Revisiting Short-Term Disability Benefits? Learn about the EI SUB Program

Posted by Jaime Laprise on Nov 21, 2018 3:38:41 PM

Now and perhaps more than ever, it’s becoming increasingly difficult for employers to attract and retain qualified workers. A variety of factors come into play when desirable candidates weigh their options before ultimately deciding on their ideal landing-spot, and unsurprisingly, high on most wish-lists you’ll find:

  • Competitive pay

  • Attractive benefits package

  • Security

Employers consult with professionals on matters relating to pay and benefit structures, but “security” can’t be addressed using a one-size fits all approach, it comes in many different forms and can be uniquely different from one employee to the next. In this blog, we’ll take a look at how employers can provide their employees with security by making use of EI’s Supplemental Unemployment Benefit (SUB) program.

disability-benefits-at-workplace

Disability Benefits in the Workplace

Long-term disability (LTD) is widely considered as a foundational piece to a benefits plan. So much so that in their 2016 National Survey of Working Canadians, Sun Life Financial found that disability coverage trailed only dental and prescription drug coverage when ranked in order of importance by a large sample of working Canadians.

Are you an employer who wants to learn more about disability benefits in  Canada? Get your copy of our webinar recording here >>

And why not? Having LTD coverage in place means one less thing to worry about while focusing on recovery and potentially adjusting to changes made to their everyday lives. Simply put, it can save a family from ruin during a time of crisis.

Here’s the thing, even though the financial impact of losing steady income will be felt almost immediately within most households, most LTD payments won’t begin until the affected individual has satisfied a lengthy period of continuous absence from work (typically 112 or 119 days).

While many employers provide some form of income protection through short-term disability coverage or salary continuation, most rely solely on the Employment Insurance (EI) sickness benefit. EI provides limited protection in the form of payments that as of 2018 are equal to 55% of earnings up to a maximum of $547 of taxable income per week. Thus the higher a worker’s salary the lower the replacement percentage of their pre-disability income.  

The benefit is paid out over a period of 15 weeks (more information on this, here).

The EI SUB Program

The EI Supplemental Unemployment Benefit, or SUB for short, allows employers to provide all, or a specific group of employees with supplementary income while they satisfy their LTD elimination period. The EI sickness benefit forms the foundation of the employee’s income replacement; employer payments make up any shortfall, up to a maximum of 95% of the employee’s normal pre-disability earnings.

Salary continuation would ordinarily offset against the EI sickness benefit, so it’s important that SUB plans are registered with the Government prior to being used. Once registered, employees will be entitled to their full EI sickness benefit.

When employers register their SUB they’re provided with a handful of choices that will allow them to dictate how the plan works, for example:

  • Who’s eligible to participate in the plan (for example: salaried only or all employees).

  • Whether SUB payments will be made during the one-week EI waiting period.

  • The amount of income paid in excess of EI sickness benefits (fixed amount or up to a percentage of normal weekly earnings). Different amounts may be payable to different groups of workers.

  • How long benefits are payable for (they don’t have to match the 15 weeks provided through EI).

Payments from a registered SUB plan are not insurable meaning EI premiums are not deducted, they are however subject to CPP as well as income tax deductions.

Employers may also take advantage of a SUB to top-up the incomes of employees who take compassionate care, maternity or parental leave. Unlike a SUB used to supplement income during a period or disability, this type of plan does not need to be registered with Services Canada. However, it is important to note on the employee’s Record of Employment (ROE) that benefits will be supplemented during the scheduled leave.

More information on the SUB program and how to register can be found on the Government of Canada website.

Conclusion

Whether an EI SUB program, traditional short-term disability insurance, or salary continuation is best for your organization depends upon a host of factors.  One thing for certain is that introducing a SUB program can provide a cost effective way to help alleviate some of the stress associated with an employee’s disability-related absence from work, allowing them to focus on their recovery. In the absence of salary continuation or a short-term disability plan, it can also represent a meaningful form of security.

Want to learn more about disability benefits in Canada? Get your access to our webinar recording now: Canadian Benefits 301 Webinar >>

This webinar is an intermediate-level session, participants are expected to have an understanding of Canadian group benefit plans. For a refresher, check out Canadian Benefits 101 and 201.

Topics: Employee Benefits

Free Webinar Recording

Canadian Benefits 301 Webinar

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In this webinar, we’re talking disability.  From the employer’s perspective:

  • Flat vs. Graded LTD benefit formulas – why it matters
  • Your higher income-earners are not as protected as your lower income-earners – why and how to fix!
  • Are you getting your money’s worth with an insured STD program?  There may be a better way.
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