Commuter Benefits: Considerations for Going Back to Work

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There’s the tough side of commuting to work: Waking up early, sitting in traffic, rushing to catch the bus or train, finding parking near the office. But then there’s the positive side—listening to music in the car, sharing the ride with a friend or colleague, reading on the train, listening to a podcast on the bus. A commute can help employees prepare for and decompress after the workday, though because of the changes to work conditions in 2020, many people have had almost a year without their normal commutes.

A Stanford University study found that last year 42% of the U.S. workforce worked from home full-time during the pandemic. However, about 40% of employers who shifted to remote work at the start of the pandemic plan to have their workers return to the office, according to a report from the Conference Board.

With this in mind, it’s time to start gearing up for the return to the office, and what better way to ease employees back into their commutes than with commuter benefits to offset transit and parking costs? Whether you offer a program already or need a refresher, we’ll run through the basics of commuter benefits to prepare you (and your employees) for the return to work.

How Does a Commuter Benefits Program Work?

Commuter benefits can help cover eligible work-related transit fare for trains, buses, trolleys, ferries, vanpools, and rideshares like UberPool and Lyft Shared, by allowing employees to set aside money before income taxes are taken out to put toward those expenses. Employers may also help cover parking benefits, which includes parking at or near work, as well as parking at a location where employees are connecting to another form of transportation for work, such a commuter train stop. In 2021, commuters can set aside $270 dollars pre-tax each month for eligible transit expenses and up to $270 for parking expenses.

Employers can choose to offer a reloadable, prepaid card or a payment voucher that participants can use to make transit or parking payments. Alternatively, employees can sign up online to receive a transit pass that renews automatically each month and is sent by mail.

Commuters can manage it all, quickly and easily on our Commuter Portal. They can also maintain their account, view any credit amounts, and load funds onto a transit card. It’s also possible to place orders for commuter products or set up recurring orders online.

A huge advantage of this benefit is flexibility. Employees can sign up at any time—not just during open enrollment—and can contribute as much as desired, up to the limits set by the Internal Revenue Service (IRS).

Why Offer Commuter Benefits?

Depending on where employees live in relation to the office, commuting costs can really add up over the course of a year. Monthly transit passes, rideshares, parking—these can be expensive, which is why offering commuter benefits can be a huge help for employees by allowing them to pay for work-related transit and parking with pre-tax money. Assuming a tax rate of 30%, a commuter maxing their pre-tax contributions for transit could save up to $81 dollars per month in taxes. If that’s a standard monthly spend, that could mean savings of $972 each year.

Consider this scenario: Kate and Jessica take the subway into work each day together. Jessica, who enrolled in commuter benefits, isn’t paying taxes on her subway fare. Kate, who hasn’t yet signed up, is paying her fee in full. Jessica has money left over to buy an overpriced coffee. Kate does not. As a result, Jessica has more focus, so she gets that big promotion.

All dramatics aside … enrolling in commuter benefits saves employees money each month, just for doing something they were going to do anyway! And it’s not just employees who save—by reducing taxable income, employers in turn reduce their FICA tax responsibility. It’s a win-win! Employers that offer commuter benefits can also gain in edge when competing for new talent and can help with retaining employees. Best of all, it’s easy to set up and get started.

Find out how to customize a commuter benefits solution that suits your needs today.

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How Can Employees Spend Their Transit and/or Parking Allowance?

There are several ways employees can spend their monthly transit or parking funds with flexible payment options such as:

  • A rechargeable debit card

  • Cash reimbursement

  • Payment vouchers

  • Direct payment to a transit authority or parking garage for monthly passes or fees

This can all be done through the participant portal with a simple user interface and step-by-step instructions to help employees enroll in the program and choose the benefits options that best meet their needs.

Common Commuter Questions from Employees

Employers: If you offer a commuter benefits program or plan to start one, you may want to know how to answer employee questions about it. Here is a list of some frequently asked questions about commuter benefits to keep on hand or share with employees interested in the program:

  • Q: Do I have to decide during my enrollment if I want this benefit?
    A: No. A huge advantage of this benefit is flexibility. You can jump into the Commuter Benefits program any time of year, and the earlier you do it, the better. There’s no requirement to sign up during enrollment, and you can contribute as much as you want up to the IRS limit.

  • Q: How can I make changes to my orders?

    A: You can do it all online. After you place your order, you can make changes or cancel it, up until your order deadline.

  • Q: How do I know my deadlines for ordering?

    A: Order deadlines are prominently displayed on the home page of the Commuter Portal. As always, if you have any questions, representatives are available 24/7, 365 days a year.

  • Q: Do I have to remember to place an order each month?

    A: Nope! If you want, you can set your order up to automatically process each month. We’ll send you an email each month to remind you of your order and prompt you to make changes if necessary.

  • Q: Is there a way to use a prepaid card?

    A: Yes. We offer a prepaid card that makes it incredibly easy. Use it at ticket kiosks, when ordering on your phone, and when making purchases directly from a transit or parking provider.

Make the Return to the Office Easier

A survey by software company Eden Commute found that 85% of workers are looking forward to returning to the office with many planning to get back by June of this year. For employers who adopted a work-from-home policy in 2020, helping employees readjust to the old (or possibly modified) routine and commute can be softened by offering commuter benefits. As people begin returning to offices and workplaces this spring and summer, consider setting up or promoting commuter benefits in the lead up to the reopening!

Send employees information about your commuter program that explains how it works, benefits, and most importantly, how to enroll. Because commuter benefits can be set up at any time of year, not just during open enrollment, it makes it the perfect benefit program for the return to work.

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It’s 2021! Welcome to a better commute, bigger savings, and a brighter future.

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By |2021-04-28T12:31:44-04:00April 28th, 2021|Commuter|
Disclaimer: ConnectYourCare does not provide tax or legal advice. This information is not intended and should not be taken as tax or legal advice. Any tax or legal information in this notice is merely a summary of ConnectYourCare’s understanding and interpretation of some of the current tax regulations and is not exhaustive. You should consult your tax advisor or legal counsel for advice and information concerning your particular situation before making any decisions.
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