Commuter Benefits enable employees to pay for certain workplace mass transit and parking expenses, up to the IRS limits, on a tax-free basis through payroll deductions. There are two primary types of Commuter Benefits:
1) Mass Transit Account
A Mass Transit account enables participants to set aside funds on a tax-free basis to pay for eligible workplace mass transit expenses such as the price of tickets, vouchers, and passes to ride a subway, train, city bus, or vanpool.
What are the limits for a mass transit account?
For 2016, the maximum tax-free election for a qualified transit plan, as set by the IRS, is $255/month. What mass transit expenses are eligible under a Commuter Benefit Account? IRC Section 132(f)(5)(c) defines qualified mass transit as transportation in a commuter highway vehicle (e.g. bus, train, subway, vanpool) if such transportation is in connection with travel between a residence and place of employment.
2) Parking Account
A parking account enables participants to set aside funds on a tax-free basis to pay for eligible workspace parking expenses, parking costs at or near their primary work site as well as parking costs at the place to access transportation to work such as a train station or vanpool stop.
What are the limits for a parking account?
For 2016, the maximum tax-free election for qualified parking expenses, as set by the IRS, is $255/month.
What parking expenses are eligible under a CBP?
IRC Section 132(f)(5)(c) defines qualified parking as parking provided to a participant on or near the business premises of the employer or on or near a location from which the participant commutes to work by transportation for which a transit pass is used, in a commuter highway vehicle or by carpool. Such terms shall not include any parking on or near property used by the participant for residential purposes.
Did You Know?
- Commuter benefits are not tied to a benefit year, so the funds will remain in the participant's account until exhausted.
- Election changes are not limited by a plan year and can be updated or stopped as employees' needs change.
- Commuter Benefit Accounts, both Mass Transit and Parking Accounts, also save employers money as pre-tax contributions that are not subject to payroll tax.
Create a culture of health with consumer-directed health plans. When employers engage their employees in their health, they have an opportunity to not only lower healthcare costs, but play a role in healthier and more productive employees.
One of the easiest wellness incentives is to offer an additional HSA or HRA contribution to employees who complete a health and wellness initiative. And when wellness contributions are made, we'll make sure to encourage employees along the way with wellness-specific messages including descriptions on their account statements.
At HSA Bank, we can integrate with a variety of wellness activity tools and vendors, making it easy for your employers to work with us on their wellness initiatives.