It was too high, so the pilot sent a letter to the Defense Finance Accounting Service, which oversees all of the military’s active duty and retired pay.

To his surprise, a DFAS official called him and assured him that his retiree pay was correct, based on the information the Navy provided.

But this spring, like more than 1,200 other Navy retirees, Bailey has been told the Navy did, in fact, miscalculate his retirement pay, and he could need to return that overpayment.

“Having spent 30 years in the Navy, it’s not surprising to me. This is a significant administrative error,” the 55-year-old father of three said. “I’m sure DFAS is looking at the Navy like, what the hell did you do to us? It’s a Navy mistake.”

Navy error upends pay for more than 1,200 retirees

The Navy announced Friday that DFAS has agreed to a three-month pause in any debt collection for the 1,283 retirees who have been overpaid.

That pause aims to give impacted retirees the time to file a debt waiver application, Chief of Naval Personnel spokeswoman Capt. Jodie Cornell said in a statement.

“Further, the pause of debt collection will be extended beyond the initial three-month period for all retirees that file a waiver application within three months of the date of their DFAS debt letter,” he said. “For these retirees, the debt collection pause is extended until a final determination is made on their waiver application.”

Roughly $7 million was overpaid to retirees, with the overpayments ranging from $35 to more than $70,000, according to media reports and DFAS spokesman Steve Burghardt.

The median overpayment amount is $2,700, he said, and official debt notification letters were sent out this week.

If an agreement cannot be reached, Burghardt said DFAS can institute an involuntary reduction of a retiree’s monthly benefit, up to 15 percent of their “net disposable pay.”

“DoD also retains the right to pursue other collection methods, as necessary,” he said.

Bailey said he expects he will have to pay back about $10,000 in overpayments due to the Navy’s error.

“I’m not in any way, shape or form saying I should keep that money,” he said. “I understand I’m entitled to a certain amount of retirement and I was overpaid. The challenge is now, what options will I be given to repay that?”

The Navy pay calculation error occurred because of an issue with the Navy’s Standard Integrated Personnel System, or NSIPS, which botched some retiree pay calculations from 2019 to February.

Another NSIPS error has caused Navy doctors and dentists to see their active-duty service time miscalculated, a misstep first reported by NBC News earlier this month.

While officials have blamed a “software issue” for messed-up retiree pay for 1,283 retirees, Cornell said in an email this week that “NSIPS performed precisely as the business rules dictated.”

But those business rules were wrong, and Cornell said the Navy first discovered the pay error in November.

“A resulting internal audit identified a business rule error, which was then updated in January 2023,” she said. “NSIPS completed system changes to implement the new business rules on 2 Feb. 2023.”

The items can be purchased via the online exchange store or at exchanges on five Army and Air Force bases. Home Depot will schedule delivery and installation of the appliances, which include washers and dryers, refrigerators, freezers, dishwashers, countertop or built-in microwaves, ranges, cooktops, ovens and hoods. The home improvement chain will also provide customer service for all deliveries and installations.

The exchanges have sold major appliances, but the primary motivation for this partnership is to provide better service to customers, especially in delivery, officials have said. Stores that don’t have Home Depot appliances on hand will still sell them and offer delivery. By June, sales associates will have a mobile checkout system to help customers browse The Home Depot inventory and buy an appliance.

“In addition to providing a significantly expanded selection of major appliances, exchange orders will be fulfilled using The Home Depot’s existing capabilities to provide efficient and dependable delivery,” said Tom Shull, director and CEO of the Army & Air Force Exchange Service.

Those five exchanges with Home Depot major appliance showrooms are Fort Moore, Georgia; Fort Cavazos, Joint Base San Antonio-Randolph and Dyess Air Force Base, Texas; and Fort Sill, Oklahoma. By October, another 60 Home Depot appliance showrooms will be added to exchanges across the continental United States.

Authorized shoppers across all military branches can also shop for these appliances at shopmyexchange.com, including: including all active, reserve and retired military members and their dependents; Department of Defense civilians and retirees; and honorably discharged veterans who have confirmed their eligibility to shop at ShopMyExchange.com.

The Home Depot officials anticipate rolling out the program with the Navy Exchange and Marine Corps Exchange stores later this year.

The purchases are tax-free and the prices will be 1% lower than the price available at Home Depot stores and its website, said spokeswoman Stephanie Meyering.

In general, Home Depot offers a 10% discount to military members, veterans and their spouses who register through their website using Sheer ID. But that 10% discount doesn’t apply to appliances, whether in Home Depot stores or online, said Meyering. That’s also stated on their website. That 10% discount will also not apply to appliances bought through the exchanges.

As always, you should still do some comparison shopping before you buy.

Military paychecks could be delayed or stopped altogether. Veterans benefits checks would similarly be delivered erratically. Equipment purchases could be canceled. Contractors and civilian workers could face the choice of furloughs or working without any guarantee of stable pay.

“Unlike the government shutdowns of the past, there is no scripted playbook for how this all goes,” said Rachel Snyderman, senior associate director of economic policy for the Bipartisan Policy Center. “We have never been in such a scenario before. But we know whatever happens, it could quickly become very chaotic.”

On Tuesday, President Joe Biden was scheduled to meet with senior congressional officials in the latest attempt to broker a deal raising the country’s debt ceiling. The Treasury is expected to reach the current limit sometime around June 1 absent congressional action to raise it.

Without a solution, the country could for the first time in history default on its debts, creating a cascade of financial problems across the economy.

Defense Department leaders have already warned those financial complications would have severe consequences for the military and other federal agencies.

At a Senate hearing on May 2, Air Force Secretary Frank Kendall said a spike in U.S. interest rates would have an “absolutely devastating impact” because of skyrocketing interest rates, which he noted are “already roughly at the level of the defense budget.” Just a few days later, at a separate Senate event, Defense Secretary Lloyd Austin warned that defaulting on the U.S. debt would result in “a substantial risk to our reputation” with allies and security partners across the globe amid questions “as to whether or not we will be able to execute programs.”

But a debt default will also have tangible effects on troops, veterans and their families, even if the timing of that impact is not clear.

“Because there is no precedent for a default, it is difficult to know the precise impacts on specific federal programs,” Veterans Affairs press secretary Terrence Hayes said in a statement.

“But what is clear is that, without the ability for the federal government to borrow funds, there is a very real potential that any government program or payment would be halted or severely delayed.

According to the Bipartisan Policy Center, the Defense Department has about $12 billion in payments to military and civilian retirees due on June 1.

Roughly $7 billion is owed to defense vendors between June 5 and June 17. Another $4 billion in military salary checks are set to be sent out on June 15. Snyderman said if the debt limit is not raised, that schedule of payouts gets thrown into disarray.

“The Treasury could prioritize some payments over others, but they also may just have to wait for other money to come in,” she said. “Now this becomes a cash flow crisis for the country.”

Austin in his Senate testimony warned that “we won’t, in some cases, be able to pay our troops with any degree of predictability.” That means money families need for rent, groceries and other basic expenses could be delayed.

Similarly, about $25 billion in veterans benefits set to be paid out in June could be delayed by days or weeks, causing problems for millions of families that depend on that support for their monthly income.

If Treasury officials prioritize those payments, veterans and service members might not see any disruptions. But that would mean delays to other government payouts instead, things like Medicare support, non-defense federal salaries and interest payments on the national debt (failing to pay that would downgrade the country’s credit rating, creating even more debt).

Todd Harrison, the managing director of the national security consulting firm Metrea Strategic Insights, noted that payment delays would also affect defense contractors.

“They could continue to do work and [the Defense Department] could continue to award contracts and obligate money, but the payment of invoices would be delayed,” said Harrison. “The administration could elect to stop all new contract awards and obligations during this period, but that would make the impact even worse,” while possibly violating the law.

“If they were to halt all new contract obligations, that would have a significant and immediate impact on [Defense Department] programs and activities,” he added.

The damage only gets worse if the crisis drags on well into the summer. Another $14 billion in defense vendor payouts are due before July 15, when another $3 billion in military paychecks and bonuses are scheduled to be paid out.

Failing to pay contractors could result in a host of lawsuits and long-term delays to procurement programs. Hayes said officials worry that vendors could “decide to reduce or completely cease providing goods and services to VA if payment was uncertain.”

Failing to pay troops — and requiring them to keep working anyway — could become a political nightmare for both parties.

Lawmakers in the past have passed legislation to blunt the impact of government shutdowns on military and veterans families, ensuring that some Department of Veterans Affairs appropriations are awarded a year in advance and ensuring that military members receive pay even during an appropriations lapse.

Those protections don’t exist if the money to cut checks isn’t there for the country.

Harrison noted that the Treasury could “continue borrowing and paying bills as usual” if Biden opts to invoke a clause in the 14th amendment. But doing so would likely mean court challenges and other complications, Biden said in a press conference earlier this month.

In March, Virginia Democratic Sens. Mark Warner and Tim Kaine introduced legislation that would have enabled all government employees and contractors to postpone paying any bills during a shutdown or debt default. The proposal has not moved forward in recent weeks.

Defense leaders said the real legislative solution is simply passing a measure to increase the debt limit, as lawmakers have done 13 times since 2009.

Earlier this month, after another meeting with congressional leaders, Biden said that he was “absolutely certain” a deal could be reached and that default “is not an option.” But in the days since, no real path ahead on the issue has emerged.

More military spouses are becoming entrepreneurs to contribute to the family’s income and fulfill their personal goals. The lawmakers want the ability to track how many of these spouse-owned businesses bid for and win federal contracts.

“This change would ensure that military spouse entrepreneurs are adequately represented and accounted for,” said Rep. Marilyn Strickland, D-Wash., in announcing a letter sent to the Office of Management and Budget May 10, on the eve of Military Spouse Appreciation Day. She is leading the effort.

While military spouse-owned small businesses can compete for federal contracting opportunities, there is no way to know whether they are doing so or being awarded contracts. The government doesn’t track military spouse participation.

As a result, there is no way for Congress to gauge trends in military spouse participation levels or address any deficiencies that might exist, the lawmakers stated. The information could also be used to help address the unemployment gap for military spouses, which has stubbornly remained at 20% for years, they said.

The lawmakers, all but one Democrats, have asked OMB to change policy to allow military spouse-owned businesses to self-identify in the Federal Procurement Data System, which is overseen by the Office of Federal Procurement at OMB. That data system includes entities registered to do business with the government. It recognizes many different self-identifiers, such as minority- and veteran- and woman-owned businesses, with codes assigned to each category. Congress, the administration, the Government Accountability Office and others use the information to identify trends and inform policy decisions.

Agencies can search what businesses and other organizations exist in the system and use the data to solicit Requests for Information from companies that might be interested in doing business with the agency, generally or on a specific type of opportunity.

The change, if adopted by OMB, would mean establishing criteria and eligibility for the military spouse-owned business category.

The change wouldn’t give spouses priority unless they qualified under another category such as veteran-owned. But agencies looking for a small business to handle a contract could express interest in those owned by a military spouse.

The housing advocates say two privatized housing companies that have been sued by military families — Balfour Beatty Communities and The Michaels Organization — are trying to force them to turn over most if not all communications regarding their housing issues, whether or not they are involved in the lawsuits.

“The subpoenas appear designed to harass [housing advocates], to drain their resources and to distract from their core mission of protecting military families from abusive landlords,” the nonprofit Armed Forces Housing Advocates stated in an April news release.

Dozens of military families are suing various privatized housing companies around the country over allegations of mold, cockroaches, sewer backups and other problems. Those include several lawsuits against Balfour and Michaels. But none of the advocacy groups are parties to the suits.

Over the past several weeks, as part of the discovery process, lawyers for the two companies issued subpoenas to National Military Housing Advocates, Armed Forces Housing Advocates and independent advocate Sarah Kline, who was previously affiliated with Armed Forces Housing Advocates.

Such subpoenas are unusual for nonprofits that aren’t part of a lawsuit, unless it’s a very large case, said John Hughes, an attorney representing some of the military families suing Fort Belvoir Residential Communities and Michaels Management Services.

Representatives of Balfour and Michaels say the subpoenas are more narrowly tailored than the advocates claim.

“The subpoena does not seek confidential information about any residents not involved in the lawsuit, and the accusations to the contrary are false,” Michaels officials said in a statement provided to Military Times.

Balfour Beatty Communities owns and operates family housing on 55 Army, Navy and Air Force installations. The subpoenas issued to Armed Forces Housing Advocates and to Kline relate to lawsuits filed by families at Tinker Air Force Base, Oklahoma; and Lackland Air Force Base, Fort Bliss and Sheppard Air Force Base, Texas.

The company argues that during the discovery process, “plaintiffs testified that [Armed Forces Housing Advocates] has relevant information related to their claims.”

“As is customary in litigation, a subpoena was issued requiring AFHA to share that information,” Balfour Beatty officials said in a statement to Military Times. “AFHA’s lawyer has not objected to the scope of the subpoena or said that a response would be unduly burdensome.”

The Michaels Organization, which owns and operates 11 military privatized housing communities, is the parent company of Fort Belvoir Residential Communities and Michaels Management Services, which are named in the Fort Belvoir lawsuit.

During the discovery process, “several plaintiffs testified under oath that a group called the ‘National Military Housing Advocates’ has information relevant to the lawsuit and to their personal claims,” Michaels officials said.

“Separately, the NMHA has filed at least one [Freedom of Information Act] request with the Army seeking documents relating to the lawsuit at Belvoir. Both of the individuals who filed that FOIA request on behalf of NMHA are plaintiffs in the case.”

“So, it is apparent that the plaintiffs, not the defendants, have involved NMHA in the lawsuit” Michaels officials said.

But the advocates insist company lawyers are asking for communications not just with families who are suing them, but any military families who have communicated with them about the companies.

The subpoenas include nearly identical descriptions of what the companies are seeking, with a list of nearly 100 items, including calendars, lists of people attending meetings, all forms of notes, medical records or reports, test readings, photographs, email, reports of telephone conversations and many more items.

Raven Roman, executive director of National Military Housing Advocates, formerly known as Belvoir Housing Advocacy Group, worries that general descriptions such as “any communications related to claims of mold or excessive moisture” would apply to any military family raising questions about housing at any installation, including those not owned by the two companies.

While Roman is personally involved in suing Fort Belvoir Residential Communities LLC and Michaels Management Services, the nonprofit advocacy group is not, she said.

“AFHA does not engage in any type of lawsuit or refer people to attorneys, and we try to work with the process that’s in place with the Military Housing Privatization Initiative because we want to avoid this exact problem,” said Kate Needham-Cano, executive director of Armed Forces Housing Advocates

“However, asking for the breadth of information regarding an entire company across the entire United States has nothing to do with those particular lawsuits, and that’s where it feels compromising … and that’s where it feels abusive to us as an organization,” Needham-Cano said. “We will use every resource available to us to lawfully participate and protect the families to the best of our ability.”

Families have a right to know “the housing company is trying to pursue information that they don’t have a right to,” Roman said. “Our main priority is to let families know what our stance is, and to let them know that we intend to oppose providing any information that might put them at risk, their communication with us.”

Both of the nonprofits are run by volunteers with limited resources. Armed Forces Housing Advocates was served with five subpoenas, Needham-Cano said, forcing them to choose between curtailing their services and grants to families for things like mold tests, food grants, window guards and reasonable accommodations, or paying for a lawyer to protect the families’ information. Luckily, they’ve had a small amount of money to be able to hire an attorney.

Roman said National Military Housing Advocates has been able to seek pro bono legal advice.

The issue could also have even broader effects, said Kelly Hruska, government relations director for the National Military Family Association. “I’m afraid the effects will be chilling on housing advocacy for military families and that it might spill over into other issues,” she said.

Military retirees normally receive a generous pension, but the problem for their survivors is that retired pay ends when the retiree dies. At the time of retirement, retirees can enroll in SBP and pay 6.5% of their retired pay, so that when they die, their surviving spouse would receive an SBP annuity equal to 55% of the retiree’s pay. Based on the latest Department of Defense statistics, 68% of military retirees with families have opted into SBP.

Challenges and Opportunities

The challenge of SBP is that if the spouse dies first, the total amount paid in is forfeited, which is one reason almost one-third of those eligible for SBP have declined it. Another reason that some veterans declined SBP is because of the “widow’s tax.” If a veteran dies of a service-connected illness, the Department of Veterans Affairs (VA) will pay their spouse Dependency and Indemnity Compensation (DIC), which is a tax-free benefit usually equal to $1,563 per month.

Previously, there was an SBP-DIC offset, known as the “widow’s tax,” in which a spouse’s SBP annuity was reduced by the amount of the DIC payment. Congress phased out the widow’s tax over the past three years, making SBP more valuable. Because of this, the 2023 SBP Open Season provides a unique opportunity for military retirees to revisit their SBP decision, which would otherwise be irrevocable.

If retirees would now like to enroll, they can “buy in” to SBP. To do so, they must pay all previous payments that they have missed since they retired, plus interest, and start paying the 6.5% premium from their retired pay going forward, until they have paid in for a full 30 years. At the retiree’s request, the Defense Finance and Accounting Service (DFAS) will calculate the cost of enrolling in SBP, and the retiree can then decide whether to enroll. If they do enroll, they must pay the back premiums either in a lump sum or in installments over 12 months – plus installment interest. Unlike regular SBP premiums that do reduce taxable retired pay, the payment of back premiums does not reduce the retiree’s taxable income.

