It’s time to talk about BAH rate protection! The Department of Defense (DoD) is getting ready to release the military 2024 Basic Allowance for Housing rates. So his is a perfect time to review BAH rate protection, or “the grandfather clause.” (Rates are usually announced on or around the 15th of December.)
Each year, the DoD calculates the costs to rent a house in each military housing area. They use that information to adjust BAH. Some areas and/or pay grades will increase and some will decrease each year. I’m really curious to see what happens for 2024.
Thankfully, the DoD has a rate protection policy. This means that (almost) no one will see their housing allowance decrease when the BAH rates decrease for their area and rank.
What Is BAH Rate Protection?
The DoD policies for BAH ensure that you don’t lose money because BAH has gone down for your pay grade at your location. Your BAH won’t go down as long as you remain at the same duty station, unless you fit one of the two exceptions listed below. Your BAH is based on the higher of:
- the rate you were receiving on 31 December of the previous year, or
- the new BAH rate in effect on 1 January.
This helps folks so that they aren’t stuck in a lease that they can no longer afford, and provides consistency for budgeting.
The only situation in which someone is not covered by rate protection is if they are demoted or have a change in dependency status.
What Happens If I Promote?
If you promote during the year, your BAH will be the higher of:
- the rate in effect for your new rank, or
- the protected rate you were receiving at your old rank
You won’t ever receive a lower BAH if you promote unless there is a change in dependency status at the same time.
How Do They Come Up With These Rates, Anyway?
It’s a pretty complex formula. Each year, the DoD (through a contractor) gathers thousands of costs for six different sizes of rental properties, and utilities, for over 400 markets across the United States. They apply this information to the BAH formula to figure out how much housing it should cover for each rank at each location, then adjust it so that it covers the designated percentage of housing costs (95% for 2024.) While a lot of people think it isn’t fair, you can’t argue that it isn’t based in data and math, because it is ALL data and math. What may be inappropriate is the housing standards upon which the rates are calculated, but that’s a different fight.
Understanding rate protection is important so that you’re not freaking out if your area’s rates go down for next year. In almost all cases, you will not lose any money thanks to the rate protection rules. But your BAH might go up. It really is a win-win situation.
More reading on BAH: