Pay and Benefits
BASIC PAY AND ALLOWANCES
Basic pay, which is taxable, makes up the largest portion of most service members’ paychecks.
Basic pay is determined by rank and length of service, and is set in law in a pay table. All service members get at least one raise each year that is approved by Congress. Service members also get automatic raises when they are promoted to a higher rank, as well as longevity raises for time in service within one rank. Longevity raises generally are given every two years.
In 2012, all service members received a pay raise of 1.6 percent effective Jan. 1, which kept pace with average wage growth in the private sector. Under that raise, basic pay starts at $1,378.80 a month for enlisted people in paygrade E-1 with less than four months of service. Pay theoretically tops out at $19,240.20 per month for four-star officers with 38 or more years of service. But by law, officer pay is limited to Level II of the federal Executive Schedule, which sets pay rates for various government officials. In 2012, that cap limits maximum monthly military pay to $14,975.10.
Annual pay raises for all ranks, which apply to basic pay and drill pay, are designed to keep pace with overall wage growth in the private sector. By law, the minimum raise must match the annual change in the Employment Cost Index, a Labor Department measurement of private-sector wage growth. But Congress can, and frequently has, increased the size of the annual military pay raise.
In February, President Obama unveiled his initial defense budget proposal for 2013, which includes a proposed 1.7 percent raise, effective Jan. 1, 2013. Like the 2012 raise, this would match average wage growth in the private sector.
For the current basic pay chart, visit www.militarytimes.com/money and click on “Pay Charts.”
BASIC ALLOWANCE FOR HOUSING
Basic Allowance for Housing is the modern version of a military program dating from 1878 under which service members are provided government quarters or a cash substitute when quarters are unavailable. As with most other forms of military pay, BAH, which is not taxable, increases with rank and varies according to location and whether a person has dependents.
On Jan. 1, 2012, BAH rates increased by an average of 2 percent, although larger rate changes — both increases and decreases — took effect for specific paygrades and locations, depending on local rental costs.
However, under a policy called “individual rate protection,” service members who arrive at a duty station and begin receiving BAH at the current rate will continue to get at least that much for as long as they remain at that location, even if rental housing costs — and BAH rates — decline in subsequent years. Only service members arriving at that location after the Jan. 1 rate adjustment would get the lower BAH rates, on the assumption that they could find suitable housing at a lower cost.
On the other hand, if BAH rates rise in a location, everyone at that location gets the higher rates. In other words, once a member arrives at a particular location and begins receiving BAH, his allowance rate can never go down — it can only go up, as long as he remains assigned to that location.
BAH rates theoretically cover 100 percent of average rental costs in every location. The operative word is average. Service members still may pay some costs out of pocket if they want more housing than the Defense Department deems adequate for someone of their rank and family status.
Under these standards, BAH rates for most enlisted personnel are based on surveys of rental costs for various configurations of apartments, duplexes and town houses. Only E-9s, the highest enlisted paygrade, receive BAH based on the cost of renting detached single-family houses.
Junior officers also are assumed to be living in town houses or apartments, and their BAH rates are set accordingly.
This means that junior officers or enlisted members in grades E-8 and below who want a single-family house likely will have to pay part of the cost out of pocket.
The housing standards that the Defense Department assigns to each paygrade as the basis for calculating BAH rates have come under criticism in recent years for being out of step with the expectations of today’s force.
BAH rates are set for more than 370 locations based on surveys of rental costs conducted by Runzheimer International under a Defense Department contract.
Two BAH rates are set for each location:
With-dependents rate. This is paid to personnel with at least one family member who meets the official definition of a dependent. The allowance does not increase for additional family members.
Without-dependents rate. This rate is for single people who have no dependents.
If a husband and wife are both on active duty and have a child, the higher-ranking spouse gets BAH at the with-dependents rate and the other gets the without-dependents rate. In dual-military couples without children, the husband and wife both get the without-dependents rate.
For 2012 BAH rates, visit www.militarytimes.com/money; click on “Pay Charts.” The link also has charts showing increases and decreases in BAH rates in both percentages and dollars as of Jan. 1, 2012, for all paygrades in all locations.
BAH Reserve Component/Transient. BAH RC/T does not vary by location like regular BAH, but it does vary by paygrade and dependent status. It is paid to members in particular circumstances, such as troops in transit from overseas locations and reservists on active duty for fewer than 30 days — for their annual two-week training stint, for example.
Reservists mobilized for 20 days or more qualify for regular BAH.
Monthly BAH RC/T rates in 2012 range from $469.50 for a single E-1 to $1,756.50 for married O-10s; payments are then prorated at 1/30th of those rates for each qualifying day.
BAH differential. Some single personnel living on base may qualify for this allowance, which varies by paygrade and goes to those who pay child support. The monthly range is $108 to $324.90. To qualify for this payment, the amount of child support paid must be equal to or greater than the BAH differential rate for a member’s paygrade.
Partial BAH. This is paid to personnel who live in barracks or bachelor quarters. Rates are based on rank and range from $6.90 a month for an E-1 to $50.70 for flag officers.
For current rates for all forms of BAH, visit www.militarytimes.com/money and click on “Pay Charts.”
OVERSEAS HOUSING ALLOWANCE
About 61,000 people living off base at hundreds of overseas locations receive the Overseas Housing Allowance, which is based on rental cost surveys generally conducted every six months and then adjusted throughout the year whenever foreign currency exchange rates fluctuate up or down by more than 5 percent. The Defense Department spends about $1.9 billion per year on OHA.
OHA is a reimbursement allowance with three components. The largest component covers rent and is based on the amount of a member’s lease, up to an authorized ceiling for a given location. Ceilings are set at a level at which 80 percent of service members in a given location have their housing costs fully reimbursed.
The second OHA component is a “utility/recurring maintenance allowance” to defray expenses paid directly to utility companies. As with the rental cost ceilings, this allowance is set at a level at which 80 percent of service members are fully reimbursed for utilities costs.
The third OHA component, the Move-In Housing Allowance, has three pieces of its own:
♦ MIHA/Miscellaneous is a fixed-rate, lump-sum payment that reflects average expenditures to make dwellings habitable, such as installing supplemental heating equipment.
♦ MIHA/Rent is an actual dollar-for-dollar payment to cover one-time, nonrefundable rent-related charges customarily or legally required in a foreign country, such as rental agents’ fees.
♦ MIHA/Security can be paid to cover costs for security-related upgrades when housing must be modified to minimize exposure to terrorist or criminal threats.
The Defense Department maintains an Overseas Housing Allowance calculator at www.defensetravel.dod.mil/site/ohaCalc.cfm.
Basic Allowance for Subsistence is a nontaxable allowance to defray a portion of the cost of service members’ subsistence, i.e., food. The allowance is not meant to compensate military personnel for the cost of food for family members.
Rates increase each Jan. 1 in tandem with an Agriculture Department index of the cost of food.
BAS rates increased by 7.2 percent in 2012. The rate for commissioned and warrant officers is $239.96, an increase of almost $17 over 2011. Enlisted members who have completed basic training qualify for BAS at a rate of $348.44 per month, an increase of more than $23 over 2011.
Personnel in basic training eat in government facilities and receive no food allowance.