Coming in January: NYC Employers Must Offer Pre-Tax Transit Benefits

Does your company have 20 or more full-time employees who work in New York city?

If you answered yes to this question, regardless of where your company is headquartered, you may be required to offer pre-tax transportation benefits to those full-time employees who work in New York city, as of January 1, 2016, the effective date of the Affordable Transit Act, which was signed into law by Mayor Bill de Blasio last year. Employers will have a 6-month grace period to comply.

Does Your Company Need to Comply?

Employers with 20 or more full-time employees who work in the city of New York are subject to this requirement, unless you are:

  • A Federal government employer
  • A New York state government employer
  • A New York city government employer
  • A unionized employer, with fewer than 20 non-union employees
  • An employer exempt from federal, state, or city payroll taxes

There is also a hardship waiver available, if you can demonstrate that offering the benefit would be a financial hardship for your company.

Which Employees Are Eligible?

If you must comply with the law, you’ll need to offer the transportation benefits to all full-time employees. For purposes of the law, a “full-time employee” means an employee who works an average of 30 hours or more per week for the employer. In addition, if you reduce your number of full-time employees to less than 20, any employees who became eligible for the benefit before the reduction will remain eligible for the benefit for the duration of their employment with your organization.

Required Benefit

If your company is subject to the Affordable Transit Act, you must offer your eligible employees the opportunity to use pre-tax earnings to purchase qualified transportation fringe benefits in accordance with federal law.

Under current federal law, this means you’ll be required to establish a Qualified Transportation Plan pursuant to Section 132(f) of the Internal Revenue Code, if you do not already one. These plans enable employees to reduce their taxable income in the amount of qualified transportation expenses, generally through spending accounts that are funded through payroll contributions. For the purposes of this law, however, parking expenses and bicycle commuting expenses are not considered to be qualified expenses.

Section 132(f) qualified transportation benefits include:

Benefit Monthly Limit in 2016 Must be offered in NYC
Expenses for transportation in a commuter highway vehicle (Vanpooling) $130 per month Yes
Transit passes $130 per month Yes
Qualified bicycle commuting reimbursement $20 per month No
Qualified parking expenses $255 per month No


For violations that occur on or after July 1, 2016, you will be subject to a minimum fine of $100 (up to $250) for each 30-day period that the employer failed to comply. For the first violation, the employer will have a 90-day period to cure the violation before the fine will be imposed. No penalties will be issued for violations occurring before July 1, 2016.


If you have questions about these new requirements or about Section 132(f) plans, contact Bell Associates at 203-707-1300 or email You can also visit us at

This article refers to regulations issued through November 15, 2015.  It is intended to be a summary of important issues and should not be considered legal or tax advice.

© Bell Associates and “Ask the Professionals,” 2015. Unauthorized use and/or duplication of this material without express and written permission from Bell Associates is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Bell Associates and “Ask the Professionals” with appropriate and specific direction to the original content.




Fearing the DOL Audit: How to Face the Monster Head-On and Win



Employers have been virtually assured that a DOL audit is in the future. The questions are: What is a DOL audit and what can you do to prepare?

An Employer’s Nightmare: The Dreaded DOL Audit and Who is Doing Them

Rumor has it that the Department of Labor (DOL) has plans to audit all employee benefits plans by the end of 2015. It’s hard to believe that is even possible, especially considering the fact that the government is not exactly known for completing tasks on schedule, but the threat is still real enough to cause loss of sleep for most employers. And I think it’s safe to say that you don’t want to be the employer who assumes the DOL won’t make due on the threat – until they come knocking on your door. Continue reading

Open Enrollment is Over…What Now?



It’s common for employers to think about their health plans only during open enrollment, when you’re considering plan design changes and offering benefits to your employees. This year, with the Affordable Care Act in effect, you’ll have to be sure to address additional items throughout the year – more than just new enrollments, election changes and claims issues. Continue reading

Are Your Employees Asking for Proof of Healthcare Coverage?


