The popularity of Commuter Check and the transit benefit have recently caused other vendors to begin serving this market. Many of them are "TPAs" that are extending their involvement with other fringe benefits to include transit benefits. New vendors have also come forward with debit/credit card programs or cash reimbursement services for transit benefits that are not fully compliant with IRS regulations.

The information below has two sections. The first provides general information on TPA services. Most important is that the TPA provide services consistent with IRS regulations. (Click here for Tax Compliance Cautionary Note.) The second section provides a list of questions and issues that employers considering other vendors or other methods for administering the transit benefit should address. Commuter Check's answers to those questions are also provided.

TPA Services
Many of our larger customers have asked about using a Third Party Administrator (TPA) to manage their Commuter Check program. Employers use a TPA to minimize internal administration, provide an enhanced program or provide personalized distribution of Commuter Checks.

TPAs have particular appeal for employers with large workforces, centralized administration and/or multiple worksites. As transit benefits become more popular, more TPAs are offering services.

Typically, these TPAs support Commuter Check with the following services:
	•	Customized program development
	•	Enrollment services including database development and payroll deduction management
	•	Ongoing administration
	•	Ordering and distribution of Commuter Checks. Distribution services include office or home-based options
	•	Reporting and record-keeping
TPAs generally charge employers a few dollars per employee per month for their services. The fees can also be borne by employees, or integrated with fees charged for other services provided by the TPA such as such as 401(k) administration and medical or expense reimbursements. Many large employers using TPAs find the Commuter Check support services cost-effective compared to the use of internal resources.

Should you have other questions about TPA support of your Commuter Check program, please call Commuter Check at (800) 727-9436. By providing you with information on only those TPAs which have proven experience with Commuter Check, we are confident that you and your employees will receive efficient service.

Questions for Section 132 Transit Benefit Vendors
Since 1990, Commuter Check Services Corp. has provided over 6000 employers and 150,000 employees with over $200 million in transit vouchers in twelve metropolitan areas across the U.S. In recent years, Commuter Check's success has caused other vendors to introduce alternate programs for administering the transit benefit. To assist decision-making about the transit benefit program that best suits an employer's needs and those of its employees, we offer the following questions that should be posed to any transit benefit provider.

Does the service cover all of the transit operators that your employees use?

Commuter Check response:
Yes. Commuter Checks are redeemable for all transit fares in the regions where Commuter Check operates. Commuter Checks can be used for not only all of the major transit operators but also with vanpools and smaller/private bus operators in the region. In essence, any operator that issues passes, tickets or tokens, i.e. transit fare media, will accept Commuter Checks.

Does the service cover the specific transit fare media needs of all of your employees including those of infrequent riders?

Commuter Check response:
Yes. Not only does Commuter Check serve riders using monthly passes, it also meets the needs of infrequent riders who require tokens or tickets instead of passes. If an employer provides a partial subsidy of employee fares, vouchers enable occasional/infrequent riders to also receive the subsidy. In contrast, with passes the subsidy is not used until after the remaining employee co-payment is paid. Commuter Check maximizes employee participation and the resulting tax benefits for employers and employees.

Do employees need to be individually enrolled, thus increasing administrative burdens on the employer?

Commuter Check response:
No. Enrollment is controlled entirely by the employer in accordance with the employer's own procedures.

Do employers need to take any action to terminate or suspend an employee's participation?

Commuter Check response:
No. Other than any payroll modifications the employer may effect, the employer simply terminates distribution of Commuter Checks to the applicable employee.

Does the employer rather than the service vendor control distribution of the benefit?

Commuter Check response:
The employer has total control over the distribution and procedures to effect distribution.

Does the service require a minimum number of participants?

Commuter Check response:
No. Commuter Check is available to any employer, for even just one employee.

Is there a start-up fee or minimum participation period?

Commuter Check response:
No. Commuter Checks can be bought without any implementation fee and without any commitment beyond the checks then ordered.

Is there a minimum time frequency for placing orders?

Commuter Check response:
No. Commuter Checks may be purchased at whatever frequency the employer seeks. Many Commuter Check customers order monthly or even twice monthly.

