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BAH Changes and On-Base Housing: What it Means

You probably heard the news on Military.com last week that military leaders are working with privatized housing for two major changes. First, they are no longer going to be covering renters insurance as part of your lease. Next, the entire cost of your on-base housing will no longer be covered by BAH.

Huh?

I’ve got a really simple breakdown on what, exactly, this means for you. Read on.

First, a little background.

Congress allowed the Defense Department this year to only cover 99 percent of housing as part of their BAH calculation. That means that while your BAH may have technically gone up in number, it did not go up as much as it would've had they been doing the math for covering the whole cost.

Also, the DoD decided that, to save some cash, they aren't including the cost of renters insurance in that calculation either.

Simply put: your BAH is meant to cover all but one percent of your actual housing cost. And you've got to spring for any insurance you want to have.

What this means for on-base people.

I've been asking the DoD to give me details on how this would impact those of who live in housing on bases for, well, months. And they always said there shouldn't be any change.

They were wrong.

According to what they said this week, it does impact you who live on base. Here’s how:

Any lease you have with a housing office will eventually no longer automatically include renters insurance coverage. You may not have realized it included it to start with. And most of the policies didn’t include very much coverage anyway. If you sign a new lease soon or are on a month-to-month contract, you are probably about to lose whatever renters insurance you have. This is already happening in some places (like Fort Campbell, Ky.). Other companies are waiting on instructions from their particular military service, they told me.

Edit: I'm getting some comments from readers saying they never once had renters insurance included in their on-base housing coverage. While I was not able to check with every housing company (there are a LOT of them), I did personally speak with representatives from some of the major ones. They all reported currently including renters insurance in their leases. Also, Tom reported in his article that  providing renters insurance is part of the housing companies' agreement with the DoD. When that started I do not know and Tom didn't say.

You may have to pay out of pocket for housing above and beyond your BAH. Since BAH only covers 99 percent of your cost, that’s 1 percent that your housing office is going to be looking to your wallet for.

In my head I envision people who get $1,000 in BAH a month walking down to the office on the first and handing them an extra $10 bill. But in reality you’ll probably agree to an auto-draft from your paycheck (the way most on-base housing is paid for now anyway) of, in this example, $10 more.

Like all BAH rate changes, paying out of pocket only impacts you if you've recently PCSed or changed residences on base. That's because those currently using the old rates are grandfathered in with what is known as "rate protection."

What we don’t know.

We still don’t know a few things about this. Here’s what they are:

When, exactly, this will happen. DoD officals told me they are working on policy guidance for the services and will get it to them and then the housing companies soon. But the Army is a little ahead of the curve (and the DoD is even basing the memo they are writing on what the Army has already done). They’ve already given out guidance and some places, like Fort Campbell, have already warned residents.

How, exactly, each company will react. Some housing companies may offer to let you pay extra for that renters insurance coverage. Others could give you guidance on where to buy your own (Fort Campbell is a good example, again, of that already happening).

What will probably happen next.

This probably isn't the end of changes to the way BAH is calculated. And that will impact people both on base and off. Congress is likely to eventually let the DoD calculate coverage to only pay for 95 percent of your housing costs. That means if your BAH is $1,000 a month, you'd be putting out an extra $50.

Why this really sucks.

Like Tom reported, DoD officials have been grappling since last year with how to handle any given BAH rate calculation change with the housing companies. And they settled on this solution: whatever people who live outside the gate have to deal with, those inside the gate should deal with, too.

The problem with that, however, comes when you look at why people live on base. Unless you are at a rural installation (29 Palms, Calif. and Fort Irwin, Calif. all leap to mind) you are probably not living on base because other housing isn't available. You are probably living there because it’s simple and convenient. You probably aren't getting more bang for your buck than if you lived off-base. But it probably made your PCS much simpler, with a huge bonus being very little commute time for your spouse.

Paying rent is easy – they take what you get already earmarked, in a way, for rent.

But you probably put-up with a lot of, well, crap … sometimes literally. Privatized housing is infamous for unresponsive maintenance help, poor quality living quarters and more. This is, of course, not universally true. But it’s true often enough that it’s considered accurate in many locations.

This change makes those things about on-base housing that make it so attractive – the simplicity – go away just a little bit. And that's bad.

The result? Even more people unwilling to trade convenience for poor quality – and even more people unwilling to fill those housing units. That’s how you get situations like this one. More and more housing companies are opening units to military retirees and DoD civilians, in particular, as their housing occupancy rates drop.

 

What do you think about this change? How is it impacting you? Tell us in the comments.

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