Edward: Welcome to the MIL News Weekly for 28 December 2025 to 3
January 2026, your essential guide to the latest news impacting the
military and veteran community.
Whether you're currently serving in uniform, a military retiree, a veteran,
or a family member, this is your source for the critical updates you need to know.
Each week, we cut through the noise to bring you the most important developments
from the Pentagon, Capitol Hill, and the Department of Veterans Affairs.
Weâll cover everything from new policies and pay raises affecting
active and reserve forces, to changes in healthcare and benefits for
retirees, and the latest on VA services and legislation for our veterans.
Let's get you informed.
Hereâs whatâs happened this past week.
Issues That Affect Active and Reserve Military Personnel
Fiscal Year 2026 Pay and Benefits Implementation
For the majority of active duty and reserve personnel, the most
immediate impact of the new year was the implementation of the
compensation adjustments authorized by the National Defense Authorization
Act (NDAA) for Fiscal Year 2026.
3.8
Percent Increase in Basic Pay
Effective January 1, 2026, all members of the uniformed services received a 3.8
percent increase in Basic Pay.
This raise is statutorily linked to the Employment Cost
Index (ECI), which measures the growth of private-sector wages.
By matching the ECI, Congress aims to ensure that military compensation
remains competitive with the civilian labor market, a critical factor
for recruitment and retention.
The increase applies across all ranks and components.
For a junior enlisted soldier (E-4) with less than two years of service,
this translates to a tangible increase in monthly disposable income.
For senior officers, the raise is substantial, though pay caps
remain in effect for the highest grades to maintain parity with
Executive Schedule Level II caps.
Basic Allowance for Housing (BAH)
The Department of Defense also released the 2026 Basic Allowance
for Housing (BAH) rates, which took effect on January 1, 2026.
On average, BAH rates increased by 4.2
percent nationwide.
This allowance is designed to cover 95 percent of housing costs,
including rent and utilities, for service members living off-base.
The 4.2
percent average masks significant local variations.
High-cost coastal areas saw larger increases to keep pace with rental
markets, while some interior markets saw more modest adjustments.
Importantly, the DoD continues to apply Individual Rate Protection.
This policy ensures that if the BAH rate for a specific location decreases, service
members already residing in that location will retain their previous, higher rate.
They will not see a reduction in their allowance as long as they maintain their
eligibility status at that duty station.
Basic Allowance for Subsistence (BAS)
The Basic Allowance for Subsistence (BAS), which offsets the cost of meals, was
also adjusted effective January 1, 2026.
Unlike Basic Pay, BAS is indexed to the cost of food as measured by the U.S.
Department of Agriculture (USDA).
For enlisted members, the monthly rate has increased to $476.95.
Officers will receive a monthly rate of $328.48.
Additionally, a specialized rate known as BAS II, available to enlisted members
assigned to government quarters that lack adequate food storage or preparation
facilities, has been set at $953.90
per month.
Civilian Pay Disparity
A significant point of friction in the federal workforce is the
disparity between the military and civilian pay raises for 2026.
While uniformed personnel received a 3.8
percent increase, President Trump signed an Executive Order on December 18, 2025,
authorizing a pay increase of only 1.0
percent for General Schedule (GS) civilian employees.
Furthermore, this order did not include any increase in
locality pay, meaning the 1.0
percent adjustment was the total increase for the civilian workforce.
This effectively results in a real-wage cut for many civilian DoD employees
when adjusted for inflation, potentially complicating the DoD's ability to
retain the civilian experts who support active duty operations in fields like
logistics, engineering, and intelligence.
Legislative Actions Affecting Active Duty Personnel
During this period, the legislative framework governing
the military was finalized.
The following bills are of primary relevance:
Bill: S.
1071 / S.
2296 - National Defense Authorization Act for Fiscal Year 2026
Signed into Law (Public Law 119-60) on December 18, 2025.
This is the primary authorization bill for the Department of Defense.
It establishes the end-strength of the armed forces, authorizes the 3.8%
pay raise, and sets policy for military procurement and operations.
It includes provisions for the modernization of the nuclear triad and
authorizes funding for the platforms used in Operation Absolute Resolve.
Bill: H.R.
5371 - Continuing Appropriations and Extensions Act, 2026
Signed into Law on November 12, 2025.
While enacted prior to the reporting week, this legislation
remains the active funding vehicle for the federal government.
It ensures that military operations, including the deployment to Venezuela,
continue to be funded in the absence of a full-year Defense Appropriations Act.
It prevents a government shutdown and ensures paychecks continue
to flow to active duty troops.
Issues That Affect Retired Military Personnel
Cost-of-Living Adjustment (COLA) for 2026
Retirees received their first adjusted annuity payments in January 2026.
These adjustments are determined by the Consumer Price Index for
Urban Wage Earners and Clerical Workers (CPI-W), which measures
inflation in the broader economy.
