New Basic Housing Allowance Policy

January 10, 2006

By John Buhl

Department of Defense (DoD) officials have announced that, starting this month, the geographic rate protection clause—which ensures that servicemembers moving to a new area receive the same basic housing allowance (BAH) rate as those already in the area—will be abolished. DoD stressed that no one would sustain a reduction to his or her current allowance.

Geographic rate protection ensured that military members moving to a particular region received the same BAH as their equal pay grades. Now they will receive the set BAH allowance for that fiscal year, even if that figure is lower than what servicemembers already living in the region receive.

In addition, servicemembers have individual rate protection, which ensures that a military member living in a particular area will not have his or her BAH reduced, even if the average housing costs of the area decline.

The individual rate protection will not be affected by the rule change—as long as the servicemember stays in the same geographic area, the allowance will not be reduced.

Geographic rate protection was established in 2000 to ensure that like-pay grades received similar housing compensation, and to ensure that military members did not have to suffer out-of-pocket expenses to obtain standard housing.

Col. Virginia Penrod, DoD director of military compensation, noted that the housing rates had reached a level where servicemembers were no longer susceptible to out-of-pocket expenses for housing.

“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.”

Col. Penrod added, “We’re adjusting rates to where they should be.”

BAH allowances are reviewed each year. They are set at average housing costs for the geographic area and adjusted based on individual pay grades.