Managing Disability Effectively Using Group Benefits Plans

A common question we receive as a benefits expert is around employee disability. Employees are concerned about becoming disabled and being unable to pay their bills. 

As we begin to formulate our answer, we start to list the insurance products that may be relevant:

• Provincial auto insurance: Mandatory third-party liability coverage protects an insured driver and/or car owner in the event that someone is killed, injured or suffers property damage as a result of the driver’s negligence. 
• Provincial workers compensation: Workers' compensation programs provide medical treatment and salary protection for employees in the case of a work-related injury or occupational disease. 
• Individual Insurance: Insurance purchased by the employee as the insurance holder. In certain cases this insurance extends to the employee’s dependents. 
• Group Benefits: Group benefits that the employee is entitled to directly through their employer. 
• EI – Employment Insurance: The employment insurance (EI) program provides temporary support to employees that are out of work. The EI benefit also provides support to employees that take time off from work due to specified conditions.  

In this blog we want to highlight the EI – Employment Insurance benefit, and how it correlates with the Group Benefits disability program.

A vast number of employers rely on the Federal EI benefit, instead of purchasing Short Term Disability (STD) insurance through the Group Benefits plan. The Long-Term Disability (LTD) is usually customized to have benefits start as soon as the EI or STD benefits runs out. 

EI Sickness Benefit 

Currently the EI sickness benefit allows employees, after a 1 week waiting period, a benefit of 55% of their earnings, to a current maximum of $638 per week, for a maximum duration of 15 weeks. EI will request a medical certificate to prove an employee is unable to work due to medical reasons. 

The federal government, as part of their 2022 budget, will extend the EI sickness benefits from 15 weeks to 26 weeks. This change is expected to take place on December 18, 2022.

Supplemental Unemployment Benefit Program (SUB program)

Some employers feel the current maximum of $638 is too low and will apply for the government Supplemental Unemployment Benefit Program (SUB program). This will allow employers to top up their employees’ weekly earnings when unemployed due to illness or injury. Employer payments under this SUB program are not deducted from the EI benefits as long as the SUB program was in place prior to payments being made to an employee that is off work due to illness or injury. 

Click here for more information on how to set up an effective SUB plan here.

Government Incentives to Add Short Term Disability to a Group Benefit plan

As an incentive for businesses, employers can register the program with Service Canada and receive a reduction in the employer portion of the EI premium.  This program is called the Employment Insurance Premium Reduction Plan. This plan is most commonly referred to as a Premium Reduction Plan (PRP).

As part of the 2022 budget, there are discussions to improve the PRP for corporations. Some of the changes being debated are:

• Improving the incentives for corporations to add an STD benefit plan.
• Expand the criteria to receive the PRP. 
• Make the application process easier.
• Improve awareness and education about the PRP program. 

If you are currently receiving the PRP, you will continue to do so when the new EI changes come into effect later this year. Changes made to the PRP program are expected in the summer of 2023. 

What is the impact for you, the employer?

As an employer, it is important to understand the impact of this change on PRP for corporations. We have included the three major changes to expect below: 

1. If you only have a Short-Term Disability plan, you may want to change the duration to match the new 26-week EI benefit period to continue to be eligible for the PRP program. 
2. If you only have a Long-Term disability plan, you will most likely want to change the waiting period to dovetail the EI benefit duration.
3. If you have both STD and LTD benefits, you essentially do not have to make any changes.  However, it would be prudent to make the duration changes to match with the government changes. 

Conclusion: Manage Absences Effectively with Short-term Disability 

In conclusion, when organizations are looking to manage absences effectively it is a logical solution to talk to your advisor about what options are the best fit.

More information on the EI changes is consistently being released. If you have any questions or would like to discuss your Group Benefits plan contact the Montridge team to receive personalized support from one of our experts.