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PHASE EIGHT: “The Next Big Adventure!”

When you are discharged or about to retire from your service in the National Guard, having plans in place may make your reintegration into civilian life a lot easier. The following information and options will assist you with preparing for this final stage of your financial lifecycle.

1) SBP (Survivor Benefit Plan)

Congress created the Uniformed Services Survivor Benefit Plan (SBP) in 1972 to put an end to the category of destitute survivors – individuals who outlive their military breadwinners and are unable to make ends meet. SBP is the sole means by which survivors can receive a portion of military retired pay. Without it--retired pay stops on the date of the retiree's death. Every military member is automatically enrolled at no cost while they serve on active duty. Should they die on active duty with an eligible beneficiary, SBP is payable. When they retire, military members must elect to receive reduced retired pay for their lifetime, so as to continue 55% of their retired pay to their survivors following their death.

2) Servicemembers' Group Life Insurance (SGLI) and Conversion

SGLI is a program of low cost group life insurance for Service Members on active duty, ready reservists, members of the National Guard, members of the Commissioned Corps of the National Oceanic and Atmospheric Administration and the Public Health Service, cadets and midshipmen of the four service academies, and members of the Reserve Officer Training Corps.

SGLI coverage is available in $50,000 increments up to the maximum of $400,000. Since SGLI is term insurance, it does not have cash or loan values and it does not pay dividends. SGLI continues for four months after you leave the service, but you have two options for conversion once you four months are up:

  1. You may convert your full-time SGLI coverage to term insurance under the Veterans' Group Life Insurance (VGLI) program
  2. You may convert to a permanent plan of insurance with one of the participating commercial insurance companies

VGLI coverage is issued in multiples of $10,000 up to a maximum of $400,000. However, a Service Member's VGLI coverage amount cannot exceed the amount of SGLI they had in force at the time of separation from service. Like SGLI, VGLI provides a maximum of $400,000 of group term life insurance for veterans. VGLI has no cash, loan, paid-up or extended insurance values and does not pay dividends.

3) Social Security

U.S. Social Security is a social insurance program that is funded through dedicated payroll taxes called Federal Insurance Contributions Act (FICA). The payroll taxes collected for Social Security are neither simply "taxes" nor do they create "retirement accounts" analogous to investment accounts such as IRAs. The FICA taxes constitute insurance premiums protecting workers and covered family members against loss of income from the wage earners retirement, loss of income from the wage earners disability, as well as survivor benefits in the event of the wage earners death.

When to claim:

Is it smart to claim Social Security benefits as soon as eligibility begins at age 62, or is it better to wait until what the government terms "full retirement age" (which falls between 65 and 67, depending on the year of one's birth)? Making the right choice means reckoning with tradeoffs.

Takers at age 62 pay a price: Each monthly check is forever reduced to 75 percent of what it would have been had they waited to full retirement age. On the upside, they're pocketing for several years money that they otherwise wouldn't have had during that period.

Despite the penalties involved, many Americans – about 50 percent, according to the Social Security Administration – take the money as soon as they can get it.

4) Retired Pay Compensation

National Guard members who complete a minimum of 20 “qualifying” years of service (creditable retirement years) become eligible for retired pay at age 60, but you must apply for it to receive it.

The “20-Year Letter”: The Secretary of the military department concerned notifies, in writing, members of the Reserve Forces who have completed the eligibility requirements for retirement and receipt of retired pay at age 60. Notice is sent to the member within one year of reaching eligibility. This is commonly referred to as the “20-year letter.”

You can apply by completing the Reserve Retired Pay Application Human Resource Command (HRC) (for those in the Army Guard) or Air Force Personnel Command (AFPC) (for those in the Air Guard) must be contacted and application forms completed before retired pay can be paid.

5) TRICARE

TRICARE is the health care program serving active duty Service Members, National Guard and Reserve members, retirees, families and survivors worldwide. There are three TRICARE contractors who operate the program in the U.S.:

  • TriWest: Contracted for the Western half of the U.S.
  • Humana: Contracted for the Southeast.
  • HealthNet: contracted for the Northeast.
  • Other locations: Wisconsin Physicians Service serves overseas locations like Puerto Rico, US Virgin Islands, and Guam, as well as the TRICARE For Life program.
  • Other coverage: United Concordia operates the TRICARE Dental Program, and Delta Dental operates the Retiree Dental Program.

TRICARE is a combination HMO/PPO medical and dental program. When not on active duty, Guard members can purchase TRICARE Reserve Select, a form of TRICARE Standard. Gray area retirees can purchase TRICARE Retired Reserve. At age 60, all military members receive TRICARE Prime or Standard. Upon reaching Medicare eligibility and enrolling in Medicare Part B, members and their families receive TRICARE For Life, a no-cost Medicare supplement. For more information about TRICARE, please refer to the TRICARE web portal.

6) Veterans Affairs Disability

If you were ill or injured during your military service, you may be eligible for benefits administered by the Department of Veterans Affairs (VA). Benefits are paid to veterans who have injuries or diseases that happened while on active duty, or were made worse by active military service. It is also paid to certain veterans disabled from VA health care. These benefits are tax-free and are paid monthly.

How to file for VA Disability benefits: To receive compensation for disabilities, you must make application to the VA, be evaluated by VA medical professionals, and have your claim for disability adjudicated by the VA. Once the VA finishes their assessment, they will award a percentage of disability to the veteran in writing. Based on the percentage of disability, compensation will begin and is payable monthly.

If the condition worsens, or the veteran feels the process was unfair or lacked some details, the veteran may appeal the award and determination to the VA, and submit application for appeal. The process is not fast, but if justified, it can result in an increase in disability compensation. Refer to the VA web site for more information and application procedures, or contact your local Transition Assistance Advisor.

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