Part Two: What employees should consider when electing commuter benefits.
Commuter benefits provide employees with a number of advantages. When electing commuter benefits, it is important to consider your tax savings, eligible expenses and flexibility.
#1 Tax Savings
If your company provides a commuter benefit plan, you have the opportunity to save on your daily commute. On average, employees save 30% or more when they choose to set aside money in a pre-tax commuter benefit account. Participants can elect up to $255 per month for pre-tax mass transit and up to $255 per month for pre-tax parking. An employee with a $125 monthly expense saves an estimated $450* annually. Employees with higher commuting expenses could save as much as $918* annually for both mass transit and parking.
#2 Eligible Expenses for Mass Transit and Parking
When you’re electing commuter benefits, you’ll want to understand the eligible expenses covered through your employer’s program. Commuter Benefits are likely (but not required) to include both pre-tax mass transit and pre-tax parking benefits. Some programs may limit expenses to specific transit systems. This can make it difficult for employees that have extended commutes or utilize multiple transit systems. If your employer utilizes a commuter benefit card, such as those provided through Benefit Resource, you will have universal access to transit providers throughout the United States. Additionally, parking benefits would be available through the same benefits card.
Some administrators, like Benefit Resource, also support the purchase of eligible van pool and ridesharing benefits (i.e. Shared Rides) under the mass transit election. Please check your area to see if these services are available and see what else you should know about ridesharing safety.
A commuter benefits program, such as those provided by Benefit Resource, allow employees the flexibility to change their election based on their schedule and their needs. For example, if an employee is taking a vacation, he can adjust his election or even make last minute purchasing decisions. Any unused balances roll over from month to month and remain available for future purchases. These “on-demand” purchasing options help eliminate stress and eliminate lost benefits.
Interested in seeing how electing commuter benefits can save you money? Calculate your savings.
Want to learn what employers should consider when evaluating commuter benefits? Click here.
* Savings are based on an estimated Federal, State and Local tax rate of 30%. Specific savings may vary. For illustration purposes only.