Cost Cut Theory

Ritter explained. the bigger loss, of course, is the future prize of the m iy, according to the financial analysts. if you left the $10,000 in for 20 years and it take in 8 percent, that would have amounted to $46,600, Ritter n onenessd. Ritter tell that taking money out of a 401(k) stick outas either a loan or a hardship withdrawalcan be a false consequence that keeps the person in crisis from taking appropriate action, such as interchange the house, getting another job, or stingerting expenses. You need a systemic solution, something thats going to change your household cash flow, he said. liberto said another reason to avoid a hardship withdrawal in the current market is that the employee would be borrowing funds that have dropped in value, with no chance to recoup the loss when the market recovers.Barbara hissing, a forethought professor and entrepreneurship expert at american university in Washington, d. c. , said that at this time of such dramatic financial upheaval, companies can help employees by providing financial education. a lot of people out there take overt know what diversification means, she said, or what the difference is between stocks and bonds. Bird said that some people who take hardship withdrawals do not understand the tax consequences until april. companies can set up training classes or communicate through a newsletter or Web page, she added. one of the things managers need to do in times of crisis is to communicate, Bird said, to share as much as they can about whats happening at the company as the financial situation plays out nationally. q MaRcH 2009 COST-CUTTING TIPS, evasive action & STRATEGIESInTRODuCeHDHPsTOCuTHeALTHCAReCOsTs Issuein 2005, a business services company want to cut its health care costs by introducing high deductible health plans ( HdHps) to its employees in hopes of increasing its enrollment. Responsealong with the HdHp options, we also started pass health savings accounts that included employer contr ibutions to these accounts, the benefits administrator at the 225-employee firm told us. end pointthese new plans increased our participation in 2006 65 percent of our employees who infix in the health program are covered in one of he HdHp plans, the benefits administrator added. due to the increased enrollment in 2006 and the trim back claims experience, we were able to offer our plans to employees in 2007 with no increase in insurance premium amounts. Issuea 400-employee transportation company was looking for simple changes to its benefits plan that would keep costs from rising more than 8 percent. Responseour ace move was to couple an increase in deductibles with a contribution increase, the dominance told us. Formerly, we also included dental coverage with the cost of medical. now, we charge special amounts for it. Finally, we increased copayments for our drug program. Resultincreasing the deductibles saved the company well-nigh $150,000. and to lessen the sting of these increases to employees, we supplemented our life offering, which was viewed positively, the controller added. CHAnGeyOuRCOnTRIBuTIOnTIeRs Issue the benefits manger at a new York-based hotel, hospitality, and lodging company was looking for a modality to change its contribution toward health care coverage to help cut costs.ResponseWe changed from a two-tiered contribution single and family to a four-tiered contribution (single, couple, single with child(ren), and family). it was through during open enrollment for 2007 benefits, the benefits manager told ioMa. Resultit enabled us to reduce costs. legion(predicate) associates with dual coverage opted out as the family plan went up by 105 percent for a contribution. it went from $22 per week to $46. www. ioma. com/HR 15