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If your company has a 401(k) retirement fund, you know how valuable the employer-match benefit is. But Intermountain Healthcare has delivered bad news to 30,000 employees: That benefit is canceled for at least a year.
As the economy slows, people are saving money by going to doctors less often and postponing elective medical procedures. In fact, Intermountain Healthcare has seen a 10 percent drop in screening colonoscopies and a drop of nearly 2 percent for surgeries.
"It's not unique to Intermountain Healthcare. We think that everyone is feeling this pressure from the weakening economy," said Intermountain Healthcare spokesman Daron Cowley.
Intermountain Healthcare has responded to the loss in patient revenue by cutting back at 120 clinics and hospitals. The company is delaying construction and remodeling projects and suspending the 401(k) employer-match benefit. "It would involve potentially several million dollars," Cowley said.
Pensions are not affected, and employees can still contribute their own money to the 401(k). But the cutback, in effect, reduces income by 3 percent for those who participate fully.
"We've only made the decision for 2009. We'll have to look at things as they go forward," Cowley said.
A recent national survey shows 6 percent of companies have made or plan to make the same cutback.
"Companies are conserving. Everyone is trying to conserve cash, both on the consumer level and the business level, and that's what we're seeing the results of," explained financial planner Thom Hall.
Hall thinks the trend will to accelerate, and he says he has grave concerns because the recession may last 10 years. "I believe that this is a time when people need to be preparing themselves, and we've got some economic storms on the horizon," he said.
Dampening Christmas cheer even further, many Intermountain Healthcare hospitals and clinics are scaling back holiday parties. "This may be one of the first times that we've asked our employees not to hold these holiday celebrations, because everyone realizes it's a tough situation that the economy is in," Cowley said.
More than half of Intermountain Healthcare's employees participate in the 401K program -- about 18,000 people who will feel a little pain. The company says Intermountain it remains financially stable and some employees will get raises in the new year, although less than in the past.
E-mail: jhollenhorst@ksl.com
