Most small businesses do not provide short-term disability insurance due to the cost. Their employees rely on the Employment Insurance (EI) sickness benefit which provides 55% of earning to a maximum of $573 per week from the second to sixteenth week of disability. Let’s face it, how many of us can survive a 45% pay cut for four months?

While the public program is modest, with a bit of foresight and paperwork, employers can supplement it to a level that is more meaningful. You can design your plan to meet the specific needs of your organization and staff. Some employers top-up the EI sickness benefit by 20% of earnings. Some also cover part of the 2-week waiting period.

There is no markup, fees or premiums; the cost of this benefit is simply the top-up payments made through your payroll system to disabled employees who have been approved for an EI sickness benefit.

With a bit of planning now, employees can return to work without the added stress of crippling debt.

Strategies:

• Decide on the level of coverage that is important to your staff.
• Decide on the level of coverage that is affordable to your organization.
• Complete your application and plan design with the assistance of your benefit broker, accountant or lawyer.

Resources:

Supplemental Unemployment Benefit Program Guide

Disability benefits should continue the paycheque when an employee is not able to work. But what does “not able to work” mean?

Most Canadian contracts provide benefits once an employee has been “totally disabled” for four months and terminate benefits as soon as an employee is no longer “totally disabled”. While such a restrictive definition saves the insurer money, it doesn’t help the employee who experiences a progressive disability or gradual recovery. Furthermore, it forces the employer to “accommodate” the partially disabled employee who is pressured into returning to work prematurely.

Good quality disability insurance includes a “partial disability” benefit that provides proportional benefits for employees who choose to return to work. This is not the same as a “rehabilitation benefit” that insurers use to force disabled employees back to work. Ideally, the partial disability benefit would provide coverage from the first day of disability through to the employee’s 65th birthday.

Strategies:

• Decide on the level of coverage that is important to your organization.
• Work with a benefit broker who understands disability insurance and is connected to suppliers that provide a broad range of quality.