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back to index backAMERItalk September,  2016


Canada: Expected shorter wait-period for certain government benefits might affect employer plans

EMPLOYER ACTION CODE: ACT

The federal government confirmed it intends to reduce the waiting period for regular and special government-paid employment insurance (EI) benefits from two weeks to one week beginning in January 2017.

KEY DETAILS

The EI waiting period is the wait before claimants receive benefits after a job loss or a substantial reduction in earnings. The reduced waiting period will apply to regular benefits (i.e., triggered by a job loss) as well as special EI benefits (i.e., triggered by leave associated with maternity, parental, compassionate care for critically ill children and sickness). The Quebec Parental Insurance Plan is not affected by the change.

Only the waiting period to access EI benefits (regular or special) will be reduced, not duration or other features.

The change was introduced in recent amendments to the Employment Insurance Act included in the Budget Implementation Act, 2016. The government also confirmed expected changes to EI regulations, which currently address:

- EI Premium Reduction Program rates (i.e., reduced employer EI premium rates for employers with qualified, registered short-term disability [STD] plans)

- Minimum requirements for an employer’s STD program to qualify for the EI Premium Reduction Program

- Requirements for Supplementary Unemployment Benefit (SUB) Plans, also referred to as EI top-up plans, including top-up plans offered to employees tied to layoffs, disability (i.e., EI sickness benefits), maternity leave, parental leave and compassionate care leave for parents of critically ill children.

The government has not confirmed whether or how EI regulations governing the above programs will be changed, but news is expected shortly.

EMPLOYER IMPLICATIONS

To prepare for this change, plan sponsors should assess current programs designed to match or coordinate with particular EI benefit programs and consider the need to amend plan terms or employee communications.

Any final decisions on plan changes and related employee communications will need to wait until the government provides greater certainty on changes to the EI regulations. However, in light of the potential implications for plan design, related financial projections, collective bargaining and employee communications, plan sponsors should review the potential implications of the waiting period change as soon as possible. A review should consider the following:

SUB top-up plans. For existing SUB plans, this change may reduce plan costs because employees will be able to access EI benefits earlier in their leave periods. Whether this will generate cost savings depends on the duration of SUB plan benefit payments (and plan utilization) as compared to the duration of benefits payable under the related EI program.

EI Premium Reduction Program. For plan sponsors that provide an STD plan designed to meet the requirements for the EI Premium Reduction Program, changes to the maximum permitted waiting period may represent a cost increase if employers are required to reduce the waiting period under their STD programs to one week. As with SUB plans, the cost impact of a change to the waiting period will likely depend on benefit plan design and use. For some plan sponsors, the anticipated cost increase may be sufficient for them to revisit the financial benefits of participating in the EI Premium Reduction Program as compared to offering an EI sickness SUB plan.

Long-term disability plan elimination period. Plan sponsors that do not currently provide an STD plan, or provide programs that match or top up EI sickness benefits, should review their long-term disability (LTD) plans to consider if a change to the LTD elimination period will be required to avoid a gap between STD benefits (or EI sickness benefits) and LTD. For example, the elimination period under the LTD plan may need to be reduced from 17 weeks to 16 weeks (i.e., 15 weeks of EI sickness benefits payable after a one week, rather than a two-week waiting period).

Source: Willis Towers Watson - GAI






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