The back payments required to “buy in” can be significant, but so can the benefits for the retiree’s family. For example, a Lieutenant Colonel who retired over 30 years ago has retired pay of approximately $6,200 per month, which will end when he dies because he did not enroll in SBP. He requested his buy-in letter from DFAS, which specified that to make up for the premiums that he would have been paying every month for the past 30 years plus interest, he would need to pay $180,000. That is a huge sum, but by buying in to SBP, his widow will receive about $3,400 each month. If his widow outlives him by just 52 months, she will have received more than the $180,000 buy-in cost. The amount of the widow’s annuity should keep pace with inflation because retired pay and the corresponding SBP annuity will increase with annual COLA increases, with no additional contributions from the retiree.

Military retirees who enrolled in SBP at retirement have a one-time chance during open season to permanently discontinue SPB premiums. If they discontinue SBP, they will not receive any refund of funds already paid into SBP and their family will not receive any annuity when they die. In most cases, they will have to get the concurrence of their spouse or other beneficiaries to disenroll.

Approaching Enrollment

Obviously, enrolling or disenrolling from SBP is a significant financial decision that retirees and their families need to make carefully. The cost of the “buy in” enrollment may not be as high as the $180,000 example, especially if someone retired more recently. Anyone who has had financial, health or family circumstances that have changed since they retired should carefully examine this unique opportunity. To take the first step toward considering enrollment, military retirees should go to the special DFAS page where they can complete a letter of intent to enroll. DFAS will then reply with exactly what the “buy in” to SBP would cost. Retirees should consult with qualified financial professionals who understand military benefits and can carefully consider what is in their family’s best interests in the context of a comprehensive financial plan.

Michael Meese is a retired Army Brigadier General and is President of the American Armed Forces Mutual Aid Association (AAFMAA).

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A recent DoD analysis, mandated by Congress, shows that if Pentagon leaders did decide to restore the full BAH level, as many lawmakers want, troops without dependents would get from $82 extra to $164 extra per month, on average.

In 2015, defense officials reduced the amount of housing allowances they pay to military families from the full cost to 95% of their rental costs, as determined by the Basic Allowance for Housing formula. The cost-saving measure was authorized by Congress, but it wasn’t required.

But due to economic conditions, concerns have grown about the affordability and availability of housing for military families. The rapidly rising cost of housing even persuaded defense officials to implement a temporary BAH increase at the beginning of fiscal years 2022 and 2023 to help service members find affordable, quality housing.

As a result, lawmakers have been urging defense officials to again have BAH cover 100% of troops’ housing costs, which DoD can do without legislation.

Congress also required DoD to analyze how much money the 5% boost would put in the pockets of average service members, based on rank and dependent status, as well as what it would cost the department. It won’t come cheap. Paying the full cost of housing would add up to $1.1 billion in DoD outlays in 2024 if the full BAH were restored in January. That’s in addition to the $26.8 billion in BAH currently paid to about 1 million service members.

DoD’s analysis, obtained by Military Times, shows, for example, that an E-5 with dependents would see an extra $111 a month, on average; an O-2 with dependents, would get an average of $118 more.

Department analysts also looked at the costs of gradually implementing a boost in the allowance, but their report doesn’t include recommendations about whether the department or Congress should act.

The current 5% out-of-pocket housing cost “reduces the buying power of service member families, especially in high cost areas of the United States,” lawmakers stated in their 2022 report requiring the DoD analysis.

Family advocates share their concern.

“Military families, like all Americans, have felt the financial pressure from the pandemic, inflation and a volatile housing market,” said Shannon Razsadin, president and executive director of the Military Family Advisory Network. “But military families don’t have the option to hunker down and ride it out. They move due to military orders, on average, every 2.5 years. From our extensive work on housing and food insecurity, we see a clear intersection between paying for housing and purchasing healthy food.

“At a time when nearly one-quarter of military families are experiencing food insecurity, an extra $100 per month could make all the difference,” she said. “We are encouraged by the options DoD presented and are hopeful Congress will lay the path for a full restoration of the housing allowance.”

Here's what that reduction in basic allowance for housing is costing troops

The DoD analysis also looked at what it would cost to restore the full BAH benefit over five years. The full implementation in 2024 would cost DoD an extra $1.1 billion in that year. Over the five years through 2028, it would add an estimated $7.5 billion (which includes inflation in housing costs).

If DoD increases the BAH gradually — by one percentage point each year for five years — service members would get less money at the start — ranging from $19 a month to $31 a month, on average. But it would cost DoD less: an extra $214 million in 2024 and an extra $4.4 billion over the five years.

The following chart from the report shows average BAH increases if DoD decides to restore the full BAH benefit.

While the monthly BAH increase would apply to all eligible for the allowance, troops living in privatized housing wouldn’t see it because their full BAH generally goes directly to their housing landlord. The rent for privatized housing is set at the BAH rate.

Generally, about two-thirds of service members live in the civilian community. Service members may choose to rent or buy a dwelling in the civilian community that costs less than the monthly BAH and can pocket the extra money. If they choose to rent or buy a dwelling that costs more than BAH, the extra expense comes out of pocket.

The allowance is designed to offset the costs of local median rents and average utilities. BAH rates are adjusted each January based on surveys and information collected about rent and utilities for different types of houses in more than 300 military housing areas in the United States, including Alaska and Hawaii.

In 2023, BAH rates rose an average 12.1%, the largest year-over-year percentage jump in the allowance in at least 15 years.

The Government Accountability Office has reported that DoD needs to improve the way it calculates troops’ housing allowances and defense officials are in the process of reviewing those procedures.

The cut troubled Murdock, but perhaps not as much as the lack of explanation from the Navy or the Defense Finance Accounting Service, which processes military and retiree pay based on information provided by the services.

“That’s not okay,” she told Navy Times. “You don’t get to lower my pay and eventually tell me why.”

Murdock, who retired in July 2022, nosed around DFAS’s self-help sections to try and figure it out early last month.

Eventually, she found her answer: The Navy had incorrectly calculated her service time and sent the wrong information to DFAS, resulting in the abrupt pay cut she now faces.

Murdock isn’t alone. Navy officials confirmed that “a software issue” resulted in incorrect service time calculations for 1,283 Navy retirees, errors that span from August 2019 to this past February.

Navy Personnel Command spokesman Lt. Cmdr. Rick Chernitzer attributed the retiree pay error to “a software issue” that has since been fixed.

“There have been no more reported issues with the data since that time,” he said.

Officials said the issue popped up on the Navy’s radar in November, when a retiree reported an overpayment.

“The Navy provided preliminary notification of an error and (DFAS) is also contacting those affected retirees and members of the Fleet Reserve, notifying them of the overpayment and corrective measures underway to correct their retirement or retainer pay,” Chernitzer said in an email to Navy Times.

As of Monday, a month after her initial shock at the decrease, Murdock said she had not been contacted by DFAS.

Officials said affected retirees can learn more about debt waiver options by going to this link.

At this point, after receiving two Navy letters but zero information as to what happened, how much she might owe or how she can dispute an error that is not her fault, Murdock said she has lost trust in the Navy.

The software issue at blame fell within the Navy’s Standard Integrated Personnel Systems, or NSIPS.

NSIPS is also to blame for the Navy prematurely awarding four years of service credit to 160 Navy doctors and dentists, a mistake that allowed 95 of those members to retire after just 16 years of service instead of the required 20 years.

Inside the Navy’s pay and personnel crisis

That issue stemmed from NSIPS incorrectly tabulating the four years of military-provided medical school in those officers’ time in service.

As a result of that “data migration error,” the other 65 medical officers saw their retirements pushed back several years because the four years of medical school does not count toward the 20 years required for retirement, even though those officers will be credited with 24 years in service when they get out, according to Chernitzer.

While both errors are attributed to NSIPS, Chernitzer said the retiree pay issue being suffered by Murdock, and the issue that led to the Navy medical officers seeing their service time incorrectly tabulated, are not connected.

NBC first reported the medical officer issue last week.

Officials did not answer questions by deadline Monday regarding why NSIPS is causing such disruptions.

But Chernitzer said last week that the NSIPS issues do not fall under the Navy’s so-called “HR Transformation” program, a sprawling, years-long, $1.6 billion effort to modernize Navy pay and administrative records that have disrupted pay and entitlements for thousands of sailors in recent years.

Fixing disability and retirement pay is Congress’ next big vets issue

Either way, the NSIPS missteps suggest further struggles as the sea service works to modernize pay and personnel systems.

News of the retiree pay snafu follows reports last week that Army Human Resources Command errors led to at least 190 active duty pilots voluntarily resigning years ahead of schedule because of missteps in how the command tracked and applied their commitments.

A matter of trust

The retiree pay cut is just the latest Navy-related pay and personnel issue to afflict Murdock.

Like thousands of other sailors, she faced long delays getting her DD-214 discharge paperwork last summer, a problem exacerbated by HR Transformation.

“I just don’t believe that the Navy isn’t going to keep doing this,” she said of the litany of problems inflicted on her and others from above. “They haven’t shown me they can be trusted with my career record, my pay or my retirement.”

Murdock also said the retiree pay adjustment has upended her carefully calibrated retirement plans.

Moreover, such problems leave retirees like Murdock in the lurch and unclear of what their options are going forward.

A former Navy public affairs officer, Murdock said she tried calling DFAS early last month and was told, “We’re getting a lot of calls from (Navy retirees) and we don’t know why.”

She acknowledges that she had an unorthodox career path to calculate, which involved four years in the Marine Corps, then time as a Navy Reservist and then full-time active duty status.

But Murdock said she worked hard to make sure her record was squared away and described the pay problem as “typical military.”

Veterans, retirees get 8.7% Social Security cost-of-living boost

She doesn’t think she should have to pay for the Navy’s mistake, but she expects to be told she will have to pay back the overpayment, potentially with interest.

“It’s ridiculous that they could be so inept and then so callous on top of that,” Murdock said. “Like, you should pay for our mistake.”

Murdock said she worries about more junior personnel having to deal with such indebtedness as well and “is resigned to the fact that I’ll probably be fighting the Navy for the next six months, minimum, to unscrew these issues.”

She wants a deep audit of how her active duty and reserve service is calculated but doesn’t trust the Navy to get it right.

In fact, she doesn’t even know where to start on that front, she said.

“I don’t believe (Navy Personnel Command) has anybody who can actually do this correctly, and I will never trust that this isn’t going to happen again,” she said.

The increases are generally in line with previous years’ increases and go into effect May 1.

This is a voluntary dental benefit for eligible active duty family members and National Guard and reserve members and their families. Active duty service members, including activated reserve component members, get most of their dental care from military dental clinics.

For active duty members with one family member enrolled the single premium is $12.36, up from $11.94 the previous year. The single enrollment premium is for the family member, not the active duty sponsor. The active duty family premium is now $32.13, up from the previous $31.04. This applies when more than one family member is enrolled.

The Tricare Dental Program is a pay-ahead program; each payment is for the next month of coverage. This voluntary Tricare dental coverage is separate from Tricare medical coverage and requires separate enrollment. The Tricare Dental Plan is administered by United Concordia Companies Inc.

Other rates:

Selected Reserve and Individual Ready Reserve (under mobilization orders)

• Sponsor only: $12.36, up from $11.94
• Single premium: $30.89, up from $29.84
• Family premium: $80.33, up from $77.59
• Sponsor and family premium: $92.69, up from $89.53

Individual Ready Reserve (not under mobilization orders)

• Sponsor only premium: $30.89, up from $29.84
• Single premium: $30.89, up from $29.84
• Family premium: $80.33, up from $77.59
• Sponsor and family premium: $111.22, up from $107.43

In addition to the monthly premiums, there may also be cost-shares for dental services. There are no cost-shares for diagnostic or preventive services.

There are also plan maximums, the most that Tricare will pay for certain dental services:

• Annual benefit maximum: $1,500 per enrollee
• Orthodontic lifetime maximum: $1,750 per enrollee
• Dental accident coverage annual maximum: $1,200 per enrollee

Collectively known as “HR Transformation” and formerly named “Sailor 2025,” the program would allow sailors to handle their pay and records needs from their phones, as easily as they bank, among other benefits.

As part of that process, the Navy would modernize and unify dozens of antiquated information technology systems that process pay and other sailor needs.

“By the end of 2019, Sailors will do most of their personnel business by smartphone ashore or desktop applications afloat,” then-Chief of Naval Personnel Vice Adm. Robert Burke wrote in “Proceedings” magazine. “By 2023, they will have forgotten about today’s personnel system and many of its frequent frustrations.”

But here in 2023, those grand promises have not materialized. In some ways, frustrations have only increased.

The Navy’s HR Transformation effort has disrupted pay, paperwork and benefits for thousands of sailors and veterans in recent years, according to a Navy Times investigation based on hundreds of pages of internal records and interviews with key leaders and sailors.

Some sailors have not been paid, while others have lost access to their healthcare or have not received the rent money or other entitlements that they are owed.

Most pressingly, those leaving active duty have seen their DD-214 and post-service paperwork and benefits severely delayed.

Eventually, the Navy has made these sailors whole, and Navy brass insist that the worst of these problems are in the service’s wake.

But they have yet to explain why the critical work of HR Transformation, slated to cost at least $1.6 billion, inflicted such pain on so many sailors.

Since the effort became an official program of record in 2019, much-heralded IT and HR systems have not come online as scheduled. Internal records reveal that the service has failed to monitor prime contractors, while not dedicating enough people with the technical know-how to do the meticulous and complex work of replacing legacy systems.

Meanwhile, the Navy shut down its old customer service model on the assumption that these new systems would come online on time, shuttering dozens of offices known as personnel support detachments, or PSDs, and shedding the personnel who worked in them. When the new systems didn’t arrive on time, a yawning customer service gap emerged.

The sea service has also at times stuck to “aggressive timelines” for rolling out key features that aligned with arbitrary dates on a calendar, records show, instead of timelines that reflected the extraordinary difficulty of the work involved, or what would happen if things went wrong.

This rush to meet deadlines played a part in nearly 3,000 sailors not getting paid or seeing their benefits interrupted in summer 2021 after a botched migration of the Navy’s enlisted and officer personnel systems, according to internal records and Navy officials.

To this day, the full extent of the problems caused by HR Transformation remain unclear, and Navy officials say they are not tracking all the disruptions caused by the modernization effort.

Still, the human toll of these missteps are apparent to those who suffered them.

Elizabeth Arms, 25, left the Navy in October. Along with thousands of her brethren in recent years, she did not have her DD-214 retirement paperwork in hand on her last day like departing servicemembers are supposed to, a problem both exposed and exacerbated by HR Transformation.

Because of the DD-214 processing backlog and Navy personnel systems showing she was still a sailor, Arms struggled to get listed as her sailor husband’s dependent while they were in Japan. This complicated efforts to get their young family back to the states early so their toddler could be treated for nonverbal autism, she told Navy Times.

Some sailors’ pay and benefits messed up by ‘unanticipated errors’ this summer

“The doctors we’ve spoken to have literally told us they’ve never seen this before,” Arms said of her family’s predicament, which resolved after Navy Times started asking questions.

Senior Chief Hospital Corpsman Chris Terry retired in November after 24 years of service, including stints in Iraq and Afghanistan.

He had to wait until March for Navy systems to catch up and pay him more than $12,000 in pay, benefits and vacation days he sold back.

His Veterans Affairs Department disability benefits also took months to kick in.

As a result, Terry said his family burned through their savings to make ends meet, and every office he contacted blamed another broken link in the bureaucratic chain.

“I love the Navy, it’s given me a career, a life, a family,” Terry said in January. “But the last six months have been the most stressful I’ve ever had to deal with in the Navy.”

A petty officer who requested anonymity for fear of reprisal said that dozens of sailors in his San Diego training school didn’t get their rent money for months last fall. Some resorted to driving Uber to make ends meet in the pricey city.

At a time when the military is struggling to recruit and retain people, the sailor said he has since questioned serving an institution that doesn’t seem to care.

“If the one item I’m guaranteed is not guaranteed, what am I doing this for?” he asked.

While officials did not provide a comprehensive tally of all incidents, other HR Transformation-related casualties have surfaced in recent years, and Navy Times has reported them out, often tipped off by sailors who felt they had nowhere else to turn.

In addition to the pay and benefits outage of 2021, HR Transformation has resulted in low-ranking sailors at the Navy’s nuclear training school in South Carolina not getting paid the housing money owed to them for months on end.

System snafu leaves junior sailors without rent money for months

The Navy’s new evaluation system, eNavFit, came online and was soon revealed as not quite ready for prime time.

When new IT systems planned as part of HR Transformation did not come online as planned, few backups existed to help sailors in need because of the PSD closures.

Michael Berman, a civilian IT expert who served as chief information officer for the California State University system, told Navy Times that organizations should avoid prematurely removing human redundancies when dealing with untested or unready technology.

“If you take humans out of the loop because you’re assuming the technology will work, that’s almost always a bad idea,” Berman said.

Glitches delay full rollout of new Navy eval program

Another aggravating factor was the fact that unit-level sailors in charge of helping their shipmates through thorny pay or records issues were woefully undertrained before reforms rolled out last summer.

Prior to the reforms, these command pay and personnel administrators—known as CPPAs—were given just two weeks of training. Some units had junior-ranking sailors navigating the Navy pay and personnel bureaucracy.

“This has not gone as planned,” Rear Adm. Stuart Satterwhite, the head of Navy HR, said last summer after the service announced the renewed effort to get after these problems.

‘Problems along the way’

The Navy’s HR Transformation was always going to be difficult.

Outside experts tell Navy Times that replacing or modernizing old IT systems can be challenging for any institution.

Oftentimes, institutions jerry-rig such systems over decades to keep them running, because they handle vital processes like pay that can’t be taken offline, even temporarily, according to Berman.

“You can look at places that have done these large transformations, and most of them have some problems along the way,” Berman said. “I have a lot of sympathy for folks trying to do to this kind of work…but I totally understand people who say, ‘we’re spending hundreds of millions of dollars, billions of dollars, and you don’t have anything to show for it.’”