Is there any advance purchase requirement?

Commuter Check response:
No. Commuter Checks can be delivered promptly after the order is received.

How much lead time is required for placing an order in order for the benefit to be provided in any month?

Commuter Check response:
In contrast to many other services, an employer can receive Commuter Checks to meet its transit benefit needs by the beginning of any month even if Commuter Check does not receive the order until just two or three days prior to the beginning of that month.

Does the service require you or your employees to have Internet access?

Commuter Check response:
No. There is no interface required for the employees to enjoy the service.

Must the employee use the transit fare media provided by the service within a specific month?

Commuter Check response:
No. Unlike passes or fare cards that expire monthly, Commuter Checks do not expire until 13 months following the month of issuance. If an employee does not use a Commuter Check in a given month, it is available for use at a later time.

What are the costs of the service?

Commuter Check response:
Unlike other services that charge as much as $7 per employee per month plus the cost of the transit media, Commuter Checks can be bought at face value plus a small handling fee (typically 3% and less in some regions). In any event, the Commuter Check fee is less than the payroll cost savings the employer receives when the program is used on a pre-tax basis.

How many years of experience does the vendor have in the transit benefits field?

Commuter Check response:
Unlike many other services that have been providing transit benefits for less than three years, Commuter Check's sole business for more than 12 years has been the provision of transit benefits. During that time it has distributed more than $200 million of value. The principals of Commuter Check were integral to the original creation and implementation of the transit voucher and have devoted themselves to this service for more than 20 years.

Does the service use cash reimbursement or debit/credit cards that may not qualify for treatment as an Internal Revenue Code Section 132 Plan? Cash reimbursement and debit/credit card plans must be looked at closely to be sure they are in full compliance with the strict requirements of Internal Revenue Code 132 and thus not expose employers or employees to possible income/payroll tax charges, interest and penalties resulting from an audit and denial of compliance. See Tax Compliance Caution Statement.

Commuter Check response:
Commuter Checks do not use cash reimbursement or debit/credit cards.

If the service uses cash reimbursement, what are the receipt, record-keeping and other procedures required of the employer to substantiate the reimbursement? Internal Revenue Code Section 132 regulations require an employer using a cash reimbursement program to obtain receipts, maintain records and otherwise maintain "bona fide" procedures to substantiate the reimbursement.

Commuter Check response:
Commuter Checks are considered fare instruments and are not reimbursements; thus, the requirements to obtain receipts, maintain records and otherwise comply with the cash reimbursement regulations are not imposed on Commuter Check's customers.

If the service uses cash reimbursement, have you confirmed that vouchers are not readily available in your area? Where vouchers are readily available, cash reimbursement is a prohibited means of taking advantage of Internal Revenue Code Section 132.

Commuter Check response:
As stated above, Commuter Check is not a cash reimbursement program.

If debit/credit cards are used, have you confirmed that outlets used by your employees to obtain transit fare media will accept the cards for transit purchases? Many retail outlets do not accept debit/credit cards for transit purchases due to the card issuer charges imposed on retailers on such transactions.

Commuter Check response:
Commuter Checks are not debit or credit cards and so such transaction charges are not imposed on the retail outlet. Accordingly, virtually all outlets in all of the regions served accept Commuter Checks.

If the service uses debit/credit cards, have you confirmed that the card can only be used for transit fare media purchases? Cards that can be used for other purposes, INCLUDING PARKING REIMBURSEMENTS, are in effect cash reimbursement programs subject to questions of compliance with Internal Revenue Code Section 132.

Commuter Check response:
Since Commuter Checks are not debit or credit cards such questions of compliance with Internal Revenue Code Section 132 do not arise.

Will the service vendor guarantee that its service when used within the dollar limitations of the Internal Revenue Code is in compliance with Internal Revenue Code Section 132?

Commuter Check response:
Commuter Checks are guaranteed to be in compliance with Internal Revenue Code Section 132 when used within the dollar limitations of Internal Revenue Code Section 132.