We’ve been playing a guessing game since the federal government first announced changes to the EI sickness benefit back in the April 2022 budget. When it would happen, and how it would work with private sickness benefits (WI/STD, LTD)etc. were just the beginning. Well, the mystery is starting to clear up with December 18th being the go-live date, providing a more generous benefit increasing from the current 15 weeks to 26 weeks.
So, what does this mean for group disability plans? There is still EI reform happening and more details are expected in the coming weeks and months specifically around the STD rate reduction program (this only applies if you have a formal STD plan and meet the qualifications). We’ll watch and share more about this as it comes out.
Should you change your long term disability benefit as a result of this change?
There are a two primary options for employers to consider.
- Keep your existing LTD waiting period of 112 or 119 days. This will provide an LTD benefit 2 months before the EI ends and in most cases, will provide a higher benefit period than the EI benefit maximum. Insurers do a pretty good job of getting people back to work, so the earlier intervention should help with better outcomes. The downside is that there could be a duplication of EI and LTD payment, which the employee would have to repay (but the LTD benefit is higher so not a hardship).
- Amend your plan to match the new EI sick benefits. This would delay your LTD benefits from 4 to 6 months. A small rate decrease would be experienced (~3-7%), but staff would have the reduced benefit that EI offers. This would also delay the LTD insurer from getting involved, which can make rehabilitation and return to work harder in some cases (early intervention is always better).
The decision will be unique to each employer’s situation. Some have no LTD benefit, so no changes are required. Some insurers will change all their plans one way or the other while others will leave it as is, but most are expected to allow employers to choose.
There is more info on the release below and we’ll be in touch as more information becomes available.
News release – November 25, 2022
Canadians who are facing illness or injury need to feel confident that they are supported and that their jobs are protected as they recover. That is why the Government of Canada is taking action to improve Employment Insurance (EI) sickness benefits.