How Much Is SBP Per Month? Calculating Your Costs

Understanding Your Survivor Benefit Plan Monthly Costs

The Survivor Benefit Plan (SBP) is a program designed to provide financial security for military families, offering a continuous income stream to eligible survivors upon the death of a military retiree. This plan helps ensure that a portion of a retiree’s income continues to support their loved ones, similar to an annuity. Understanding how the monthly premium for SBP is determined and what factors influence this cost is important for military members and their families.

Calculating the Monthly SBP Premium

The calculation of your monthly SBP premium primarily depends on a percentage of the “base amount” you elect to cover. This base amount represents a portion of the retiree’s gross retired pay that the service member chooses to protect. It can range from a minimum of $300 up to the full amount of the gross retired pay. This decision directly influences both the premium paid and the annuity received by the survivor.

For spouse coverage, the standard premium percentage applied is 6.5% of the elected base amount. This percentage is automatically deducted from the retiree’s monthly pension. For example, if a retiree selects a base amount of $2,000, the monthly SBP premium for spouse coverage would be $130 (6.5% of $2,000). Premiums are paid from gross retired pay, which means they are not counted as taxable income, effectively reducing the out-of-pocket cost for SBP.

For most current retirees, the premium for spouse coverage is calculated as 6.5% of the designated base amount. An alternate two-part formula may apply for service members who entered active duty on or before February 28, 1990, or those retiring for disability, if it results in a lower premium. This formula involves a smaller percentage of an initial “threshold amount” and a higher percentage for the remaining base amount.

Key Determinants of SBP Cost

The retiree’s chosen base amount is the most impactful factor influencing the monthly SBP premium. A higher elected base amount, which can be any figure between $300 and the full retired pay, directly translates to a higher monthly premium. This choice allows retirees flexibility in balancing premium costs with the desired level of financial protection for their beneficiaries.

The type of beneficiary designated also plays a significant role in determining the premium percentage or calculation method. While spouse and former spouse coverage generally use the 6.5% rule, premiums for child coverage are typically lower. Child-only coverage costs are based on factors such as the retiree’s age and the age of the youngest child at the time the election takes effect. If children are covered in addition to a spouse, the additional cost for the children is often minimal, as they are secondary beneficiaries.

Insurable interest coverage, available when there are no eligible spouses or children, has a different and often higher premium structure. The cost for insurable interest coverage is 10% of the member’s gross retired pay, plus an additional 5% for each full five years the beneficiary is younger than the retiree, though total costs cannot exceed 40% of the retired pay.

Changes and Cessation of SBP Premiums

The monthly SBP premium can change over time or may eventually cease altogether. Since SBP premiums are directly linked to retired pay, any Cost of Living Adjustments (COLAs) applied to the retiree’s pay will proportionally increase the SBP base amount. As the base amount increases, the monthly premium also rises, ensuring that the survivor’s annuity maintains its purchasing power against inflation.

A significant event that can lead to the cessation of SBP premiums is reaching “paid-up” status. This occurs when a retiree has made 360 monthly payments, equivalent to 30 years of premiums, and has also reached the age of 70. Once both these conditions are met, the monthly premium becomes $0, but the SBP coverage continues, providing a lifetime annuity to the eligible beneficiary without further cost to the retiree. This provision automatically stops deductions from qualifying military retired pay accounts.

Premiums will also stop if the designated beneficiary becomes ineligible for the SBP annuity. For instance, if a surviving spouse remarries before age 55, their SBP payments will cease, although eligibility may be restored if the marriage later ends due to death or divorce. Similarly, for child beneficiaries, premiums stop when all covered children lose eligibility, typically by reaching age 18, or age 22 if they are full-time students. If a retiree loses their spouse through death or divorce, SBP deductions are suspended, and the retiree only pays for SBP when they have an eligible beneficiary.