White House to Senate: Scuttle 'marriage penalty' on BAH

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U.S. Air Force
U.S. Air Force

White House to Senate: Scuttle 'marriage penalty' on BAH

by: Tom Philpott | .
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published: June 06, 2015

The Obama administration applauds several steps the Senate Armed Services Committee has taken to dampen military compensation growth next year, including support for a third straight pay raise cap, a jump in co-pays on drug prescriptions filled off base, and a deep cut in taxpayer support of commissaries, which is sure to shave shopper savings and store hours.

But the White House strongly opposes surprise language inserted in the committee’s fiscal 2016 defense authorization bill to eliminate Basic Allowance for Housing for more than 40,000 servicemembers married to other servicemembers and living off base within United States.

The move would inflict a “significant marriage penalty” on members married to other members, says Office of Management and Budget in a June 2 heartburn letter to committee chairman Sen. John McCain, R-Ariz., detailing features of the bill (S. 1376) it wants removed or modified.

Hardest hit by eliminating BAH for the most junior members of most dual-service marriages would be women, OMB explains.  That’s because 20 percent of women on active duty are married to another servicemember versus only 3.7 percent of active-duty men.

“These women will lose significant benefits and support they are owed for their service to our country,” OMB says.  So if the committee prevails on this issue, it would “degrade the culture and environment needed to keep our military open and welcoming to military families, and risks sacrificing the strengths they bring to our nation’s defense.”  It also predicts “negative impact on the recruitment and retention of the high quality servicemembers, and families, required for our all-volunteer force.”

The administration also opposes bill language to lower BAH to 75 percent of a full tax-free allowance to members who lower actual off-base housing costs by sharing residences with other servicemembers.

It’s not clear which senators on the committee pushed for these two BAH atop also supporting the administration’s call to trim annual BAH adjustments a percentage point or two for several years until recipients are paying 5 percent of rent and utility costs out of pocket.

Critics say the BAH changes sought have an old-time feel and go against the grain of more prominent proposals in the bill to “modernize” compensation as with adoption of a new 401(k)-like Thrift Saving Plan with government matching of member contributions to ensure future members or those who opt into a new retirement package earn with some portable retirement benefits even if they serve only a term or two.

The administration agrees with many dual-service couples heard from in the last week that BAH is essential compensation earned separately by every member not assigned housing.  Yet on this issue, senators appear to be reverting to the “paternalism” of a bygone era when the services worried about “taking care of their own” rather than paying competitive salaries.

Paternalism, in this case, means providing only enough BAH for each dual-service couple to cover average local rent and utilities for housing adequate to their rank or pay grade.  It’s the same logic reflected in the fact that BAH for unmarried members or those “without dependents” remains set significantly below the “with dependents” rate paid to married members.

Some senators have now decided dual-service couples shouldn’t get more in combined BAH than needed to rent acceptable housing, even though BAH has operated this way for years, likely since it first was approved in 1998 when Congress voted to merge two separate pays, of Basic Allowance for Quarters and stateside Variable Housing Allowance, into one payment.

Senators are treading where the Military Compensation and Retirement Modernization Commission in January declined to go.  The commission report says it studied allowances in detail including the “fairness and equity” of differing rates.  It even investigated eliminating allowances, which means moving to a full salary system, to see if that would improve “overall transparency of the compensation system.”

In the end, the report explains, commissioners found “the allowance system strikes an appropriate compromise between representing compensation to servicemembers and assistance for their living expenses.”

The House-passed defense authorization bill would make no change to the BAH or its process for adjusting rates.  But the Senate committee has dual-service couples angry, sounding off and looking for a Senate sponsor to fight to amend the bill during the next week of full floor debate.

“Equal work for equal pay,” wrote one member of a dual military couple in an email complaint.  “Each person serves in their own right under their own contract and deserves equal compensation for their service regardless of who their spouse works for. On what other planet are two individual working people pooling resources considered a scam?”

“Would it truly be fair,” wrote another, “to have two military personnel living together that are merely friends making more money individually than two personnel who happen to be married?  Instead of considering the money flowing to the couple, the military needs to consider them as individuals [and] keep it fair.”

“I'm appalled at the decision proposed by our Senate to decrease BAH for dual military couples,” wrote one member assigned to the costly San Diego area.  “Is the lower ranking spouse any less deserving of those entitlements? What about dual military couples that both pay child support, as in our case, of $2400 per month ($1200 each)…The vast majority of dual-mil couples I spoke to said divorce would be certain if it meant not losing $2K plus (in SD area). I'm for having one member receive a lower ‘without dependents’ rate but this makes no sense at all.”

The Senate committee, like the full House, rejected a Pentagon plan to consolidate Tricare options, raise Tricare fees on working-age retirees and set a first-ever Tricare for Life enrollment fee for newly Medicare-eligible retirees.  But the committee does embrace raising pharmacy co-pays at Tricare retail outlets and via mail order sharply over the next decade.

Family members and retirees would see co-pays on brand name drugs at retail jump to $28 in 2016 and $46 by fiscal 2025.  Brand drugs filled by mail would increase from $16 to $28 next year and to $46 by 2025.

To comment, write Military Update, P.O. Box 231111, Centreville, VA, 20120 or email milupdate@aol.com or twitter: @Military_Update

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