Banner ad: Harold D. Carr
Watch video: Harold D. CarrSide ad: Car Star - Hi TechSide ad: Larson Automotive GroupSide ad: The Vaporium

Your 2020 Guide to Military Benefits

Military service members and veterans have seen major changes to their pay and benefits over the past year.

A new retirement benefit, revised rules for Tricare health insurance and changes to GI Bill rules can have a far-reaching impact on the lives and livelihoods of military families around the world.

For the most part, it’s good news. Basic pay is once again rising at the same rate as private-sector wages after several years of tight Pentagon budgets resulted in service members losing some ground compared to their civilian counterparts. The new retirement benefit, which includes cash contributions to a Thrift Savings Account, is a major boost for the vast majority of the force that serves for six or eight or ten years but never reaches the 20-year mark to become eligible for a lifelong pension.

Yet revisions to health care coverage and the GI bill education benefits are more complex, and may impact individual service members, veterans and their families in different ways.

 

Maximizing the options available to you is essential to making the most out of your military career. These are generous benefits. You’ve earned them. Getting smart about what has changed and what hasn’t is worth your time.

Basic pay is getting its biggest boost in a decade

A look at the basics that make up your basic pay … and what could be in store for your bank account come 2021:

What is basic pay?

Basic pay is determined by rank and length of service, with automatic raises when troops meet certain time and promotion markers. In addition, each year Congress determines how much of a pay raise all troops should get.

The figure is tied by law to the anticipated increase in private sector pay, but lawmakers in the past have approved bigger raises to help with recruitment and retention or smaller raises to save money for other military priorities.

Annual pay increases

The annual military pay increase takes effect in January of each year. The White House issues its target for the hike each August, either going along with the projected rise in private sector wages, known as the Employment Cost Index, or offering justification for proposing a different rate.

Congress has the final say, however. In the past, lawmakers have overridden attempts by the White House to submit lower pay raises in an effort to save money for other priorities. The raise is usually applied across the board, although lawmakers made an exception at the height of the wars in Iraq and Afghanistan to provide more money for some mid-career service members to help with retention.

The most junior enlisted service members make around $20,000 a year in basic pay (not including allowances, special pays and other benefits), while enlisted troops nearing retirement typically earn about $70,000 annually. Officer pay is significantly higher: The most junior officers clear close to $38,000 a year while senior officers nearing 20 years of service can make in excess of $170,000. That means that even a small change in the anticipated pay raise calculations can make a big difference for military families.

For example, in recent years (but not for 2021) the Pentagon has backed plans for a pay raise 0.5 percent below the federal formula for the annual increases.

If that reduction were to be put in place for 2021, an E-4 with three years of service would see a difference of about $150 in take-home pay over the course of a year compared to the expected level of pay boost. For a senior enlisted or junior officer, the difference is closer to $300 over 12 months.

Outside advocates have said even though those gaps won’t cover a mortgage payment, they are the difference between being able to afford a monthly co-pay for prescriptions or having to go without. That makes even small increases or trims a major issue in the military community.

Since the start of the all-volunteer military force in 1973, Congress has authorized a pay raise of at least 1 percent for troops every year, even during budget cycles where other civilian wages held steady. For the last four years, those increases have matched the rate of expected growth in civilian wages.

This year’s pay raise

The 3.1 percent pay raise troops received in January 2020 was the largest they had seen since 2010. That increase matched the federal formula based on the annual Employment Cost Index calculation, but lawmakers and the president claimed credit for the boost as proof they are taking care of military members and families.

In February, White House officials released their fiscal 2021 budget proposal which included a 3.0 percent pay raise for next January. It too matches the ECI formula under federal law, and if it becomes law, it would mark the first time in a decade that troops receive pay raises of 3 percent or more in consecutive years.

Lawmakers have already voiced support for that level. If it holds, that means a monthly boost of around $70 for junior enlisted troops, $125 for senior enlisted and junior officers, and nearly $240 for senior officers.

Congress is expected to debate the pay raise level along with the rest of the defense budget over the next few months. Typically, the full budget plan is not approved until winter, even though the next fiscal year begins Oct. 1. With the November election compressing the legislative schedule this year, final approval of the pay raise could again stretch well into the fall and early December.

Current BAH rates aim to cover 95 percent of housing costs

This year, the Pentagon bumped the 2020 Basic Housing Allowance rates an average 2.8 percent higher compared to last years, setting the tax-free benefit at a level intended to cover 95 percent of the anticipated housing costs for each assigned duty post in the U.S. Individual service members are now expected to pay the remaining 5 percent of housing costs with out-of-pocket cash.

What is BAH?

Basic Allowance for Housing provides service members not living on base or in government-provided housing a cash supplement to be able to rent housing at local market rates. The amount paid to a service member depends on rank, whether or not they have dependents, and where they are based.

Eligibility

Any active-duty service member stationed in the 50 U.S. states who is not provided with government housing is eligible. Those stationed in U.S. territories, possessions or overseas who are not provided government housing are eligible for an Overseas Housing Allowance, which is calculated under a separate formula.

Noteworthy

 

BAH is non-taxable, and unlike the Overseas Housing Allowance, if a service member can find housing below the BAH rate for their assigned location, they are able to pocket the difference, because what service members actually spend is not used to calculate BAH. (In Overseas Housing Allowance, however, it’s “use it or lose it.” Service members lose whatever portion of OHA they do not spend.)

How BAH is calculated

DoD calculates median rental costs for 300 military housing areas, including Alaska and Hawaii. The calculations are based on the rental costs for a 1 or 2 bedroom apartment, a 2 or 3 bedroom townhome, and a 3 or 4 bedroom single family home, and then set against specific enlisted and officer ranks for a service member with dependents and service members without dependents.

Rates very widely

Based on rank and the local real estate market, what you take home can be less than $1,000 or more than $3,000. For example, an E-1 at Fort Bragg, North Carolina without dependents would receive $954 according to the 2020 BAH Calculator. On the other hand, a colonel or Navy captain working in Washington, D.C. with dependents would receive $3,171, based on the 2020 rates.

Check your rates

For details of locations across the country, you can use the Defense Department’s official BAH calculator here.

What if BAH for my area is cut while I live there?

Service members are protected from falling rates under a rate protection policy that maintains their current rate for as long as they remain at their location, regardless of whether the official rates drop. However, they will receive the new, lower rate if they are demoted or if their dependency status changes, in which case they’d receive the current rate for their new status.

If rates rise in a location, all service members receive the higher rates regardless of when they arrived. Two rates are set for each location by a survey of rental costs: The with-dependents rate goes to personnel with at least one dependent, whether that be a spouse or a child, and does not increase for additional family members.

What if my spouse and I are both in the military?

If there are no children, both spouses get the without-dependents rate. If the couple has children, one spouse receives the with-dependent BAH rate, while the other gets the single-rate BAH.

You can find more information here.

CLICK FOR COMPLETE ARTICLE

 


Top

Logo: WA Military Resource Guide
This is an unofficial website that includes the listing of telephone numbers of the Air Force, Army, Navy, Marine Corps and Coast Guard commands in the state of Washington. It is published by West Coast Publishing, a firm in no way connected with the Department of Defense, the Air Force, Army, Navy, Marine Corps or Coast Guard. The appearance of advertisements on this website does not constitute an endorsement by the Department of Defense or the Army, Air Force, Navy, or Marine Corps or Coast Guard of products or services advertised. All products and services advertised in this publication shall be made available for purchase, use or patronage without regard to race, color, religion, sex, national origin, age, marital status, physical handicap, political affiliation or any other non-merit factor of the purchaser, user or patron.