CSRS and Military Retirees
Retirees under the Civil Service Retirement System (CSRS) and
military retirees received a 2.8
percent COLA effective December 1, 2025, payable in the January 2026 checks.
This increase is intended to protect the purchasing power of the pension against
the rising costs of goods and services.
For a retiree with a monthly pension of $3,000, this adjustment results in an
increase of approximately $84 per month.
FERS Retirees: The "Diet COLA"
Retirees under the Federal Employees Retirement System (FERS) received
a smaller adjustment of 2.0
percent.
This discrepancy is due to the statutory formula governing FERS COLAs.
Under the law, if the CPI-W increase falls between 2.0
percent and 3.0
percent, the FERS COLA is capped at 2.0
percent.
This mechanism, often derided as the "diet COLA," means that FERS retirees
effectively lose purchasing power in years like 2026 where inflation (2.8%)
exceeds their adjustment (2.0%).
TRICARE 2026: Rising Healthcare Costs
Perhaps the most significant financial headwind for retirees in 2026 is
the steep increase in TRICARE costs.
The Department of Defense implemented a new fee schedule effective January
1, 2026, which differentiates beneficiaries based on when their
sponsor entered the service.
Group A consists of sponsors who entered service before January 1,
2018, while Group B includes those who entered on or after that date.
Annual Enrollment Fees
Enrollment fees, effectively the premiums for TRICARE coverage,
have risen for the new year.
For TRICARE Prime, Group A retirees now pay an individual fee of $381.96
and a family fee of $765.00.
For Group B retirees, these Prime fees are higher, set at $462.96
for individuals and $927.00
for families.
The cost disparity is even more pronounced for TRICARE Select.
Group A retirees pay $186.96
for individual coverage and $375.00
for family coverage.
In stark contrast, Group B retirees face fees of $594.96
for individuals and $1,191.00
for families, meaning Group B families pay more than three times the enrollment
fee of their Group A counterparts.
Deductibles and Catastrophic Caps
In addition to enrollment fees, retirees face higher out-of-pocket costs for care.
For TRICARE Select, Group A retirees have an annual family deductible of
$300, whereas Group B families face a network deductible of $397 and
a non-network deductible of $794.
The Catastrophic Capâthe maximum amount a family pays out-of-pocket
for covered services in a calendar yearâhas also been adjusted.
For a Group A retiree family on TRICARE Select, the catastrophic
cap has risen to $4,381.
For Group B families, the cap is set at $4,635.
This means that despite the 2.8
percent COLA, a retiree with significant medical needs could see a large portion
of their pension increase consumed by these higher liability limits.
Pharmacy Copayment Increases
Beginning January 1, 2026, pharmacy copayments have also
increased for beneficiaries who fill prescriptions at retail
pharmacies or through home delivery.
The cost for a 30-day supply of brand-name formulary drugs at a retail
network pharmacy has risen to $48, up from $43 in the previous year.
Generic drugs at retail pharmacies remain at $16.
For those using the home delivery service, the copayment for a 90-day
supply of generic drugs has increased from $13 to $14, while brand-name
drugs now cost $44, up from $38.
Non-formulary drugs have seen the steepest hike, rising to $85.
Federal Employees Health Benefits (FEHB) Increases
For military retirees who transitioned to the federal civil service
and carry FEHB insurance, the situation is even more challenging.
The Office of Personnel Management (OPM) announced that the enrollee share of FEHB
premiums increased by an average of 12.3
percent for the 2026 plan year.
This double-digit premium hike far exceeds both the military COLA (2.8%)
and the civilian pay raise (1.0%).
For many retired federal employees, this represents a significant net
reduction in disposable income.
The OPM attributed these sharp increases to the rising cost of
prescription drugs and the aging demographic of the covered population.
Legislative Context for Retirees
The protection of retiree benefits remains a core function of the NDAA.
While the FY 2026 NDAA did not introduce radical new benefits for
retirees, it maintained the essential structure of the COLA and rejected
proposals that would have further eroded the value of the benefit.
Bill: S.
1071 - National Defense Authorization Act for Fiscal Year 2026
Signed into Law (Public Law 119-60) on December 18, 2025.
The law authorizes the continued funding of the Defense Health Agency
(DHA), which oversees TRICARE.
It mandates reports on the efficiency of the disability evaluation system
and ensures the continuity of the Survivor Benefit Plan (SBP).
Importantly, it did not include any legislation to decouple military retiree
COLAs from the CPI-W, preserving the current inflation-protection mechanism.
Issues That Affect Veterans Affairs
2026 VA Disability Compensation Rates
Effective December 1, 2025, with payments beginning January 1, 2026, VA disability
compensation rates were increased by 2.8
percent.
This Cost-of-Living Adjustment ensures that the tax-free compensation provided
to veterans for service-connected injuries keeps pace with inflation.
