Military service members and veterans in Massachusetts have seen major changes to their pay and benefits over the past several years.
For the most part, it’s good news.
The BAH increase reflects the skyrocketing costs of housing around the country. At the same time other increasing costs nationwide, including health care costs, have affected military families in other ways, with some increases in Tricare costs and pharmacy costs.
While the pandemic affected many services and programs offered to military families, it’s also brought home the need for using technology to amplify these services, such as more telehealth offered by the Military Health System.
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 generous benefits. You’ve earned them. Getting smart about what has changed and what has not is worth your time.
Basic Pay — A big increase may be coming
Service members saw a significant pay increase in January, but the 2023 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.
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 2.7 percent pay raise troops received in January 2022 was just slightly below the 3.0 percent raise they got in 2021. That increase matched the federal formula based on the annual Employment Cost Index calculation.
For junior enlisted troops, the raise means about $800 more in take-home pay this year. For senior enlisted and junior officers, it’s about $1,400 more. An O-4 with 12 years service will see about $2,600 more over 2021 pay levels.
Discussions on the fiscal 2023 pay raise have not yet begun on Capitol Hill, but are expected to commence in March. The ECI formula calls for a 4.6 percent pay raise in 2023, significantly above this year’s raise. If that figure is approved, it will be the largest pay boost for military members in 20 years.
Congress is expected to debate the pay raise level along with the rest of the defense budget over the next few months. Typically, the full budget plan is not approved until winter, even though the next fiscal year begins Oct. 1. However, during election years (like this one), Congress sometimes completes the work earlier to avoid post-election conflicts with outgoing members.
Basic Allowance for Housing climbs sharply
This year, the Basic Allowance for Housing saw the largest increase since before 2016. It increased, on average, by 5.1%.
That percentage is an average across the board, and Defense Department data showed that nearly half of the 300 military housing areas in the U.S. saw increases of more than the 5.1%.
Generally, rates for BAH are adjusted once a year, and take effect Jan. 1. But the surging housing costs in 2021 caused DoD to move quickly to ease the financial burden for service members, by authorizing a temporary BAH increase in 56 military housing areas. The service members were eligible from Oct. 1 through Dec. 31, 2021. Troops were required to apply for the extra money, and it’s retroactive. Those temporary increases ended when the new 2022 rates took effect. But troops can still apply for the past allowance to which they were entitled.
This tax-free benefit is set at a level intended to cover 95 percent of the anticipated housing costs for each assigned duty post in the U.S. Individual service members are now expected to pay the remaining 5 percent of housing costs with out-of-pocket cash.
Are off-base troops eligible for 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.
Who’s eligible for BAH?
Any active-duty service member stationed in the 50 U.S. states who is not provided with government-owned housing is eligible. Those living in privatized housing — owned and operated by civilian companies for the military — generally pay their BAH each month to the housing company. Those stationed in U.S. territories, possessions or overseas who are not provided government housing are eligible for an Overseas Housing Allowance, which is calculated under a separate formula.
BAH is non-taxable, and unlike the Overseas Housing Allowance, 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, because what service members actually spend is not used to calculate BAH. (In Overseas Housing Allowance, however, it’s “use it or lose it.” Service members lose whatever portion of OHA they do not spend.)
How BAH is calculated
DoD calculates median rental costs for 300 military housing areas, including Alaska and Hawaii. The calculations are based on the rental costs for a 1 or 2 bedroom apartment, a 2 or 3 bedroom townhome, and a 3 or 4 bedroom single family home, and then set against specific enlisted and officer ranks for a service member with dependents and service members without dependents.
Based on rank and the local real estate market, monthly BAH varies widely. For example, an E-1 without dependents at Twentynine Palms Marine Corps Base, Calif., receives $1,146 a month . An O4 with dependents stationed there gets $2,274. An O6 with dependents stationed at Fort Sill, Okla., gets $1,926 a month, according to DoD.
Check your rates For details of locations across the country, you can use the Defense Department’s official BAH calculator.
What if BAH for my area is cut while I live there?