The Navy’s HR Transformation effort involves replacing or modernizing 55 disparate, old IT systems.

In some cases, the legacy systems are running on engineering languages and code no longer in use, according to officials, and those who wrote the code are no longer around.

“We have been forced to conduct analysis to reverse engineer languages and coding to support our transformation efforts,” Capt. Jodie Cornell, a Navy spokeswoman, said in an email. “We have made great strides in doing this work, but we anticipate there will be additional complications as we work through the hundreds of interfaces and thousands of data exchanges.”

Cornell also said the Navy has been “forthright in the complexity” of HR Transformation.

“While we knew it would be complex at the time we started, we couldn’t know all the variables of the transformation until we actually began,” she said. “We made the best decisions we could, given the information we had at the time and our understanding of the risks associated with our awareness of the gaps in our information base.”

While Navy HR Transformation was always going to be a Herculean task, leaders have yet to precisely explain how these mistakes happened and whether sailor suffering could have been minimized.

After several Navy Times interviews with key leaders and hundreds of pages of records obtained via a Freedom of Information Act records request, what led to these failures—and whether anyone sounded the alarm in advance--remains unclear.

The Navy has yet to provide the full scope of records requested by Navy Times under FOIA.

The Chief of Naval Personnel, Vice Adm. Rick Cheeseman, told Navy Times earlier this year that a revised HR Transformation plan now underway should help prevent severe disruptions to pay, DD-214s and benefits going forward.

But outside IT experts warn that unforeseen problems do arise with such jobs, and Cheeseman did not rule out future “pockets of pain” for the fleet.

“We are laser focused on unburdening sailors and unburdening commands, so they can solely focus on the mission,” Cheeseman said. “I am really looking for 2023 to be sort of the year of transparency from us, getting out and telling our story.”

If anyone’s pay or benefits are interrupted, Cheeseman urged them to sound the alarm.

“For every step forward, we may take two steps back in a certain area,” he said. “I need sailors to be very vocal with their issues, let us know what’s going on….we’re working hard and we are laser-focused on making it better for them going forward.”

Retired Senior Chief Terry said he worries that junior sailors won’t speak up for fear of reprisal.

“If senior enlisted are facing these troubles, what are the junior enlisted facing, and what are the people facing that are afraid to say something?” Terry said this month.

While his team proceeds with lessons learned, Cheeseman indicated he is not interested in looking back at what went wrong.

“I put very little time into the autopsy,” he said.

The Navy can point to some victories.

Cheeseman has led an effort to require less so-called “key supporting documents” when processing things like leave, enlistment bonuses and housing entitlements. Stated simply, sailors have to show less forms when claiming certain benefits.

He also reported this month that the service’s DD-214 backlog “is gone,” and that a customer service center in Virginia is now months ahead, currently processing separation paperwork for sailors scheduled to leave this summer.

But even progress has revealed the complexity of the job.

Last fall, the Navy announced that it had cleared a backlog of thousands of sailors who left the service before Oct. 1 and were still awaiting their DD-214.

After Navy Times reported the development, sailors reached out to debunk that claim, alleging they had retired before that date and still didn’t have their paper.

Navy officials later confirmed a pocket of outstanding retirement packages were sitting in the system that nobody tracked because they were mislabeled or in the wrong queue.

“It should be criminal,” a senior officer, who retired last year and requested anonymity so that his job hunt wouldn’t be impacted, told Navy Times about retirement paperwork issues. “We’ve always been taught that you take care of sailors and they’ll take care of you. The Navy’s not taking care of people.”

‘Unacceptable’

As HR Transformation trundled along, the missteps have at times dragooned in lawmakers and outside entities.

Officials with the Navy-Marine Corps Relief Society say their non-profit has seen an increased need for financial aid for sailors in recent years due to pay and benefits disruptions.

“As the Navy began to transform its pay system, the Society saw increased requests for assistance due to challenges with pay and allowances,” society spokeswoman Gillian Gonzalez told Navy Times.

The society doled out roughly $2.9 million to 2,185 clients in 2017, according to Gonzalez.

That figure rose to $5.1 million for 3,566 members in 2019, and to $5.6 million for 2,991 to members with “pay problems” in 2022, she said.

Society officials are in regular contact with Navy HR about such issues, and Gonzalez said in January they are hopeful the problems are ebbing because fewer folks are coming back for repeat assistance.

Meanwhile, sailors have increasingly turned to lawmakers for help.

Congressional inquiries to the Navy regarding DD-214 issues soared from 206 in 2018 to 429 in 2022, according to Navy data.

“There seems to be a lack of urgency among Navy officials in both finding a solution to these delays and communicating these delays to sailors,” Sen. Marco Rubio wrote in a scathing letter to Navy Secretary Carlos Del Toro in October. “It is apparent the Navy has not considered the hardships that sailors experience given the Navy’s delays in processing their paperwork.”

A Rubio constituent who contacted the Florida Republican’s office shared a copy of the letter with Navy Times.

Rubio’s staff confirmed the letter’s authenticity but declined further comment.

That retired officer said he was forced to hold onto his active-duty ID card, potentially breaking the law, because it was the only way he could log into the system to check on the status of his paperwork.

“Failing to live up to the government’s end of the bargain on taking care of servicemembers also exacerbates the existing recruitment crisis the Navy and other branches are facing,” Rubio wrote. “This is unacceptable.”

Joint Force challenges

The Navy does not suffer such HR modernization travails alone.

A bottleneck in a similar Army effort led to thousands of soldiers not getting their discharge paperwork in January.

The Air Force paused the rollout of its new evaluation system in November after that system failed to add evals to airmen’s official records, among other flaws.

Air Force still struggling to launch working performance review system

“As we have shared our lessons learned with our sister services, we have found they are facing similar challenges with similar delays,” Cornell said in an email. “And we are all reminded of the hard-learned lessons of the Department of Defense’s pursuit of the Defense Human Integrated Resources System.”

Known as DIMHRS, the Pentagon’s HR transformation effort burned through $1 billion over 12 years before officials pulled the plug in 2010.

Former Chairman of the Joint Chiefs of Staff Adm. Mike Mullen called the effort “a disaster,” while former Defense Secretary Robert Gates said the only thing the program produced was “an unpronounceable acronym.”

Decades spent patchworking aging IT systems to keep them running is common in many large institutions and is known as “technical debt,” according to Berman.

“If you never pay your credit cards off in full but you just pay the minimum payment every month, eventually you’re going to be in trouble,” Berman said. “It’s the same thing with an IT system.”

Navy officials say this work has to be done.

And while they’re reluctant to place any firm date on when sailors will handle their HR needs entirely on their phone, they promise that the pain will be worth it.

“We could no longer stand aside, doing nothing,” Cornell said. “That had been done for decades and the cost of maintaining an antiquated HR system that was not meeting the needs of our Sailors and their families was becoming prohibitively expensive and utterly unacceptable.”

More questions

The Navy has instituted a raft of reforms that leaders say will make transformation less painful going forward, but questions persist.

The service brought on a longtime government executive and IT specialist, Manuel Hermosilla, to lead the HR Transformation effort in late 2021.

Before that, an IT expert had not been leading the tech-heavy HR Transformation effort since it became a program of record in 2019.

While today’s HR Transformation leadership is focused on moving forward, records obtained by Navy Times suggest what went wrong.

PowerPoint slides point to “minimum” Navy oversight on prime contractors, while noting “aggressive delivery” schedules and “high levels of technical and operational risk” as prominent factors in the 2021 imbroglio that disrupted pay and benefits for thousands of sailors.

Cheeseman’s predecessor, now-retired Vice Adm. John Nowell, was in charge when that outage occurred, and he began a raft of HR Transformation reforms in May 2022, weeks before he handed the CNP reins to Cheeseman, records show.

In an internal memo, Nowell wrote that reforms require “a stable billet structure, a technically competent workforce, and sufficient resources,” raising questions about why such pillars weren’t in place before.

Now retired, Nowell did not respond to a request for comment sent to his LinkedIn profile or through the Naval War College, where he is an advisor.

“It is clear that, given the benefit of perfect hindsight, that no leader would intentionally direct a course that would lead to those results,” CNP Cheeseman’s spokeswoman, Cornell, said in an email.

‘We owe them the visibility’

Cheeseman insists that the difficult work of HR Transformation is going more smoothly, and disruptions are less frequent than they once were.

The DD-214 backlog is a thing of the past, and travel claims are getting processed faster, he said.

Even disruptions are helping improve the system, Cheeseman said.

Issues uncovered when junior sailors did not get paid their rent money for months while undergoing nuclear training in South Carolina led to overall process improvements, he said.

Some HR Transformation accomplishments, such as an online portal for sailors to file their permanent change of station, or PCS, claims are up and running, but Cheeseman noted that only about a quarter of the fleet are using that option.

The Navy has also in recent months started notifying commands in advance of transformation-related system outages, but why that wasn’t done from the start remains unclear.

“We are much more transparent with all system stakeholders on these upgrades,” Cheeseman said. “We owe them the visibility.”

But while claiming progress, Cheeseman was reluctant to say when a modernized system will be up and running.

“It would be empty and premature for me to say what date we’re actually going to be able to target,” he said. “We should know a little bit more in the spring to be able to tell leadership and Congress where we think we’re going to go.”

While Cheeseman is loath to tack on any firm dates for when HR Transformation will be completed, internal records show that the main system sailors will one day use on their phones, Navy Personnel and Pay, or NP2, likely won’t come fully online until January 2024 at the earliest, two years late.

The consolidation of the 55 legacy IT systems is not expected to be completed until fiscal year 2028.

‘Failure is not an option’

HR Transformation envisions a time when automated systems will help sailors through most of their pay and personnel needs, with a handful of “centers of excellence” serving as backstops for tougher issues.

These six centers are backed up by 13 regional support centers, Cornell said, replacing the network of 67 personnel support detachments, or PSDs, that once existed on bases to help sailors. Those PSDs were closed on the assumption that the new HR systems would come online as scheduled.

“Realignment of the work wasn’t completed until September 2022, therefore the efficiencies that come from consolidation have not yet been completely realized,” she said. “The important takeaway is that we are always adapting, learning and improving.”

Cheeseman said he hears the gripes of sailors who miss the old model.

“I totally understand they want to go sit next to somebody at PSD and talk about it,” Cheeseman said. “But for every negative story we get…we hear very positive comments through our (MyNavy Career Center) that their issue was resolved. Again, they got to an expert faster than they would have in the past. So we need to do a better job telling that story.”

But to some sailors, not having a physical office on their base to go to has so far made pay or DD-214 issues that much more vexing.

“There’s no customer service anymore,” a retiring chief who was issued a mistake-riddled copy of his DD-214, told Navy Times last year. “Everything’s through email. You can’t walk into a building and ask questions. You’re kind of screwed.”

“The Navy took away the personnel support detachments from commands and isolated it into a central point of failure with the (centers of excellence),” retired Senior Chief Terry said.

Officials also blame funding cuts by Congress and the COVID pandemic for HR Transformation lines of effort not coming online on time.

Cheeseman said the unexpected has hindered the Navy’s efforts, and outside experts say such surprises are common with IT modernization jobs.

“As we got down the transformation road, and as we started bolting on new systems…you’re quickly learning the lessons and it becomes a lot more complex,” he said. “Trying to turn those lessons fairly quickly in what was a COVID environment was problematic.”

Going forward, the Navy plans to more consistently update and modernize such systems, so that future sailors won’t grapple with the kind of cobwebbed, long-neglected arrays the Navy is now struggling to replace.

“If we fail to do this, we will find ourselves back in the situation of trying to operate this HR enterprise with inferior, out of date tools and solutions,” Cornell said. “That is why failure is not an option.”

New overseas cost-of-living allowance, or OCOLA, rates will go live with June 1 paychecks, a senior defense official told reporters on Tuesday, in locations including Hawaii, Guam, Japan, Australia and some in Europe.

“Even those locations where OCOLA rates will start to decline, pay in 2023 is still higher than it was in 2022,” the official said, citing this year 4.6% increase in basic pay across the services. “So, most service members will still have a higher take-home pay, even with OCOLA reduction, than what they had in 2022.”

The official spoke on background because they were not authorized to speak on the record about the policy updates.

Roughly 230,000 service members receive non-taxable OCOLA on top their regular pay, to help offset the difference in cost of buying goods like groceries and clothing while serving abroad versus what they would be able to buy stateside. The U.S. inflation rate and the strengthening of the dollar versus other currencies in recent years has driven decreases in the allowance, but late last year, Congress stepped in to restrict the Defense Department to implementing decreases only once every six months.

As a response, the Pentagon put a hold on OCOLA drops at the end of last year. The new rates implemented this month will hold steady until November, the official said.

“At the time, we were still implementing decreases in other areas such as Europe,” the official said. “For example, Germany had largely already absorbed their decreases, and so what we are seeing with more locations in [the Indo-Pacific region] this time around, it’s just kind of a natural next step to making sure that we’re ensuring parity across all of the theaters.”

While increases have continued during that 90-day pause, the official said that Singapore specifically is due for an increase with May’s new levels.

Rates are determined by a survey to gather data on where service members and their families are shopping, as well as country-specific fluctuations in currency and buying power, then tiered based on paygrade, time in service and number of dependents.

“So OCOLA reductions were and are largely being driven by higher inflation rates here in the U.S., the contiguous U.S., as compared to many of the OCONUS locations, as well as the strengthening of the U.S. dollar in foreign currencies,” the official said.

Housing allowances are about to go up for more than 100K troops

The Pentagon is hoping that other pay and allowance increases implemented this year will soften some of the blow. In addition to the basic pay raise, housing allowances have increased in several locations, and basic allowance for subsistence has increased roughly 11%.

Congress also created the basic needs allowance in 2022, slightly increasing paychecks for service members living at up to 130% of the poverty line, based on their family size.

This year, the department has been ordered to increase that threshold to 150%, increasing the estimated number of families who benefit to about 2,400.

The monitoring, which generally costs around $30 a month or more, can help troops and family members keep on top of their finances, with information about new activity on their credit reports. With early detection, troops can take steps to nip fraud and other problems in the bud. The three credit reporting agencies are currently providing the service to all active duty members.

The bipartisan proposal, introduced Thursday by Sen. Tom Carper, D-Delaware; Sen. Amy Klobuchar, D-Minnesota; Sen. Kevin Cramer, R-North Dakota; and Sen. Steve Daines, R-Montana, would amend the Fair Credit Reporting Act to expand the definition of those eligible for free credit monitoring to include all in the uniformed services, regardless of duty status, to include members of the National Guard and reserve components. It also would expand the free credit monitoring to their spouses and dependents over 18.

“We owe it to our service members and their families to make sure that their financial well-being is protected while they are protecting our country at home and abroad,” said Carper, a 23-year veteran of the Navy and the Navy Reserve, in an announcement about the proposal. “Military families are often more vulnerable to cybersecurity breaches, which can expose personal data like sensitive financial and identification information.”

Ensuring that military families have full access to credit monitoring services will help keep their information secure, said Cramer, in the announcement.

Credit files maintained by the credit reporting agencies include information about where you live, whether you pay your bills on time and the amount of debt your are carrying; whether you’ve been sued or arrested; or filed for bankruptcy. The information is used to make decisions on whether to lend you money, rent you an apartment, and, importantly for many in the military, whether you should be given a security clearance.

The legislation is endorsed by TransUnion, one of the three major credit reporting agencies, and by The Military Coalition, according to the announcement.

“The current law … provides a safety net for most but not for all of our uniformed services as we would intend,” said Jack Du Teil, president of The Military Coalition, in a statement provided in the senators’ announcement. “The key to oversight is to expand the current law to include all service members — a course of action TMC has long supported.

“We appreciate that this legislation also expands credit monitoring coverage to spouses and dependents of uniformed service members,” he said.

A proposal was introduced in the House in March to expand the free credit monitoring to all uniformed service members, but it didn’t include family members.

The pilot program continues at eight commissaries in the continental U.S., at least through June, but the delivery fee has more than quadrupled. The new delivery fees, implemented March 1, now depend on the distance of the customer from the commissary and range from $15.99 for a delivery within one to five miles up to $29.99 for a 16- to 20-mile trip.

Previously, it was about $4 per delivery, which was the only cost to customers beyond the actual cost of groceries and the 5% surcharge. Customers also have the option of tipping the delivery driver when they check out online.

The commissary website notes that the pricing is determined by the delivery service provider, not by the Defense Commissary Agency.

With a $4 delivery fee — which was the only money the contractors received — the program wasn’t sustainable, said numerous sources.

The federal minimum wage for federal contract workers is $16.20 per hour. Add on the current mileage rate of 65.5 cents per mile, plus fringe benefits and other costs, and “it’s very difficult to make it work,” said Todd Waldemar, founder and CEO of ChowCall, the contractor providing the delivery service at all eight commissaries in the pilot program, in explaining the delivery fee increase.

Losses of $40 to $70 per delivery were cited in the questions asked by potential bidders in the contract solicitation for the expansion of the deliveries at all stateside commissaries.

“Expansion will be delayed until further notice as DeCA performs additional market research” to find an approach that’s sustainable and cost-effective for commissary customers, said commissary agency spokesman Kevin Robinson.

That means they’re trying to find a way to make the program viable for contractors, while keeping the cost for commissary customers as low as possible.

“DeCA has been working hard to make this work,” said Waldemar. “My interpretation is that they’re trying to find that sweet spot of how to make it viable for a contractor while staying true to their mission of improving quality of life for service members, families and other authorized commissary customers.

“It’s close to being viable,” he said.

Caitlin Hamon, deputy director of government relations for the National Military Family Association, said the program is still needed.

