How Military Spouses Deal with Benefits and Debt
Military spouses and dependents share in the benefits earned by service members and that often includes the pressure and stress that comes with trying to collect those benefits. Military spouses often have to relocate, leave jobs, start a new home and make new friends as they crisscross the country or even the world when a service member is assigned to a new base. The challenge to keep up socially and financially can cause a great deal of stress on a marriage. Fortunately, the military recognizes that and is taking steps to try and ease the transition whenever possible. Under the 2003 Servicemember’s Civil Relief Act (SCRA), spouses of active duty service members can get help with their financial obligations if they have burdensome loans that are either in the service member’s name or in both spouses’ names. During the period of active duty, SCRA caps interest rates on any service member’s credit card, mortgage or certain other loans at 6% per year. In addition, SCRA protects a service member debtor and his or her spouse from eviction, and from foreclosure and/or forced sale of a home. It also limits the ability of a health or life insurance company to terminate a policy, and protects a military family from impending bankruptcy proceedings. In the tragic event that a service member dies while on active duty, SCRA benefits essentially end, but the Department of Defense (DoD) and the Department of Veterans Affairs (VA) provide many benefits for the surviving spouse and any children.
Helping Spouses Receive Benefits
Married members of the military can ease the transition for spouses by helping them take the steps needed to qualify for the benefits due a solider and family. The service member is required to fill out paperwork that allows their spouse to receive benefits. This is known as the Defense Enrollment Eligibility Reporting System (DEERS). It is the first step toward being approved to use all military facilities and receive all benefits. It is helpful if the spouse keeps an original copy of the marriage certificate to settle any questions about the relationship. If children are involved, birth certificates and Social Security cards are needed for their enrollment. Everyone involved must have a Social Security card. Once the paperwork is finished, make sure to get a military ID card for the husband, wife and all children over the age of 10. Other items to take care of include listing the spouse as a beneficiary on the life insurance policy, and checking to make sure your income tax status reflects your marriage and the state where you will be living. There should be orientations for married people on base to be sure they understand what benefits they receive and where to go for help. Find the Community Service Center and direct any questions to them.
Accessing Benefits for Spouse and Dependents
Spouses and dependents entitled to benefits from the VA have a lot of paperwork to complete that can, at times, be very confusing and time-consuming. The application forms are available on the VA website, but you must exercise a great deal of patience to do this successfully by yourself. It may be in your best interest to call the regional benefit office in your area and ask for an appointment to speak with an advisor to help with the process. Each of the benefits available for spouses and dependents has its own form, its own set of requirements for eligibility and compensation and all of it can be tedious to work through. In addition to filling out forms, you must have support documents and know the specific conditions that must be met before any benefit is approved. For example, to claim the Survivor’s Pension, a dependent must fill out VA Form 21-534EZ and be under 18 or, if under 23, a dependent must be attending a VA-approved school or be permanently incapable of self-support due to a disability that happened before the age of 18. Even then, your yearly family income must be less than the amount set by Congress or you won’t receive anything. And that’s just for one benefit! Similar forms, requirements and documents of proof are needed for Dependency and Indemnity Compensation, Dependents Educational Assistance Program, and virtually every benefit program available. So take a deep breath, ask for appointment with a VA representative at the regional offices, bring any proof you have to support your claim, and exercise patience. You will need all of that.
Active Duty Benefits
Military spouses qualify for a long list of benefits once they have filled out the DEERS paperwork. Some of the benefits are fairly obvious, but some may not be.
The obvious benefits active duty spouses can look forward to include the following:
- Health insurance
- Life insurance
- Commissary privileges for food, gas and household goods
- Free or discounted prices at bowling alleys, theatres, recreational facilities, and teen youth centers
- Help with housing costs
There are also lesser-known benefits worth looking into.
These include the following:
- Military Spouse Preference Program – The Department of Defense gives military spouses preferential treatment for job openings in civilian positions.
- Express Loan Program – The Small Business Administration gives military spouses small business loans to start or expand their business. Up to $350,000 can be borrowed at very low interest rates.
- GI Bill Benefits – While the service member or veteran typically receives the education benefits of the GI Bill, it can be transferred to a spouse or dependent as well.
- Medical and Dental Facilities – Most bases have their own medical and dental facilities that give priority treatment to service members and their dependents.
- Child Care Services – These services are available for children up until they start kindergarten.
