By Defense Travel Management Office

Service members can have a direct impact on their overseas Cost of Living Allowance (COLA) indexes by participating in a Living Pattern Survey (LPS). In April, service members overseas will be asked to serve in a critical role by completing the survey. The more households that participate in the surveys, the more accurate the COLA will be.

Overseas COLA is a non-taxable supplemental pay allowance, designed to offset overseas prices of non-housing goods and services. It affects approximately 260,000 members at 600 locations overseas, including Alaska and Hawaii. Approximately $1.8 billion is paid in overseas COLA annually.

Overseas COLA is intended to equalize purchasing power. The prices of goods and services overseas are compared with the prices of equivalent goods and services in the United States. The result of this price comparison is an index that reflects a cost of living. If prices in the continental United States (CONUS) are rising at a greater rate than those overseas, your overseas COLA will decrease, and vice versa. However, if prices rise or fall at the same rate, your overseas COLA will stay the same.

Two surveys determine the relative cost of living overseas compared with the United States:

• Living Pattern Survey (LPS) - asks service members where they shop (e.g., commissary, Exchange, catalog, Internet) and what percentage of goods they purchase at each of these places. Service members can have a direct impact on overseas COLA indexes by participating in the LPS.

• Retail Price Schedule (RPS or Market Basket Survey) - annually prices approximately 120 goods and services based on information from the LPS.

Before COLA increases or reductions become final, recommendations are reviewed by the Military Advisory Panel (MAP), consisting of a representative from each of the seven uniformed services. When approved by the MAP, these recommendations are forwarded to the principals, a group composed of deputy assistant secretaries and directors representing each of the uniformed services.

Overseas COLA is not a fixed amount and vary for each service member. Adjustments are either immediate or made incrementally, depending on whether the payment will increase or decrease. Increases in COLA are made immediately whereas COLA reductions are phased in to help minimize the impact. Payments are determined by location, rank, years of service and number of family members.

Overseas COLA is only based on a service member’s income, not his or her spouse. Overseas COLA fluctuations should be considered in household budgeting and fixed expenses, such as car payments, and should be based on what a service member can afford without overseas COLA. Overseas COLA will fluctuate based on the exchange rate and could go up or down from pay period to pay period.

Service members can calculate their COLA rate at http://www.defensetravel.dod.mil/pe...form.html. The calculation tool is updated with the current COLA amounts each pay-period.

The Defense Travel Management Office (DTMO) manages the results of COLA surveys. Comprehensive information about COLA, to include an informational video and frequently asked questions, is located on the DTMO Web site at www.defensetravel.dod.mil.