This week, the DoD announced the new 2021 BAH (Basic Allowance for Housing) rates, which will take effect on January 1, 2021.
Overall, the DoD is spending an increase of 2.9% on BAH for military members. However, that doesn’t mean your service member’s compensation will increase by that exact amount. BAH rated are calculated by military installation (based on the zipcode of the main gate) and by the service member’s rank. So some locations and ranks will see a greater increase, while others may experience a small decrease.
The increased BAH rates represent an overall increase of $1 billion, raising the DoD BAH payments from $22 billion to $23 billion. This will be paid out to approximately 1 million service members receiving BAH payments.
BAH rates are calculated to cover 95% of the local expenses for rent and utilities, which should include electricity, heat, water, and sewer services. The additional 5% is the out-of-pocket expectation for the service member. This varies, depending on rank and whether or not the service member has dependents. The average out-of-pocket responsibility is estimated to be $70 to $158 each month, which the DoD considers to be a “competitive and healthy” benefits package.
If you choose to live off base, you have the freedom to live somewhere below your monthly BAH and pocket any extra savings. Or you can live somewhere above your BAH and pay the difference out of pocket. If you live on base, housing offices should collect the BAH automatically without charging the additional 5%.
If you aren’t moving this year, you don’t have to worry about your BAH decreasing, because the DoD has individual rate protection for all members. Essentially, if local BAH rates decrease, people are grandfathered in and keep their old higher rate. As long as you have uninterrupted BAH eligibility in a given location, you will not see your BAH rate decrease. This protects service members who are in long-term housing contracts so they can continue to cover rent or mortgages. However, if you PCS, get demoted, or change your dependents status, then the newer decreased rate may apply.
Who determines BAH rates and whether they need to increase at a specific location? Well, indirectly, you do! Each year, the military services and local housing offices collect data for approximately 300 different military installations, including Alaska and Hawaii. (Service members stationed out of the country, OCONUS, receive a different housing allowance, called an Overseas Housing Allowance, or OHA.) Local military commands help conduct surveys to study housing rates at local apartments and individual housing units. So if you have concerns about the BAH rates at your installation, talk to the chain of command and the local housing office to help make adjustments to future rate calculations. If you get a survey asking you about BAH rates and housing costs, take the time to answer it. Your responses may help shape future BAH rates.
PCSgrades provides multiple resources for military families who have PCS orders and are deciding where to live. Our Community Insights include reviews of on-base housing and off-base neighborhoods, as well as local schools and moving companies. If you need to buy or sell a home, our Real Estate Rewards program helps connect you with a military-friendly real estate agent who understands the challenges military families face when moving.