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Impact of the pandemic on Commuter and Dependent Care Accounts

Benefits Administration and Outsourcing|Health and Benefits|Retirement
COVID 19 Coronavirus

By David Speier | June 5, 2020

Learn how the COVID-19 pandemic may change commuter and dependent care benefits

Recently it occurred to me that even though I had not been in the office for several months, I was still using my pretax commuter benefit to pay for my parking space. I got on the commuter administrator’s site and realized I had just missed the deadline to cancel my parking payment for the next month. By the time it cancels, I may be heading back to the office.

My neighbors, who are working from home, have young children, and they no longer need day care when and if it reopens. Fortunately, the government is now allowing them to make a change to their pretax Dependent Care Flexible Spending Account deductions.

These are new realities that many employees are facing during this pandemic crisis, minor in the grand scale of things but still relevant.

These realities raise longer-term questions: Will the way we work and live post-pandemic change the way certain employee benefits must behave from a structural and administrative standpoint? When and how often will we need to be in the office? How will we commute to work? Will our support centers, such as day care, operate in the same way? Will we take care of our elderly family in the same way? The answers to these questions might require changes to benefits such as commuter and dependent care. Let’s explore how each might be affected.

Commuter

In the post-COVID-19 future, it is likely that more employees will work from home, and the requirements for employees to work at an office might be less rigid. Those employees who do return to the office may be less certain about what transportation to take based on concerns about crowded public transportation for some time after the pandemic passes.

The pretax benefits created to respond to old patterns of commuting will need to be more flexible, allowing employees to change the level of reimbursement more frequently and in a timely manner. They will need to allow seamlessly for changes to modes of transportation where the medium (debit card or mobile application) used to transact is the same regardless of the way they get to work. It is also likely that the primary technology needed will be mobile applications because the decision of whether to work from home or go to work may be made at a moment’s notice.

Dependent Care

Similarly, the way families work will likely change even after the pandemic passes with more people working from home. Uncertainty about work location can have a disruptive impact on childcare and care for elderly parents. In addition, economic conditions might make external care less affordable for an uncertain period of time. In this regard, the federal government has already stepped in, loosening the rules to allow changes to dependent care elections in the middle of 2020. Employers and their enrollment administrators will need to adapt to these changes. The question we should ask is whether these changes will be limited to 2020 or whether we need to evolve these benefits to meet the new reality, allowing employees to change their dependent care elections more frequently based on work-from-home status, financial status, status of an aging parent or the employment circumstances of another member of the household.

I think it's very likely these benefits will need to evolve to handle a post-COVID-19 world. We've already seen a short-term response to the dependent care benefit, allowing midyear changes that would not have been possible in the past. Going forward, at the very least we will probably see more flexibility in commuter and dependent care benefit design to accommodate changing patterns of work as our society grapples with the "next normal."

Author

Managing Director, Benefits Accounts

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