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Housing Allowances Change Jan. 1

By Staff Sgt. Alicia K. Borlik
American Forces Press Service

WASHINGTON, Dec. 3, 1997 – A nontaxable basic allowance for housing replaces the variable housing allowance and basic allowance for quarters Jan. 1.

The basic allowance for housing combines the two older allowances into one single payment based on rank, with or without dependants, said Saul Pleeter, DoD assistant director for compensation, military personnel and policy. Most service members should see no dramatic changes in total payments, he said.

DoD will introduce the new rates gradually during a six-year transition. During this time, rates will increase in high-cost areas and decrease in low-cost areas. Pleeter said personnel will be rate-protected as long as they remain at their current duty station with no change in dependency status. Members will also be protected upon promotion, but not demotion.

The new rates are based on housing costs for civilians with comparable income levels in the same area. Under this system, the annual growth in the housing allowance will be indexed to increases in the national average monthly housing cost. Initial rates won't be known until mid-December, Pleeter said.

"The biggest benefit service members will see is accurate allowances that increase or decrease over time based on changes in housing costs," he said.

The current system has many flaws, including being tied to basic pay raises rather than the housing cost index, Pleeter said. Increases, therefore, were not keeping up with housing costs, he said.

The basic allowance for quarters and variable housing allowance systems had become inefficient and inequitable, according to the National Defense Authorization Act for fiscal 1998. President Clinton signed the act into law recently, approving the consolidation of housing allowances.

Military personnel will no longer have to report their housing expenses on the variable housing allowance survey. "If they gave you $200 in VHA and you didn't spend it (under the old system), you would have to return half of it," Pleeter said. Under the new system, members keep the entire amount regardless of what they spend.

The family separation allowance (type 2) will increase from $75 to $100, Jan. 1.

The Defense Authorization Act also calls for the overseas housing allowance to incorporate the basic allowance for quarters. Other entitlements tied to the old basic allowance for quarters will be calculated in the same manner as they are today. The family separation allowance (type 1) is now termed the family separation housing allowance and will be based on the basic allowance for housing or the overseas housing allowance instead of the old basic allowance for quarters.

The basic allowance for subsistence will also change. The act ties it to the Agriculture Department's food plan indexes. The allowance will be adjusted to the new levels in a transition beginning Jan. 1.

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