Employment Insurance Benefit Changes

20/12/2022 | Employee Benefits

What is changing?

The federal government will extend EI sickness benefits from 15 to 26 weeks effective December 18th, 2022.

What decisions and actions do employers need to take?

While there is no requirement to align to the 26-week EI sickness period, employers still have a choice they can make. There are two main paths to take:

  1. Make no changes to your benefits plan (namely the Long-Term Disability (LTD) and Short-Term Disability (STD) benefits) and continue to offer a higher benefit to your employees.
  2. Change STD duration and LTD elimination period to match the new 26-week EI period.

There is no right choice and the direction you choose will depend on your situation. The remaining information outlines situations that employers may be in and how the EI change affects those situations.

EI Premium Reduction Program (PRP)

The PRP allows employers with eligible STD plans to pay lower EI premiums and it will not change this year. The government has indicated it will make changes in 2023, at the earliest. The eligibility criteria are not changing; therefore, all plans that currently qualify for the premium reduction will remain eligible and are not required to make a change at this time.

Groups with LTD but without STD

If a group has LTD but does not have STD and relies on EI sickness, do they need to change the elimination period of their LTD benefit to 26 weeks (182 days)?

No, this is not a mandatory change; however, since EI sickness benefits do not offer claim management/early intervention and return-to-work services, it is possible that longer elimination periods may result in longer claim duration. If there is an overlap period of EI sickness benefits and LTD, the member will cease to receive EI, and will switch to LTD.

What would be the impact on LTD rates if the plan changes to a longer elimination period?

The LTD rates will generally be lower, by around 7%.

What could happen if an employee is receiving EI sickness benefits and LTD benefits at the same time?

EI considers LTD benefits as “other income” that needs to be deducted from the EI sickness benefits payment. If an employee is receiving EI and LTD benefits at the same time, the employee may be required to refund EI for benefits overpaid. To avoid this situation, disability claim managers will remind the plan members to close their EI sickness claim once they are approved for disability benefits.

If EI sickness benefits will be paid for 26 weeks and LTD benefits are payable from 17 weeks, how much is paid during week 17 to 26?

The insurer is the first payor and will pay the LTD benefit amount offered in the current LTD policy. The EI benefit should stop EI at week 17 to avoid overpayments. The insurers disability claim managers will remind the plan members to close their EI sickness claim once they are approved for disability benefits.

What is the value of keeping shorter elimination periods in LTD plans?

A shorter elimination period guarantees earlier access to insurers intervention expertise, which can help return plan members to health and work without unnecessary delay. The shorter elimination period will also allow plan members to receive a higher benefit amount earlier. The EI benefit pays 55 percent of earnings up to a maximum of $638 a week and those payments are taxed. Whereas LTD benefits typically pay up to 67 percent of earnings and payments are usually not taxable.

 

Groups with LTD and STD

What happens if plan sponsors have STD and LTD included in the plan?

The EI sickness extension does not obligate plan sponsors to amend their STD and LTD plans to align with the new 26-week EI period.

What would be the impact on rates if the group changes plans to 26 weeks?

In principle, LTD rates will be lower and STD rates will be higher. The net result would be slightly higher total premiums combining the savings in LTD and the extra cost of STD.

Since the EI sickness program change will be effective before the end of year, when is the best time to implement LTD or STD plans changes?

Changes can be made at any time, including at renewal.

Groups with STD and no LTD

Do plan sponsors need to change the benefits period of their STD to 26 weeks?

No. The EI PRP is not changing, so STD plans registered with the government for PRP do not need to make changes to preserve EI premiums reductions currently.

If plan sponsors have self-insured STD plans, do they need to change benefits periods of their short-term disability plans to 26 weeks?

No. If their STD plan is registered with the government for the EI Premium Reduction Program, there is no need to make changes to preserve EI premiums reductions now because the PRP is not changing right now.

What would be the impact on STD rates if the plan changes to a longer benefit period?

Rates will be higher – generally speaking, the longer the benefit period the higher the rate.

Groups with a Supplementary Unemployment Benefit Plan (SUB)

A SUB plan increases the bi-weekly income an employee receives while on EI Sickness Benefits, above the standard 55%. This type of plan is self-insured and financed by the employer rather than a third party.

Do plan sponsors need to change the benefits period of their SUB plan to 26 weeks to match EI?

No. The amount and duration offered in the SUB plan is at the employers discretion. If any changes are made, EI would need to be notified so that the SUB plan would not offset the EI benefits received.

What will happen if the SUB plan benefit period is not changed to 26 weeks?

If you offer an LTD plan then employees will still transition to that benefit after they complete the waiting period, moving them to a longer and higher benefit.

If you do not offer an LTD benefit then an employee on EI will see their benefit amount reduce to 55% of their insurable earnings (up to $650) after the 15 week mark.

Please don’t hesitate to Contact us if you have any questions.

 

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