Exhibit 4: Analysis of Cost Implications Cost Saving Strategy: Copay · Dollar-for-dollar savings equal to amount of copay Deductible: · Health insurance – 15% savings of benefit cost Required probationary periods: · Health insurance – 5% savings of benefit cost · Dental insurance – 10% savings of benefit cost Improved claims processing: · Unemployment compensation – 8% of benefit cost · Workers’ compensation – 3% of benefit cost · Short-term and long-term disability – 1% of benefit cost Exhibit 3: Two Possible Packages for Cutting Benefit Costs Option 1: Implement copay for benefits: · Pension plan ($25.00 per month) · Life insurance premium ($10.00 per month) · Health insurance premiums ($50.00 per month) · Dental insurance ($10.00 per month) · Short-term and long-term disability insurance ($7.50 per month) Reduction of Benefits · Eliminate 10-minute paid break (workers leave work 10 minutes earlier) · Eliminate one paid holiday per year · Eliminate two sick days per year Option 2: Improved claims processing: · Unemployment compensation · Workers’ compensation · Short- and long-term disability insurance Increase deductible from $500 to $1,000 on health insurance Implement probationary periods: · 6 months’ probationary period on health insurance · 1 year probationary period on dental insurance Implement probationary period of 1 year on dental insurance Implement copay for benefits: · Health insurance - $50.00 per month · Dental insurance - $10.00 per month · Life insurance - $10.00 per month · Short- and long-term disability insurance - $5.00 per month Reduction of benefits: · Eliminate payments to thrift plan · Eliminate two paid holidays per year · Eliminate tuition reimbursement Exhibit 2: Benefit Preferences Benefit Type/Method of AdministrationImportance to Workers Pensions 87 Health insurance 86 Life insurance 79 Paid vacation 82 Holidays 82 Long-term disability 72 Paid sick leave 70 Short-term disability 69 Paid rest periods, lunch periods, etc. 55 Dental insurance 51 Christmas bonuses 31 Profit sharing 21 Education expenditures 15 Contributions to thrift plans 15 Discount on goods 5 Fair treatment in administration 100 Note: 0 = unimportant; 100 = extremely important Exhibit 1: Current Compensation Costs Average yearly wage $27,290.00 Average hourly wage 13.12 Dollar value of yearly benefits, per employee 16,904.00 Total compensation (wages plus benefits) $44,194.00 Benefits (by Category) Dollar Cost/Employee/Year 1. Legally required payments (employer’s share): a. FICA taxes $2,088.00 b. Unemployment compensation 434.00 c. Workers’ compensation 546.00 2. Pension, insurance, etc. (employer’s share): a. Pension plan premiums/pension payments 1,460.00 b. Life insurance and health insurance 427.00 c. Health insurance 4,000.00 c. Short-term disability 83.00 d. Salary continuation/long-term disability 57.00 e. Dental ...