When business became so slow at BTI Canada last year that temporary layoffs were inevitable, management handed out pink slips, but it also maintained those employees' basic benefits coverage.

Marissa Gibson, senior human resources consultant at BTI, a travel management company based in Toronto, says that in terms of benefits, nothing changed for its 24 laid-off employees.

"All the benefits are intact," says Gibson, "including [employees'] ability to access educational assistance and travel benefits. As well, we are also paying both the employee and employer (premium) portions of their group benefits." The only item the company is not covering is voluntary coverage. So if employees had additional life or AD&D, for example, they would be responsible for the premiums. The company expects laid-off employees to return to work later this month and sees the slump, due to the events of Sept. 11, as temporary.

Brian Kassner, assistant vice-president of group underwriting at Sun Life Financial in Toronto, says most benefits contracts are not automatically extended beyond "the end of the month in which the layoff occurs or the end of the following month." But, he adds, requests for benefits extensions in the current circumstances in Canada have increased.

Gibson says BTI chose to extend benefits coverage because it wanted to take a different approach with the layoffs. She adds that the company wanted to make the experience "as painless as possible."

Here we are in the 21st century and lifestyles and work environments are changing. Are those old benefits plans that employers tempt us with when recruiting and complain about when the bills come in still necessary?

Take dental plans, for example. Can we prove that having a comprehensive dental plan is the most cost- and health-effective way to go? Could you not argue that by providing employees with the means to repair and replace their teeth we're encouraging them not to do their utmost to preserve them?

For instance, one alternative would be to use benefits dollars to assist employees in making better health choices. We could also place more of the onus on them to protect their health and that of their families. So instead of looking at cost-containment (which employees perceive as taking away benefits), we should look at ways to engage employees in the business of their health. If anything, it will make them more productive.

Human resource gurus are constantly reminding us that rewards and recognition are what today's employees seek and what keeps them motivated. Can we use this approach towards employee benefits? Let's pursue the idea of employees being the 'captains of their fate' and make them responsible for staying healthy, while giving them the assistance to do so.

Another alternative is to discard your dental plan. Offer employees a direct 100% reimbursement for preventive work (check-ups, cleaning, scaling, etc.) and bonus dollars for maintaining regular check-ups. Provide insurance with a high deductible for restorative and major work.

Educate your employees about the drug plan. Provide them with an allowance for vitamins and minerals, and circulate healthy recipes for weight maintenance. Produce statements showing them the cost of their drugs and show them how much of that money could be returned to them if used for bonuses or profit-sharing instead.

Have employees participate in focus groups and brain-storming sessions. Share the numbers with them and determine how they feel about dollars spent on benefits. Ask them for suggestions on what should be provided and how money can be allocated to them in other ways. I'm not advocating we leave employees without insurance--there will always be those with serious health issues.

But remember 20 years ago when an employee collecting long-term disability benefits was a rare event? Let's strive for that type of utilization again. Reduce stress in the workplace, find out what your employees need and expect from their jobs and reward them when they do well.

Plan administrators lament that their employees do not appreciate the value of their benefits plans. If we can use our employee expertise, gain their trust and enthusiasm for both good health and saving money, by the time we reach the 22nd century, benefits plans as we know them may no longer be necessary.

Health benefits spending When it comes to whether the economic downturn will negatively affect health benefits plans, 49% of respondents say 'yes' and 35% say 'no.'

For the most part, employers are tightlipped about changes, if any, to their health benefits plans--especially if those changes mean benefits will be cut back due to the recent economic downturn.

Despite the downturn, provincial governments may have increased health spending. Late last year, the Canadian Institute for Health Information in Ottawa said the provinces are spending $69.2 billion on healthcare in fiscal year 2001-2002. While that is an increase from $49 billion in fiscal year 1996-1997, it may also be due to the increasing cost of health services.

In this month's e-poll, however, employers are almost evenly divided when it comes to whether or not the recent economic downturn will negatively affect their health benefits plans. In fact, 49% of them said the economic downturn will negatively affect their health benefits plan, 35% said it will not and 10% are uncertain.

For some employers,the future of their benefits depends on funding. Louise Koza is manager of pension investments and plan policy at the University of Western Ontario in London, Ont. She says "what will have an impact is if the provincial government funding is substantially altered. It just puts us in a tight funding situation, which generally affects the whole university--including benefits programs." Koza could not discuss specific details, but adds that changes are driven provincial financing.

What should employers do in bad times?
The real secret is in what they should have done. First, is providing good information on investment options and risks, so when the market slides, particularly if it's severe, employees are forewarned and know to diversify their investments to limit the impact. If employees understand market volatility--that equities can sink--and they're given an opportunity to invest in other investments that have capital guarantees, such as guaranteed investment certificates (GIC), then they understand they can limit their risk. During a crisis, employers should remind employees that risks exist and markets will slide. Warn them in the good times and then remind them in the bad times that this isn't the end of the world.

What should employees do?
The first thing is don't panic. You don't want employees saying, 'the market is down, we'd better sell everything.' You want them to remember that the market will climb back up again. The reason we invest in equities is because history tells us that, over time, markets go up more than they go down. So employees should relax and wait for the turnaround. And that's easier to do if you've diversified your investments. It's also easier to do if you're putting money into a define contribution (DC) plan and don't draw it out for 10, 15 or 20 years.

What about employees close to retirement?
A lot depends on plan terms. Generally, DC plan or group registered retirement savings plan (RRSP) members can roll their money at retirement into a personal RRSP. If they do that they've delayed drawing out the money and haven't taken any losses because essentially the money's in the same investments as before. Now if they have some money in GICs and the market is down then maybe they want to cash that part and allow the equity portion time to recover. People close to retirement also want to buy annuities. But with today's interest rates you don't get much for your money. So what do you do? You probably delay buying the annuity until interest rates go back up again.

What are employees afraid of when markets drop?
That they won't come back up again. We all think that the direction we're going in is the one we're going to continue in. As you get close to retirement, your accumulated retirement savings, whether they're in a DC plan or an RRSP, are going to be a big part of your wealth and you don't like to see it disappearing in front of you. It's the fear of not having enough money to live on and the fear that a short-term impact on the market can drain away your retirement income [that scares people].