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Employment Insurance Program Changes

As promised in the 2021 budget, the federal government has modernized Employment Insurance (EI) to better reflect the current context. Recently, the government announced two significant changes.

The first is the increase of the EI insurable earnings from $60,300 to $61,500 annually thereby increasing the weekly maximum EI benefit to $650, effective January 2023. The second is a change to the sickness benefit period. The federal government has made a permanent extension of the benefit period from 15 to 26 weeks, effective December 2022.

How are employee benefits affected?

The increase to the weekly maximum benefit may be reflected in adjustments to Short Term Disability plans.

  • STD/WI plans with a set maximum based on the EI maximum—not a specific dollar maximum—will reflect the increase automatically, starting January 1, 2023. Premiums will reflect the increase in the STD benefit amount payable. No contract amendment is necessary. 
  • If the plan is registered for the Employment Insurance Premium Reduction Program (PRP) and the plan’s maximum benefit is less than $650, plan sponsors may wish to consider increasing the STD maximum to $650, to remain eligible for the EI PRP. 

The increase in the benefit period, however, can have a significant effect on both STD and Long-Term Disability (LTD) benefits. Employers may wish to consider the following:

CurrentPossible AmendmentEmployer Consideration
120 day elimination period for LTD plan (No STD plan)Change elimination period to 189 days (26 weeks) to match EIRate reduction to LTD by extending elimination period to match EI.

Reduced claim management time (possibly extending employee absence)

Maintain 120 day elimination period as higher income earners will be better off with the shorter EP

Communicate changes to employees  
17 week STD benefit period

19 week LTD elimination period (120 day)
Increase STD benefit to 26 weeks

Increase LTD EP to 26 weeks
Increase STD rate

Decreased LTD rate
Carve out plan where STD pays for first 2 weeks, EI pays for next 15 weeks, then LTD begins at 17 weeksIncrease LTD EP to 26 weeksEliminate overlap between EI and LTD

Potential rate reduction

Disadvantage to higher income earners

ASSOCIUM Benefits invites plan sponsors to review their disability plans in light of these changes. For most, there are potential rate savings regardless of which insurance company is underwriting your plan.

As noted, however, employees earning higher incomes will be disadvantaged by the extension of the LTD Elimination Period as their benefit would be greater than EI.

Our insurance partners such as the Co-operators, Equitable Life, Unistar, and others, will not be making any unilateral changes to their disability benefit plans.

If you wish to explore amending your benefits plan to match the 26 week EI benefit, please contact your ASSOCIUM representative.

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