“This is a service that families want, that they requested during the pandemic,” she said. “We think it’s important those families who need the delivery have it still as an option and still have access to the low-cost grocery benefit of the commissary.

“We were told by families, and earlier by DeCA, that the delivery services were becoming more popular,” she said. “We would encourage them to explore other avenues of funding for the delivery. Obviously the federal government has restrictions, but there’s something to be said for looking at the civilian counterpart grocery setup.”

Here's how DoD is helping commissary shoppers save more money

Waldemar noted that pricing in the delivery service industry is challenging, not just for the commissary agency but across the entire industry. The increases in delivery fees have affected the number of people using the service, he said, without providing specifics.

“But it’s still a great program, and it’s still going well,” he said.

“We, as a contractor, want to be profitable, but we also want to minimize the fees,” Waldemar said. “Volume is important. The more volume, the better for us.”

The doorstep delivery program is an expansion of the Commissary Click2Go program, where customers at stores worldwide can order online and pick up their groceries curbside at their commissary.

But this test has taken the groceries a step farther — to the customer’s front door. Commissary employees pick the items from the shelves to fill the customer’s online order, then bring them to the delivery driver curbside.

The eight pilot locations have seen an influx of 17,503 new Click2Go customers since the delivery program started, said Robinson, the commissary spokesman. The store with the largest sales volume is Fort Belvoir, Virginia, with 5,013 orders totaling $643,169 from May 18, 2022, through March 31, 2023.

In addition to Fort Belvoir, the doorstep delivery pilot program is available at seven other locations: Scott Air Force Base, Illinois; Fort Bragg South, North Carolina; MacDill Air Force Base, Florida; Naval Station Norfolk, Virginia; Joint Base Lewis-McChord, Washington; and Marine Corps Air Station Miramar and Naval Station San Diego in California.

Rivet, another delivery services company that was part of the pilot program until February, was also successfully providing services, with military spouse employees.

“We were asked by the commissary to continue service without government funding and we shared, based on industry norms and pilot data, it is impossible to have a nationwide program without funding it, especially when federal regulation restricts revenue and adds costs,” said Harold Earls, co-founder of Rivet.

“Rivet was forced to pause services, letting go 41 military spouses” in late February, he said. But he’s optimistic that DeCA is working on a viable solution “and has a strong commitment to creating jobs for military spouses that transfer with them when they PCS,” he said.

Waldemar said 60% of ChowCall’s employees are military affiliated, including spouses and veterans.

When Rivet left the pilot program, ChowCall took over delivery services at all eight commissaries.

Limited options for the commissary agency

There are constraints DeCA has that other grocers who provide commercial delivery services don’t have. The agency, which relies on taxpayer dollars to pay for operations, to the tune of about $1.4 billion a year, is a benefit, not a business. Others in the delivery service industry have ways to earn revenue besides the customer fees they charge, according to questions and answers in the now-canceled solicitation. That includes marking up prices to pay for deliveries.

“The commissary cannot mark up pricing for groceries to cover or subsidize the cost of delivery,” commissary officials stated in the solicitation Q&A. “DeCA has statutory pricing and savings requirements that commercial grocery outlets do not have.”

DeCA officials have consistently said that all costs will be covered by customers using the delivery service. The agency won’t subsidize the program.

One questioner estimated a net loss of nearly $40 on each delivery, using the commissary at Fort Lewis, Washington, as an example. The estimate was based on a delivery fee of $11.99, which is the top of the range of the industry average.

Delivery from that commissary often takes drivers 45 minutes; plus there’s a 21-minute average wait time at the commissary for commissary employees to bring out the groceries. The local required wage rate noted for drivers is $20.90 per hour, along with the 65.5 cents per mile reimbursement.

Waldemar said the doorstep delivery is important to expand access to the commissary benefit. It’s especially important, he said, for spouses who may need to get their groceries delivered, for various reasons, when the service member is deployed.

ChowCall also partners with other businesses, expanding options for deliveries.

“Ultimately we want the military community to have better options than everybody else,” he said. “We want to tangibly make people’s lives better.”

The award of the contract to TriWest Healthcare Alliance Corp. of Phoenix was reaffirmed following a protest filed with the Government Accountability Office by the current contractor, Health Net Federal Services, DHA officials announced April 20. The protest had been dismissed in February because defense officials pulled the contract back to address concerns in the procurement, according to a GAO official at the time.

With DoD’s decision, the contract for that region, for now, is on track to start in August 2024, pending any possible future protests or other legal actions.

In a statement provided to Military Times, officials with Health Net Federal Services said the company “is following the established process as we consider challenging this decision.”

Health Net “disagrees with the Department of Defense’s decision to reaffirm the award for the Tricare West Region contract for T-5, the next generation of Tricare.”

Health Net “is proud to continue to serve providers and beneficiaries under the current Tricare contract throughout 2023 and into 2024,” officials stated.

There are currently more than 2.8 million Tricare beneficiaries in the west region, and an additional 1.5 million beneficiaries will be transferred there from six states in the east region: Arkansas, Illinois, Louisiana, Oklahoma, Texas and Wisconsin.

All told, there are an estimated 9.6 million Tricare beneficiaries. The $70.9 billion east region contract was awarded to Humana Government Business of Louisville, Kentucky, the current contractor for the east region.

Combined, those two new contracts could potentially be valued at $136 billion over nine years. Under these managed care contracts, health care is provided to eligible members of the military, their families, retirees and their families. The new Tricare contracts will allow patients to transfer specialty care referrals to a new doctor when they move, whether their new duty station is in their current region or not. It will also provide improvements to customer service by reducing the average time to answer calls to 20 seconds, according to DHA officials.

According to the Defense Health Agency’s announcement, after officials received the protest, they “discovered information potentially impacting one area of the evaluation,” and they conducted an examination of the source selection record, before reaffirming the award.

The protest remains under a protective order at GAO, according to DHA.

There could be an additional protest filed with GAO, and contractors also have the avenue of filing separate legal challenges with the United States Court of Federal Claims. If additional protests are filed, the Defense Health Agency would be required to suspend work on the contract.

The proposal from Republican Rep. Mike Garcia would set the minimum pay for any member of the military at $31,200 a year, the equivalent of $15 an hour for a 40-hour work week. The Pentagon objected to Garcia’s similar proposals in the past, citing the expense of paying for higher salaries and noting that the plan does not factor in additional compensation that troops already receive.

Lawmakers have put more focus on junior enlisted pay issues this session, as the Pentagon has struggled to balance troops’ compensation with other priorities like equipment modernization and training hours.

Proposal to guarantee minimum-wage salaries for all troops fizzles

Under current military pay scales, the most junior troops make about $21,000 in salary. Individuals with ranks E-4 and above and those who have served for at least three years can earn more than $31,200 in basic pay. About 63,000 current service members make less than that mark, according to Defense Department records.

All troops received a 4.6% pay raise in January as part of the annual defense budget process. The White House has asked for an additional 5.2% pay raise next January as part of its fiscal 2024 budget request. Even with that boost, the lowest junior enlisted pay would only rise to around $22,000 annually.

But those pay totals don’t factor in other military stipends such as housing allowances, specialty pays, enlistment bonuses and food assistance. Depending on where troops are stationed, the housing and food payouts combined can effectively double younger troops’ total military compensation.

Better pay for junior troops will be top focus of new House panel

Garcia noted that despite those benefits, about 23,000 military families are qualify for food stamps, according to federal estimates. He said that kind of financial insecurity is unacceptable for individuals who have volunteered to serve the country.

“To build the military of the future that will deter aggression from China and other adversaries, we must be able to recruit and retain qualified Americans to serve in our military,” Garcia said in a statement. “The simple reality is that we can’t do that if your local fast food chain is paying more than the armed services.”

The fiscal 2023 National Defense Authorization Act limits how often the overseas COLA can be decreased to no more than once every six months, unless the reductions come about as part of a permanent change-of-station move. There is no limit on how often the overseas COLA can be increased.

The overseas COLA can go up or down based on two factors: differences between the cost of living for troops overseas and those stateside, and currency fluctuations. The defense bill “enacted restrictions limiting the Department to instituting OCOLA decreases … no more than once every six months,” said Navy Cmdr. Nicole Schwegman, a DoD spokeswoman.

Service members living in Hawaii and Guam have heard from local commanders that their COLA is about to be decreased, based on those annual calculations. But the issue is still being discussed at the Pentagon.

”No final decisions have been made to implement any change to COLA for members serving in Hawaii, Guam or any other overseas locations at this time,” Schwegman said.

Currently, the overseas COLA is adjusted once a year by region based on comparisons between prices in the region and prices in the continental U.S. But it can also be adjusted as often as every pay period for currency fluctuations, determined by the appreciation or depreciation of the foreign currency. The difference can amount to hundreds of dollars a month, depending on a service member’s rank and number of family members.

Defense officials have been working to implement the new law, and it’s not clear yet whether this will affect possible reductions in overseas COLA for the last pay period in April. But if it doesn’t happen then, it may not happen until much later this year, according to a source familiar with the deliberations. The law also requires DoD officials to notify Congress six months before changes are made in the COLA tables, and it’s not yet clear whether this has happened.

Jenna Lang, the wife of a Navy captain stationed at Yokosuka, Japan, said the stability provision “is really fantastic.”

The frequent changes in the allowance because of currency fluctuations, often paycheck to paycheck, has been a major problem, she said.

“The hardest part for families is the budgeting piece,” she said.

While her family can deal with wild downward swings in COLA, Lang said she is concerned about other families. Such swings in the allowance are particularly hard on more junior enlisted and officers, who may be on tighter budgets.

The overseas COLA is meant to offset higher prices of non-housing goods and services overseas, essentially equalizing purchasing power at businesses outside the gate with that of service members in the continental U.S. As one example, she cited of the effects of COLA decreases in young families eligible for the Women, Infants and Children Overseas Program. The commissary is often out of milk, she said. Young families can go out in town and buy milk, but those who are eligible for the Overseas WIC program can’t use the vouchers for milk and other nutritional items in stores outside the gate.

While milk and other items may be cheaper out in town, she says, the families using Overseas WIC are still having to pay for them. There’s also the issue of whether the family is comfortable going into a civilian store where the language and labeling are different. Some may not have access to a car, and it’s also more difficult with young children in tow.

Worries in Hawaii, Guam

During a March 15 Senate Armed Services personnel subcommittee hearing, Sen. Mazie Hirono, D-Hawaii, told defense officials that service members there have contacted her office because they have been hearing about an imminent decrease of about 50% to their OCOLA.

“That’s a big potential cut,” Hirono said. “Certainly, I share their concerns. Hawaii has the most expensive cost of living of any state in the country today.

She cited the cost of a gallon of gas at $4.85, more than $1 above the national average, and a gallon of milk at about $7.25, nearly $3 above the national average.

“As we continue to combat inflation, the thought of slashing the cost-of-living allowance for service members in Hawaii is absurd,” she said, and asked for the justification for such a large reduction.

Gilbert Cisneros Jr., undersecretary of defense for personnel and readiness, told subcommittee members that it’s not just Hawaii facing issues with OCOLA, but other areas such as Germany and Japan.

“As people are struggling here in the continental United States, it’s kind of evened the playing field out,” he said. “All these areas are facing the same cut because, again, the COLA is meant to bring the pay scale or pay in alignment with what it would be here, to make sure that the dollar — if they were here in the states —that the dollar would stretch just as far as they are overseas.”

Cisneros committed to providing more information about the cuts.

Tracy Cullinan, a Navy commander’s wife living in Hawaii, said a COLA decrease would be a detriment to her family’s finances, but because they are a dual income family, they will adapt.

“For other families, meeting basic needs is going to be a struggle,” she said. “I’ve seen many military families already struggling with putting food on the table, paying for rising utility costs and putting gas in their vehicles. Many military families here already utilize food pantries, free and reduced lunch, WIC and other social programs.

“I worry for those who are already stretching their budget as it is,” she said. “I’ve run into families who have absolutely no room for extras and any sort of emergency would be catastrophic.”

Military families are advised to use the commissary and on-base gas stations, housing and daycare to get the most competitive pricing, she said, “but the demand is greater than the supply, forcing us to find those things out on the economy.”

Inflation continues to be a problem in Hawaii, she said, citing the skyrocketing prices of fresh fruit and vegetables as one example.

Senior military leaders have been doing the best they can to communicate to families with the information they have, and they’ve also been working to appeal the expected reduction in COLA, she said.

More transparency

The law also requires the Defense Department to provide more information about the methodology it uses to determine the cost-of-living allowance payments.

According to DoD, overseas COLA is adjusted once a year, using a formula that compares the prices of goods and services overseas with average prices for equivalent goods and services in the continental U.S. Service members only receive a COLA if costs are higher at their overseas location than average CONUS costs.

If prices in the continental U.S. rise more quickly than the prices overseas, the Overseas COLA will decrease.

Two surveys are used for the annual COLA adjustments to determine the relative cost of living in the continental U.S. compared with the overseas cost. A Living Pattern Survey of service members, conducted every three years, asks where service members shop and what percentage of goods they buy locally, at commissaries and exchanges, and through online retailers.

Then each year, the Retail Price Schedule, a market basket survey, captures prices for about 120 goods and services based on the shopping outlets identified by the most recent Living Pattern Survey.

The annual adjustment is separate from the adjustments based on fluctuations in the foreign currency.

For example, since there weren’t any economic stimulus checks in 2022, you don’t have to worry about tax rules related to that. And service members don’t need to concern themselves with tax forms they received from the Defense Finance and Accounting Service related to Social Security withholding.

Some benefits, deductions and credits that were available in the past few years because of the pandemic have gone away or reverted back to pre-COVID levels, said Susan Mitchell, DoD tax counsel and executive director of the Armed Forces Tax Council. For example, the child tax credit is lower than it was in 2021, and both the child and dependent care credit and the earned income tax credit revert back to pre-COVID levels.

The basics

The deadline for filing, or to file an extension, and pay your taxes, is Tuesday, April 18. (The 15th falls on a Saturday and Monday the 17th is Emancipation Day in some jurisdictions.) There are also some longstanding tax filing extensions available for certain service members. If stationed outside the U.S. and Puerto Rico, troops can qualify for an automatic two-month extension until June 15, both for filing and paying taxes that are due. This extension is designed to help troops overseas who may have trouble getting all the documents they need.

Those overseas who can’t file by that extension can request an additional extension, until Oct. 16.

Remember that any taxes due must be paid by that April 18 deadline (or the June 15 deadline, if overseas) or you could be subject to both interest charges and a failure-to-pay penalty, Mitchell said.

Special rules apply for service members deployed to a combat zone. The deadline for filing and paying taxes is generally extended for their period of service in the combat zone plus 180 days after their last day in the combat zone.

Earned Income Tax Credit

The EITC applies to eligible low- and moderate-income workers, subject to certain qualifying rules. The credit could reduce the amount of taxes owed and perhaps increase your refund. There are special EITC rules and considerations for military members who receive nontaxable pay such as a housing allowance or who are stationed outside the United States. For more information, visit the IRS page on the EITC for military members.

This credit is phased out at certain income levels and number of dependents. It is completely phased out for married couples filing jointly with an earned income of $59,187 or more with three or more children.

You may qualify for the EITC even if you can’t claim children on your tax return. The minimum age for a childless worker to qualify for the credit reverts back to 25, compared to age 19 in 2021. The maximum age of 65 has also been reinstated, after being eliminated for 2021.

Child and dependent credits

Child tax credit: This credit is lower than it was in 2021, when it received a one-year, temporary bump. Tax credits reduce the amount of taxes you owe, dollar for dollar, which is typically better than a deduction, which reduces the amount of your income that is subject to tax, Mitchell notes.

For tax year 2022, the child tax credit is $2,000 per child age 16 or younger. It’s also subject to phase out as income rises, starting at $400,000 for joint filers and $200,000 for single filers.

Child and dependent care credit: You may be able to claim the child and dependent care credit if you paid for the care of a qualifying individual to enable you — and your spouse, if filing a joint return — to work or actively look for work, according to the IRS. Generally, you may not take this credit if you are married and filing separately. However, see What’s Your Filing Status? in IRS Publication 503, Child and Dependent Care Expenses, which describes exceptions to the rule.

The amount of the credit is a percentage of the amount of you paid to a provider while you worked or looked for work. That percentage depends on your adjusted gross income, but the maximum credit is 35% of your eligible expenses. There are limits, however.

For 2022, you may claim up to $3,000 in expenses if you had one qualifying dependent, or $6,000 if you had two or more. So, when the maximum 35% credit is applied, that puts the top credit at $1,050 for one child; and $2,100 (35% of $6,000) for more than one child. The more you earn, the lower the percentage of employment-related expenses that are allowed. Once your adjusted gross income is over $43,000, the maximum credit is 20% of your employment-related expenses, according to the IRS.

Other notable changes

♦ A number of military spouses are teachers, and the deduction has increased to $300 for out-of-pocket expenses for supplies, books, COVID-19 protective items or other materials. That’s up from $250 in 2021.

♦ The “kiddie tax” takes less of a bite, Mitchell notes. This tax on income-generating assets in a custodial account was enacted to discourage wealthier individuals from transferring assets to their children to take advantage of lower tax rates.

The first $1,150 of a child’s unearned income is tax free for those 18 or younger, or if the child is a full-time student under age 24, up from $1,100 in 2021. The next $1,150 is taxed at the child’s rate. Any excess over $2,300 is taxed at the parent’s rate.

