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Camp Humphreys / USAG Humphreys

Cost of Living

The Overseas Cost of Living Allowance (COLA) is a non-taxable allowance designed to offset the higher overseas prices of non-housing goods and services. In Korea, the COLA amount is calculated in Korean won, but paid in US dollars. Overseas COLA is intended to equalize purchasing power so that Service members can purchase the same level of goods and services overseas as they could if they were stationed in CONUS. It is calculated by comparing the prices of goods and services overseas with average prices for equivalent goods and services in CONUS. The result of this comparison is an index that reflects a cost of living. If prices in CONUS are rising at a greater rate than those overseas, COLA will decrease. If prices overseas are rising at a greater rate than those in CONUS, COLA will increase. Similarly, if overseas prices rise or fall at the same rate as CONUS prices, COLA will stay the same.  In an overseas market, the COLA rate is also influenced by the local currency exchange rate.  If the value of the local currency decreases in comparison to the US dollar (meaning that you get more local currency for each US dollar) your COLA payment will go down.  If the value of the local currency increases in comparison to the US dollar (meaning that you get less local currency for each US dollar) your COLA payment will go up.

Overseas COLA is not a fixed amount. COLA adjustments are either immediate or made incrementally, depending on whether the payment will increase or decrease, as well as whether the change is based on currency or data. For COLA changes based on data, increases are made immediately, but COLA reductions based on the annual cost-of-living assessment (greater than two index points) will be implemented in 50% increments to help minimize the impact. COLA changes based on currency are effective immediately for both increases and decreases to COLA. COLA reductions become final following review and approval by the Military Advisory Panel (MAP).

Two surveys determine the relative cost of living overseas compared with CONUS. The Living Pattern Survey (LPS), conducted every three years, captures input from Service members and their families to establish where and how they purchase goods and services. The Retail Price Schedule (RPS), conducted every year, collects prices for a market basket of approximately 120 goods and services. Service members play a critical role by participating in the surveys.