Intermountain Healthcare cuts 401(k) match for employees

With the downturn in the economy and fewer patients seeking medical help, Intermountain Healthcare has announced that it will stop matching employees' contributions to their 401(k) savings plans, beginning in 2009.

The nonprofit health-care organization, which is also the state's largest employer, calls the move a suspension that's not necessarily permanent. Intermountain announced the changes to the 401(k) savings plans in a Nov. 24 newsletter.

"The decision has only been made only for 2009 at this point," Intermountain spokesman Daron Cowley said.

Some employees were not thrilled after they read the newsletter.

"This equals a 4-5 percent decrease in the worth of annual benefits that are figured into our salary," said one employee, who did not want to be named, fearing retribution from Intermountain. "In other words, all of the employees were told that they were taking a 4-5 percent decrease in salary."

Intermountain's leaders maintain that the suspension of the matching benefit will keep costs down for patients and say the change is an attempt to prevent employee layoffs. Beginning in the fall, fewer patients received elective surgeries and other preventive-care procedures.

Intermountain's 2007 net revenues were $3.6 billion. Net revenues for 2008 are expected to be about $3.8 billion, Cowley said.

Employees — from custodians to the president — can contribute portions of their income to retirement after working at Intermountain for one year, and about 18,000 of the organization's roughly 30,000 employees now contribute. Most employees contribute 4 percent of their incomes and receive a 3 percent match, Cowley said, although some employees contributed 5 percent and received a 4 percent of match if they've been hired since Jan. 1, 2007, and receive different pension benefits than their longer-employed colleagues.

Intermountain hasn't released specific estimates of how much it anticipates to save in 2009 without the matching benefit. The savings will be in the millions, Cowley said. Employees can continue to contribute to their 401(k) plans; they just won't receive the matching benefit.

The newsletter that announced the 401(k) plan changes also said that most employees will receive a year-end thank-you bonus, except for physicians and managers, who agreed to forgo the bonus so that more money could be passed to the rank-and-file employees. The newsletter said that most employees will receive a pay raise in 2009.