Commuter benefits in a hybrid work world
What’s next for commuter benefits? It depends on the individual and their employers’ return to work policy.
As the world adjusted to remote work in 2020 due to the COVID-19 pandemic, so did the employee benefits landscape. From health to retirement and everything in between, employees were looking to their employers for guidance and answers. With the rise in remote work the role of specialized benefits like commuter benefits changed drastically. As we look forward, it is important for employers, benefit-providers, and transit authorities to think creatively around what’s next for commuter benefits.
At this point employers should have communicated to their remote workers to consider pausing or canceling their tax-exempt commuter benefit dollars. Over the last year, this was likely not top-of-mind for most employees as other priorities took center stage. What’s next for commuter benefits depends on the individual and their employers’ return to work policy. If an employee has transitioned to 100% remote work, they may no longer have a need for the mass transit or parking benefits they once enrolled in.
Related: With commutes trimmed to seconds, more older Americans stay on the job
In these cases, there is an opportunity for employers to readjust or rethink their benefits packages and perhaps reallocate the distribution of those fund to other employee benefits. Some examples include:
Health Savings Accounts (HSAs): HSAs are triple tax-advantaged savings accounts that provide an additional avenue for preparing for long-term retirement while leaving money accessible for short-term expected or unexpected medical expenses.
Flexible Savings accounts (FSAs): FSAs have similar tax advantages to Commuter Benefits—offering and contributing employer dollars to a Dependent Care FSA will help employees off-set rising daycare costs.
Lifestyle Spending Accounts (LSAs): While these accounts are taxed, they are funded by the employer, and can serve as an employer-driven alternative to commuter benefits. Because of their unique design, the employer can choose contribution distribution as well as to decide what constitutes an eligible expense.
Tuition reimbursements or education/continuing education opportunities to help prepare employees for whatever the future of work holds.
For businesses that will be returning to the office, there are many variables to consider as employers and employees look to renew or update their commuter benefits program. Not all organizations will be returning to the office full-time, meaning that monthly passes will no longer be the de facto best option when it comes to purchasing transit passes.
Transit authorities around the country understand the issues around monthly passes and have been trying to get creative. Some authorities are emphasizing alternative pass options such as 10 or 20-ride passes with no expiration date providing some form of bulk discount without the fear of losing money.
COVID-19 has led to heightened awareness of germs and in turn there has been an increased desire for contactless payments in major metro areas. Prior to COVID-19 many of these metro areas like New York, Chicago, and Miami had started installing contactless payment terminals to create an efficient method for boarding trains and buses. Now, with the public’s increased comfort with contactless payments in other areas of their lives, contactless payments will become a more widely accepted form of transportation payment, leading to changes in how commuters think about their payment methods.
However, the return to work unfolds it will be important for employers to communicate benefits options clearly and meaningfully to the employees and to partner with a benefits provider who provides options and flexibility. When it comes to commuter benefits it is important to partner with a provider who can support employees however, they commute to work, whether that be a rideshare, public transportation or personal car and parking.
Some flexible options for commuter benefits include:
- Pre-paid terminal-restricted debit card: These cards provide an IRS-compliant payment method for transit and parking plans that is accepted at U.S. transit authority terminals for fare media purchases.
- Cash reimbursement: Where fare media is not available or for parking purchases, gives participants the ability to submit for reimbursement of their commuter expenses either online or through a mobile app. Direct load solutions: These allow participants to use a smart card (or similar account-based technology provided by the transit authority) to directly load their commuter benefits funds for specific pass and fare fees from their tax-advantaged commuter accounts.
- Mobile payments: Employees are able to add their benefits debit card to their mobile wallet to take advantage of faster, more secure and contactless payment systems where available. Plus, for employers, this contactless payment method is extremely cost-effective.
Lastly, it is important to remember that commuter benefits are generally rollover accounts by nature. When employees begin commuting once again it would be helpful for employers to remind them, they may have commuter funds saved and ready to be used.
Becky Kinder is senior director of product management at WEX.
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