As a military spouse, you’re likely aware of the various allowances and benefits that your family receives while your service member is on active duty. One of these benefits is the overseas cost-of-living allowance (OCOLA), which provides financial support to service members who are stationed outside the continental United States.
Recently, the Defense Department announced some changes to the OCOLA process that may impact your family’s finances. Effective May 15 and Nov. 15, reductions in OCOLA due to changes in cost-of-living and currency fluctuations will only happen once every six months. Additionally, reductions based on annual cost-of-living assessments will be split between the two six-month cycles, while reductions based on currency fluctuations will be implemented in full each cycle.
These updates are in line with changes mandated by Congress in the National Defense Authorization Act for Fiscal Year 2023. The goal is to create more financial predictability for service members stationed outside of the continental United States.
It’s important to understand that OCOLA rates are calculated based on a living pattern survey, which measures where members shop, and retail price surveys, which measure the cost of non-housing goods and services in the locations where members shop. The rates depend on the service member’s duty location, pay grade, time in service, and number of dependents.
While reductions may occur less frequently, it’s important to stay informed about these changes to ensure that you and your family are prepared for any potential impact on your finances. Remember, the Defense Department will still implement OCOLA increases continuously throughout the year when warranted.
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