New Housing Allowance Guidelines Won't Result in Pay Cut

Geographic rate protection is expiring in January because Basic Allowance for Housing rates have reached a level where servicemembers no longer have to pay out-of-pocket expenses for housing, said Air Force Col. Virginia Penrod, DoD director of military compensation.

Any rate cut from year to year will not negatively affect servicemembers who are remaining in the area where they already receive BAH, she noted.

Penrod stressed that the BAH rate is set at the average housing cost for the area. Rates are further set based on military rank, with each pay-grade level having a set acceptable standard of housing. Servicemembers may still have to pay some out-of-pocket expenses if they choose to live above that level. Conversely, if servicemembers choose to live below the average level, they will still receive the same BAH rate.

Troops still have "individual rate protection" as long as they stay within the same geographic area. If average housing costs in a given geographic area go down, troops already living in that area continue to receive the higher amount. However, troops moving into that area receive the lower amount. Geographic rate protection was a temporary protection put into effect to prevent troops of the same pay grade living in the same area from getting different amounts of housing allowance.

Rate protection was instituted in 2000 to ensure troops' BAH rates were the same among like-pay grade individuals living in the same area while troops were still paying part of their own housing expenses, Penrod explained. Now that BAH rates are high enough to cover servicemembers' entire housing expenses, geographic rate protection isn't necessary, she said.

"It was a short-term program," she said. "We always had in our minds that we would eliminate the protection once the out-of-pocket (expenses) went to zero."

Under the new BAH guidelines, a servicemember moving to a new area will receive the appropriate BAH rate for that area, regardless of whether troops already living there are receiving a higher rate, she said.

This change makes financial sense, Penrod said. "We're adjusting rates to where they should be," she said.

Each year, BAH rates are adjusted with input from military housing offices in the area, Penrod said. If it is determined the rate needs to be increased, all servicemembers living in that area will receive the increase.