Over the last few weeks we have been receiving many calls from our clients inquiring what type of documentation they could provide to their employees for proof of healthcare coverage when filing their 2014 tax return.   We wondered why employees were looking for this, since the ACA does not require such proof of coverage for 2014. Under the ACA, for 2014 individuals were mandated to either be enrolled in a healthcare plan or pay a penalty. However, due to many changes in the ACA law and the impending implementation of the reporting requirements in 2016 (based on 2015 enrollment), the IRS is not requiring proof of medical coverage for 2014 individual tax filings.  Instead, they are considering that the health plan enrollment information will be provided by individuals on the  “honor system” when filing their 2014 tax return. Continue reading

Paying the Transitional Reinsurance Fee

The transitional reinsurance program was implemented to stabilize premiums in the individual market due to anticipated enrollment of higher risk individuals in the Health Insurance Marketplace when it opened in 2014. The fees collected are also intended to reimburse the U.S. Treasury for the $5 billion that was spent on the early retiree reinsurance program that began in 2010.

For 2014, the contribution rate is $63 per covered life per year.  Final regulations have split this fee into two payments – one for each of the reimbursement programs. The contribution rate for 2015 is $44 per covered life and the contribution rate for the final year of the program has not yet been announced. Self-funded, self-administered plans are exempt from the transitional reinsurance fee for the 2015 and 2016 reporting years. Continue reading

Know the ACA Reporting Rules: What Do You Need to Report to the IRS?

The IRS has just released draft copies of the forms employers will need to meet their reporting requirements under the Affordable Care Act.

The Affordable Care Act adds two new sections of the Internal Revenue Code that require many employers, beginning in 2015, to file additional forms to provide information needed to confirm compliance with the ACA’s “individual mandate” (Section 6055) and “employer mandate” (Section 6056) provisions. Continue reading

New Federal Same-Sex Marriage Rules – How Will They Affect Your FMLA Policy?

A proposed Department of Labor rule affects how your organization’s FMLA policy treats married couples of the same gender.

 What is the FMLA?

The Family and Medical Leave Act of 1993 (the FMLA) requires covered employers to allow their eligible employees to take up to 12 weeks of unpaid leave per year to care for a family member (including a spouse) who suffers from a serious medical condition. The employer must allow the employee to stay on the group health insurance plan, and after the leave ends, the employee must be allowed to return to the same or equivalent position with equivalent compensation.

Last year, in the case of United States v. Windsor,the U.S. Supreme Court struck down Section 3 of the Defense of Marriage Act, which specifically limited the definition of marriage—for purposes of federal law—as only between one man and one woman. As a result of the Windsor decision, federal law now recognizes valid same-sex marriages.

But many federal laws, including the FMLA, look to state law definitions of marriage when determining who is eligible for benefits. The FMLA permits spousal leave benefits only when the marriage is legal in the state where the employee resides. So an employee who gets married to a spouse of the same sex in Maryland, where same-sex marriage is legal, but who lives in West Virginia, where it is not legal, would not be eligible for FMLA spousal leave.

New FMLA Rules Proposed

This policy would change under new rules proposed by the Department of Labor in June. The proposed rule would modify FMLA regulations so that an employee is eligible for FMLA leave to care for a spouse if the marriage was valid where it was performed. This is known as the “state of celebration” approach, and it has already been adopted by other federal agencies including the IRS, the State Department, and the Department of Defense. Continue reading

U.S. Supreme Court issues ruling on Affordable Care Act “contraceptive mandate”

In a 5-4 decision, the United States Supreme Court ruled on June 30, 2014 that closely-held, for-profit corporations, may be exempt from the Affordable Care Act’s requirement that employer-sponsored health plans cover contraceptives, if complying with the mandate violates the sincerely-held religious beliefs of the corporation’s owners. Continue reading