And let your group insurance pay the fare. Well, it’s not really that simple, but with gas prices so high, even insurance folks are getting into the act.
Believe it or not, in addition to healthcare and daycare, some transportation expenses are also tax qualified. No, you can’t just deduct the subway token on your next 1040EZ, but “(q)ualified transportation benefits can be provided directly by you or through a bona fide reimbursement arrangement.”
Under a Qualified Transportation Expense Plan (QTEP), employees can save up to 40% on their out-of-pocket expenses on certain transit and parking costs. These expenses, which have to be associated with their commute to work, can be paid with pre-tax dollars. They’re most commonly used in major cities by commuters who take mass transit, but they’re also available to workers who use carpools.
In a recent survey, the Society for Human Resource Management found that 14% of employers offered a QTEP (or other transit subsidy). That’s about 1 out of every 7 companies: not bad for a benefit that’s been so long under the radar.
Now, there are some rules and guidelines for companies that want to go this route [ed: ugh!]. For one thing, QTEP’s can’t be offered under a Section 125 (i.e. “cafeteria”) plan; that’s because they’re enabled under Section 132, which has its own rules:
1) There are monthly dollar limits, any reimbursements that go over these limits become taxable income to the employee
2) There are special rules about how (and when) benefits are calculated
3) It’s not really “use it or lose it,” because unused funds can be rolled over. They can’t, however, be cashed out.
4) Employees can “join up” any time during the year, not just at Open Enrollment
I suspect that the reason we haven’t seen more of these is twofold: first, they’re not as well known (or as aggressively marketed) as their Section 125 “cousins. And second, until recently, there hasn’t been such a hue and cry over gas prices. If they continue to hover in the $3/gallon range, though, don’t be surprised to see more airplay given to QTEP’s.