We’ve been getting a lot of questions about recent changes to sickness benefits in the Government of Canada’s Employment Insurance EI program and employee benefits. Some employers include short-term disability insurance in their employee benefits plan. Others rely on EI sickness benefits to cover an employee’s leave up until long-term disability kicks in on the employer’s benefits plan.
Whether you have short-term disability or you rely on EI, it’s important to understand how these recent changes can impact your employee benefits plan. There’s a bit of confusion around this, so let’s look at how it works and what you need to know.
1. What’s Changed to the EI program and employee benefits?
It was announced at the end of 2022 that EI sickness benefits will be extended from 15 weeks to 26 weeks, meaning that Canadians are now eligible to receive up to 26 weeks of EI sickness benefits if they are sick and need time off work to get well. Employee benefits plans typically include a waiting period of 17 weeks to access long-term disability (LTD) benefits. But with the EI extension, many are looking at increasing the LTD waiting period to 26 weeks. Some might think that delaying an employee’s access to long-term disability benefits will lower their rates but we’re actually seeing that carrier rates have been increasing as a result of matching the EI program waiting period with your LTD employee benefits.
2. Why Would LTD Rates Increase?
Long-term disability (LTD) benefits typically include rehabilitation programs and access to other services. These services are designed to help an employee get well and back to work as soon as possible. However, when an employee’s access to those benefits gets pushed from 17 weeks all the way out to 26 weeks, it delays their path to recovery. This means that employees might stay on long-term disability leave for longer than usual because they haven’t started their rehabilitation sooner. That is the primary reason why we’re seeing an increase in carrier’s rates when we look at the impact of the EI program changes on employee benefits.
If your employee benefits plan includes short-term disability, we do not recommend increasing that benefit to 26 weeks. There’s no reason to make this change just because the EI benefit has been extended, especially since we’re seeing that long-term disability rates are going up when the wait period is longer.
3. How Should LTD Be Managed Moving Forward?
If your employee benefits plan does not include short-term disability and relies on the EI sickness benefit, we encourage you to keep your long-term disability 17 week wait period as is. Getting your employee on long-term disability sooner is ultimately better for their recovery and your plan’s bottom line. Employees can get the care they need and get back to work as soon as possible.
You should advise your employee to apply for long-term disability as soon as they are able to. Once approved, they should get off the EI plan. Keep in mind that it is illegal for someone to collect both EI and long-term disability benefits at the same time. Be sure to clearly communicate with any employee going through this process. Most carriers also have a procedure in place to avoid duplication. It is always helpful to connect and make sure the employee understands how the EI program and employee benefits work together.
Conclusion
Are you wondering whether you need to revisit your short- or long-term disability product in your employee benefits plan because of the EI sickness benefit changes? We’re here to help. Reach out and let’s look at your options.
