New Jersey becomes first state to require employers to offer pre-tax transportation fringe benefits

As of March 1, New Jersey became the first state to require employers to offer pre-tax transportation fringe benefits (“Transit Benefits”) to employees. 

Who is impacted? 

Every employer subject to New Jersey’s unemployment compensation law that employs at least 20 employees in the state is required to offer Transit Benefits to those in-state employees not currently covered by a collective-bargaining agreement. For employers with fewer than 20 New Jersey employees, including union-represented employees, there is no requirement to offer the benefits at this time.  

This is not dependent on where the company is sitused — it’s whether they are subject to the New Jersey unemployment compensation law. If they have 20 qualified employees in the state, they would need to determine if they are subject to the unemployment compensation law.

What Transit Benefits must employers offer?

New Jersey employers must provide pre-tax election transportation benefits that provide commuter highway vehicle and transit benefits. The law requires that the Transit Benefits be provided “at the maximum benefit levels” allowable under federal law. For 2019, the maximum benefit levels allowable are $265/month for commuter highway vehicle benefits (“vanpooling”) and any transit pass (combined), and $265/month for qualified parking.

What is the deadline to comply with the Transit Benefits law?

The mandate was effective for any employer, whether self-funded or fully insured, immediately upon the bill’s signature on March 1, 2019. But it states that it is “inoperative,” meaning no penalties will be assessed against employers for noncompliance until March 1, 2020, or the effective date of implementing rules and regulations by the New Jersey Commissioner of Labor and Workplace Development. No rules and regulations have been issued so far. 

What does UnitedHealthcare offer?

UnitedHealthcare offers a Commuter Expense Reimbursement Account (CERA) with OptumBank®. UnitedHealthcare’s Flexible Spending Account (FSA) will be required due to banking setup for fully insured customers to take advantage of the Optum CERA, while UnitedHealthcare’s FSA would be preferred for ASO customers with Optum CERA.

For additional information, please contact your UnitedHealthcare representative.