Easing pain at the pump for your employees
From the February 2008 issue of Ceridian Connection
Every day tens of millions of Americans commute to work. Many people drive their own cars. Others use mass transit. And still others drive to a park and ride facility, paying for gas, parking and mass transit. Commuting expenses can exceed $5,000 per year. What if there was a way your company could offer a program that paid for itself and saved your employees approximately $1,000 a year in commuting expenses? And these are just the monetary benefits.
An uncertain future for the cost of oil and gas
During the first week of 2008, crude oil prices hit a new high, surpassing $100 per barrel. According to the American Automobile Association (AAA) and the Oil Price Information Service, the national average for a gallon of gasoline is hovering around $3.00. Countries such as China and India are placing increased demand on oil supplies. While countries such as Nigeria, Iraq and Venezuela place increased strain on production. The increased demand for oil and its erratic supply have led some analysts to predict the price of gas to peak this spring at approximately $3.40 per gallon -- another record high. At those prices, it will cost $68 to fill a 20-gallon tank. In response to rising fuel prices, mass transit operators cannot help but raise fares, further increasing employee commuting costs.
"Employers have never been in a better position or had a better opportunity to help their commuting population ease the burden of escalating gas prices," says Jon Attwooll, Ceridian product manager. "The IRS recently increased the monthly pretax limits that apply to Ceridian's Commuter Administration Services transit and parking programs." Attwooll points out that effective January 1, the new limits increased to $115 per month for transit expenses, and $220 per month for parking expenses. "That means," concludes Attwooll, "a park and ride employee who uses the full $335 per month benefit will spend $4,020 per year in pre-tax dollars. That would reduce the participant's taxable gross income by $4,020, which could reduce his or her tax burden by over $1,200."
Commuter plans have several benefits
Saving employees more than $1,000 a year is the most tangible reason employers create, and employees participate in, qualified transportation programs. The pretax dollars are exempt from federal income taxes, Social Security taxes and in most cases state income taxes. This provides employees with up to a 30 percent annual tax savings on mass transit and/or parking expenses.
The employees and employers can enjoy other benefits with these programs as well. "Employees participating in this plan can take advantage of the now common online shopping cart method to make their purchases. They can purchase their vouchers or fare media (ride tickets) with pretax dollars that have been set aside via automatic payroll deductions based on monthly elections," explains Attwooll. The tickets are mailed directly to the employee's home. There is no need to stand in ticket lines or struggle with kiosks and correct change. Commuter administration services can also induce commuters who drive to pursue mass transit commuting options, which have an obvious environmental benefit. Fewer people on the roads and more commuters using buses, trains and other mass transit options translate into a decrease in polluting emissions generated from the daily trek to and from work. With the increasing concern for the environment, this benefit offers the opportunity for both commuters and their employers to reduce their carbon footprints.
What's in it for employers?
In addition to the obvious employee benefits, there are several good reasons to develop and implement these plans. Employers who adopt these plans save more than 7 percent on payroll taxes for every dollar their employees set aside for these expenses, which helps offset the administrative fees for these programs. Ceridian's Commuter Administration Services frees company staff from the administrative burdens of managing a qualified transportation program in-house. Finally, offering pretax commuter benefits adds market differentiation for your benefits package as your company competes for employee resources.
A road well traveled
In creating, implementing and managing qualified transportation programs, most employers want to partner with an experienced provider. Ceridian offers nationwide coverage and has been administrating these programs since 1999. Currently, Ceridian manages plans for more than 200 clients with over 20,000 participants and enjoys a 90 percent customer retention rate.
Let Ceridian design a unique plan for your industry and employee demographics that aligns with your company's objectives. If you're interested in learning more about Ceridian's Commuter Administration Services, contact your Ceridian representative and find out how your company can fuel its competitive advantage.
Every day tens of millions of Americans commute to work. Many people drive their own cars. Others use mass transit. And still others drive to a park and ride facility, paying for gas, parking and mass transit. Commuting expenses can exceed $5,000 per year. What if there was a way your company could offer a program that paid for itself and saved your employees approximately $1,000 a year in commuting expenses? And these are just the monetary benefits.
An uncertain future for the cost of oil and gas
During the first week of 2008, crude oil prices hit a new high, surpassing $100 per barrel. According to the American Automobile Association (AAA) and the Oil Price Information Service, the national average for a gallon of gasoline is hovering around $3.00. Countries such as China and India are placing increased demand on oil supplies. While countries such as Nigeria, Iraq and Venezuela place increased strain on production. The increased demand for oil and its erratic supply have led some analysts to predict the price of gas to peak this spring at approximately $3.40 per gallon -- another record high. At those prices, it will cost $68 to fill a 20-gallon tank. In response to rising fuel prices, mass transit operators cannot help but raise fares, further increasing employee commuting costs.
"Employers have never been in a better position or had a better opportunity to help their commuting population ease the burden of escalating gas prices," says Jon Attwooll, Ceridian product manager. "The IRS recently increased the monthly pretax limits that apply to Ceridian's Commuter Administration Services transit and parking programs." Attwooll points out that effective January 1, the new limits increased to $115 per month for transit expenses, and $220 per month for parking expenses. "That means," concludes Attwooll, "a park and ride employee who uses the full $335 per month benefit will spend $4,020 per year in pre-tax dollars. That would reduce the participant's taxable gross income by $4,020, which could reduce his or her tax burden by over $1,200."
Commuter plans have several benefits
Saving employees more than $1,000 a year is the most tangible reason employers create, and employees participate in, qualified transportation programs. The pretax dollars are exempt from federal income taxes, Social Security taxes and in most cases state income taxes. This provides employees with up to a 30 percent annual tax savings on mass transit and/or parking expenses.
The employees and employers can enjoy other benefits with these programs as well. "Employees participating in this plan can take advantage of the now common online shopping cart method to make their purchases. They can purchase their vouchers or fare media (ride tickets) with pretax dollars that have been set aside via automatic payroll deductions based on monthly elections," explains Attwooll. The tickets are mailed directly to the employee's home. There is no need to stand in ticket lines or struggle with kiosks and correct change. Commuter administration services can also induce commuters who drive to pursue mass transit commuting options, which have an obvious environmental benefit. Fewer people on the roads and more commuters using buses, trains and other mass transit options translate into a decrease in polluting emissions generated from the daily trek to and from work. With the increasing concern for the environment, this benefit offers the opportunity for both commuters and their employers to reduce their carbon footprints.
What's in it for employers?
In addition to the obvious employee benefits, there are several good reasons to develop and implement these plans. Employers who adopt these plans save more than 7 percent on payroll taxes for every dollar their employees set aside for these expenses, which helps offset the administrative fees for these programs. Ceridian's Commuter Administration Services frees company staff from the administrative burdens of managing a qualified transportation program in-house. Finally, offering pretax commuter benefits adds market differentiation for your benefits package as your company competes for employee resources.
A road well traveled
In creating, implementing and managing qualified transportation programs, most employers want to partner with an experienced provider. Ceridian offers nationwide coverage and has been administrating these programs since 1999. Currently, Ceridian manages plans for more than 200 clients with over 20,000 participants and enjoys a 90 percent customer retention rate.
Let Ceridian design a unique plan for your industry and employee demographics that aligns with your company's objectives. If you're interested in learning more about Ceridian's Commuter Administration Services, contact your Ceridian representative and find out how your company can fuel its competitive advantage.
