Some service members in Germany could see their overseas cost of-living allowance drop by more than $200 per month under new COLA rates set to take effect on May 16, according to U.S. military officials in Europe.
Overseas COLA is a tax-free allowance designed to offset the higher costs of good and services overseas compared to the U.S. The allowance varies depending on a members’ location, rank and number of family members. The rates are adjusted based on changes in costs and foreign currency exchanges.
The allowance is being reduced in many locations in Germany because the 2013 Retail Price Schedule found that the costs for recreation, childcare, household help, telephone service, Internet and other services have gone down, according to a news release Wednesday from U.S. Army Europe.
Under the new changes, a service member in paygrade E-3 with fewer than two years of service and three dependents would see a drop in COLA of $100 per month if he or she lives on or within 50 miles of a military installation, the news release says.
However, service members living in remote locations have seen an increase in their COLA rates. That same E-3 would get $50 more per month if he or she lived farther than 50 miles from a military installation. Increases for any troops living in such “no support” locations took effect April 1.
As of September, about 250,000 service members in more than 600 locations were receiving overseas COLA, which cost the Defense Department a total of about $2 billion a year total.
Adjustments in overseas COLA rates are based on “living pattern surveys” conducted in all overseas locations every three years.