With more people returning to the office in the aftermath of COVID, commuter benefits have taken center stage in the voluntary benefits space. Commuter benefits can help defray the costs of commuting to and from work at a time when higher prices for fuel and food are stressing employee budgets.
Are commuter benefits right for your company? That is for management and benefit administrators to work out. If they aren’t already included in your company’s voluntary package, the powers that be should at least start looking into them. Commuter benefits are increasingly important to employees. They could be an enormously powerful recruitment and retention tool.
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What They Are, How They Work
Commuter benefits are compensatory benefits that help employees cover the cost of commuting. They are typically offered as direct cash reimbursements to pay for mass transport, parking, etc. They are often administered through specialized accounts into which employers contribute a certain amount of money on a set schedule.
Employers can bear the entire cost of the benefits themselves. Alternatively, they can share the cost with employees. In a cost-sharing scenario, employee contributions are treated like any other type of payroll deduction. A certain amount is deducted from the employee’s pay and added to the commuter benefits account.
Things Employers Should Consider
No doubt commuter benefits can help employees defray the costs of traveling to and from work. But they are not ideal for every situation. Like any other type of voluntary benefit, employers need to consider everything from needs to resources before offering commuter benefits. Here are some key things to consider:
1. Program Administration
It is entirely possible for an employer to set up and administer its own commuter benefits plan. But doing so is not as simple as it sounds. There are legal and tax implications that need to be considered. Commuter benefit plans are also governed by strict rules. In most cases, BenefitMall in Dallas says that it is best for employers to outsource plan administration to third-party administrators.
2. Financial Implications
Every employee benefit requiring direct expenditure comes with financial implications. There are two things to think about in this respect. First are the elections related to commuter benefits. In other words, what types of commuter expenses can the benefits cover? Will funds be exclusively for mass transit and parking, or will they also cover services like ride sharing and van pooling?
Next up are the fees associated with administration. Companies choosing to outsource plan administration typically pay either a flat fee or a fee based on a percentage of the dedicated funds. Fees add to the cost of commuter benefits on the employer’s end.
3. Tax Implications
In addition to helping employees cover commuting costs with a voluntary benefit, employers need the opportunity to help their workers improve their tax positions. How so? By setting up commuter benefits that take advantage of tax savings via pre-tax contributions. Contributing to a commuter benefits account with pre-tax dollars could help employees save upwards of $1,500 annually depending on program elections.
A Lot of Value for Very Little
A well designed commuter benefits package offers a lot of value for very little money. There are costs associated with such benefits, but the value the benefits return tends to outweigh the costs. At least that’s the case for many employers who already offer commuter benefits.
Are they right for your company? The only way to know for sure is too sit down and do a thorough examination of a program’s details. If commuter benefits do make sense for your organization, they could be a big plus for your employees.