Basic Rates for Veterans with No Dependents
For a veteran with no spouse, children, or dependent parents, the
monthly compensation scales with the severity of the disability.
A 10% disability rating now yields a monthly payment of $176.36.
As the rating increases, so does the compensation: a 20% rating pays $348.66,
30% pays $552.47,
and 40% pays $795.84.
At the 50% level, the payment is $1,132.90,
rising to $1,435.02
for 60% and $1,808.45
for 70%.
The highest tiers provide $2,102.14
for an 80% rating, $2,362.30
for 90%, and finally, $3,938.58
for a 100% disability rating.
Rates for Veterans with Dependents
Veterans with a disability rating of 30% or higher are eligible for additional
compensation if they have dependents.
For a veteran with a spouse and one childâa common family configurationâthe
monthly payments are significantly higher.
A 30% rating for this family structure pays $666.47.
At 60%, the payment increases to $1,663.02.
For the most severe cases, a 90% rating yields $2,703.70,
and a 100% rating provides $4,318.99
per month.
For veterans with severe disabilities requiring aid and attendance, or
those with additional children, the rates scale even higher.
For example, the Special Monthly Compensation (SMC-L) rate for a
veteran with a spouse (no other dependents) is now $5,120.42
per month.
The Veterans Health Administration Reorganization
On December 15, 2025, the VA announced a sweeping reorganization of the Veterans
Health Administration (VHA), with implementation commencing in early 2026.
This initiative represents the most significant restructuring of the
VA healthcare system since 1995.
The core of this reorganization is the consolidation of the Veterans
Integrated Service Networks (VISNs).
The VA plans to reduce the number of VISNs from 18 to 5.
These new, larger regional networks will report directly to
the Under Secretary for Health.
Strategic Goals of the Reorganization:
Eliminate Bureaucracy: By removing layers of middle management, the VA aims
to speed up decision-making processes.
VA Secretary Doug Collins stated that the current structure is
"riddled with redundancies" that confuse lines of authority.
Empower Local Leaders: The plan intends to give more autonomy to the directors
of the 170+ VA Medical Centers, allowing them to respond more agilely to the needs
of their specific veteran populations.
Standardization: The consolidation aims to ensure that VA policies are
applied consistently across the country, eliminating the "postcode lottery"
where care quality varies by region.
While the VA assures that patient care will not be disrupted,
such a massive administrative upheaval carries inherent risks.
The transition is expected to take 18 to 24 months.
Veteran Service Organizations (VSOs) will be monitoring the process
closely to ensure that the reduction in regional oversight does not
lead to a decline in accountability or support for local facilities.
Community Care Network (CCN) Overhaul
Concurrent with the internal reorganization, the VA has launched
a major initiative to restructure its Community Care Network (CCN).
With approximately 40% of VA care now delivered by private
providers, the contracts governing these relationships are critical.
The VA released a Request for Proposals (RFP) to replace the current
third-party administrator contracts, many of which expire in 2026.
The new strategy employs an "indefinite delivery/indefinite
quantity" (IDIQ) contract model.
This approach allows multiple health plans to compete to serve veterans in
the same region, rather than awarding a monopoly to a single contractor
for a massive geographic area.
The goal is to drive competition, improve the quality of the provider
network, and give veterans more choice in how they access care.
Legislative Actions Affecting Veterans
Several key pieces of legislation were signed into law or implemented
during this period, addressing specific gaps in veteran support systems.
Bill: H.R.
983 - Montgomery GI Bill Selected Reserves Tuition Fairness Act of 2025
Status: Signed into Law (Public Law 119-55) on December 12, 2025.
This law addresses a long-standing inequity for Reservists.
It mandates that public colleges and universities must charge in-state tuition
rates to veterans using the Montgomery GI Bill-Selected Reserve (MGIB-SR),
regardless of their residency status.
Previously, many reservists were forced to pay out-of-pocket for the difference
between in-state and out-of-state rates.
Schools that fail to comply risk losing their eligibility
to receive VA education funds.
This protection applies to academic terms beginning on or after August 1, 2026.
Bill: H.R.
1815 - VA Home Loan Program Reform Act
Status: Signed into Law (Public Law 119-31) in July 2025.
Implementation of this law is ongoing and critical for veteran
homeowners facing financial hardship.
It establishes a "partial claim" program for VA Home Loans.
This mechanism allows veterans who have missed mortgage payments to defer the owed
amount to the end of their loan term (as a non-interest-bearing subordinate lien)
rather than facing immediate foreclosure.
This aligns VA protections with those available to FHA borrowers and provides
a vital safety net for approximately 70,000 veterans currently in default.
And that's your Weekly Briefing.
Staying on top of these changes is key to navigating your career,
your retirement, and your benefits.
Thank you for tuning in.
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Weâll be back next week with another roundup of the news that matters most
to the military and veteran community.