♦ Taxpayers can deduct the cost of operating an automobile for business, charitable, medical or moving expense purposes. Taxpayers may use the optional standard mileage rates, but there are two rates for 2022. For the last six months of 2022, the standard rate for business travel was 62.5 cents per mile, up 4 cents from the rate effective for the first six months of the year. The rate for deductible medical or moving expenses was 22 cents for the last six months of the year, also up 4 cents from the first half. Unlike most others, military members can take deductions on out-of-pocket moving expenses.

♦ Employers were allowed to provide more tax-free benefits for parking and transportation, up to $280 per month in 2022.

♦ Itemized deductions haven’t changed much. The deduction for state and local income taxes, property taxes, real estate taxes is still capped at $10,000. The home mortgage interest deduction is still limited to $750,000 of mortgage debt.

What’s that form 1099K?

Mitchell highlights a change affecting military spouses and service members who operate a business selling goods or services, which is resulting in questions from the field. Starting with tax year 2022, third-party payment networks, such as PayPal and Venmo, are required to send you a form 1099K if you have been paid more than $600 during the year for goods and services, regardless of the number of transactions. Previously, that 1099K was only sent to those receiving more than $20,000 in gross payments, with more than 200 transactions.

“Any time you receive income, you are reporting that as income. But the 1099K shows you the third party also reported it to the Internal Revenue Service,” Mitchell said. “The 1099K generally is going to show the amount you owe income tax on, that they count as gross income.”

This only applies to goods and services, and doesn’t apply to payments from family and friends, Mitchell said.

State treatment of military retirement income

Some states don’t have an income tax. Other states have decreased or eliminated state taxes on military retirement income.

For example, in 2022, Virginia enacted a law that gradually phases out taxes on military retirement for retirees age 55 and older, up to a cap of $40,000. It starts with tax year 2022, when the first $10,000 of their retirement pay is tax free. By 2024, up to $40,000 of military retirement pay is tax free. Be sure to check out your state’s laws.

Tax issues from toxic-water relief in Hawaii

Civilians, including military retirees, in Hawaii who were affected by the toxic, fuel-tainted water in Hawaii in late 2021 and early 2022 were sent 1099 forms from the Defense Finance and Accounting Service, reporting as income the reimbursements they received from the military.

The Internal Revenue Service announced Wednesday that these civilians won’t have to pay taxes on the reimbursements they received from the Defense Department.

Hawaii civilians don’t owe taxes on Red Hill reimbursements, IRS says

This tax issue didn’t affect currently serving military members and their families, who also received reimbursements.

During the crisis, some people chose to leave their homes while officials worked to flush out the fuel. Others remained in their homes but were instructed not to use or drink the water. They were reimbursed for hotels, meals and, in some cases, personal property damage.

Those haven’t already filed their tax returns should not include those payments in their gross income on their tax returns, IRS officials said in the announcement. Taxpayers who have already filed their 2022 tax returns and included the payments in their gross income should file amended returns using Form 1040-X, Amended U.S. Individual Income Tax Return.

The IRS provided additional instructions for these taxpayers:

• If taxpayers already filed their 2022 tax return electronically and included the reimbursements in their gross income, they should electronically file IRS Form 1040X. Officials said most electronic tax software and tax professionals offer an electronic amended return filing option. The “Explanation of Changes” should begin with “Red Hill Relief” in the electronic form.
• *If the form is filed on paper, mark the top of Form 1040-X with “Red Hill Relief” and begin Part III, “Explanation of Changes,” with “Red Hill Relief.” The paper amended return should be mailed to: Department of the Treasury, Internal Revenue Service / Austin, TX 73301-0052.

Tax help

Because so many twists and turns may apply to military members and their families, including state tax laws, it’s helpful to get free tax preparation assistance. While the tax preparation services through military legal assistance offices on base aren’t as plentiful as they once were, there are still many installations running these services through the Volunteer Income Tax Assistance program, Mitchell said. You can find information about locations at Military OneSource.

Another helpful resource is the MilTax free software that’s provided on the Military OneSource website for currently serving members, to include active duty, Guard and reserve members. Eligibility extends for to 365 days after a service member leaves the military.

A big benefit of the MilTax program are the military tax consultants, who can answer questions by phone or chat, 24/7.

Tips

♦ Using the MilTax software can help avoid math errors, Mitchell said, because the software does those complex calculations and catches any math errors. She suggests printing out a copy of the return to review before submitting it to the IRS. “People can always amend the return later, but it’s certainly simpler getting it right the first time,” she said.

♦ Use the same name on your tax return that’s on your Social Security card. Check and double check your Social Security number.

♦ The fastest and most reliable way to file taxes is to file electronically and choose direct deposit. Make sure your bank account numbers are correct for the direct deposit.

♦ Getting a refund? Check the status of your refund at the IRS web page, “Where’s My Refund?”

♦ Didn’t receive a tax document? Mitchell advises first contacting the employer or issuing agency. If they can’t get a copy, contact the IRS for help, at 800-829-1040. You’ll provide your information, and your employer’s information. The IRS will contact the employer, but will also send you a substitute form to report the information that’s on the missing document. If the employer sends a document later with different information, the taxpayer may need to file an amended return.

But there have been improvements in the rules for making a permanent change of station move, relating to replacement costs for items lost or destroyed and the handling of lithium batteries, privately owned firearms without serial numbers, gun safes, electronic products and other items, according to officials with the U.S. Transportation Command, the agency responsible for the household goods process.

The shortage of truckers has persisted for years, long before the pandemic.

“Truckers, drivers are a key component of the household goods process. It’s been problematic, and I would say it won’t be any different this summer,” said Dan Bradley, director of government and military relations for the International Association of Movers.

“Moving companies have continued to pay more for labor, pay more for drivers, but it’s an availability issue,” he added. “You’re competing with a lot of people who do a lot of different logistics and transportation jobs. If you find good labor and find good drivers, they’re golden. Those people are gold.”

Service members and families are being moved this moving season under the household goods process that’s been in place for years, not the new Global Household Goods contract.

Officials are focusing on upcoming moves under the current system while starting the transition to implement the new program. No service members will be moved under the reformed process until September, when a phased implementation will begin, said Andy Dawson, director of the Defense Personal Property Management Office.

Industry and TRANSCOM officials have been working to iron out issues to ensure household goods moves are as smooth as possible during this peak season, June and July. Understanding the challenges ahead, they are asking moving companies to only accept the shipments they can service. In recent years, when companies were overloaded, some service members were left stranded when no one showed up to pack and load their household goods. A host of other problems have cropped up as well, notably damaged and lost items.

Meanwhile, changes in regulations and evaluations affecting moving companies have left them uncertain about how much business they will get this year and how the new contract will affect them in 2024. As a result, they may be taking a conservative approach to hiring and prepping equipment, worried that making investments now may be too much of a gamble. Some long-time movers are deciding to shut their doors, Bradley said.

Roadblocks cleared for $6.2 billion reform of household goods moves

“When you execute over 300,000 shipments a year, it’s hard to talk in generalities about the impact of some of the changes,” Dawson said. “Every individual move has its own set of circumstances surrounding it.”

There were 302,731 shipments in 2022, and officials expect about the same number this year, Dawson said. Shipments don’t equate to the number of moves; some service members have multiple shipments.

Some changes implemented last year contributed to a better experience for service members, “not perfect, but better,” he said. For example, the military branches have worked to somewhat ease the number of people moving in the peak season crunch time. TRANSCOM officials also worked with service officials to set a DoD-wide goal of limiting the maximum number of moves to 9,000 per week.

Some rule changes this moving season

♦ Lithium batteries: Movers must properly pack and label lithium-ion batteries of 100 watt-hours or less (lithium metal batteries 2 grams or less) in personal property. Previously there were no clear rules about handling these batteries, and it was handled on a case-by-case basis. More frequently, movers are seeing lithium battery power rather than electric in common items such as vacuum cleaners and lawn equipment, Dawson said.

“That’s one of those things that puts service members in a last-minute predicament,” he said. “We’re trying to clarify what industry can ship in compliance with federal law, so service members aren’t forced to make a decision based on things they’ve procured with their hard-earned money” when a mover isn’t able to take the item.

♦ Privately owned firearms without serial numbers: New rules primarily affect firearms considered to be antique. Any firearm manufactured after 1968 and without a serial number won’t be packed. Those that are made before 1968, but without a serial number, can be packed. For those firearms, a Customs and Border Protection Form 4455 Certificate of Registration is required — or a bill of sale, a receipt or other document adequately describing the firearm, such as special markings — on the household goods inventory. Previously, there was no distinction for shipping firearms without serial numbers, which caused concern about tracking lost or stolen weapons.

♦ Gun safes: Companies must now either weigh empty gun safes separately, or the use the manufacturer’s weight to meet the Joint Travel Regulation requirement to allow 500 pounds of additional weight in personal property shipments.

♦ Replacement costs: For lost or damaged items, the replacement liability for the company must be based on the local replacement cost or cover any shipping or delivery costs — without passing on membership fees, which may be required to purchase the item, to the service member. In situations where a repair estimate can’t be obtained, the moving company is responsible for full replacement value.

♦ Damage to electronic items: Items that no longer work when they arrive at the destination will be assumed to be related to the transit, unless the problem was documented before leaving the customer’s residence.

♦ In-transit visibility: Moving companies must provide shipment updates in the Defense Personal Property System, such as when it enters or leaves storage, arrives or departs from a port of embarkation, or there is a delivery date change. This will allow DoD and service members to track and confirm information about their shipment.

Coming soon — a new moving system

The new Global Household Goods program is expected to be fully in place for domestic shipments by peak season 2024. A phased approach will start later for international moves, to be fully in place by the 2025 moving season.

The new contract, worth a potential $17.9 billion if DoD exercises all contract options over the next nine years, aims to fix military families’ long-standing problems with damaged household goods, missed pickup and delivery times, and other frustrations with movers.

The contract will essentially outsource the management of the process that moves service members’ household belongs, providing complete door-to-door household goods relocation transportation and warehouse services. TRANSCOM will continue to oversee the program. But it’s the first time the Defense Department has consolidated management of the movement of service members’ belongings under one contract.

Dawson said he has spent a lot of time talking with industry representatives and others, including military spouses, in his first months on the job, “to make sure I’m oriented right in making the best recommendations to leadership at TRANSCOM and across the department, so we can get this right for everyone.”

He also speaks from personal experience. Dawson, a retired Army officer, made nine military moves in his 25-year career.

“I remember every single move,” he said. “I come into the job with a sense of empathy for what our service members are going through as they relocate around the world.”

Some of these civilians, including some military retirees, would have been on the hook for thousands of dollars in taxes if the issue hadn’t been resolved. This tax issue didn’t affect currently serving military members and their families, who also received reimbursements.

Those haven’t already filed their tax returns shouldn’t include those payments in their gross income on their tax returns, IRS officials said in the announcement. The deadline for filing tax returns for most is April 18.

Taxpayers who have already filed their 2022 tax returns and included the payments in their gross income should file amended returns using Form 1040-X, Amended U.S. Individual Income Tax Return.

A number of federal civilian employees and other civilians who aren’t employed by the federal government received 1099 forms from the Defense Finance and Accounting Service, reporting as income the reimbursements they received from the military because they were affected by the Navy’s toxic jet fuel spill in drinking water in late 2021 and early 2022.

Some people chose to leave their homes while officials worked to flush out the fuel. Others remained in their homes but were instructed not to use or drink the water. They were reimbursed for hotels, meals and, in some cases, personal property.

Defense officials have been in close communication with the IRS and the Treasury Department in seeking tax relief for these civilians, said Susan Mitchell, DoD tax counsel and executive director of the Armed Forces Tax Council.

The Treasury Department and the IRS decided that the Red Hill fuel spill is a qualified disaster under federal law because the secretary of the Navy determined it warranted assistance from DoD, according to the IRS announcement. In addition, the reimbursements were made in order to promote the general welfare and weren’t compensation for services.

The IRS provided additional instructions for these taxpayers:

• If taxpayers already filed their 2022 tax return electronically and included the reimbursements in their gross income, they should electronically file IRS Form 1040X. Officials said most electronic tax software and tax professionals offer an electronic amended return filing option. The “Explanation of Changes” should begin with “Red Hill Relief” in the electronic form.
• *If the form is filed on paper, mark the top of Form 1040-X with “Red Hill Relief” and begin Part III, “Explanation of Changes,” with “Red Hill Relief.” The paper amended return should be mailed to: Department of the Treasury, Internal Revenue Service / Austin, TX 73301-0052.

Defense officials plan to change eligibility rules for the Basic Needs Allowance in July, increasing the income eligibility cap to 150% of federal poverty guidelines, Secretary of Defense Lloyd Austin said during a March 28 Senate Armed Services Committee hearing.

That’s six months before DoD is required by law to make the change. The higher income cap “will allow us to help more families,” Austin said.

In a related move, two members of the House have introduced legislation to make the Basic Needs Allowance tax exempt.

Mandated in the 2022 National Defense Authorization Act, the allowance serves as a safety net for military families to help combat food insecurity. It went into effect in January, and currently goes to troops whose total family income is less than 130% of federal poverty guidelines, which, in addition to total family income, are based on household size and location.

In the 2023 National Defense Authorization Act, lawmakers included a provision raising the income eligibility cap for the allowance to 150% of federal poverty guidelines, which would allow more families to qualify. DoD is required to implement the new provision by 2024, but the law allows them to do it earlier.

Initial screening by the Air Force, Marine Corps and Navy found 85 service members who may be eligible. The Army issued its guidance on Feb. 27 and has begun screening its soldiers.

Based on Defense Department estimates, the higher income cap would increase the number of active duty families who might be eligible for the allowance to about 2,400.

Allowance for the most at-risk military families begins to take shape

One sticking point is that the Basic Allowance for Housing is counted as income by DoD when calculating eligibility. Sen. Kirsten Gillibrand, D-New York, asked Austin whether he would consider removing BAH from the calculation for the Basic Needs Allowance.

“We will do whatever’s feasible or what we’re allowed to do by law,” Austin replied.

Military family advocates have argued that BAH should be excluded when calculating total family income for the nees allowance, but Congress left it up to DoD to determine whether to include it. Defense officials have since agreed to exclude the housing allowance for some service members — but only in high cost-of-living areas as determined by defense officials.

“DoD’s own surveys show that 24% of our service members experience food insecurity,” Gillibrand said. “Last year, I met with military families on Staten Island who spoke about the challenges they face in basically putting food on the table to feed their kids.

“However, very few service members are considered eligible for Basic Needs Allowance … since [the housing allowance] is included in family income calculations.”

Without a change, the needs allowance “will remain out of reach for families who need it the most,” said Eileen Huck, government relations senior deputy director for the National Military Family Association.

Lawmakers call for tax exemption

Meanwhile, two congressmen have proposed legislation that would make the Basic Needs Allowance tax exempt.

“Taxing support meant to help the most vulnerable undermines the purpose,” said Rep. Steve Womack, R-Arkansas, who introduced the proposal March 22 with Rep. Dan Kildee, D-Michigan. “BNA should be treated like other military benefits outside of earned income, which is exactly what this bill prescribes.”

Military members “deserve to receive the full value of their military benefits,” said Kildee. “The Basic Needs Allowance, which helps support thousands of service members and their families, is not income and should not be subject to income taxes.”

Family advocates support the efforts to make the BNA tax free.

“Congress’ intent in authorizing BNA was to put more money in low-income military families’ pockets, not to increase their tax burden,” said Huck.

The new benefit is one of six measures announced Wednesday by defense officials to address some needs in parental leave, child care, education and career advancement for military spouses.

The memorandum, signed by Secretary of Defense Lloyd Austin, also expands eligibility for the popular My Career Advancement Account (MyCAA) financial assistance program, to include spouses of service members in paygrades E-6 and O-3. Until now, the program, which provides up to $4,000 for obtaining a professional license, certificate or associate degree, was available to spouses of troops in paygrades E-1 to E-5, W-1 and W-2, and O-1 and O-2.

Austin is also requiring improvements to the Exceptional Family Member Program within 90 days.

Flexible spending accounts

The dependent care flexible spending accounts will allow service members to set aside up to $5,000 in pretax income, through payroll deductions, for eligible dependent care expenses. Defense working groups are in the process of developing procedures to implement those accounts, said Susan Mitchell, tax counsel for the Department of Defense and executive director of the Armed Forces Tax Council.

Officials hope to implement these accounts for service members by this year’s open season, which will start in mid-November. If it’s not ready by then, there will be a special enrollment period so service members can sign up to contribute in the 2024 tax year, Mitchell said.

The most recent DoD survey of active duty spouses found that 38% of all them who have children at home routinely use child care.

Federal government employees, including DoD civilians, already have access to dependent care flexible spending accounts as do a number of private-sector employees. According to the Bureau of Labor Statistics, 43% of civilian workers had access to these accounts in 2021.

A number of military family advocates have been asking for this benefit to help reduce the net cost of child care for military families, many of whom have long faced difficulties finding affordable, quality child care. The pandemic exacerbated the problem and has had lasting effects on availability.

“We are doing back flips here,” said Kelly Hruska, government relations director for the National Military Family Association. “This is a benefit every DoD civilian has access to.”

The association, she said, has been asking for this benefit for military families for well over a decade.

A dependent care flexible spending account can be used to pay not only for home and child center care, but also preschool, summer day camp, before and after school programs for children up to age 13, and for adult daycare, according to Internal Revenue Service regulations. The funds are deducted from the service member’s gross pay and deposited into the account before taxes are calculated. Child care bills are then paid with those funds. The end result is a lower tax bill.

Married service members with one child, who have eligible child care expenses, could receive a tax benefit by contributing $5,000 to a dependent care flexible spending account, according to a recent report from Rand, the federally funded think tank. For these members, the tax decrease ranges from $382.50 to $1,382.50, depending on their overall income, the report stated.

