MIL News Weekly

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.

We’ll 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.

Here’s what’s 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 Cap—the maximum
amount a family pays out-of-pocket

for covered services in a calendar
year—has 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
child—a common family configuration—the

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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We’ll be back next week with another
roundup of the news that matters most

to the military and veteran community.