255
SEC. 655. CONCURRENT RECEIPT OF VETERANS DIS-
ABILITY COMPENSATION AND MILITARY RE-
TIRED PAY. 
Section 1414(a) of title 10, United States Code, is 
amended by inserting before the period at the end the fol-
lowing: ‘‘, and in the case of a qualified retiree receiving 
veterans’ disability compensation at the rate payable for 
a 100 percent disability by reason of a determination of 
individual unemployability, payment of retired pay to such 
veteran is subject to subsection (c) only during the period 
beginning on January 1, 2004, and ending on September 
30, 2009’’. 
SEC. 656. MILITARY SURVIVOR BENEFIT PLAN BENE-
FICIARIES 
UNDER 
INSURABLE 
INTEREST 
COVERAGE. 
(a) AUTHORITY TO ELECT NEW BENEFICIARY.—
Section 1448(b)(1) of title 10, United States Code, is 
amended—
(1) by inserting ‘‘or under subparagraph (G) of 
this paragraph’’ in the second sentence of subpara-
graph (E) before the period at the end; and 
(2) by adding at the end the following new sub-
paragraph: 
‘‘(G) ELECTION
OF
NEW
BENEFICIARY 
UPON DEATH OF PREVIOUS BENEFICIARY.—
256
‘‘(i) AUTHORITY FOR ELECTION.—If 
the reason for discontinuation in the Plan 
is the death of the beneficiary, the partici-
pant in the Plan may elect a new bene-
ficiary. Any such beneficiary must be a 
natural person with an insurable interest 
in the participant. Such an election may be 
made only during the 180-day period be-
ginning on the date of the death of the 
previous beneficiary. 
‘‘(ii) PROCEDURES.—Such an election 
shall be in writing, signed by the partici-
pant, and made in such form and manner 
as the Secretary concerned may prescribe. 
Such an election shall be effective the first 
day of the first month following the month 
in which the election is received by the 
Secretary. 
‘‘(iii) VITIATION
OF
ELECTION
BY 
PARTICIPANT
WHO
DIES
WITHIN
TWO 
YEARS
OF
ELECTION.—If a person pro-
viding an annuity under a election under 
clause (i) dies before the end of the two-
year period beginning on the effective date 
of the election—
257
‘‘(I) the election is vitiated; and 
‘‘(II) the amount by which the 
person’s retired pay was reduced 
under section 1452 of this title that is 
attributable to the election shall be 
paid in a lump sum to the person who 
would have been the deceased person’s 
beneficiary under the vitiated election 
if the deceased person had died after 
the end of such two-year period.’’. 
(b) CHANGE IN PREMIUM FOR COVERAGE OF NEW 
BENEFICIARY.—Section 1452(c) of such title is amended 
by adding at the end the following new paragraph: 
‘‘(5) RULE FOR DESIGNATION OF NEW INSUR-
ABLE INTEREST BENEFICIARY FOLLOWING DEATH 
OF ORIGINAL BENEFICIARY.—The Secretary of De-
fense shall prescribe in regulations premiums which 
a participant making an election under section 
1448(b)(1)(G) of this title shall be required to pay 
for participating in the Plan pursuant to that elec-
tion. The total amount of the premiums to be paid 
by a participant under the regulations shall be equal 
to the sum of the following: 
‘‘(A) The total additional amount by which 
the retired pay of the participant would have
258
been reduced before the effective date of the 
election if the original beneficiary (i) had not 
died and had been covered under the Plan 
through the date of the election, and (ii) had 
been the same number of years younger than 
the participant (if any) as the new beneficiary 
designated under the election. 
‘‘(B) Interest on the amounts by which the 
retired pay of the participant would have been 
so reduced, computed from the dates on which 
the retired pay would have been so reduced at 
such rate or rates and according to such meth-
odology as the Secretary of Defense determines 
reasonable. 
‘‘(C) Any additional amount that the Sec-
retary determines necessary to protect the actu-
arial soundness of the Department of Defense 
Military Retirement Fund against any increased 
risk for the fund that is associated with the 
election.’’. 
(c) TRANSITION.—
(1) TRANSITION PERIOD.—In the case of a par-
ticipant in the Survivor Benefit Plan who made a 
covered insurable-interest election (as defined in 
paragraph (2)) and whose designated beneficiary
259
under that election dies before the date of the enact-
ment of this Act or during the 18-month period be-
ginning on such date, the time period applicable for 
purposes of the limitation in the third sentence of 
subparagraph (G)(i) of section 1448(b)(1) of title 
10, United States Code, as added by subsection (a), 
shall be the two-year period beginning on the date 
of the enactment of this Act (rather than the 180-
day period specified in that sentence). 
(2) 
COVERED
INSURABLE-INTEREST
ELEC-
TIONS.—For purposes of paragraph (1), a covered 
insurable-interest election is an election under sec-
tion 1448(b)(1) of title 10, United States Code, 
made before the date of the enactment of this Act, 
or during the 18-month period beginning on such 
date, by a participant in the Survivor Benefit Plan 
to provide an annuity under that plan to a natural 
person with an insurable interest in that person. 
(3) SURVIVOR BENEFIT PLAN.—For purposes 
of this subsection, the term ‘‘Survivor Benefit Plan’’ 
means the program under subchapter II of chapter 
73 of title 10, United States Code.