According to a 2021 DoD demographics report, 35% of active duty members have children. Of those, nearly 42% have at least one child age 5 or younger. Another 33% have at least one child in the 6 to 11 age group.

The decision about whether to take advantage of this benefit will be up to parents, Hruska noted, but military personal financial counselors should be available to help them work through those decisions.

Other initiatives

In addition to these new accounts and expanded eligibility for MyCAA, Austin’s memo announced:

♦ Improvements to the Exceptional Family Member Program. Within 90 days, the department expects to establish a standard process for enrolling and disenrolling families, a move to ensure that family members with special needs have access to the care, support and expertise they need. Support personnel will be required to make personal contact with each enrolled family at least once a year, and to better coordinate the available support. Service officials will be required to enhance oversight and evaluation, and submit quarterly data to measure performance and program effectiveness.

Military OneSource will assign a single specialty consultant to each family to provide better continuity of support, complementing the services provided at military installations.

♦ Universal prekindergarten at Department of Defense Education Activity schools. This proposal is dependent on funding from Congress, If lawmakers approve, it would be phased in over five years. DoD has requested more than $90 million in its fiscal 2024 budget for this purpose. Research shows that children who go to preschool are nearly 50% more likely to finish high school and go on to higher education, defense officials have noted.

♦ Professional license portability. Austin noted that President Joe Biden on Jan. 5 signed into law a requirement that professional licenses, except those to practice law, be portable for service members and spouses as they move between states. It marked the first time a federal law has addressed the problems military spouses face trying to obtaining meaningful employment and continue their careers.

“The Department is committed to robust communication with service members and their spouses to ensure there is broad awareness of the new law and will also continue to work with the states to promote the sharing of licensure best practices and the approval of occupational licensure compacts,” the memo stated.

♦ Promoting new parental leave benefits. DoD has issued new policies to provide 12 weeks of paid parental leave to service members after the birth or adoption of a child, or long-term foster-care placement. Now, Austin is directing DoD public affairs officials to immediately launch a “messaging campaign to publicize the important new benefit now available under the Military Parental Leave Program.”

The White House has proposed a 5.2% pay raise for all service members in 2024, following a 4.6% boost in salaries that went into effect in January. But House and Senate lawmakers have discussed the idea of boosting that even further — particularly for younger enlisted troops — as a way to make up for soaring inflation costs in recent years, and encourage more Americans to sign up.

On Wednesday, during a hearing on recruiting challenges before the Senate Armed Services Committee, senators broached the topic again as a way for military leaders to meet their personnel goals for the year.

Troops would see biggest pay raise since 2002 under Biden budget plan

But defense officials said they want to study the idea as part of future military compensation reform, instead of implementing it as a quick fix this year.

“We have done reviews of this and found that if you do a job in the Navy or Marine Corps and do the same job in the private sector, on average the people doing the job in the military earn more,” said Erik Raven, Under Secretary of the Navy. “But there remains this perception that [service members] earn much less than their private sector counterparts.”

He expressed concerns that targeted pay raises for smaller groups within the total force could cause complications in salaries across the ranks.

Army and Air Force officials said they are looking at improving some targeted military enlistment and reenlistment bonuses as a better way to help with recruiting, and at making sure the 5.2% pay raise proposal is adopted by Congress as soon as possible. In recent years, the defense budget hasn’t been approved until months after the new fiscal year starts.

But lawmakers questioned whether that will be enough.

“The promise of competitive pay is the foundation for the all-volunteer force,” said Sen. Joni Ernst, R-Iowa, noting that an internal survey by the Defense Department found compensation issues to be the top concern for troops.

She bristled at equating civilian and military pay.

“It’s an apples-to-oranges comparison when you’re asking young men and women to travel around the world and be separated from their family,” adding that she will continue to press for improvements in the months to come.

House Armed Services Committee members have planned a similar push, establishing a new quality-of-life panel to investigate pay issues. Committee Chairman Rep. Mike Rogers, R-Ala., has said he believes junior enlisted pay is too low and needs adjustment in coming years.

Better pay for junior troops will be top focus of new House panel

Even if military pay were to be boosted above the White House’s request in the upcoming budget, its impact on recruiting this year is unclear. The next military-wide pay raise is not scheduled to go into effect until January 2024. The services’ recruiting goals run through September of this year.

All of the armed services except for the Space Force have said publicly that they expect to miss their recruiting goals for fiscal 2023. Officials at the hearing blamed a mix of obstacles for the shortfall, including low unemployment in the private sector and rising concerns among the public that military service is often detrimental to individuals’ health.

Republican lawmakers said they believe that recruiting efforts have been hurt by too much focus by defense leaders on controversial social topics such as abortion access and diversity training. But the military witnesses disputed that assessment, saying recent surveys have not shown those to be a significant deterrent.

Basic pay has been rising, and service members saw a 4.6% increase in 2023, the highest annual increase since 2003. The Basic Allowance for Housing increased, on average, by a whopping 12.1%, and it ranged up to 38%.

The BAH increase reflects the skyrocketing costs of housing around the country. At the same time other increasing costs nationwide, including for health care, have affected military families in other ways.

Whether it’s health care, retirement benefits, commissaries and exchanges, family support, VA loans, GI bill education benefits or the plethora of other benefits, maximizing the options available to you is essential to making the most out of your military career. These are your benefits. Getting smart about the rewards you have earned is worth your time.

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Basic Pay Housing Allowance Retirement Pay Tricare Changes Life Insurance Spouses and Children Buying a Home GI Bill and Tuition Commissaries and Exchanges

BASIC PAY ON THE RISE

Service members saw a significant pay increase in January, but the 2024 pay raise could be the largest in decades.

Basic pay is determined by rank and length of service, with automatic raises when troops meet certain time and promotion markers. In addition, each year Congress determines how much of a pay raise all troops should get.

The figure is tied by law to the anticipated increase in private sector pay, but lawmakers in the past have approved bigger raises to help with recruitment and retention or smaller raises to save money for other military priorities.

The annual military pay increase takes effect in January of each year. The White House issues its target for the hike each August, either going along with the projected rise in private sector wages, known as the Employment Cost Index, or offering justification for proposing a different rate.

Congress has the final say, however. In the past, lawmakers have overridden attempts by the White House to submit lower pay raises in an effort to save money for other priorities. The raise is usually applied across the board, although lawmakers made an exception at the height of the wars in Iraq and Afghanistan to provide more money for some mid-career service members to help with retention.

The most junior enlisted service members make around $25,000 a year in basic pay (not including allowances, special pays and other benefits), while enlisted troops nearing retirement typically earn about $70,000 annually.

Officer pay is significantly higher: The most junior officers clear close to $40,000 a year while senior officers nearing 20 years of service can make in excess of $170,000. That means that even a small change in the anticipated pay raise calculations can make a big difference for military families.

For example, in past years (not in 2022) the Pentagon has backed plans for a pay raise 0.5 percent below the federal formula for the annual increases.

If that reduction were put in place for 2023, an E-4 with three years of service would see a difference of about $160 in take-home pay over the course of a year compared to the expected level of pay boost. For a senior enlisted or junior officer, the difference is closer to $340 over 12 months.

Outside advocates have said even though those gaps won’t cover a mortgage payment, they are the difference between being able to afford a monthly co-pay for prescriptions or having to go without. That makes even small increases or trims a major issue in the military community.

Since the start of the all-volunteer military force in 1973, Congress has authorized a pay raise of at least 1 percent for troops every year, even during budget cycles where other civilian wages held steady. Since 2018, those increases have been 2.5 percent or more.

The 2023 and 2024 pay raises

Troops in 2023 received their biggest pay raise in two decades. The 4.6% increase was up significantly from the 2.7% raise they received in January 2022, and the highest annual increase since 2003.

The pay boost matched the federal formula based on the annual Employment Cost Index calculation and received criticism from some lawmakers for not being high enough, given inflation’s effect on the cost of many basic household goods like groceries and gas.

For junior enlisted troops, the raise meant about $1,300 more in take-home pay this year. For senior enlisted and junior officers, it was about $2,500 more. An O-4 with 12 years’ service will see about $4,500 more over this year over 2022 pay levels.

Discussions on the fiscal 2023 pay raise have not yet begun on Capitol Hill, but are expected to commence in early spring. The ECI formula calls for a 5.2 percent pay raise in 2024, even higher than this year’s raise.

If that figure is approved, it will be the largest pay boost for military members since 2002, when the figure was 6.9%.

Congress is expected to debate the pay raise level along with the rest of the defense budget in the spring and summer. Typically, the full budget plan is not approved until winter, even though the next fiscal year begins Oct. 1.

This year, Republicans overseeing the House Armed Services Committee plan to establish a special panel on quality of life issues to explore a host of issues surrounding service member pay and benefits. That group is expected to begin their work in early summer, but any proposals they draft won’t be put into effect until late 2024 at the earliest.

Basic Allowance for Housing Climbs Sharply

The Basic Allowance for Housing increased by an average of 12.1% in January 2023, the biggest hike in at least 15 years.

The largest percentage boost in the allowance was at Twentynine Palms Marine Corps Air Ground Combat Center, California, where troops received an average 38% increase compared to 2022 rates.

Generally, rates for BAH are adjusted once a year and take effect Jan. 1. But surging housing costs in recent years have led DoD to move more quickly to ease the financial burden for service members, authorizing a temporary BAH increase in dozens of housing areas in 2021 and 2022. The service members, eligible from Oct. 1 through Dec. 31 of those years, were required to apply for the extra money but it’s retroactive and they can still apply if they were eligible. The temporary increases ended when the new new annual rates took effect.

Meanwhile, there are ongoing reviews of how BAH is calculated and whether it meets the needs of service members.

What is BAH?

Basic Allowance for Housing provides service members not living on base or in government-provided housing a cash supplement to be able to rent housing at local market rates. The amount paid to a service member depends on rank, whether or not they have dependents, and where they are based.

This tax-free benefit is set at a level intended to cover 95 percent of the estimated average housing costs for each assigned duty post in the U.S. Individual service members are now expected to pay the remaining 5% of housing costs out of pocket.

Any active-duty service member stationed in the 50 U.S. states who is not provided with government-owned housing is eligible. Most service members have the choice of where to live. Those living in privatized housing — owned and operated by civilian companies for the military — generally pay their BAH to the housing company each month.

If a service member can find housing in the civilian community below the BAH rate for their assigned location, they are able to pocket the difference.

Those stationed in U.S. territories or overseas who are not provided government housing are eligible for an Overseas Housing Allowance, which is calculated under a separate formula.

Unlike BAH, however, the allowance only covers what they are actually spending on housing. They can’t pocket money they don’t spend.

How BAH is calculated

DoD conducts a survey to calculate median rental costs for 300 military housing areas, including Alaska and Hawaii. The calculations are based on the rental costs for a one- or two-bedroom apartment, a two- or three-bedroom townhome, and a two- or three-bedroom single family home. Junior enlisted, for example, might be entitled to a small apartment while more senior enlisted and officers might be entitled to a house.

Two rates — with and without dependents — are set for each location. The with-dependents rate goes to personnel with at least one dependent, whether that be a spouse or a child, and does not increase for additional family members.

BAH varies widely, based on rank, dependents and local real estate markets. For example, an E-1 without dependents at Twentynine Palms receives $1,569 a month. An O-4 with dependents stationed there gets $3,111. An O-6 with dependents stationed at Fort Sill, Oklahoma, gets $1,962 a month, according to DoD.

For details of locations across the country, you can use the Defense Department’s official BAH calculator.

Service members receive BAH rate protection as long as they remain in their home, even if rates drop. However, if they move, are demoted or their dependency status changes, they would receive the rate for their new status.

If rates rise in a location, all service members receive the higher rates regardless of when they arrived.

For dual-military couples with no children, both spouses get the without-dependents rate. If the couple has children, one spouse receives the with-dependent BAH rate, while the other gets the without dependents rate.

More information on BAH is available from DoD.

Basic Needs Allowance

A new Basic Needs Allowance for low-income military families took effect Jan. 1. The payout is designed to serve as a safety net for individuals whose total family income, including the spouse’s income, falls below 130% of the federal poverty guidelines, which are set annually. In 2023, a family of three with less than $46,600 in total income would be under that 130% mark. But for many members, the housing allowance puts them above the threshold.

Few service members were eligible for the assistance when the initial eligibility rules were released this year. Service officials have been screening service members and notifying those who might be eligible. As of Feb. 1, only about 85 individuals were potentially eligible, far fewer than outside advocates had expected.

Once service officials notify service members of eligibility, those individuals must apply for the new allowance.

Congress last year passed language in the annual defense policy bill raising the income eligibility for the allowance to 150% of federal poverty guidelines. Defense officials have until 2024 to implement that higher mark, but could do so earlier.

Researchers from Rand Corp. have said as many as 1,135 troops would qualify for the assistance under that higher benchmark. DoD policy allows service members who believe they may qualify for the benefit, but haven’t been screened as eligible, to submit applications on their own. They should contact their financial counselors for help in understanding the requirements.

Retirement Pay

All service members entering the military are automatically enrolled in the Blended Retirement System, or BRS. Only those with service prior to 2018 remain in the legacy, all-or-nothing 20-year pension plan.

BRS is a blend that combines traditional monthly retirement checks of the legacy system with some new features that allow military members to take some financial rewards with them even if they don’t serve up to the 20-year mark to qualify for a retirement pension. Historically, only 19% of active-duty service members and 14% of Guard and reserve members in the legacy system served long enough to get retirement benefits.

In 2018, more than 400,000 eligible service members opted into the new BRS, out of the 1.6 million serving active-duty and reserve troops who were eligible to make a choice between the legacy system and the new system.

Whether you opted in or are part of the new crop of service members automatically enrolled in BRS, you need to pay attention to the key elements of the BRS, because it’s a critical part of your retirement planning and financial future:

How the Blended Retirement System works

Under the BRS, you’ll get the traditional monthly retirement pay for life if you serve for 20 years or more and earn a full retirement from the military. But it’s 20% less than what it would have been under the legacy system.

If you retire from active duty with 20 years of service under BRS, you’ll receive 40% of the average of your highest 36 months of active-duty pay as your retirement pay. That percentage increases by 2 percentage points for each additional year of service. The legacy benefit provides 50% of your highest 36 months of pay.

Retirement pay has an annual cost-of-living adjustment.

Thrift Savings Plan

The Thrift Savings Plan, or TSP, is like a private-sector 401(k) retirement plan savings account. The TSP has been available to service members for years, but a government match has been added. The money you contribute to your TSP is always yours. You own the DoD contributions after you serve at least two years.

Here’s how it works: After you have served for 60 days, a TSP account will be created and automatic deductions of 3% of your basic pay start going to your TSP. (You can change that amount, but by law, you will automatically be reenrolled at 3% each year.) DoD kicks in 1% automatically, but will contribute up to an additional 4% of base pay to match your contributions.

So, if you put 5% of your base pay in your TSP, DoD also puts in 5%. Making your 5% contribution to your TSP is key to getting the maximum benefit out of BRS.

While service members should contribute at least 5% of their basic pay to get the full DoD match — and not leave money on the table — everyone can contribute more, up to a limit of $20,500 in 2023. For those with civilian retirement accounts such as a 401(k) as well as a TSP, the contribution limits apply to the combined amounts.

Continuation pay and retirement

The services will make a one-time payout of continuation pay when a service member reaches 12 years of service. To receive that continuation pay, which is similar to a retention bonus, you must commit to serve an additional four years.

In 2023, active-duty soldiers, sailors, airmen and guardians get 2.5 times their monthly basic pay as of the first day of their 12th year of service. Reserve and Guard members of these services get half their monthly pay — except for those in the Army Reserve and Guard, who get four times their monthly pay. For Marines, 2023 means a big bump: five times monthly basic pay for active duty and a full month’s pay for reservists.

It’s the prerogative of the services to adjust that multiplier to meet their retention needs. Continuation pay is taxable, but you can also contribute all or part of it to your TSP. You can receive it in a lump sum or, to help reduce your taxes, you can opt to receive continuation pay in four equal installments over four years.

Lump sum retirement pay option

When you retire under BRS, you can request an up-front lump-sum payment of part of the retirement pay you’d receive before you reach full Social Security retirement age, which for most people is age 67. You can receive either 25% or 50% of its “discounted present value.” That means the amount is cut by a discount rate published yearly. For 2023, it’s a 6.32% reduction.

If you take the lump sum, the retirement checks are reduced by either 25% or 50%, depending on which percentage you received, until you reach age 67. At that point, your retirement check returns to its full amount. The lump sum is taxable; retirees can choose to receive the money in up to four installments over four years to reduce the tax burden.

TIP: To get the most out of your BRS benefit, make sure you’re contributing at least 5% to your Thrift Savings Plan account, to get the matching DoD contribution of up to 5%. Why turn down free money?

You can find more information about BRS via the Defense Department.

Tricare

The Tricare health care program is one of the most important benefits for almost 9.6 million beneficiaries.

Some military families have seen a rise in their health care costs in 2023. Generally speaking, if a Tricare beneficiary paid out of pocket for Tricare before, those costs went up. active-duty service members don’t have any out-of-pocket costs.

Pharmacy costs will hold steady through the end of 2023, with no pharmacy copay increases. Active-duty members pay nothing for their covered medications through military pharmacies, retail pharmacies in the Tricare network and through the home delivery benefit. The military pharmacy is still the lowest cost option for all military beneficiaries, because there’s no cost for covered generic and brand-name drugs at these pharmacies.

There are fewer community pharmacies in the Tricare retail pharmacy network this year after more than 10,600 independent retail pharmacies chose to leave the network. More than 42,000 pharmacies remain in the network — including nearly 12,000 independent pharmacies — compared to more than 59,000 in 2022.

