The Department of Veterans Affairs (VA) pays a benefit called Dependency and Indemnity Compensation (DIC) to your surviving spouse and dependent children if you die of service-connected causes. This includes deaths after retirement if the cause of death is due to an injury incurred or disease contracted while the member was on active duty.
DIC may also be paid if you had a 100 percent VA disability rating for ten continuous years prior to death, or if less than ten years, then at least five continuous years from the date of release from active duty. The VA determines who may receive DIC.
Benefit
Effective December 1, 2009, DIC payments to all surviving spouses are at the monthly rate of $1,154, adjusted annually for cost of living. If you are rated as totally disabled as a result of a service-connected disability for at least eight continuous years preceding death, your spouse is entitled to an additional $246. An additional $286 is payable for each dependent child.
SBP Reduction
Any DIC paid to your spouse is subtracted from SBP payments; although, DIC payments to or for children do not affect SBP payments.
Refund of SBP Costs
A refund is paid to your surviving spouse for the costs deducted for that part of the SBP benefit not received due to DIC being paid. If the DIC payment offsets the entire SBP payment, all costs will be refunded. These refunds are taxed as income to the survivor since they were not taxed when deducted from retired pay.
Note: Refunds are not made for: (1) Added costs associated with 1992-93 Open Season enrollments/changes or (2) enrollment costs associated with 1999-2000 and 2005-2006 Open Season elections).
DIC and Taxes
DIC payments are exempt from Federal and state income tax, which gives the surviving spouse more "take home" income.
Remarriage and DIC
When a surviving spouse remarries after age 55, but prior to age 57, DIC payments stop and SBP payments may be reinstated. If the spouse's SBP was reduced or eliminated because of DIC, the full SBP payment may resume. The SBP remarriage rules will apply. The spouse must first repay all the SBP costs that were refunded when DIC first began. Installment type repayments are allowed; contact DFAS for details.
Examples
In the following example the base amount selected for SBP coverage is $2,500 (which would provide an annuity of $1,375). The surviving spouse is entitled to both SBP and DIC.
SBP: $1,375
- DIC payments - $1,154
= SBP payable after DIC =$221
Note that the total of SBP plus DIC is still equal to what SBP would have paid alone; however, the DIC portion of the payment is not taxable as income. The spouse is refunded the costs paid by the retiree except what would have been paid to provide the spouse a benefit of $221.
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Wartime veterans who have limited or no income may be eligible for the non-service-connected disability veterans pension, a tax-free monthly benefit paid by the federal VA. The financially struggling spouses and children of deceased wartime veterans may also be eligible for pension benefits.
It is highly recommended that you seek the free assistance of an ODVA-trained and certified veteran service officer, who can help you determine the benefits you may qualify for and walk you through the application process.
Benefits and Programs
Veterans Pension
This benefit provides supplemental income to help veterans and their families cope with challenges arising from homelessness and other financial crises. The amount paid is set by federal law and varies based on your net worth and the amount you and your dependents receive from other sources.
For more information:Federal VA: Veterans Pension
Survivors Pension
If you are the financially struggling spouse or child of a deceased veteran who served his or her country during wartime, you may be eligible for survivors pension, a benefit of the federal VA.
Also known as death pension, survivors pension is a tax-free, needs-based monetary benefit for the survivors of deceased veterans, if your income is low enough to meet the requirements set by Congress. You must also be single (children must be unmarried to be eligible; spouses must not have remarried).
For more information: Federal VA: Survivors Pension
Aid and Attendance (A&A)
Veterans and survivors who qualify for a federal VA pension due to financial circumstances may be eligible for additional compensation if you require the aid and attendance of another person. This tax-free supplement to the monthly pension is commonly called A&A.
You or your deceased spouse must meet the federal VA’s service, age, disability and income requirements for Veterans Pension or Survivors Pension to be eligible for A&A.
Since the A&A provision increases the income allowance, you may be eligible for a supplemented pension even if your income is too high for a basic pension. However, you must still meet the applicable service and age or disability requirements.
For more information: Federal VA: Aid & Attendance and Housebound
Housebound
Veterans and survivors who qualify for a federal VA pension due to financial circumstances may be eligible for additional compensation if you are housebound, meaning confined to your home because of permanent disability.
You or your deceased spouse must meet the federal VA’s service, age, disability and income requirements for veterans pension or survivors pension to be eligible for this additional tax-free monthly compensation.
Since the housebound provision increases the income allowance, you may be eligible for a supplemented pension even if your income is too high for a basic pension. However, you must still meet the applicable service and age or disability requirements.
Those who qualify for a pension may also be eligible for additional compensation due to needing the aid and attendance (A&A) of another person, which is based on different criteria. However, you cannot receive both A&A and Housebound benefits at the same time.
How to apply
The federal VA requires you to submit evidence in support of your request for an increased monthly pension, preferably a report from your attending physician validating the need for housebound care.
For more information:Federal VA: Aid & Attendance and Housebound
Change Direct Deposit and Contact Information
You can change your direct deposit and contact information online, by mail or by phone. The following benefit information can be changed:
- Disability compensation benefits payment and contact information
- Pension benefits payment and contact information
- Education benefits payment information
For more info: Federal VA: