUING A FULL-TIME COURSE OF STUDY OR TRAINING IN A HIGH SCHOOL, TRADE SCHOOL, TECHNICAL OR VOCATIONAL INSTITUTE, JUNIOR COLLEGE, COLLEGE, UNIVERSITY, OR COMPARABLE RECOGNIZED EDUCATIONAL INSTITUTION; OR (III) INCAPABLE OF SUPPORTING HIMSELF BECAUSE OF A MENTAL OR PHYSICAL INCAPACITY EXISTING BEFORE HIS EIGHTEENTH BIRTHDAY OR INCURRED ON OR AFTER THAT BIRTHDAY, BUT BEFORE HIS TWENTY-SECOND BIRTHDAY, WHILE PURSUING SUCH A FULL-TIME COURSE OF STUDY OR TRAINING; AND

"(C) THE CHILD OF A PERSON TO WHOM THE PLAN APPLIES, INCLUDING (I) AN ADOPTED CHILD, AND (II) A STEPCHILD, FOSTER CHILD, OR RECOGNIZED NATURAL CHILD WHO LIVED WITH THAT PERSON IN A REGULAR PARENT-CHILD RELATIONSHIP."

IN ADDITION TO THE APPLICATION OF THE PLAN PROVIDED BY SUBSECTION 1448(A) TO PERSONS WHO ARE MARRIED OR WHO HAVE DEPENDENT CHILDREN, SUBSECTION 1448(B) PROVIDES FOR "INSURABLE INTEREST" COVERAGE IN THE FOLLOWING LANGUAGE:

"(B) A PERSON WHO IS NOT MARRIED AND DOES NOT HAVE A DEPENDENT CHILD WHEN HE BECOMES ENTITLED TO RETIRED OR RETAINER PAY MAY ELECT TO PROVIDE AN ANNUITY TO A NATURAL PERSON WITH AN INSURABLE INTEREST IN THAT PERSON."

SUBSECTION 1450(A) OF THE SAME TITLE PROVIDES FOR PAYMENT OF THE ANNUITY AUTHORIZED BY THE PLAN 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

"(3) THE NATURAL PERSON DESIGNATED UNDER SECTION 1448(B) OF THIS TITLE AT THE TIME THE PERSON TO WHOM SECTION 1448 APPLIES BECAME ENTITLED TO RETIRED OR RETAINER PAY, IF THERE IS NO ELIGIBLE BENEFICIARY UNDER CLAUSE (1) OR (2)."

A REVIEW OF THE LEGISLATIVE HISTORY OF THE SURVIVOR BENEFIT PLAN SHOWS THAT IT WAS THE CULMINATION OF A LONG RECOGNIZED NEED FOR THE PROTECTION OF MILITARY WIDOWS AND DEPENDENT CHILDREN. THE DEPARTMENT OF DEFENSE ORIGINALLY PROPOSED THAT THE PLAN MAKES NO SPECIFIC PROVISION FOR CHILDREN, BUT INSTEAD SUGGESTED THAT THOSE PARENTS WHO DESIRED TO PROVIDE BENEFITS FOR CHILDREN WOULD DO SO UNDER THE INSURABLE INTEREST PROVISION. HOWEVER, DURING CONSIDERATION OF THE MATTER IN THE HOUSE OF REPRESENTATIVES A SPECIFIC CHILDREN'S BENEFIT WAS ADDED BY 10 U.S.C. 1450(A)(2). SEE B-178966, DECEMBER 6, 1973, 53 COMP. GEN. (1973).

THUS, IT APPEARS THAT THE PURPOSE OF INCLUDING THE PROVISION IN 10 U.S.C. 1448(B) THAT A PERSON WHO IS "NOT MARRIED AND DOES NOT HAVE A DEPENDENT CHILD" MAY ELECT AN INSURABLE INTEREST ANNUITY WAS TO PROTECT A MEMBER'S WIFE AND DEPENDENT CHILDREN FROM BEING EXCLUDED FROM COVERAGE UNDER THE PLAN IN FAVOR OF SOME OTHER PERSON HAVING AN INSURABLE INTEREST IN THE MEMBER. IT IS OUR VIEW THAT SUCH PROVISION WAS NOT INTENDED TO PREVENT A MEMBER WHO IS NOT MARRIED WHEN HE BECOMES ENTITLED TO RETIRED OR RETAINER PAY FROM ELECTING INSURABLE INTEREST COVERAGE FOR HIS DEPENDENT CHILD, WHO UNDER ANY ORDINARY DEFINITION OF THE TERM WOULD, AT A MINIMUM, QUALIFY AS A "NATURAL PERSON WITH AN INSURABLE INTEREST" IN THE MEMBER. SEE 52 COMP. GEN. 973, 975 (1973). HOWEVER, SINCE ALL ELECTIONS, IN ORDER TO BE VALID, MUST BE MADE PRIOR TO THE MEMBER BECOMING ENTITLED TO RETIRED OR RETAINER PAY, THE REDUCTION IN THE MEMBER'S RETIRED OR RETAINER PAY PURSUANT TO SUCH AN ELECTION MUST BE AT THE HIGHER "INSURABLE INTEREST" RATE PROVIDED BY 10 U.S.C. 1452(C) BEGINNING AT THE TIME THE MEMBER FIRST BECOMES ENTITLED TO SUCH PAY.

QUESTION 1 IS, THEREFORE, ANSWERED IN THE AFFIRMATIVE AND QUESTION 2 REQUIRES NO ANSWER.