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Housing allowances explained

Housing can be one of the most difficult aspects of military life because of the frequent moves most service members must make. The services offer many programs and benefits to ease the situation and ensure that adequate and affordable housing is available.

Basic Allowance for Housing

Hundreds of thousands of service members stationed in the U.S. live off base and collect the Basic Allowance for Housing, or BAH. The tax-free monthly allowance goes to families who cannot get government quarters or who choose to live off base.

The system is intended to provide service members with housing compensation in line with civilian rental costs in the area where they are stationed. Allowances are based on location, rank and whether a member has dependents.

Allowances are devised from surveys of local civilian housing costs and adjusted accordingly. Rates are usually adjusted each Jan. 1, although Pentagon officials can update more often, as they did in adjusting rates in the Gulf Coast region in the wake of Hurricanes Rita and Katrina in 2005.

Under a recently completed five-year program to improve BAH, the allowance now covers 100 percent of average rental costs in all locations. Before the BAH overhaul began, service members paid an average of nearly 19 percent of their housing costs out of pocket.

Defense officials stress that BAH now fully covers average rental costs. Some service members still might choose to pay out of pocket for a portion of their rent to get larger accommodations. Thus, out-of-pocket costs for all members will never be eliminated.

Over its five-year upgrade to the BAH program, the Pentagon maintained “geographic rate protection,” a sort of artificial floor that prevented BAH rates from dropping in any area where housing costs happened to decline in a given year.

With the completion of the five-year plan, defense officials removed that geographic rate protection with the BAH rate changes that took effect Jan. 1, 2006, which means allowance rates can now go up as well as down in some locations from year to year.

However, the BAH program still features “individual rate protection” — a service member who arrives at a duty station and begins receiving BAH at that year’s rates will continue to get that rate for as long as he or she remains at that location, even if housing costs later decline in that area. However, newly arriving service members at that location will get the lower BAH rate on the assumption that they will be able to find suitable housing for less.

Because housing allowances are based on the prevailing rental cost of the area where a member works, someone who changes duty stations without changing residences may see a change in BAH. For example, a member could be stationed in an area with several duty stations within commuting distance from his residence. The member could be reassigned to one of the other duty stations and decide not to change residences.

Since his BAH would be based on his new duty station, he could see a change. If this change in duty assignment involves a low-cost or no-cost move, the member, with the permission of his service, can continue to receive his former BAH payment.

BAH differential

Single members living on base and paying child support may qualify for additional monthly payments. For 2007, these payments range from $94.20 to $283.50. Exact amounts are determined by paygrade.

If child-support payments are lower than the amount of the differential, the service member receives nothing more. In such cases, a member could qualify for the differential by increasing the amount of child support payments.

Overseas Housing Allowance

Military members on official accompanied overseas tours either are provided housing or receive Overseas Housing Allowance.

Eligibility for OHA does not require that family members join the service member overseas.

Members on unaccompanied overseas tours also receive OHA if government housing is not available. The families of service members on an unaccompanied overseas assignment remaining in the U.S. get the appropriate BAH for their local area.

Members assigned to overseas duty must fill out DD Form 2367, “Individual Overseas Housing Allowance Report,” to receive OHA. Check with local housing offices for specific procedures.

OHA compensates members for most housing expenses, including utilities, maintenance and move-in expenses. Rental ceilings are computed so 80 percent of members with dependents in a given location have their rental costs fully reimbursed by OHA.

Unaccompanied members and members without dependents are entitled to 90 percent of the rate for members with dependents.

Reservists

The 2006 Defense Authorization Act led to a significant change in BAH policy for reservists. Previously, reservists had to serve on active duty for 140 days or more to qualify for full BAH; any lesser period of mobilization qualified them only for reduced BAH Reserve Component/Transient (formerly BAH Type II) payments.

Reservists now qualify for full BAH when they are mobilized for more than 30 days. In addition, reservists mobilized for 30 days or less specifically in support of a contingency operation also get full BAH. They receive 1/30th of their normal full BAH rate for each day on active duty.

The only reservists who still draw BAH RC/T are those activated for noncontingency active duty, such as their two weeks of routine annual training. They receive 1/30th of their normal BAH RC/T rate for each day on active duty.

Two-household Families

The government provides dual housing allowances for service members on unaccompanied tours overseas who are unable to get into government quarters, but still are supporting a family stateside.

In such situations, members are eligible to receive a Family Separation Housing Allowance (equal to OHA) and Basic Allowance for Housing at the “with dependents” rate for their family.

Did You Know?

The Defense Department maintains an online calculator for Overseas Housing Allowance rates at https://secureapp2.hqda.pentagon.mil/perdiem/ohaform.html.