A more thorough explanation of the rules is located here: BAH Rate Protection Rules.
In anticipation of the 2014 Basic Allowance for Housing (BAH) rates being announced soon, I thought it was exactly the right time to review the Department of Defense (DOD) policy on BAH rate protection.
Each year, the DoD uses a huge range of information to calculate the BAH rates for the upcoming calendar year. Because BAH is based on market rates, BAH may go up or down in any location and for any ranks within that location.
Fortunately, the Department of Defense BAH has a rate protection policy that prevents service members from having their housing allowance lowered mid-tour. Every new calendar year, service member who have not experienced a PCS move will receive the larger of the old rate or the new rate. Service members BAH is protected from rate decreases, but service members do receive rate increases when they occur.
There are a few exceptions to this rule. If a person is demoted, or experiences a change in dependency status, their new BAH will be calculated at the current levels. However, if you are promoted, you are still guaranteed to get the higher of your old protected rate or the new, higher ranking rate.
The new rates only apply to people who move into an area, have a change in dependency status, or are demoted. For people who are residing in an area that has a decrease in the BAH rates, it rarely actually affects you.
You can read more at the BAH Frequently Asked Questions page.
Still confused? Ask questions!