By Cory Titus and Jen Goodale

Military families facing financial challenges deserve an allowance that covers their housing costs – not one that forces them to pay hundreds of dollars out of pocket toward living expenses while dealing with skyrocketing rents, inflation, and other financial pressures.

That’s why MOAA’s annual Advocacy in Action campaign will include our ongoing work to restore the Basic Allowance for Housing (BAH) to 100% of these costs – it’s been at 95% since 2019, damaging the financial readiness of servicemembers and their families.

[TAKE ACTION: Ask Your Lawmakers to Restore BAH]

Servicemembers don’t choose where they are stationed, and they are always on call. Many are forced to live far from their base or unit to find safe and affordable housing. The challenges mount further for families, with spouses of those in uniform more likely to be unemployed or underemployed.

Military Compensation: A Unique Package

Military service demands a distinct set of responsibilities and sacrifices, necessitating a specialized compensation structure tailored to the profession's unique demands.

The compensation package for servicemembers is made up of three distinct components:

• Basic Allowance for Housing (BAH)
• Basic Allowance for Subsistence (BAS)
• Basic pay

Along with the tax benefit associated with BAH and BAS, these pays constitute the Regular Military Compensation (RMC) package.

[MOAA ISSUE PAPER: Restoring BAH]

BAH is designed to cover housing expenses, including rent and utilities, at the servicemember's assigned duty station. This allowance includes a "with dependents" rate to accommodate larger living accommodations for those with families. BAS is a monthly stipend intended to offset the costs of food for the servicemember.

Adjustments, Not Raises

To maintain the purchasing power of servicemembers' compensation in the face of rising costs, each component of RMC is adjusted annually based on government metrics designed to track changes in wages, food costs, and housing expenses.

These adjustments do not represent a net raise in compensation; rather, they are intended to prevent the erosion of servicemembers' purchasing power due to inflation and cost-of-living increases.

BAH History

Congress eliminated servicemembers’ out-of-pocket housing expenses in 2005, setting BAH at 100% of average rental and utility costs. However, the government backtracked a decade later.

The 2015 National Defense Authorization Act (NDAA), responding to budget pressures under sequestration, allowed DoD to reduce the rate to 95%. The cut was phased in at one percentage point each year from 2015 to 2019.

Effect on Servicemembers and Families

When BAH does not cover housing and utility costs (which have skyrocketed based on availability and inflation), servicemembers must cover the difference using the already lower basic pay or subsistence portions of the compensation package.

DoD estimates the average out-of-pocket housing costs range from $85 to $194 per month; however, more than 70% of respondents to the 2023 Blue Star Families’ annual Military Family Lifestyle Survey reported paying more than $200 out of pocket per month.

[RELATED:  Survey: Military Families Less Likely to Recommend Service]

The reduced BAH coverage leaves some military families stressed to cover the costs of food, clothing, child care, retirement planning, and so on. Military families should not have to prioritize one basic need over another. According to FY 2024 DoD tables, the average E-5 with dependents will pay $1,416 a year out of pocket for housing, while the average O-3 with dependents will pay $1,692 a year.

Providing a sufficient housing allowance is crucial to alleviating the burden on servicemembers and military families and ensuring they have access to suitable accommodations without excessive commutes or financial hardship. Failure to address this issue could contribute to retention problems within the uniformed services.

Lessons Forgotten

From improvements in Temporary Lodging Expenses and Dislocation Allowance to years of last-minute BAH increases and the creation of the Basic Needs Allowance to address food insecurity, both DoD and Congress clearly recognize the financial strains on servicemembers and their families. However, all these efforts are substandard solutions to a self-inflicted problem: DoD opted to reduce BAH and has spent the years since working to address second- and third-order effects of decisions that placed increased financial burden on the backs of its own servicemembers.

Servicemembers need your help to get their BAH returned to 100%. Help support our Advocacy in Action campaign by writing your lawmakers and asking them to co-sponsor the BAH Restoration Act.