Who Pays the Former Spouse Survivor Benefit Plan (SBP) Premium in Divorce?

It depends.  In military divorce, Texas case law establishes that courts have authority to order the Servicemember to pay the SBP premiums and doing so does not equate to impermissible permanent alimony.  The Former Spouse, however, can be ordered to pay as well.  In short, there is no automatic answer since either outcome is possible.

It is important to note that DFAS must deduct the premium from the Servicemember’s military retired pay.  Any provision in a divorce decree that orders DFAS to deduct the premium from the Former Spouse’s share of retired pay is unenforceable.  DFAS will ignore it.

That means that if the Former Spouse is ordered to pay the premium, his or her payment (or, in reality, repayment) can only happen in one of two ways, as follows:

  1. Direct reimbursement, where the Former Spouse writes a check to the Servicemember each month, or
  2. Reduction in the percentage of retired pay awarded to the Former Spouse that offsets the cost of the SBP premium.

Whichever of the two options is contemplated, the Former Spouse should ensure that he or she does not overpay.  The premium is always 6.5% of the “base amount,” with the base amount being the amount of retired pay being insured for future SBP annuity payments.  If the Former Spouse’s writes a check for the full cost of the premium or permits his or her percentage award to be reduced by the full 6.5%, then he or she will ALWAYS be overpaying the cost of the premium.  This stems from the fact that the cost of the premium is a component in DFAS computing the Servicemember’s “disposable retired pay.”  And, the Former Spouse’s retired pay is a percentage of the Servicemember’s disposable retired pay. 

So, a 6.5% reduction is NEVER the right answer.  A more nuanced calculation will be required to determine exactly how much the Former Spouse’s percentage award should be reduced to offset the portion of the premium not reflected in disposable retired pay. 

If you are a soon-to-be Former Spouse, speak with a qualified military divorce attorney to ensure that, if you will be paying the premium, you don’t overpay.

Author Jim Cramp is a retired active duty colonel and principal attorney at the Cramp Law Firm.  The Cramp Law Firm provides a spectrum of family-related legal services in the greater San Antonio Region.