Will the military ‘widows tax’ disappear this year?

Cathy Milford (center), whose husband died shortly after retiring from the Coast Guard, speaks at a Capitol Hill rally to end the military “widows tax.” Milford was flanked by Sens. Doug Jones, D-Ala. (left), Susan Collins, R-Maine (right), and Jim Risch, R-Idaho (right of Collins), and accompanied by a host of military and veterans advocates. (Leo Shane III/Staff)

Cathy Milford has been fighting against the military “widow’s tax” for 25 years, and said it’s always an emotional drain.

“This is just an awful thing to do,” she said after a Capitol Hill rally Tuesday pushing for a fix on the issue. “Every time I talk about this, I have to dig my husband up and bury him all over again.”

Her husband, Harry, retired from the Coast Guard just a few months before suffering a fatal aneurysm. The couple would have celebrated their 50th anniversary this year.

Instead, she’s spending time on Capitol Hill lobbying lawmakers on problems with military and veterans benefits for surviving spouses. Milford is one of more than 65,000 individuals nationwide hurt by the issue, costing each an average of $11,000 each year.

“I could have well paid off my house with that over the years,” Milford said. “And I worry about the other families who need that money. I don’t like to come up (to Washington, D.C.) to talk about this, but who are they to ignore me and these problems?”

The first, the Dependency and Indemnity Compensation program, awards around $15,000 a year to survivors of veterans or troops who die of service-related causes. There is no cost to troops or families to enroll.

The other, the Survivor Benefit Plan, gives families of military retirees who enroll up to 55 percent of their loved ones’ retirement pay after the veteran dies. The life insurance-type payouts are subsidized by DoD, but require enrollees to pay-in part of their retirement benefit to be eligible.

Individuals who qualify for either SBP money or DIC benefits receive full payouts from the respective programs. But family members who qualify for both are subject to an offset, where for every dollar paid out in DIC their payouts under SBP are reduced by one dollar.

That costs those families up to $1,000 a month in payouts advocates insist they deserve. Some families have avoided the offset penalty by transferring benefits into their children’s accounts, but that creates other complicated tax issues.

Lawmakers passed a partial solution two years ago, extending a stipend to cover some of the offset, but advocates have said that a full solution needs to be a congressional priority.

“Some of our families have been waiting over four decades for this moment in time,” said Bonnie Carroll, founder of the Tragedy Assistance Program For Survivors.

“It’s important to remember that military spouses move every few years with their service members and face unemployment rates up to four times higher than their civilian counterparts. (This money) is essential to their financial security.”D

Federal rules take thousands in payouts from military families, but Congress has struggled to fix the problem.By: Leo Shane III

The legislation — introduced by Sen. Doug Jones, D-Ala. — does not yet have a price tag or a funding mechanism to cover the estimated $5.7 billion cost of ending the SBP-DIC offset problem. In past years, paying for the benefits has been the largest barrier in legislative success.

But Jones and Sen. Jim Risch, R-Idaho, said they believe there is momentum to act on the issue this year.

“This is incredibly unfair,” Risch said at the Capitol Hill rally. “There isn’t anyone who would look at this and not say that it’s just flat wrong, for people to pay premiums on an insurance policy and not be able to collect because the government is too greedy.”

Advocates have several events planned this week to raise awareness on the issue and lobby for quick action on Jones’ bill. Milford said she hopes this is the last time she’ll have to beg lawmakers to take action.

“I’m tired of hearing how much this is going to cost,” she said. “How much have they saved already by taking our money away?”