What 99% BAH Means For You

The 2015 National Defense Authorization Act contains a particular provision that has been vocally unpopular with military families:  a reduction of the amount of housing costs that Basic Allowance for Housing (BAH) is supposed to cover to 99% of the calculated costs for your location, rank, and family size.  As you know, there is a formula by which housing costs are calculated.  Since 2005, BAH rates have been set to cover 100% of the calculated average housing costs for each demographic group.  The 2015 NDAA directs that calendar year 2015 BAH rates be set at 1% lower than the average calculated housing costs.

The complaints have been loud and strong.  I can see both sides of the issue, but I lean towards the “no big deal” side of things.  While I understand that any decrease in benefits is disappointing, the military is downsizing.  Generous benefits are a recruiting and retention tool, and the military has significantly lower needs for either recruiting or retention than it has had in the past.

I am concerned about what it means for the future of BAH, but I also know that 100% reimbursement is a very recent thing.  For the first 12 years of my marriage, my husband’s housing allowance covered as little as 80% of the calculated housing costs.  I realize that this makes me an old fogey and biased, but that is my perspective.

In addition, I am acutely aware that BAH rates change every year regardless of what percentage they are covering, and that almost no one will lose money because of the BAH rate protection policies.

Also, BAH has always been an average figure, meaning that by design approximately half the recipients will have costs higher than BAH and approximately half the recipients will have costs lower than BAH.  While that is the intent, my experience has been that most of the people I know tend to spend less than their BAH, pocketing the difference for other spending purposes.

Lastly, I know that in areas with large military populations, market forces always adjust to the housing rates being provided by the Department of Defense.  In many areas, rental prices are artificially high because of the power of BAH and because so many people house-hunt based on their BAH.  These changes may help to bring those rental costs back to a level that would actually be supported by a true free market economy.

So, what does 1% actually look like in terms of less spending power?  I’ll use 2014 rates, because 2015 rates have not yet been published.  (They will probably come out next week, if you’re waiting!)

For an E-4 with dependents stationed at Fort Leonard Wood, 1% of the 2014 calculated costs is $9.  For an 0-1 without dependents in Jacksonville, Florida, 1% equals about $13.  For an E-7 with dependents in Dover, Delaware, 1% of 2014 BAH is about $17.  For an o-4 with dependents living in Washington, DC, 1% of 2014 BAH is nearly $30.  I’m not saying these are insignificant numbers, but they are not huge.

In the greater scheme of things, I am really conflicted.  I am acutely aware that military benefits are under constant threat, and that those benefits make up a large portion of overall military compensation.  Any cut to military benefits is essentially a pay cut, which I am obviously against.  However, I also know that there our country as a whole is facing serious economic difficulties, and that cuts are going to have to be widespread, and that they are probably going to be painful.  1% of BAH seems like a small sacrifice when our troops have pressing equipment, staffing, and training needs.

About the Author

Kate Horrell
Kate Horrell is a military financial coach, mom of four teens, and Navy spouse. She has a background in taxes and mortgage banking, and a trove of experience helping other military families with their money. Follow her on twitter @realKateHorrell.
  • JohnD

    But if you live in quarters you lose everything and get everything related to the house except phone and cable covered! This is a ploy to keep people on post in already built housing! Civilians can move into Govt housing since it is privately run. You still need permission to live off post, don’t you? This whole affair may be a moot point!

    • Kate

      JohnD, I would be surprised if it makes a significant difference between the on-post people and the off-post people. As shown, it is a very small amount of money.

      And I don’t think people need permission to live off post. The only time my husband needed permission to live off post was when he was key and essential personnel, and there was a house assigned to his billet. He asked for, and received, permission to live elsewhere because it was smallish for our family size and there were plenty of other people seeking on-base housing who were delighted to get a larger house.

  • airplane74

    If you want to change it in a big way the one question that I have is why should dual military both get bah (1=family the other = single bah) when if someone that is not dual military only gets one bah. This would be a big savings to the armed forces all together. I REALY THINK THIS SHOULD BE WHAT OUR GOVERMENT LOOKS AT BEFORE TAKEING OR LOWERING THE BAH.

    • Brad37

      Then similarly by the same silly logic, two military members living in the same home as roomates shouldn’t both get BAH.

      • david heath

        Almost, but roommates aren’t married. There is a key difference between two people sharing a house and a married couple.

    • Kate

      airplane74, I understand where you’re coming from but I disagree. BAH is a large part of total military compensation. If you restricted BAH to only one person in a dual military couple, you’d be cutting the overall compensation of the other service member significantly. Is their work worth less because they their spouse is also military?