Service members are protected from falling rates under a rate protection policy that maintains their current rate for as long as they remain at their location, regardless of whether the official rates drop. However, they will receive the new, lower rate if they are demoted or if their dependency status changes, in which case they’d receive the current rate for their new status.
If rates rise in a location, all service members receive the higher rates regardless of when they arrived. Two rates are set for each location by a survey of rental costs: 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.
What if my spouse and I are both in the military?
If there are 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 single-rate BAH.
Military Retirement Pay — know your options
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.
The BRS combines traditional monthly retirement checks of the legacy system with some new features that allow military members to take some government benefits 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 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 the BRS, you need to pay attention to the key elements of the system, 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 is 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, and that percentage increases by 2% for each additional year of service. The retirement pay has an annual cost of living adjustment. (The legacy benefit provided 50% of your highest 36 months of pay.)
How the DoD’s Thrift Savings Plan works
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 there was no government match until now. 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 in 5% of your base pay to 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 2022. For those with civilian retirement accounts such as a 401(k) as well as a TSP, the contribution limits apply to the combined amounts.
What’s continuation pay and when is it paid?
The services will make a one-time payout of continuation pay when the 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 2022, active duty members get 2.5 times their monthly basic pay as of the first day of their 12th year of service. Reserve and Guard members get 0.5 times their monthly pay — except for those in the Army Reserve and Guard, who get 4 times their monthly pay. It’s the prerogative of the services to adjust that multiplier to meet their needs, such as retention. 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 opt to receive either 25% or 50% of its “discounted present value.” That means the amount is cut by a discount rate published yearly. For 2022, it’s a 6.54% reduction.
If you take the lump sum, the retirement checks are reduced by either 25% or 50%, depending on the 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 at the Defense Department’s Blended Retirement System website.
Tricare changes: What you need to know
The Tricare health care program is one of the most important benefits for almost 9.6 million beneficiaries.
In 2022, Tricare beneficiaries added their health care costs to the list of costs that were increasing in the current economic environment. 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 also increased for 2022, with co-payment increases ranging from $1 to $8. The increase doesn’t affect active-duty service members, who pay nothing for their covered medications through military pharmacies, retail network pharmacies 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 were also changes to the Tricare retail pharmacy network in December, 2021. CVS returned to the network. Walmart, Sam’s Club and some community pharmacies left the retail pharmacy network. CVS has nearly 10,000 pharmacy locations, including many inside Target stores. The Tricare retail pharmacy network has more than 59,000 pharmacies.
The Tricare health program has also temporarily expanded the telehealth program during the national health emergency declared because of the pandemic, to make it easier for military beneficiaries to get care. Tricare covers telehealth visits by telephone, and eliminates patient co-pays and cost shares for telehealth options.
For several years before the pandemic, Tricare has covered the use of secure video conferencing to provide medically necessary services, allowing patients to connect with a provider using a computer or smartphone. Tricare has also expanded the medical services eligible for telehealth.
Who’s eligible for Tricare?
Tricare offers 11 different options, with choices depending on the status of the military sponsor and the geographic location: 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 on or after Jan. 1, or changing status (i.e., 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, and medical care by civilian providers wouldn’t be covered. The one-month open season begins on the Monday of the second full week in November and goes through the Monday of the second full week in December. 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 to stay enrolled.
The law overhauling Tricare included the strict limitation on switching between Tricare plans. Beneficiaries can’t switch between Tricare Prime and Tricare Select until the yearly open season starting each November, unless there’s some sort of qualifying life event, such as the birth of a baby, a move to a new duty station, marriage or retirement.
And 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 Tricare options?
Tricare offers two core options: Tricare Prime and Tricare Select. Select replaced Tricare Standard and Tricare Extra in 2018. All active-duty members are required to enroll in Tricare Prime; they pay nothing out of pocket. Active-duty families can 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.
What are the Tricare plans?
