The 2019 Basic Allowance for Housing (BAH) rate increase is currently proposed at 2.9% according to the Department of Defense’s FY2019 Defense Budget. The January 1, 2018, and January 1, 2019, average BAH inflation rate assumptions are respectively, 1.7 percent and 2.9 percent on average, reflecting the Department’s move to slow the growth of pay and benefits.
The 2019 BAH increase will be effective on January 1, 2019, and service members would see their first increase in their January 15th, 2019 pay. The actual BAH increase will always vary by area.
As mentioned before, the BAH program includes a plan to slow growth, which will eventually achieve a 5% out-of-pocket cost for living expenses. For 2019, the rate will cover 95 percent of service members’ housing costs, a one percent drop from last year. BAH used to cover 99% of housing expenses but by 2019, service members will be paying 5% of their housing expenses out of pocket.
Not all locations will see an increase, as BAH is based on the duty station zip code, or school zip code in the case of veterans using the Post-9/11 GI Bill®, and thus corresponds with the cost of living of that zip code. For instance, cities with a very high cost of living such as Honolulu, Chicago, and Los Angeles have a very high BAH rate to help off-set those costs. Smaller cities such as Tacoma or Colorado Springs have a lower cost of living and therefore a lower BAH.
FY2012 – FY2019 Basic Allowance for Housing (BAH) Comparison
|Year||Proposed Increase/Decrease||Actual Increase|
BAH Changes Timeline
Defense Department began increasing housing allowance rates to bring them in line with actual rental market housing costs across the country and to reduce members’ out-of-pocket housing costs. Prior to this initiative, a military member’s housing allowance covered only about 80 percent of their full housing costs, leaving an out-of-pocket cost of up to 20 percent.
Housing allowance rates were increased enough so that the median out-of-pocket “off-base” housing cost was completely eliminated for members by pay grade, location, and dependency status. The Military Services also entered into numerous public-private ventures (PPVs) designed to eliminate inadequate government housing by leveraging private sector financing, expertise, and innovation to provide necessary housing faster and more efficiently than traditional Military Construction processes would allow.
Authorized the monthly Basic Allowance for Housing (BAH) rates to be set at 99 percent (vs. 100 percent) of the median rental housing costs. 99 percent of service members’ housing costs are covered.
The FY 2016 NDAA provided the authority to slow the rate of growth in BAH by 1 percent per year until 5 percent out-of-pocket is reached. Phased in 1.0 percent increments per year over 4 years. 98 percent of service members’ housing costs are covered. The actual implementation of the out-of-pocket adjustment is computed based on a percentage of the national median cost, so that the actual out-of-pocket dollar amount will be the same by grade and dependency status in every military housing area.
97 percent of service members’ housing costs are covered.
96 percent of service members’ housing costs are covered.
95 percent of service members’ housing costs are set to be covered, the full 5 percent out-of-pocket rate adjustment beginning on January 1, 2019.