There is also a new Tricare Pharmacy Home Delivery policy: You must approve each refill when you’re enrolled in the automatic refill program, so that you only receive the prescriptions you need. Express Scripts, the administrator of the program, will let you know by phone, email or text, that you have a refill coming up. You’ll log in to your account to confirm you want it.

Tricare expanded the telehealth program during the pandemic to make it easier for military beneficiaries to get care. It now covers telehealth visits over the phone as a permanent benefit. While there was a temporary waiver on patient costs for telehealth during the pandemic, patients now pay cost-shares and co-pays. Telehealth costs are like costs for in-person care.

Tricare also covers the use of secure video conferencing to provide medically necessary services, allowing patients to connect with a provider using a computer or smartphone.

Who’s eligible?

Tricare offers 11 different options, with choices depending on the status of the military sponsor and the geographic location. It is open to active-duty members; military retirees; National Guard and reserve members; family members (spouses and children registered in the Defense Enrollment Eligibility Reporting System) and certain others, including some former military spouses and survivors, as well as Medal of Honor recipients and their immediate families.

Those entering the military or changing status (e.g., from active duty to retired) should make sure they and their eligible family members are enrolled in the Tricare program of their choice. Those who don’t enroll may only receive care at a military clinic or hospital on a space-available basis; medical care by civilian providers would not be covered. The one-month open season begins on the Monday of the second full week in November. During that time, you can enroll in a new Tricare Prime or Tricare Select plan or change your enrollment. If you’re satisfied with your current Tricare health plan you don’t have to take action.

The law overhauling Tricare included a strict limitation on switching plans outside of open season. The exception to that rule is if there is a qualifying life event, such as the birth of a baby, a move to a new duty station, marriage or retirement.

For retirees, a new dental program, the Federal Employees Dental and Vision Insurance Program, or FEDVIP, has replaced the now-defunct Tricare Retiree Dental Program.

What are the options?

Tricare offers two core options: Tricare Prime and Tricare Select.

All active-duty members are required to enroll in Tricare Prime; they pay nothing out of pocket. Active-duty families can also enroll in Tricare Prime without an enrollment fee. Prime beneficiaries are assigned a primary care manager, or PCM, at their local military treatment facility or, if one is not available, they can select a PCM within the Tricare Prime network. Specialty care is provided on referral by the PCM, either to specialists at a military facility or a civilian provider.

Tricare Select is similar to a traditional fee-for-service health plan. Patients can see any authorized provider they choose, but must pay a deductible and co-pays for visits. Patients pay lower out-of-pocket costs when they receive care from a provider within the Tricare network.

All Tricare programs have a cap on how much a family pays out of pocket each fiscal year, depending on the sponsor’s status and the type of Tricare program used.

By law, Tricare beneficiaries fall into one of two categories:

♦ Group A: Sponsors who entered the military before Jan. 1, 2018, and their dependents; and

♦ Group B: Sponsors who entered the military on or after Jan 1, 2018, and their dependents.

Those in Group A and Group B have different enrollment fees and out-of-pocket costs.

The plans

♦ Tricare Prime: Similar to a health maintenance organization, Tricare Prime has lower out-of-pocket costs but requires enrollees to use network providers and coordinate care through a primary care manager — a doctor, nurse practitioner or medical team. It’s free to active-duty members. Families enrolled in a Tricare Prime plan don’t have to pay enrollment fees or co-payments unless they use the point-of-service option or fill a prescription outside of a military pharmacy. Retirees must pay an annual enrollment fee (Group A retirees pay $351.96 for an individual, $703.92 for a family in 2023). Co-payments for medical visits are lower than other programs.

♦ Tricare Prime Remote: Service members who live and work more than 50 miles or an hour’s drive from the nearest military treatment facility must enroll in Tricare Prime Remote. Family members are eligible if they live with an enrolled service member in a qualifying location, or they may use Tricare Select.

♦ Tricare Prime Overseas: This is a managed-care option for active-duty members and their command-sponsored family members in nonremote locations. They have assigned primary care managers at a military treatment facility who provide most care and referrals for and coordination of specialty care. Tricare Prime Remote Overseas is a managed care option in designated remote overseas locations, with most care from an assigned primary care manager in the local provider network who provides referrals for specialty care. Activated National Guard and Reserve members and their families also may enroll in these options while the sponsor is on active duty; retirees and their families aren’t eligible.

♦ Tricare Select: This is a preferred provider plan — authorized doctors, hospitals and other providers are paid a Tricare-allowable charge for each service performed. Costs are higher for out-of-network providers, and certain procedures require pre-authorization. There is no enrollment fee for active-duty families. Group A working age retirees were required to start paying monthly enrollment fees in 2021. Co-pays vary by status and type of care: An in-network primary care outpatient visit costs Group A retirees and their families $34 in Tricare Select, for example, while Group A active-duty family members pay $25. Group B active-duty family members pay $18.

♦ Tricare Reserve Select: Qualified Selected Reserve members can buy Tricare coverage when they are in drilling status — not mobilized. The program offers coverage similar to Tricare Select.

♦ Tricare Retired Reserve: “Gray area” National Guard and Reserve retirees who have accumulated enough service to qualify for military retirement benefits but have not reached the age at which they can begin drawing those benefits (usually age 60) can purchase this insurance, which offers coverage similar to Tricare Select.

♦ Tricare for Life: This wraparound program is for retirees and family members who are eligible for Tricare and Medicare. The provider files the claims with Medicare; Medicare pays its portion and then sends the claim to the Tricare for Life claims processor. Enrollees must enroll in Medicare Part A (free for those who paid Medicare taxes while working) and Part B (monthly premium required) to receive Tricare for Life.

♦ Tricare Young Adult: Unmarried dependent children who do not have private health insurance through an employer may remain in Tricare until age 26 under a parent’s coverage via TYA Select or TYA Prime. Premiums are required for both.

♦ US Family Health Plan: Beneficiaries who live in one of six designated areas, can enroll in this as a Prime option. Those enrolled get all their care, including prescription drugs, from a primary care provider the beneficiary selects out of a network of private doctors affiliated with one of the not-for-profit health care systems in the plan. Beneficiaries don’t get care at military hospitals or clinics, or from Tricare network providers when enrolled in the US Family Health Plan.

Action items

Beneficiaries must take action to enroll in a Tricare plan in order to be covered for civilian health care. Those who don’t enroll will only be able to get health care at a military clinic or hospital on a space-available basis.

To be eligible for any of the Tricare plans, beneficiaries must first be enrolled in the Defense Enrollment Eligibility Reporting System. Active-duty members are automatically registered in DEERS when they join the military, but they must register eligible dependent family members. Service members should make sure the information is correct for their family members. Only military members can add or remove family members; this is done through the local ID card office.

Life Insurance

Service members automatically received an extra $100,000 of life insurance coverage starting March 1, increasing the maximum Servicemembers’ Group Life Insurance coverage amount to $500,000. All service members automatically got the extra coverage, including those who have previously declined or reduced their Servicemembers’ Group Life Insurance, known as SGLI. The boost applies to all those eligible for SGLI, including active duty, Guard and reserve members.

Troops pay a premium of $31 per month for $500,000 worth of coverage, which will be deducted from their pay. The extra $100,000 of coverage costs them an extra $6 per month. The rate hasn’t changed; the cost is still 6 cents per $1,000 of insurance. SGLI coverage is offered in increments of $50,000. The monthly premium is the same regardless of the service member’s age or other factors.

If active-duty service members want to decline or reduce their new coverage, they can use the SGLI Online Enrollment System. Reservists with part-time SGLI coverage who want to reduce or decline their coverage should use Form SGLV 8286 and provide it to their personnel office.

It’s the first time the maximum SGLI coverage amount has increased since 2005.

The maximum coverage for Veterans’ Group Life Insurance, or VGLI, also increased to $500,000, also up by $100,000. That is not automatic. Eligible veterans must request it. Service members leaving the military on or after March 1 who had the maximum SGLI coverage can purchase VGLI coverage up to $500,000. Veterans under age 60 who currently have $400,000 maximum VGLI coverage will be able to purchase additional coverage, in increments of $25,000, at specified anniversary dates.

GI BILL AND TUITION ASSISTANCE

In the past year, new restrictions were put on sailors looking to use tuition assistance and Congress passed new authorities to ensure GI Bill benefits aren’t disrupted by future national emergencies.

POST-9/11 GI BILL

The Post-9/11 GI Bill is a benefit for the latest generation of service members and veterans, as well as their eligible dependents. It includes payment of tuition and fees, a monthly housing allowance, and a stipend for textbooks and supplies.

The amount of time you spend on active duty determines your benefit level. In general, the higher your benefit level, the less you have to pay out of pocket for school, maxing out at the 100% benefit level, which covers full in-state tuition at public universities.

Here’s what veterans who received an honorable discharge after Sept. 10, 2011, are eligible for, based on the amount of time they’ve served:

• 100%: 36 months or more of active-duty service, or at least 30 continuous days and discharged due to service-connected disability
• 90%: At least 30 months, less than 36 months.
• 80%: At least 24 months, less than 30 months.
• 70%: At least 18 months, less than 24 months.
• 60%: At least 6 months, less than 18 months.
• 50%: At least 90 days, less than 6 months.
• No benefit: Less than 90 days.

If your service ended before Jan. 1, 2013, your Post-9/11 GI Bill benefits will expire 15 years after your last separation date from active service. If your service ended after that date, your benefit does not expire.

What it covers

You can use your benefits toward an education at a college, university, trade school, flight school or apprenticeship program.

While the benefit covers all in-state tuition and fees at public institutions, it may not have the same reach at a private or foreign school. The maximum tuition coverage for private nonprofit, private for-profit and foreign schools for the 2022-23 school year was $26,381.37. That figure is expected to increase again in August.

Housing stipend

The housing stipends GI Bill users receive depend on the level of benefits they’re eligible for, how many courses they take and where they go to class.

The rate is determined by DoD’s Basic Allowance for Housing scale and is paid at the same rate an active-duty E-5 with dependents would receive in a particular area. If you are pursuing a degree entirely online, you get half of the national BAH average.

Congress passed changes to the program at the start of the coronavirus pandemic to allow students forced online by campus closures and virus mitigation efforts to receive full housing benefits. Those protections have now expired, but could be used again in similar cases of national emergency under legislation passed by Congress in 2022.

The VA had historically based the housing allowance on the location of the main campus of a school, even if the student in question was taking classes at a different branch campus that could be many miles away. However, in 2019, the Forever GI Bill directed VA to instead base the housing allowance on the location where a student takes most of his or her classes.

Transfer rules

Service members may transfer their benefits to a dependent, provided they have already served in the military for at least six years and agree to serve four more after the transfer is approved by the DoD.

The transfer must happen while you are still in uniform. Veterans who have already separated from the military are not eligible to transfer their benefits. Children are only eligible to start using the transferred benefits after the service member doing the transfer has completed at least 10 years of service. Spouses can use the transferred benefits right away.

What’s new

♦ A pending court case could allow veterans who are eligible for both the Post-9/11 GI Bill and the Montgomery GI Bill to use both benefits consecutively, essentially giving some veterans another 12 months of education benefits. However, that issue is still under debate in the courts, and unlikely to be settled for the start of the 2023-2024 academic year.

♦ Active-duty troops who received a Purple Heart for combat injuries are now allowed to transfer their benefits to dependents regardless of how long they served or their ability to commit to more service.

♦ Since August 2022, active-duty servicemembers are eligible for the VA Yellow Ribbon program, which allows private schools to match VA benefits with their own tuition assistance.

More online

You can find more detailed info about the GI Bill here:

The VA also maintains a GI Bill Comparison Tool.

You can apply for the Post-9/11 GI Bill online or by visiting a local VA regional office. If you’ve already chosen a school or program, arrange a meeting with the institution’s VA certifying official, who can help you get started.

TUITION ASSISTANCE

Service members have more education benefits available to them than just the GI Bill.

While service members can begin to use their GI Bill benefits on active duty, they can often get help paying for college from their service branches — and save the GI Bill for later — by using tuition assistance.

TA is a federal benefit that covers the cost of tuition, up to particular limits, for active-duty service members, as well as some members of the National Guard and reserves. The funds are paid directly to schools by the service branches.

Each service has its own requirements.

♦ Air Force: All officers incur a service requirement if they use TA, but there is no service-length requirement to begin using the benefit. Enlisted airmen using tuition assistance must have enough time remaining in service to complete any courses in which they enroll.

♦ Navy: Enlisted sailors and officers, including Navy Reservists, must have a minimum of three years of military service before becoming eligible to use TA. That total was increased in 2022 from the previous requirement of two years service.

♦ Army: As of Aug. 5, 2018, there is no longer a one-year waiting period after completion of Advanced Individual Training, Basic Officer Leader Course or Warrant Officer Basic Course to receive TA. Active-duty officers incur a two-year service obligation.

♦ Marine Corps: After previously having to wait 18 to 24 months to use TA, Marines now have no minimum service-length requirements for the benefit. However, they must agree to at least two more years of active-duty service to use the benefit.

♦ Coast Guard: Active-duty members must have been on long-term active-duty orders for more than 180 days to access TA. The Coast Guard also has unit-specific requirements and requires commanding officer approval.

♦ Guard/Reserve: Soldiers who are activated or on drill status are eligible under the same conditions as active-duty Army personnel. Air National Guardsmen and reservists of other branches are eligible for TA if they are activated, and the use of TA often comes with a service obligation once the last course is completed.

Limits

The Defense Department caps tuition assistance at $250 per semester hour and $4,500 per fiscal year. The Coast Guard cap for fiscal 2022 totaled only $3,750, but it was increased to $4,500 for fiscal 2023.

Generally, TA funds can be used to pursue a higher degree than what you have already earned, up to the master’s degree level. If you have a bachelor’s degree, you can use it to pursue a graduate degree — not an associate or second bachelor’s, though there are some exceptions. Some branches require you to create a degree plan or take a branch-specific course before your TA benefits are approved.

Spouse and family support

For decades, military families have dealt with issues that come with the military lifestyle, such as frequent moves and deployments. They have many of the same needs as their civilian counterparts, but often have more difficulty finding employment and affordable, quality child care, for example.

Bases worldwide offer families a wide variety of support services, from legal assistance and tax preparation, to child care, education and employment assistance, financial counseling, relocation assistance, youth programs, and deployment and mobilization support.

To find out more about what’s available, start with the family centers on military installations or MilitaryOneSource.mil, which offers access to additional assistance by phone or chat, 24 hours a day.

Most of the information on Military OneSource is available to the public, but some extra services are available for free to service members and their immediate family members, survivors of deceased service members, and certain others. Retiring or separating service members and their immediate family members can also access these services for one year after they leave the service.

Among those services are nonmedical counseling — available in person, by phone, secure chat or secure video session — as well as financial counseling, including tax preparation and tax filing help. Spouse employment and education services; language translation services for documents, health and wellness coaching, child/youth behavioral counseling, and family life counseling are also available.

SPOUSE EMPLOYMENT AND EDUCATION

Spouses can visit their installation’s family center for employment and education assistance. They can also visit the Spouse Education and Career Opportunities, or SECO, section at MilitaryOneSource.mil for information about scholarships and other education and employment needs. SECO offers a free, personalized benefit through certified career counselors to help spouses investigate career options, education options or entrepreneurial projects.

Through DoD’s My Career Advancement Account program, or MyCAA, spouses of certain junior service members can receive tuition assistance of up to $4,000, with an annual cap of $2,000, to pursue licenses, certifications or associate degrees needed for employment in any career field or occupation. Spouses may also use their MyCAA scholarship at an approved institution to help with the costs of national tests for course credits required for a degree approved under the MyCAA program. This benefit is available to spouses of active-duty members in paygrades E-1 to E-5, W-1 and W-2, and O-1 and O-2. Under a recent provision in law, military spouses remain eligible for this financial assistance if their military sponsor is promoted beyond the eligible ranks, as long as they have an approved education and training plan in place through the program.

Spouses can also search job opportunities on the Military Spouse Employment Partnership site, where hundreds of businesses that have been vetted by the Defense Department are seeking to hire military spouses.

More than 600 employers are MSEP partners, and as the number has grown over the past decade, those employers have hired over more than 250,000 military spouses. The pandemic has shown the value of remote work in many professions, and remote work can be extremely beneficial for military spouses as they move from place to place. A number of these employers have remote work opportunities. In addition, through Military OneSource, spouses can get a free one-year membership to FlexJobs, a career platform that specializes in vetted, flexible and remote job openings.

Many military spouses spend time and money getting new professional licenses when they move to a new state. It costs money for exams and other fees, as well as lost pay potential as they go through the process. To help with these costs, the law allows spouses to apply to their service branch for reimbursement up to $1,000, for relicensing and recertification costs each time they relocate with their service member.

The Department of Labor has information about state professional licensing requirements, specifically for military spouses, at dol.gov/agencies/vets/veterans/military-spouses/license-recognition. It’s a resource to help military spouses understand the laws of each state, and to find information about the appropriate licensing board in the states for each occupation.

What’s new

A new federal law requires states to provide reciprocity of professional licenses, except for attorneys, to military spouses, but few details are available about how states will implement that law, the Military Spouse Licensing Relief Act, part of the Veterans Auto and Education Improvement Act of 2022.

A new paid fellowship program allows spouses to be placed with civilian companies seeking full-time employees. The Military Spouse Career Accelerator Pilot program is free to employers, and spouses will be paid by DoD during their 12-week fellowships. It’s open to spouses of currently serving members of the Army, Navy, Marine Corps, Air Force and Space Force, to include active, Reserve and National Guard components. The hope is at the end of the 12-week fellowship, the company will directly hire the spouses. There’s no guarantee, but this fellowship gives spouses the chance to show their skills and learn new ones.