- Tricare Prime: Prime is similar to a health maintenance organization, which 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. If you’re an active duty family enrolled in a Tricare Prime plan, you won’t have to pay enrollment fees, or co-payments unless you’re using the point-of-service option or filling a prescription outside of a military pharmacy. Retirees must pay an annual enrollment fee (Group A retirees pay $323 for an individual, $647 for a family in 2022). 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/Prime Remote Overseas: Tricare Prime Overseas is a managed-care option for active-duty members and their command-sponsored family members living in non-remote 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. By law, Group A working age retirees (those who entered the military before Jan. 1, 2018), were required to start paying monthly enrollment fees in 2021. Copays vary by status and type of care: An in-network primary care outpatient visit costs Group A retirees and their families $32 in Tricare Select for example, while Group A active-duty family members pay $24 and others — Group B active duty family members those whose sponsor entered the network on or after Jan. 1, 2018, pay $16.
- 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, from 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 U.S. Family Health Plan.
Eligible dependents must be registered
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.
Help for military spouses and children
Military families are a microcosm of society, with many of the same needs and issues as their civilian counterparts. But layer on the frequent moves, deployments and other unique aspects of military life, and problems can be intensified with issues such as spouse employment, child care and finances.
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. The pandemic may have affected the availability of some services while at the same time, intensifying the need for these services.
Central points of contact 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.
For decades, two of the biggest issues for military spouses have been finding employment and finding good quality, affordable child care. Here are some of the programs that address those needs:
Military 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 on 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. 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 500 employers are MSEP partners, and as the number has grown over the last 10 years, those employers have hired over more than 200,000 military spouses.
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 set up a website, based on DoD’s data about licensing, 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 other options are available to military spouses?
The pandemic has shown the value of remote work in many professions, and remote work can be extremely beneficial for many spouses.
DoD recently started two pilot programs to help military spouses increase their professional knowledge and access to remote work opportunities. Spouses have access, at no cost, to Udemy, an online education platform. Another initiative is providing access to FlexJobs, an online providing vetted, remote job openings across the U.S.
For more information on these initiatives, spouses should visit the Spouse Education and Career Opportunities section of MilitaryOneSource.mil.
Officials are tracking usage of these programs to see whether they should continue.
Child care for military families
The Defense Department 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.
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 DoD 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. For more information, visit this site.
What else is the DoD doing to ease the child-care burden?
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. Congress has allowed a DoD pilot program that provides fee assistance for in-home child care, for example. It’s currently available in five regions, but is limited to 250 slots. MilitaryChildCare.com provides more information.
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, whose parents are in a lower priority category, if the military family is expected to be on a wait list for more than 45 days after the time they need care.
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.
Want to buy a home? The VA can help.
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 a record high 1.4 million VA-backed loans in 2021, with an average loan amount of $310,000. The total loan amount was more than $447 billion.
How does the VA home loan program work?
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.
Who’s eligible for a loan under the VA program?
Eligible service members and veterans can apply, via private-sector lenders, for home-purchase loans. As of 2020, there are no VA loan limits for veterans who have the full VA loan 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.
What are the fees under the VA home loan program?
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 percent fee, for example, while a veteran making a second cash-out refinance loan would pay a 3.6 percent fee. A full fee table is available.
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.
What to keep in mind when enrolling
The key step for service members and veterans is to obtain a Certificate of Eligibility, either through the VA’s 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 issued a “warning order” against deceptive lending practices.
Among the red flags: 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.
What’s the VA loan program 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 Learn more from the VA here.
Which service members qualify for the VA loan program?
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 the Republic of 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. Reserve and National Guard members become eligible after six creditable years in service. Troops discharged for a service-connected disability are eligible regardless of service length.
What’s new in the VA loan program?
The federal law for VA home loans changed in 2020 to make it easier for veterans to buy homes in areas with high real estate values, taking away the loan limit maximums previously required in certain areas of the country.
Some veterans have experienced difficulty in using their VA loan benefit, especially in competitive housing markets in 2021 where multiple bids are made on houses. VA officials have said that misperceptions still persist among sellers and selling agents that VA financing is less desirable than conventional loans. Some advocates have said requirements for the VA loan program are cumbersome and burdensome. VA officials say more industry education is needed.
