Press Release – February 23, 2023
The Government of Canada has extended the Employment Insurance (EI) sickness benefit from 15 to 26 weeks effective December 18, 2022. This means that applicants with eligible claims on or after December 18, 2022 will be able to receive up to 26 weeks of EI sickness benefits.
How does this affect your Group Benefits Short Term Disability (STD)/Long Term Disability (LTD)?
If your Group Benefit Program has an STD benefit for which you are receiving a Premium Reduction (PRP), there is no immediate impact. We expect that changes to the program, if any, will be released in 2024. Your provider for the STD and LTD currently communicates well to transition claims from STD to LTD and as such there will be no impact to these claims.
If your company uses EI as the short-term sickness benefit and has an LTD benefit, here are answers to some of the questions you may have:
Q: How much would the LTD rate decrease if I change the elimination period from 112 days to 182 days?
A: Matheis Financial Group has tested the pricing with providers. The reduction in LTD coverage is at the front end of the benefit and the most expensive claims are those that last longer than 18 months. Providers are quoting savings of approximately 7% – 10%. If your LTD premiums are Employee paid (non-taxable benefit), then this is a reduction in payroll deduction, however income for the period of weeks from 15 to 26 would be based on the EI schedule (55% of income up to $650/week in 2023) – less than the LTD benefit, making the savings insufficient to compensate for the reduction in income replacement coverage. If the LTD premiums are Employer paid (taxable), these would be company savings, however employees may view the reduction in their income replacement coverage as a take-away.
Q: When should the company submit the Plan Administrator Statement for an LTD claim?
A: Plan Administrators should submit the Plan Administrator’s Statement as soon as they are aware that an employee’s medical leave will be greater than 3 – 4 months, regardless of the length of the EI benefit period. When in doubt, file the Statement and put the provider “on notice” that a claim may be forthcoming.
Q: How should the employer communicate with an employee while on EI up to 26 weeks?
A: Communication with employees during a medical leave is essential. Reach out to the employee on a regular basis starting at the time of the medical leave and encourage an update schedule. Once the medical leave reaches the elimination period, the LTD provider creates a communication triangle and will begin a comprehensive medical review with regular updates to ensure that the communication lines stay open between the employee, the provider, and the employer. This will provide the details required to schedule the workload until the employee returns to work. Should the LTD elimination period be extended to 26 weeks, the employer and the LTD provider may have more difficulty initializing the communication with the employee and possibly delaying the return-to-work process.
Have more questions? We have the answers! If would like to discuss the details of your plan, please reach out – we are here to help harmonize your Total Rewards Program with your Employee experience.