Reduction in Retainer Pay for Survivor Benefit Plan

The Disbursing Officer of the Marine Corps Finance Center requested a decision concerning the proper method of effecting a reduction in retainer pay for Survivors' Benefit Plan participation by two Marine Corps Reserve Sergeants. In one case, the monthly charges for spouse coverage was refunded to a sergeant whose wife had died, and the cost of coverage was recomputed. As the wife died on the first of a month, the charges were refunded and recomputed as of the first of the next month. The disbursing officer felt the sergeant might be entitled to a refund and recomputation for the month in which the wife died. In the second case, the Survivor Benefit Plan cost reduction from a sergeant's monthly retainer pay was initiated on the date of his transfer to the Fleet Marine Corps Reserve on a pro rata basis for the days remaining in that month and then monthly thereafter. The disbursing officer doubted the correctness of that method as Survivor Benefit Plan coverage costs are to be assessed on a monthly basis. In the first case, GAO held that where Survivor Benefit Plan coverage is terminated because of the death of a spouse, full reduction of retired pay for spouse coverage is required for the month in which they die. Charges for that month may be made on a pro rata basis only if regulations providing for such a change are issued under law. In the second case, GAO stated that if an active duty member is placed in a retired or retainer pay status effective on a day other than the first of a month, charge for coverage begins the first day of the month beginning after retirement unless a regulation is issued pursuant to law providing for pro rata charge for part of a monthly coverage. In the absence of a regulation, when a member's last day of duty before retirement is other than the last day of the month no charge is made for the partial month in retirement status.