How do I protect SBP during a divorce?

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Q:  I was mar­ried in Octo­ber 1994 and I retired from active duty in August 1995 after 24 years of ser­vice. My wife and I will be divorc­ing after the sep­a­ra­tion time required time by the law in North Car­olina. I have two ques­tions.  First, to pro­tect my SBP do I need to elect the for­mer spouse option once I have given DFAS a year’s notice and in doing so what are my choices after that? Sec­ond, TRICARE; my wife was only on active duty with me for 11 months, before I retired and for the last 20 years we have been together, can she qual­ify on her own for TRICARE or does she have to be on active duty with me for 20 years and not just dur­ing my retire­ment?  Thank you for your help.

–Dave, North Carolina

A:  When it comes to divorce, my first piece of advice is almost always the same:  Make sure that you have good legal coun­sel.  There’s a lot at stake and you should have an attor­ney that is well versed in the nuances of mil­i­tary divorce at your side as you work through this dif­fi­cult time.  That being said, I’ll touch on the two areas you mention.

First, from your per­spec­tive the first way you could “pro­tect” your SBP for future use is to elect for­mer spouse cov­er­age once your divorce is final.  If you vol­un­tar­ily do this, you will con­tinue to pay the SBP pre­mi­ums and your for­mer spouse will be cov­ered if some­thing hap­pens to you.  Again, if you make this elec­tion vol­un­tar­ily and down the road get mar­ried you will be able to change the cov­er­age to your new spouse.  You could also pro­tect your SBP for future use by noti­fy­ing DFAS of the divorce (in writ­ing) and they would sus­pend the SBP cov­er­age effec­tive at the date of the divorce.  You would not pay pre­mi­ums while you had no eli­gi­ble ben­e­fi­ciary.  If you get mar­ried again under this sce­nario you would notify DFAS and a year after the new mar­riage the cov­er­age and pre­mi­ums would begin.  In either of those two sit­u­a­tions you would “pro­tect” SBP cov­er­age for use in the event you remarry.

On the other hand, if the divorce decree requires you to carry for­mer spouse SBP and DFAS is fur­nished a copy of the decree within one year of the divorce you will con­tinue to pay the pre­mi­ums and will not have the flex­i­bil­ity to change the cov­er­age with­out court approval.  This is called a deemed elec­tion (as opposed to voluntary).

The sec­ond part of your ques­tion is much eas­ier.  Since the mar­riage to your soon to be ex-spouse did not over­lap for 20 years with your qual­i­fy­ing retire­ment ser­vice (it was less than one year), she will not be eli­gi­ble for TRICARE.  In fact, her ben­e­fits will end on the day of the divorce. She may be able to pur­chase cov­er­age through the Con­tin­ued Health Care Ben­e­fit Pro­gram.

I hope this helps and encour­age you to get the help you need!

JJ

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Scott Halliwell and JJ Montanaro are CERTIFIED FINANCIAL PLANNER™ practitioners with USAA Financial Planning Services, one of the USAA family of companies. Certified Financial Planner Board of Standards, Inc. owns the certification marks CFP® and Certified Financial Planner™ in the United States, which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

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