      • David Heath

        Consider this. BAH is meant to cover housing costs. A married couple living together does not need twice the amount of a single person. They don’t need a bigger house. If they live in separate houses then they should both receive it. That extra BAH is free (not to mention tax-free) money straight into their savings account. Military compensation is your base pay. Benefits include BAH, BAS, free medical, free education etc.

    • Guest

      and sometimes dual military are forced to live in seperate states, sometimes seperate countries… if they have a child together this means one of the military members will have a home for the child and one will not

      • david heath

        You’re right, but the point the OP was making is a married couple living in the same house.

  • Renee

    I am a military wife and I think that BAH is something that should be given to all service members regardless of marital status or family situation. They work hard every day and that compensation is something they deserve, to deny benefits simply because of the fact they got married is wrong. Most of these military personnel spend a lot of their time deployed and aren’t even home to reap the benefits. They use that money to pay for their homes and the upkeep on them when they are away. Those lucky enough to wives and children know that the extra money is supporting the family when they are away. I know that the cut doesn’t seem like much but some have larger families then others and frankly the money is the same whether you have no children or ten. These small deduction will add up for the families with children.

    • david heath

      Such is the life of a military member. Why should the government pay for someone’s multiple children and larger houses? Reminds me of welfare. A lot of people much harder for much less without feeling a sense of entitlement.

  • MJ Boice

    Not sure if this is an error or not, but I decided to investigate the BAH for the Quantico, VA area since my husband and I will be moving there this summer. Now, the 2014 BAH for an E-6 is $2130. The 2015 BAH rate is a FULL 9% LESS, coming out at $1938! That’s a significant leap! I looked at the BAH for E5 an E7 as well to compare their percentage losses. E7: a 1% decrease going from $2148 to $2022. An E5: actually gets a 1% INCREASE going from $1812 to $1830! I truly hope this is a system error, because if they are using ONE rank’s BAH (depending on installation location) to “even out” the decrease….well, let’s just say that they will have a VERY vocal spouse of a SSGT in their ear! SHEESH!

    • Kate

      MJ Boice, I think maybe you don’t understand how and why BAH is calculated each year. Rental costs in each area change each year, and BAH is adjusted to reflect the market conditions. It is not unusual for rates to raise or drop 10% in a year, even when they are covering 10%, nor is it unusual for one rank to go up and one rank to go down. The outskirts of DC, in particular, were hard hit by falling market prices in this year’s calculations.

      You might find this article helpful to understand how BAH works: https://paycheck-chronicles.military.com/2013/12/1

      I hope that helps

      • MJ Boice

        Kate, Thank you. It does help. While I now understand that it is not unusual for rates to raise or drop by a factor of 10% in a year or that it is possible for one rank to go up while others go down, that seemed like such a very drastic jump in just a years time for one particular rank.

        I’m very interested in the statistical data that is collected and analyzed to come up with these numbers. I’ve followed the links to some of the other articles you have published that cover an overview of the process, and I am interested in learning more.

        Would you happen to know where one could find the rental market survey results percentages, rates from the local utility provider and the consumption information that is collected and analyzed to determine BAH rates? Is there a “one stop shop” site where I could find this information or would I need to look at the NOAA and the Census Bureau sites independently?

        Typically, I like logic to rule over emotion…but when I saw that percentage decrease I was so shocked! Seeing facts as they are really help me to understand the process and feel like I have a better grip over certain situations, so thank you for the clarification. I’m betting once I look more in depth at the data, I’ll feel even more comfortable preparing for the future. :)

        • Kate

          MJ, I haven’t yet found a public resource for the data that Runzheimer collects. I’m pretty sure it isn’t publicly available because the DoD paid for it and doesn’t really want to share all the information it has paid for with others who can use it for profit.

          Let me know if you have any more questions…there are a lot of nuances and details that can be confusing.

  • Bethany

    That could be accurate. There are many things that go into the BAH rates beside this change to cover “only” 99% of the calculated cost. The E-6 with dependents rate is calculated based on the cost of a 3 bedroom townhome whereas the E-5 rate is based on a 2 bedroom townhome. If the E-6 rate went down while the E-5 rate went up, that may may mean that the survey of housing costs found the 3 bedrooms got cheaper this year while 2 bedrooms went up.

  • jsfisch

    I was in the Navy for 10 years, never once saw BAH decrease. I’m on the GI bill right now and my BAH went down by $246 / month. Not exactly 1% and apparently the staying in the same area rule doesn’t apply to veterans.

    • Kate

      jsfisch, that doesn’t sound right. The monthly housing allowance (MHA) associated with the Post 9/11 GI Bill does include rate protection, AND the MHA rates do not change on 1 January, but rather on 1 August. I’m thinking that something else has changed. Was the month in question a full month of classes? Has your enrollment status changed from full-time?