Spouses interested in applying can visit the Military OneSource Spouse Education and Career Opportunities page at myseco.militaryonesource.mil/portal/article/military-spouse-career-accelerator-pilot.

Companies interested in hosting a military spouse fellow can learn more and sign up on the Hiring Our Heroes website, hiringourheroes.org/employers/hosting-a-fellow/mscap-host-interest-form/. The fellowship program is being administered through the U.S. Chamber of Commerce Foundation.

CHILD CARE

The Defense Department’s child care systems include more than 600 child development centers, school-age care facilities and a number of family child care homes at more than 230 locations worldwide. All are required to adhere to DoD regulations. These programs are nationally recognized for their quality, and programs meet strict standards for curriculum, safety and health. Fees are on a sliding scale based on total family income. Families can learn more about the child care options offered at or near their installation at the official DoD website MilitaryChildCare.com. The website gives parents more visibility over what child care slots are available at multiple installations in a given area, and allows them to register and apply for child care in advance. Families can submit unlimited requests for child care, and remain on waitlists for a preferred program even after being offered care by another program.

Working military families get higher priority in child care programs under a DoD policy implemented recently. The policy also allows officials to displace children who are already in a child development program if their parents are in a lower priority category and the gaining family is expected to be on a wait list for more than 45 days after the time they need care.

Any family child care provider on an installation who offers child care for other families’ children for 10 or more hours per week must be certified through installation officials. Families can get lists of certified family child care homes at their installation’s child development program office. They can also find certified family day care homes through the MilitaryChildCare.com website.

Military families can also find high-quality, subsidized child care in their local civilian community if care is not available on base. Families must register at the MilitaryChildCare.com website for fee assistance through this program, operated through the nonprofit Child Care Aware of America.

Military families also have another option to help them find hourly and on-demand child care. Through MilitaryOneSource, families will get a paid subscription to a service that lets them search for child care providers in the nationally recognized service. DoD doesn’t pay for the child care, but pays for the subscription to the service that provides connections to available child care providers.

What’s new

In the fiscal 2023 national defense policy legislation, Congress authorized funding for 16 more child development centers to help address the shortage of care. This was 14 more centers than the administration requested. It generally takes about five years before construction is completed and these centers open their doors.

DoD and the services are looking at new ways to ease the child care shortage, such as streamlining the hiring process for child care workers and providing workers higher pay and more benefits.

Congress has also approved a DoD pilot program that provides fee assistance for in-home child care. It’s currently available in 11 regions, with limited spaces available. MilitaryChildCare.com provides more information.

VA Home Loans

The Department of Veterans Affairs home loan program took shape near the end of World War II and has been used by millions of service members and veterans since then. It’s one of the most popular benefits for veterans. Lenders issued 746,091 VA-backed loans in 2022, with an average loan amount of $343,895. The total loan amount was nearly $257 billion.

The basics

The VA doesn’t issue the loans, it backs the loans issued by financial institutions. The VA guarantees a percentage of an eligible beneficiaries’ home-purchase or home-refinance loan, allowing the lender to provide better, more affordable terms and often letting the borrower seal the deal without a big cash down payment.

Eligible service members and veterans can apply, via private-sector lenders, for home-purchase loans. There are no VA loan limits for veterans who have the full entitlement. For a VA-backed home loan, you’ll still need to meet your lender’s credit and income loan requirements in order to receive financing. These VA home purchase loans can be used to buy manufactured homes or homes under construction, in some cases, but not mobile homes.

The VA loan program also offers cash-out refinance loans.

An Interest Rate Reduction Refinance Loan can reduce the rate on an existing VA-backed loan.

Fees

VA loans come with funding fees that vary by loan type and veteran status. Veterans using the benefit for the first time on a no-down-payment purchase loan pay a 2.3% fee, for example, while a veteran making a second cash-out refinance loan would pay a 3.6% fee. A full fee table is available via the VA.

Veterans receiving VA disability compensation are exempt from fees. Other loans, including joint loans, construction loans and loans to cover costs of energy-efficient repairs, also can be backed by VA. Consult your lender for information.

Action items

The key step for service members and veterans is to obtain a Certificate of Eligibility, either through the eBenefits site or via their lender, to be eligible for a VA-backed loan.

Those seeking to refinance existing loans should read lenders’ advertising material carefully: VA and the Consumer Financial Protection Bureau have warned against deceptive lending practices. Among the red flags are aggressive sales tactics, low interest rates with unspecified terms, and promises that borrowers can skip a mortgage payment as part of the new loan — a practice prohibited by VA.

Deadline

VA loan eligibility does not expire, though the entitlement can only be used for the borrower’s place of residence (not a rental property). It can be reinstated after the loan is paid off or under other circumstances — another veteran can assume the loan, for instance. Learn more from the VA.

Service members whose time in uniform falls within these date ranges must have 90 days of active-duty service to qualify:

• Sept. 16, 1940-July 25, 1947
• June 27, 1950-Jan. 31, 1955
• Aug. 5, 1964-May 7, 1975 (Note: For those who served in Vietnam, this era begins Feb. 28, 1961).
• For loan purposes, VA considers “Gulf War” service beginning Aug. 2, 1990, and continuing through the present day. Service members from that time period must have completed 24 months of continuous active-duty service to be eligible, or at least 90 days if they have the right discharge status.
• If your time in uniform doesn’t apply to the date ranges above and you were enlisted and separated on or before Sept. 7, 1980, or if you were an officer and separated on or before Oct. 16, 1981, you need 181 continuous active-duty days to qualify. If your service came after the above date ranges, you need 24 months of time in or less if you have certain discharges.
• Troops now on active duty become eligible after 90 days of service for as long as they remain on active duty. Eligibility now includes National Guard members with at least 90 days of active service including at least 30 consecutive days under Title 32, Sections 316, 502, 503, 504 or 505.
• Troops discharged for a service-connected disability are eligible regardless of service length.

What’s new

Eligibility has been expanded for National Guard members. It now includes troops with at least 90 days of active servicem including at least 30 consecutive days under Title 32, Sections 316, 502, 503, 504 or 505.

Some veterans have experienced difficulty in using their VA loan benefit, especially in competitive housing markets in which multiple bids are made on houses. VA officials have said that misperceptions still persist among sellers and agents that VA financing is less desirable than conventional loans. Those in the industry have recommended that veterans question their Realtors and lenders about their experiences and how often they’ve helped veterans use their VA loan benefit.

For more eligibility details, visit VA’s eBenefits site or call 877-827-3702.

MILITARY STORES

At a time when costs are rising on virtually everything, two benefits that help those in the military community stretch their dollars are commissaries and exchanges.

Commissaries are on-base stores that sell discounted groceries to authorized customers.

Exchanges are on-base stores (with an online component) that sell a variety of items ranging from clothing and shoes to toys, furniture, home appliances and electronics. They have on-base gas stations and stores that sell alcoholic beverages.

Over the past few years, eligibility to shop at military commissaries and exchanges has expanded to include more people in the military community.

COMMISSARIES

Those eligible to use the commissary benefit include active duty, Guard and reserve members, military retirees, Medal of Honor recipients, and their authorized family members. These shoppers have IDs issued by DoD. In a recent change, commissary employees can also shop, but not their family members. DoD and Coast Guard civilian employees in the U.S. and on service agreements overseas are among the authorized shoppers, too.

In 2020, eligibility was expanded to veterans with service-connected disabilities, Purple Heart recipients, former prisoners of war, and primary family caregivers of eligible veterans enrolled under the VA’s Program of Comprehensive Assistance for Family Caregivers. Eligible veterans use their veterans health ID card, or VHIC, to gain access to the installation and to shop. Spouses and other family members aren’t allowed to shop; however, they are allowed to come into the stores with the veteran. Family caregivers who qualify for the benefit will have access to a memo at VA.gov which will be used for entry, along with a driver’s license, passport or other authorized form of ID.

What’s new

In an effort to help service members and families deal with rising food costs, the Defense Department has invested in commissaries this year to decrease the price of most grocery items by about 3% to 5%. They’re particularly focusing on food staples like bread, milk, eggs and other items. Officials aim to increase overall commissary savings to 25%, compared to stores outside the gate. Before the extra funding, the overall savings were an average of 22%. Customers also pay a 5% surcharge which is used to cover construction costs and other needs.

The commissary agency finished rolling out its Click2Go program to all commissaries worldwide in the fall of 2021. Customers choose their items online, select a pickup time, and at the appointed time, head to the Click2Go parking spaces where commissary employees bring their groceries to their car and finish the transaction.

Commissary officials have been testing doorstep delivery at eight locations in the continental U.S. where authorized shoppers who live within 20 miles can order groceries to be delivered. For now, the delivery fee in most cases is less than $4. That’s in addition to tips customers might provide for the delivery driver. Contractors have focused on hiring military spouses. As of this writing, the future of the doorstep delivery isn’t clear, although commissary officials have said they’re working to expand the program and offer it at more locations.

Officials have taken other steps to boost the benefit, such as expanding hours of operation. That includes 56 stores that have converted from six- to seven-day operations.

Payment accepted: Cash, personal checks, travelers checks, money orders, debit cards, Military Star card, American Express, MasterCard, Visa, Temporary Assistance to Needy Families (TANF), Supplemental Nutrition Assistance Program, Women, Infants and Children (WIC), American Red Cross Disbursing Orders, commissary gift cards, and coupons.

Sales restrictions: Most commissaries don’t sell beer or wine, although there’s a limited test selling the libations in 12 stores. Commissaries do sell tobacco in stores on Army and Air Force bases. DoD policy is that tobacco can’t be sold at a discount greater than 5 percent below the lowest competitor in the local area.

Rules on who can use overseas commissaries are affected by status-of-forces agreements between host nations and the U.S. Situations vary by country, and individuals should check with the local U.S. military command or installation they plan to visit before they travel.

Most commissaries have evening and weekend hours. To find a store, and get information such as hours and directions, go the commissary website click on “Store Locator.”

EXCHANGES

Exchanges are the military’s version of department stores, selling discounted brand-name goods from civilian companies, as well as their own private label items. There is no sales tax.

There are four exchange systems: The Navy Exchange Service Command, the Marine Corps Exchange system; Coast Guard Exchange system; and Army and Air Force Exchange Service, also known as The Exchange. Eligible exchange shoppers can shop online at www.shopmyexchange.com, www.mynavyexchange.com and www.shopcgx.com.

Stores support themselves almost completely through their sales income. All profits are used to fund military Morale, Welfare and Recreation programs, and to build or renovate stores.

Eligible shoppers include all ranks of active duty, retired, National Guard and reserve members and their families, Medal of Honor recipients, and their families, surviving spouses and former spouses. Those eligible can shop at any exchange, regardless of service affiliation.

In 2021, defense officials expanded U.S. exchange shopping eligibility to DoD and Coast Guard civilians.

In 2020, the exchange benefit was authorized by law for all veterans with VA service-connected disability ratings; Purple Heart recipients; veterans who are former prisoners of war; and primary family caregivers of eligible veterans under the VA caregiver program.

All honorably discharged veterans can shop online at the exchanges. The Veterans Online Shopping Benefit does not grant on-installation access, unless the veteran falls into another category, such as having a VA service-connected disability rating.

Overseas stores offer many U.S. products that may be difficult to find otherwise. Commands often impose shopping restrictions to limit the sale of U.S. goods on the illegal market.

Stateside and overseas exchanges accept MasterCard, Visa, American Express and Discover credit cards. Exchanges also offer their own credit plan through the joint-exchange Military STAR Card.

The Army issued its guidance for implementing the allowance Feb. 27, and Training and Doctrine Command has begun screening soldiers at Advanced Individual Training, said Army spokeswoman Heather Hagan.

As for other soldiers, “Our intent is to send a list of soldiers that should be prioritized for screening to the major commands by the end of the month,” said Army spokeswoman Heather Hagan.

Information was not available on the number of soldiers who have been identified so far.

Mandated in the 2022 National Defense Authorization Act, the allowance serves as a safety net for military families to help combat food insecurity. It goes to troops whose total family income is less than 130% of federal poverty guidelines, which in addition to income are based on household size and location.

Based on November guidance from the Defense Department, the Navy, Air Force and Marine Corps issued their instructions about two months ago and completed their initial screening by the end of January.

But they identified just 85 service members who might be eligible. Those sailors, Marines, airmen and guardians represent less than 0.000167% of the roughly 507,800 active enlisted force in pay grades E-1 through E-5. The numbers are far fewer than advocates and lawmakers had hoped.

“I was disappointed to see that so few service members are eligible for the Basic Needs Allowance … we can and must do better,” Rep. Andy Kim, D-N.J., ranking member of the House Armed Services military personnel subcommittee, told the services’ senior enlisted leaders during a hearing Thursday. But Kim said he understands more research is needed to identify the root causes of food insecurity.

“No soldier, airman, guardian, Marine or Coast Guardsman should join the military and then experience food insecurity,” said Sergeant Major of the Army Michael Grinston.

Service members who are identified as possibly being eligible for the BNA are notified, but they must then apply for it and provide documentation to substantiate total household income, including that of a spouse. Once the application is received and certified, service officials have 30 days to determine eligibility and the amount of the allowance, and issue the first payment. Although the Basic Needs Allowance took effect Jan. 1, payments are not retroactive.

Not every service member who is screened as possibly being eligible will qualify, because DoD doesn’t have information on total family income. The services have also developed procedures for service members to apply for the allowance if they haven’t been screened as eligible, but believe they may be.

The allowance makes up the difference between the military family’s income and the amount that meet 130% of the federal poverty guidelines. Here’s an example, based on Military Times calculations:

♦ A family of five has a total gross household income of $42,500.

♦ The applicable federal poverty guideline for a family of that size and in that location, as determined by the U.S. Department of Health and Human Services, would be $35,140.

♦ $35,140 X 1.3 (130% of federal poverty guideline) = $45,682.

♦ $45,682 - $42,500 = $3,182.

♦ $3,182 divided by 12 months = $265 per month in Basic Needs Allowance.

In the 2023 National Defense Authorization Act, lawmakers included a provision raising the income eligibility cap for the allowance to 150% of federal poverty guidelines, which would allow more families to qualify. DoD is required to implement the new provision by 2024, but could do so earlier.

Based on Defense Department estimates, the higher income cap would increase the number of active duty families who might be eligible for the allowance to about 2,400.

Military family advocates have argued that the Basic Allowance for Housing should be excluded when calculating total family income, but Congress left it up to DoD to determine whether to include BAH as income. Defense officials have since agreed to exclude the housing allowance for some service members — but only in high cost-of-living areas as determined by defense officials.

The $842 billion Defense Department spending plan for fiscal 2024 represents a 3.2% increase for military operations over current levels, one that administration officials said enables the country to keep pace with national security threats. Specific military priorities and purchases of the full $1.7 trillion federal spending plan will not be unveiled until next week.

Thursday’s unveiling of the Biden administration’s budget is essentially a spending wish list that kicks off months of back and forth with Congress, the body that actually passes government budgets. With the House controlled by Republicans, the GOP has the power to block much of the outlined spending.

But the inclusion of a sizable pay raise for all troops starting in January 2024 is likely to win the support of both parties. Congress has largely gone along with the president’s past military pay raise proposals, and on several occasions in the last two decades, lawmakers have voted to raise pay even higher.

Biden’s fiscal 2024 budget plan proposal also calls for increases in allowances meant to ease economic burden for military families, including increases to the basic allowance for housing and the newly created basic needs allowance, which gives extra monthly pay to junior-ranking troops with large families.

“Specific programming increases include the further expansion of community-based, child care fee assistance, a public-private partnership to increase child care capacity, and a reduction in parent fees for child care workers in order to recruit and retain staff,” are also included in the proposal, according to budget documents.

Under Biden’s plan, military pay would increase by 5.2% next year, which would be the largest boost since a 6.9% average military pay increase in 2002.

The 2023 pay raise — which went into effect just over two months ago — was 4.6%. Combined with the 2024 proposal, troops would see almost a 10% increase in take home pay over a two-year stretch.

The raise is based on the federal Employment Cost Index, which tracks wages and salaries of private sector workers annually. It does not take into account general inflation increases.

Congressional critics have said the actual impact of the seemingly generous pay boosts for military families is minimal, because the higher costs of household goods and fuel aren’t factored into the calculation. Inflation rates soared about 8% at various points last year.

For junior enlisted troops, the 5.2% pay raise would mean about $1,600 more next year in take-home pay. For senior enlisted and junior officers, the hike equals about $2,900 more.

The government is looking into ways to slow the growth of military pay

For an O-4 with 12 years of service, it’s more than $5,400 in extra pay in 2023.

Republicans on the House Armed Committee have vowed to re-examine all military pay this year, with a particular focus on raising junior enlisted pay rates. However, whether that work will impact the fiscal 2024 budget debate or the fiscal 2025 discussion remains to be seen.

The budget would also allocate funds to help the Pentagon implement a yearslong strategy to reform its sexual assault prevention and response programs, including a new, independent special prosecutor’s organization for adjudicating sexual assault, domestic violence, child abuse and other crimes.

Funding is also needed to hire a professional, dedicated workforce of educators and case workers to conduct prevention training and response support, reforming an existing system that often relies on service members to perform those roles as a collateral duty.

The White House’s budget overview does not make any mention of other specific personnel or readiness initiatives, including diversity, equity and inclusion or anti-violent extremism education and research, which have both figured into recent years’ budgets.

Conservative lawmakers have communicated recently they would not support spending on DEI or extremism issues.

A more detailed list of the Pentagon’s plans with respect to operations, training and end strength is expected later this month.