The federal government has confirmed that it will reduce the waiting period for employment insurance benefits. Currently the Employment Insurance payment period is 17 weeks, which includes a two week waiting period where no benefits are paid, plus a 15 week period of paid benefits.
Beginning January 1, 2017, the waiting period before EI benefits become payable is reducing from two weeks to one week. The 15 week period of paid benefits is not changing, so this means the total EI benefit period will be 16 weeks.
How does this affect plan sponsors?
This change will affect Short Term Disability (STD) plans qualified under EI Supplementary Unemployment Benefit Plans (SUB) and the EI Premium Reduction Program (PRP). EI Service Canada has indicated that plan sponsors will have four years to make any needed adjustments so that existing plans can continue to comply with SUB and PRP requirements. The transitional period will end on January 3, 2021.
A SUB plan provides supplementary income benefits in addition to EI payments. A PRP is one where employers receive reduced employer EI premium rates if they provide employees with a wage loss replacement plan that meets certain standards established by EI Regulations.
Plan sponsors with a SUB plan may need to adjust their waiting period (known as the “qualifying period” in Manulife contracts) and potentially their overall benefit period because EI is starting payments one week earlier. This may result in a reduction in premiums charged by Manulife.
Plan sponsors with PRP plans with waiting periods (known as “qualifying periods” in Manulife contracts) greater than seven days will need to reduce their waiting period to seven days or less in order to continue to qualify under the PRP program and receive a reduction in their EI premium rate. This may result in an increase in premiums charged by Manulife.
In certain situations, plan sponsors will also need to consider if a change to the Long Term Disability (LTD) elimination period is required to avoid a gap between short-term disability benefits (or EI sickness benefits) and LTD, but in many cases this will not be necessary.
All new PRP and SUB plans effective on or after January 1, 2017 will need to comply with the new seven day waiting period.
Communicating with plan sponsors
EI Service Canada has confirmed they are currently sending general information letters to employers and plan administrators. More information about the transitional period will be sent to affected employers in early January.
**Sourced from Manulife