Some commuter benefit plans allow funds to be rolled over year-to-year unless an employee resigns, in which case any unused money in the account would be forfeited. However, there are many factors to consider when adding these perks to your organization’s benefits package. Below, explore the different types of commuter benefits, the business impact the plans can make, which states and regions require them, and how to offer them to your workforce. However, some state and local jurisdictions may require employers to offer them to employees. For instance, large metro areas like New York City, the Bay Area, and Seattle are more likely to have laws requiring that commuter benefits be available. Commuter funds roll over from year to year and are not “use it or lose it.” However, unused commuter benefits funds will be returned to the employer if an employee leaves the company.
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- Since understanding every facet of a work benefit is essential to getting the most out of it, we’ve compiled an FAQ that covers the most important aspects.
- Most of the time, employers or their third-party benefits administrators decide whether commuter funds expire yearly or can roll over to the following year.
- When deciding if you should offer commuter benefits to employees, you should consider your company location, how your workers commute, and what benefits they prefer.
- Some local governments offer commuter plans to organizations and their employees, but usually, employers establish them as part of a benefits package.
- However, some employers allow commuter benefits funds to pay for Lyft Shared and Uber Pool rides.
- Employers and employees can contribute to an employee’s commuter benefits plan.
Check with local authorities to determine which requirements may apply in your area. Employers must reimburse employees for transportation after employees produce commuter benefits meaning proof of the expense. Reimbursements are only tax-free if a voucher isn’t available for you to distribute to employees.
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If you change employers, retire, or get terminated, you have a set amount of time after your last day of employment to use the funds before they’re forfeited. You may have seen recent news coverage of customers of financial services companies falling victim to social engineering scams. Scammers impersonate a trusted company to convince their targets into revealing or handing over sensitive information such as insurance, banking or login credentials.
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Employers and employees can use commuter benefits to their advantage. Paying with tax free dollars helps save money and reduce overall transportation costs. When highway and street traffic are jammed, drivers become susceptible to stress and tension. If they add parking lot charges, they’ll be financially stressed as well. With a commuter benefits plan, employees don’t have to worry about making decisions on the road and can dramatically reduce their commuter costs. When deciding if you should offer commuter benefits to employees, you should consider your company location, how your workers commute, and what benefits they prefer.
Scenario 3: Biking Benefits
Any organization in the state of New Jersey with 20 or more full-time employees must offer pre-tax elections for public transit costs. By reducing commuting-related stress and financial burdens, commuter benefits can enhance employee productivity and overall workplace morale. Transportation reimbursement programs enable employees to be reimbursed for their commuting expenses, such as fuel, tolls, and public transit fares. Employers can offer either fully or partially subsidized parking fees for employees who drive to work.
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This scamming can happen via text, email or websites set up to look like the trusted company. According to a recent Newsweek poll, 58% of workers think their employers should help cover their commuting expenses. Younger workers, who are becoming the largest portion of the workforce, hold this belief most strongly, with 74% of those ages and 73% of those ages agreeing.
- Many types of commuter transportation benefits are available, including transit and parking passes, commuter highway vehicles, eligible computer benefits cards, and many other possibilities.
- With the rising costs of transportation and the increasing awareness of environmental sustainability, commuter benefits have become an essential consideration for both employers and employees.
- Commuter benefits — also known as transportation benefits — are perks or compensation offered to employees to help offset the cost of traveling to and from work.
- Employees can save $700 each year if they set aside the maximum amount of money for transit expenses each month.
A commuter highway vehicle is any vehicle with a seating capacity of at least six adults, not including the driver. Mass transit, ridesharing, bicycling, and other sustainable methods can reduce air pollution, emissions, and traffic congestion. They also reassure employees who want to help protect the environment.
Commuting is an integral part of daily life for millions of employees around the world. With the rising costs of transportation and the increasing awareness of environmental sustainability, commuter benefits have become an essential consideration for both employers and employees. This article explores everything you need to know about commuter benefits, including their types, advantages, legal frameworks, and implementation strategies.
Employers provide employees with pre-paid transit cards or reimburse a portion of their public transportation expenses. This benefit can be integrated into broader company sustainability initiatives. Now, there are several types of transportation benefits for employees. Let’s take a deeper look at it and discover commuter benefits examples. However, some employers allow commuter benefits funds to pay for Lyft Shared and Uber Pool rides.
They can make compensation packages more attractive to new employees, save money on payroll taxes and parking lot costs, and boost workplace morale and productivity. In most cases, employers or third-party benefit administrators decide whether their commuter funds expire yearly or if the amount is allowed to roll over. However, this is only the case with taxable benefits, as the IRS only allows up to $325 per month for pre-tax transportation benefits and $325 for qualified parking expenses. Because commuter benefits are pre-tax deductions, they can reduce the amount your employees pay in payroll and income taxes. When employees contribute to their commuter benefits plan, they owe less in federal income, Medicare, and Social Security taxes. These limits are adjusted annually for inflation, and employers can offer these benefits to employees to reduce their taxable income, effectively lowering overall commuting costs.
By subsidizing these costs, employers help reduce the financial burden on employees who use public transportation to commute to work. State and Local Employer Commuter Benefit RequirementsA number of state and local governments have imposed requirements that employers offer commuter benefit programs to employees. Google offers an extensive commuter benefits program that includes shuttle services, biking reimbursements, and pre-tax transit passes. The program has been highly successful in reducing single-occupancy vehicle trips and promoting sustainable transportation. If you’re looking to help your employees with the cost of transportation, you have a few options. You can use a local government plan, vouchers, or pre-tax deductions to pay for your employees’ transit benefits.
They are designed to alleviate the financial burden of commuting, and can significantly enhance an employee’s overall compensation package. Also, they are attractive and affordable benefits for small business employees. A commuter benefits plan in compensation packages can simplify the practice of attracting and retaining top talent. This advantage is especially beneficial in areas with expensive commutes.