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Friday, January 28, 2011

Military Benefits for Former Spouses: Legislation and Policy Issues

David F. Burrelli
Specialist in Military Manpower Policy

In 1981, the Supreme Court ruled that the former spouse of a military member or retiree could not be awarded any share of that member’s/retiree’s retired pay as a part of a divorce property settlement in a community property state. In response, Congress enacted the Uniformed Services Former Spouses’ Protection Act (USFSPA) in 1982. Under the USFSPA, state courts can treat disposable military retired pay as divisible property in divorce cases. In addition, certain former spouses would remain eligible to receive certain military benefits or privileges. The USFSPA has since been modified on a number of occasions.

The USFSPA allows for ‘disposable’ military retired pay to be divided as part of a divorce settlement. The law makes no assumption of such a division nor does it presume how much of a division should be made. However, state laws may vary on these concepts. In addition, the USFSPA allows for certain military benefits to be awarded to qualifying former spouse. These include health care benefits and commissary/exchange privileges.

Confusion exists over the distinction of ‘disposable’ versus ‘total’ retired pay. The use of disposable retired pay may have implications in terms of taxes withheld and taxes paid. In addition, recent changes in other laws that affect military retired pay may inadvertently affect the amount of retired pay a former spouse receives. For example, diability pay is not divisible under the USFSPA. Recent changes that allow certain military retires to receive both disability pay and military retired pay (until recently, these were offsetting), increase the amount a retire may receive and may also increase the former spouse’s share in cases where the division was made on a percentage basis.

In other situations, later career and financial decisions made my military retirees may affect the availability of their retired pay. For example, military retirees who take federal civilian jobs and then retire from those jobs can waive their military retired pay and credit their military time to their civilian careers. In so doing, they eliminate their retired pay, and thereby any share that might have been awarded to the former spouse.

Since its inception, the USFSPA has remained contentious. Opponents of the law feel that it is unfair and should be modified or repealed. Proponents argue that the law protects the former spouse within nationally accepted standards and that protection should be improved in some details. These proposed modifications include (1) expanding the eligibility for commissary and exchange benefits for former spouses, (2) providing survivor benefits for certain former spouses, (3) terminating direct payments to a former spouse upon remarriage, (4) limiting judicial jurisdiction during the reopening of a settled divorce, and (5) further redefinition of “disposable” retired pay. As with the original provisions of the USFSPA, these and other proposed changes have been the source of great debate.

On October 12, 2004, a Federal Judge dismissed a case challenging the USFSPA.

Although legislation making various changes to the USFSPA has been introduced in the past, none of this legislation has allowed for retroactive change to settled cases.

Date of Report: January 12, 2011
Number of Pages: 23
Order Number: RL31663
Price: $29.95

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