Cost Cut Theory

Ritter explained. the bigger loss, of course, is the future value of the property, according to the financial analysts. if you left the $10,000 in for 20 years and it earned 8 percent, that would exhaust amounted to $46,600, Ritter noted. Ritter said that taking m wholenessy out of a 401(k) planas either a loan or a harm withdrawal heap be a false solution that keeps the person in crisis from taking earmark action, such as selling the house, getting another job, or sliceting expenses. You need a systemic solution, something thats going to change your household cash flow, he said. liberto said another reason to overturn 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 Bird, a management professor and entrepreneurship gifted at american university in Washington, d. c. , said that at this time of such dramatic financial upheaval, companies can h elp employees by providing financial education. a lot of people out there dont know what diversification means, she said, or what the difference is between stocks and bonds. Bird said that some people who scram 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 theater directors need to do in times of crisis is to communicate, Bird said, to share as much as they can about whats natural event at the troupe as the financial situation plays out nationally. q MaRcH 2009 COST-CUTTING TIPS, TACTICS & STRATEGIESInTRODuCeHDHPsTOCuTHeALTHCAReCOsTs Issuein 2005, a business services company sought to cut its health care monetary values by introducing high deductible health plans ( HdHps) to its employees in hopes of increasing its enrollment. Responsealong with the HdHp options, we also started offering health savings accounts that included employer cont ributions to these accounts, the benefits administrator at the 225-employee firm told us. Resultthese new plans increased our participation in 2006 65 percent of our employees who participate 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 reduced claims experience, we were able to offer our plans to employees in 2007 with no increase in premium amounts. Issuea 400-employee transportation company was looking for mere(a) changes to its benefits plan that would keep costs from rising more than 8 percent. Responseour principal move was to couplet an increase in deductibles with a contribution increase, the controller told us. Formerly, we also included dental coverage with the cost of medical. now, we charge additional amounts for it. Finally, we increased copayments for our drug program. Resultincreasing the deductibles saved the company roughly $150,000. and to diminish 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 way 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 done during open enrollment for 2007 benefits, the benefits manager told ioMa. Resultit enabled us to reduce costs. Many 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