On November 25, 2022, the Government of Canada announced the Employment Insurance (EI) sickness benefit would be permanently extended to 26 weeks from 15, effective December 18, 2022.
Individuals who qualify and establish a new claim on or after December 18, 2022, will be able to receive up to 26 weeks of EI sickness benefits. EI sickness benefits remain at 55% of the applicant’s average weekly insurable earnings, up to a maximum entitlement of $638 for 2022.
What does this change mean to your Long-Term Disability (LTD) program?
Typically, the federal EI program, or an employer-sponsored Short-Term Disability (STD) benefit, matches the LTD program elimination period. However, with the December 18th, 2022, extension of the EI benefits to 26 weeks, many LTD programs will overlap the EI payments.
For employer-sponsored LTD plans with a typical four-month elimination period, in the event of an EI sickness claim, the claimant is required to report to EI that group LTD coverage is in place. Group LTD programs are typically first payor and most carriers do not have an offset for EI payments.
Here are some of the advantages of leaving the LTD elimination period unchanged.
- Earlier intervention with disability management practices
- Validation of medical absences (EI does not proactively manage or adjudicate disability claims)
- Potential reduction of LTD claims as a focus on return to work happens sooner
Alternatively, some employers may wish to extend the LTD elimination period to match the new EI 26-week benefit period. Any potential impact on rates, associated with extending the LTD elimination period, would be based on the particulars of the group and the individual carrier. Further, extension of the LTD elimination period should be carefully considered with respect to contractual wording, collective agreements, and the employer’s philosophy around disability management.