When military personnel die as a result of their service, their spouses are entitled to a death gratuity. Currently, the payment is $100,000. It is free from federal and state income taxes for any service member who dies while on active duty or while performing authorized travel to or from active duty. The death gratuity is payable to a surviving spouse. If there is no spouse, the gratuity is payable to the child or children of the deceased in equal shares. Burial and memorial benefits are also available to spouses, as well as other financial help for widows. The VA pays a burial allowance up to $2,000 if the veteran’s death is service-connected. If the service member is buried in a VA national cemetery, some or all of the cost of transporting the deceased may also be reimbursed. Dependency and Indemnity Compensation (DIC) is a monthly benefit paid to surviving spouses of some deceased veterans, including those who died while on active duty. The current base rate is $1,233 of 2016, with increases for each surviving child and in certain other instances. There also is a transitional benefit of $306 for children under 18. The Survivors’ (Death) Pension is a need-based benefit paid to a surviving spouse who has not remarried and whose income falls below a certain threshold. For example, a surviving spouse with no dependent children must have an annual income of less than $7,933 to qualify for the Death Pension.
Life Insurance and Health Insurance
Unless a service member declines coverage when called into service, he or she is automatically enrolled in the Servicemembers’ Group Life Insurance (SGLI) plan, which is a low-cost term life insurance policy. SGLI premiums are deducted from the service member’s pay. Upon the death of an active duty service member, a spouse can receive a maximum of $400,000, which is exempt from taxation. In addition, surviving spouses of service members who die in the line of duty may be eligible for Survivor Benefits Plan (SBP) payments. The SBP is a monthly annuity that is based on what a service member would have received upon retirement. The annuity is reduced when the surviving spouse reaches age 62 or if the spouse remarries before the age of 55. TRICARE is a managed health care program of the DoD. CHAMPVA is a similar program offered by the VA. Surviving spouses and beneficiaries of deceased veterans may be eligible for one of these health insurance programs.
VA Loan Benefits
Spouses of service members who died on active duty, or as a result of a service-connected disability, may be eligible for a VA home loan. The surviving spouse must not have remarried if younger than 57. These VA-backed loans are made by private lenders but protected against loss if the payments are not repaid by the borrower. The largest guarantee that the VA currently provides is $60,000. Lenders can lend up to four times the guaranteed amount and can waive a down payment if the surviving spouse’s income and credit qualify. If a service member or his or her spouse received a VA loan before the member’s death, the surviving spouse may also be eligible for a VA-guaranteed Interest Rate Reduction Refinancing Loan (IRRRL). This is a loan that replaces the original mortgage with one with a lower interest rate, or one that replaces an adjustable-rate mortgage with a fixed-rate one.
Education Benefits for Military Spouses and Dependents
Under the VA Dependents’ Educational Assistance (DEA) program, surviving spouses who remain single are eligible to receive educational assistance benefits for up to 45 months after a death or disability as a result of active duty service.
Dependents’ Educational Assistance benefits can be used for the following:
- Degree programs at colleges and universities
- Accredited distance learning programs
- Vocational, business and technical training
- On-the-job training programs
Spouses also can receive help from the My Career Advancement Account (MyCAA), Memorial Scholarships or the Spouse Education and Career Opportunities (SECO) program. MyCAA provides tuitions credits of up to $2,000 a year toward an associate’s degree or professional certification at an approved college. Memorial scholarships are offered through the Veterans Affairs office at varying levels, depending on funding. The SECO program does not offer money, but does offer help planning for a career and pointing you toward the resources needed to obtain a degree. If the deceased service member contributed to the Montgomery GI Bill education program, the surviving spouse or dependents are entitled to a refund. Those who enrolled had $100 a month deducted from their pay for 12 months. Surviving spouses and dependents are entitled to the $1200, or whatever portion of that the military member contributed to the program. Contact the St. Louis Regional Processing Office (at 400 S. 18th Street, St. Louis, MO, 63103) for details.
About The Author
Bill “No Pay” Fay has lived a meager financial existence his entire life. He started writing/bragging about it in 2012, helping birth Debt.org into existence as the site’s original “Frugal Man.” Prior to that, he spent more than 30 years covering the high finance world of college and professional sports for major publications, including the Associated Press, New York Times and Sports Illustrated. His interest in sports has waned some, but he is as passionate as ever about not reaching for his wallet. Bill can be reached at [email protected].
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