Each year the DoD adjust BAH Rates across the board. They use a host of information to calculate how much they should provide servicemembers. In some locations BAH Rates increase, and in others they decrease.
Thankfully, the BAH Rate Protection policy ensures your BAH rate won’t decrease in the middle of your assignment, even if BAH Rates for your location decrease. This is important to know, with the recent news that the DoD is decreasing BAH to 99% of the expected cost of housing in your area.
Let’s take a look at BAH Rates and how the BAH Rate Protection policy maintains your BAH rates, even if they decrease in your area.
How BAH Rates Are Calculated
Determining BAH Rates is actually a fairly complicated process, so we will simplify it to the basics here. You really need to know two things: how the data is collected, and how it is processed.
BAH data is based on rental prices, the cost of utilities, and the price of renter’s insurance. Rental costs are collected on apartments, townhouses/duplexes, and single-family rental units of varying bedroom sizes. This information is then mashed into a complex formula that is designed to give service members housing based on their pay grade and dependent status.
The process is a bit complicated and is repeated each year. Sometimes the BAH rates increase, other times they decrease.
You can learn more about BAH Rates in the DoD BAH Primer, a 13 page pdf which explains everything in detail.
BAH Rate Protection
The good news is you shouldn’t see your BAH Rate drop during the middle of your assignment, even if the rates for your location decrease in any given year. There are certain exceptions to this rule, which we’ll cover in just a moment.
Individual BAH Rate Protection: This prevents decreases in your housing allowance, as long as your status doesn’t change. Servicemembers are entitled to the greater of the published BAH rate on January 1, or the BAH they were paid on December 31 of the previous year. This rate protection is in place from the time a servicemember arrives on an installation until the status of the servicemember changes due to:
- Permanent Change of Station (PCS)
- Reduction in paygrade
- Change in dependent status
Two important notes: The Change in dependent status on means “with dependents” or without dependents,” not the number of dependents. So you won’t see a BAH decrease if you have another child or if one of your children moves out of your home (provided you still have dependents).
Receiving a promotion also doesn’t hurt your BAH, only a reduction in pay grade will potentially decrease your BAH. So if you are promoted in a given year, you should be eligible for an increased BAH, again using the higher of the BAH Rate on January 1 of the given year, or the previous protected rate.
Summing Up BAH Rate Protection
To sum it up, BAH Rate Protection ensures that servicemembers will receive published increases in BAH Rates, but not decreases, unless any of the 3 previously mentioned conditions apply. Decreased BAH Rates should only affect servicemembers who PCS into a new area, have a change in dependency status (change from with dependents to without, or vice-versa), or to those who receive a reduction in pay grade.