Those in the industry have recommended that veterans question their realtors and their lenders about their experience and how often they’ve helped veterans use their VA loan benefit. The National Association of Realtors is working to improve perceptions of the VA loan and make it easier for realtors to navigate the VA loan process.
VA officials are working with advocates and Congress on potential changes to the program. Additional details of the home loan process are available here. For more eligibility details, visit VA’s eBenefits site or call 877-827-3702.
In the past year, more students became eligible for VA’s Yellow Ribbon program and new tuition assistance caps were put in place for some service members.
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 does the Post-9/11 GI Bill cover?
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 2020-21 school year was $25,162.14. That figure is expected to increase again in August.
How does the Post-9/11 GI Bill housing stipend work?
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.
However, 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 are set to last through spring 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 is 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.
Can Post-9/11 GI Bill benefits be transferred?
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 in the Post-9/11 GI Bill program?
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. The issue is under appeal and may not be settled in time for the start of the 2022-2023 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.
Starting in August 2022, active duty service members are eligible for the VA Yellow Ribbon program, which allows private schools to match VA benefits with their own tuition assistance.
More Post-9/11 GI Bill information
You can find more details here on the GI Bill.
You can head here for 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 for active-duty troops
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.
Here’s how tuition assistance works, and what you’ll need to know to make the most of it:
What is military tuition assistance?
Tuition assistance 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.
Who is eligible for military tuition assistance?
Each service has its own requirements.
- Air Force/Space Force: All Air Force and Space Force officers incur a service requirement if they use TA, but there is no service-length requirement to begin using the benefit.
- Navy: Enlisted sailors and officers, including Naval Reservists, must have a minimum of two years of military service before becoming eligible to use TA.
- 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 Coast Guard 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 for a certain amount of time once the last course is completed.
What are the limits?
The Defense Department caps tuition assistance at $250 per semester hour and $4,500 per fiscal year. The Coast Guard recently set its cap for fiscal 2022 at $3,750.
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.
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 have expanded to include more people in the military community.
Who can shop at commissaries?
Eligibility: 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 on service agreements overseas are among the authorized shoppers, too.
As of Jan. 1, 2020, the eligibility was expanded by law to all veterans with service-connected disabilities, Purple Heart recipients, former prisoners of war, and primary family caregivers of eligible veterans enrolled under the Department of Veterans Affairs Program of Comprehensive Assistance for Family Caregivers. Service connected disabled and other veterans who are eligible 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. They just can’t buy anything. 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 at commissaries?
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 are also planning to test doorstep delivery this year.
Commissaries add a 5 percent surcharge at the cash register which is generally used to pay for construction and renovation of stores, and equipment purchases. Because commissaries receive taxpayer funding each year for most operating costs, they’re able to offer groceries at generally lower prices overall than civilian stores. The law requires that overall, average commissary savings must be consistent with the baseline savings of 23.7 percent, compared with civilian grocers outside the gate.
There are a variety of initiatives to improve convenience and savings for customers, such as the Your Everyday Savings (YES!) program. That program has dropped prices long term on hundreds of popular brand items ranging from certain brands of toilet tissue, baby food, Spam, yogurt, to cereal and other types of products.
Commissaries also sell their own private label brands.
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.
Some commissaries overseas have restrictions, such as ration controls in South Korea in order to control black marketing of U.S. goods.
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.
Locations and hours: Most commissaries have evening and weekend hours. To find a store, and get information such as hours and directions, visit www.commissaries.com and click on “Store Locator.”
Who can shop at military 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.
Eligibility: 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 exchange shopping eligibility to Department of Defense and Coast Guard civilians, who are now able to shop in military exchanges in the U.S.
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.
Employees. Exchange employees are paid from exchange revenue, not taxpayer dollars. The exchanges also seek to hire military spouses, with hiring preference programs.
Overseas. 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.
Payment. 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.
Should you be in the midst of a military divorce or contemplating divorce, contact the Law Offices of Renee Lazar at 978-844-4095 to schedule a FREE one hour no obligation consultation.