COVID-19, inflation, rising gas prices… it seems like everything is changing up work the past few years, and employee benefits are changing with it.
When most began working from home, the benefits of a no-commute work day were seen by many: cutting down on travel time, gas prices and more. However, a few years out from early-pandemic life means many are returning to on-location work, either full-time or within a hybrid model.
One thing employers can do to accommodate those who are not able to work remotely is to offer a commuter benefits program to lessen the stress of daily commutes.
What are commuter benefits?
Commuter benefits programs allow employees to get reimbursed or otherwise financially supported for the money they spend on their daily commute to the worksite. Commuter benefits can apply to benefits for parking, transit, vanpool, bicycle commuting and more.
Those employees who decide to enroll in a commuter benefits program can use pre-tax money to pay for these benefits. A monthly cap on transportation benefits is set by the IRS and adjusted for inflation. In 2022, the maximum monthly amount is $280.
A good commuter benefits plan should be beneficial for all employees who commute daily, regardless of whether they drive themselves, vanpool, take the train or use another transit method. Employers may offer different types of commuter benefits, including:
- Smart cards
- Transit passes
- Debit cards
- Direct payments
- Parking cash reimbursement
Why should your company consider commuter benefits?
The world of remote work has changed the way businesses are run, and flexibility is a priority for many employees. However, not all worksites can offer work-from-home benefits, so adding benefits to accommodate the hassle of a daily commute is a good way to show that you acknowledge your employees’ daily commute and the hassles that come with it.
Commuter benefits are more important now than ever. This year, commuting costs hundreds more dollars thanks to rising gas prices and inflation.
In 2021, the average annual cost of commuting in the U.S. was $2,157. This year, it’s up to $2,914 – a 35% increase, per a report from Overhead on Conference Calls. The study found that gas price increases were the most significant factor in these increases. In fact, Americans will spend 58% more on gas this year than they did last year.
The top cities with the highest percentage increase in annual commuting costs, according to the report, are:
- Pittsburgh, PA (60.1%)
- Philadelphia, PA (59.9%)
- Cincinnati, OH (59.1%)
- Phoenix, AZ (58.1%)
- Columbus, OH (58.0%)
These stats make a good case for adopting commuter benefits if you don’t already have them or updating your current plan. Some cities are even proposing legislation that would make commuter benefits mandatory for companies with a certain number of employees.
They don’t just benefit employees, though – commuter benefits save the company tax dollars, too. They’re considered pre-tax and aren’t subject to payroll or income taxes. This means that your company is paying less for commuter benefits than it would for giving your employees the same amount in a bonus.
Real-life example: Princeton University
One real-life example of a commuter benefits program is Princeton University in Princeton, New Jersey.
Their program “allows faculty and staff who travel to work using public transportation–trains, buses, subways, or van pools–to deduct monthly commuting expenses pretax through payroll deduction.” They allow those who participate in the program to order vouchers or monthly passes for transit, order parking vouchers or add funds to a fare card or Payflex debit card.
They also offer parking reimbursements online, with the rule that the parking must be “located on or near the participant’s work location or a location from which the participant commutes to work.”
Princeton University’s program also states that travel expenses can include a highway vehicle, “provided the vehicle has a seating capacity of at least six adults plus driver and is reasonably expected to be used for at least 80% of the mileage for commuter trips in which the vehicle is at least half full, not including the driver.”
In addition to these commuter benefits, Princeton University also encourages alternative methods to commute to work such as biking, walking or taking the train, through the use of financial incentives.