Ride-share users, your employee commuter benefits package just got a little better. Earlier this year, Lyft became the latest ride-sharing app to give riders the chance to pay using employee commuter benefits.
That means riders can now use pre-tax dollars to pay for Lyft rides the same way commuter benefits can be used to cover transit costs or parking expenses. Lyft isn’t the first ride-sharing app to add commuter benefits — Uber beat them to it back in August — but Lyft’s addition of commuter benefits signals a trend that could save big-city commuters time and money on the way to work each day.
Right now, it’s not possible for workers to use commuter benefits to pay for regular cabs — including regular Uber or Lyft rides. But Uber and Lyft found a clever way around this. Benefits can be used when riders select Lyft Line or uberPOOL, the apps’ carpooling options.
If you’re curious about this benefit and whether or not it’s worth linking your Uber or Lyft account to your commuter benefit account, we’ve got you covered.
What are commuter benefits?
Commuter benefits are an employer-provided benefits program that lets you set aside pre-tax dollars in an account to be used for your commute costs. Employees can use these benefits to pay for public transportation — trains, subways, buses, even parking passes — used on their daily commute with pre-tax dollars. The amount of money you set aside to pay for your commute doesn’t count as income, so you’re not taxed on it.
Which benefits programs are included?
Each ride-hailing service has partnered with select benefits programs, although there is some overlap. For example, if your company’s benefits package is with Zenefits or TransitChek, you can use them with Lyft, but not with Uber. On the other hand, if you are with EdenRed or Ameriflex, you can only pay with your benefits on the Uber app. The lucky commuters with benefits under WageWorks, Benefit Resource and Navia can use their benefits on either rideshare app.
How do I sign up for commuter benefits?
Workers have to sign up for commuter benefits in order to receive them. You will be asked to select how much money you want to set aside from your paycheck each month to cover your transportation costs.
Once you’re enrolled, you may receive a benefits card (it can be used like a regular debit or credit card) to make transportation purchases. Otherwise, you can purchase transportation expenses using your regular credit or debit card and then submit a claim to be reimbursed through your benefit provider.
Reach out to your employer’s human resources department to find out how to take advantage of your commuter benefits program.
How much can I really save?
Depending on your current tax bracket, you could have up to 40% more to spend on your commute. For example, if you’re in the 35% tax bracket and contribute $200 each month to your commuter benefits account, you’re getting an extra $70 to spend on your commute each month. That’s an extra $840 per year.
But here’s the catch: Commuter benefits contributions are capped at $255 per month. So if you are already relying on your benefits to finance your monthly subway pass or parking garage expenses, you may not have much left over to use on Lyft or Uber rides.
What are Lyft Line and uberPOOL?
To use commuter benefits to pay for Lyft or Uber rides, you have to select the apps’ carpooling options — either Lyft Line or uberPOOL. Carpool vehicles seat six or more passengers. Both Uber and Lyft use algorithms to place riders going toward the same area together. Because you’re carpooling, however, you may or may not have a shorter commute, depending on traffic in your city and how many other riders get picked up or dropped off during your trip.
How to use commuter benefits on Lyft
First, you need to add your commuter benefits card to your profile.
- When you open the Lyft app, tap “Payment” in the left-hand side menu to see your payment options.
- Select “Add credit card,” enter your commuter benefits card information, and save. The card will have a “Commuter” distinction.
- Next, set the card as your default payment method. There are two ways to do this:
- Select the card as your default payment method for your personal profile under the “payment defaults” section in the “Payment” menu.
- When you open the app, set your location and destination. You’ll then see the last four digits of the card is being used to pay for the trip. Tap the numbers to change your payment method to your commuter benefits card. You should see a rectangular icon with a diamond in its center when using your benefits card.
- Select “Lyft Line & Ride.”
You can only use your benefits to pay for carpools under Lyft Line. Select the pooling option to be matched with a car with six or more seats, and you’ll be all set.
How to use commuter benefits on Uber
Add your commuter benefits card to your profile by going to the left-hand menu and adding your commuter benefits card under “Payment.” You can also add the card after setting your location and destination under uberPOOL, shown below.
Tap on your card information to set or add your commuter card as a payment option.
Your benefits can only be used to pay for carpools under uberPOOL. Select the pooling option to be matched with a car with six or more seats, and you’ll be good to go.
Using pre-tax dollars saves you up to 40%
The most obvious perk of using your commuter benefit is that you’re using pre-tax dollars, so your dollar goes up to 40% further. If you’re already paying out of pocket for your commute, this could be a huge benefit.
Cut back on driving
If you drive to work, a 2014 Trulia analysis found you likely spend about 30 minutes in the car each way. If it’s more affordable for you to use a ride-sharing app, you can use that time to read or catch up on work or a nap while you ride.
Reduce your carbon footprint
Legally, commuter benefits can only be used with efforts to reduce your commuter footprint, so ride-sharing counts only when you’re placed in a car that seats six or more passengers. If you drive to work, this cuts down your footprint and takes the hassle out of organizing a carpool.
Lyft Line or uberPOOL only
You may want to put your pre-tax dollars elsewhere if you’re not into making new friends each morning. You’ll be placed in a vehicle that seats six or more people when you use your benefits card, and other riders may have various personality types.
Limit on contribution
Your contribution is limited to $255 a month, which may or may not be a month’s worth of commuting, depending on how much your commute costs. For example, a LendingTree analysis found the average monthly cost of commuting with Uber’s non-pool service UberX in New York City is more than $700. Still, $255 pre-tax will help cut down on your monthly spending for the trip to work.
Only available in select major cities
The apps’ commuter benefits options are only available in select major cities so far. Here’s a breakdown of where you can use yours.
Lyft: New York City, Boston, Seattle, and Miami
Uber: New York City, Boston, Chicago, Washington, D.C., San Francisco, Philadelphia, Las Vegas, Denver, Atlanta, Miami, Los Angeles, San Diego, Seattle, and New Jersey (state).
The post How to Pay for Uber and Lyft Rides With Your Employee Commuter Benefits appeared first on MagnifyMoney.