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Income Replacement in the COVID-19 Context: Private Disability and Government Program Options

Private disability and government program options

The Canada Emergency Response Benefit (CERB) wound down at the end of September 2020 signaling a restart to the Employment Insurance program and the introduction of three new federal programs to support Canadians whose jobs continue to be affected by the COVID-19 pandemic. Canadian workers who are ill and/or unable to work for reasons related to COVID-19 may now have multiple public and private income support options.

The information in this document will help you navigate the programs options available to Canadian employees experiencing a COVID-19-related work interruption. The scenarios described capture most situations but are not exhaustive. Each situation should be assessed on its own merits and viewed alongside plan documentation and resources that provide full detail on government programs.

Identifying income replacement options 


Employee is COVERED under a short-term disability plan
Income Replacement Options

 

APOSITIVE DIAGNOSIS

Employee was diagnosed                COVID-19 positive  

 

During the first wave employees were eligible for Short-Term Disability Benefits with no waiting period and no medical certificate required

During the second wave employees may be eligible for Short-Term Disability benefits if unable to work (including remotely) but waiting period may apply, medical certificates may be required and general offsetting provisions may offset available for Canada Recovery Sickness Benefits.1

 

BSELF-ISOLATION/QUARANTINE

Employee has symptoms of           COVID-19 but has not been tested.

 

No benefits payable unless proof of disability is provided as per regular requirements under the plan1. May qualify for government programs.


Employee is COVERED under a salary continuance plan
Income Replacement Options

 

C – POSITIVE DIAGNOSIS/SELF-ISOLATION/ QUARANTINE -

The provisions of an employer’s salary continuance plan will specify the circumstances under which an         employee may be eligible to apply for income replacement benefits.

 

Employer or government benefits depending on plan provisions. May qualify for government programs.


Employee is NOT COVERED under a Short-Term Disability or Salary Continuance Plan
Income Replacement Options
Is ELIGIBLE for Employment Insurance Benefits 
Is NOT ELIGIBLE for Employment Insurance Benefits 

 

D – POSITIVE DIAGNOSIS -

Employee diagnosed COVID-19     positive and cannot perform the              tasks of own employment

 

Canada Recovery Sickness Benefit (CRSB)

or

EI sickness benefits

 

Canada Recovery Sickness Benefit (CRSB)

 

E – SYMPTOMS

Employee has symptoms of                 COVID-19 but has not been tested       and can’t perform the tasks of my      own employment

 

 

Canada Recovery Sickness Benefit (CRSB)

or

EI sickness benefits  

 

Canada Recovery Sickness Benefit (CRSB)

 

F – QUARANTINE

Employee in quarantine or                     self-isolation for one of the reasons         as ordered by public health authority (such as returned from abroad, in         contact with a person infected by COVID-19)

 

Canada Recovery Sickness Benefit (CRSB)

 

Canada Recovery Sickness Benefit (CRSB)

 

G – PREVENTATIVE ISOLATION – EMPLOYER ORDERED

Employee sent home by employer to         be in preventative isolation because,        for example employee is in poor        health

 

Canada Recovery Sickness Benefit (CRSB)

or

EI regular benefits

 

Canada Recovery Sickness Benefit (CRSB)

or Canada Recovery Benefit (CRB)

 

H – FAMILY MEMBER SICK WITH       COVID-19 OR SELF-ISOLATING DUE     TO COVID-19

Employee must stay at home to take       care of a family member who is sick    with COVID-19 or who must                       self-isolate as ordered by a medical practitioner, a person in authority,            the government or the public health authority.

 

Canada Recovery Caregiving Benefit (CRCB)

or

EI caregiver benefits (for critically ill dependent)

 

Canada Recovery Caregiving Benefit (CRCB)

 

I – SCHOOL CLOSURE

Employee must stay at home to take        care of their child because of a          daycare, day program or school closure/reduced hours.

 

Canada Recovery Caregiving Benefit (CRCB)

 

Canada Recovery Caregiving Benefit (CRCB)

 

J – LAYOFF OR JOB LOSS

Employee was laid-off or lost their             job due to COVID-19

 

EI regular benefits

 

Canada Recovery Benefit (CRB)

 

K – REDUCED WORKING HOURS

Employee’s normal working hours           have been reduced (50% reduction        in average income) due to COVID-19

 

EI regular benefits

 

Canada Recovery Benefit (CRB)

 

L – VOLUNTARILY AT HOME – UNDERLYING CONDITION

Employee stays home as a preventive measure because advised to by a          medical practitioner, the government      or the public health authority

 

Canada Recovery Sickness Benefit (CRSB)

or

EI sickness benefits

 

Canada Recovery Sickness Benefit (CRSB)

 

M – VOLUNTARILY AT HOME – FEAR

Employee decided to stay home       because they are afraid of contracting      the virus. Employee has no underlying health condition.

 

Not eligible for any benefit

 

Not eligible for any benefit


 

How are insurance carriers administering claims related to COVID-19?

Most insurance carriers in Canada will administer claims in the following manner:

  • STD claims from plan members who have COVID-19 symptoms, but have not received a positive COVID 19 test result will be adjudicated as usual for disability claims and the waiting period will apply. 
  • STD claims from plan members who have received a positive COVID-19 diagnosis will either be approved as “disabled” for at least 14 days and the waiting period will be waived (1st wave) or will be adjudicated as usual for disability claims, the waiting period will apply and available Canada Recovery Sickness Benefits may be offset (2nd wave depending on the carrier’s own policies).
Carrier Administration
Not all carriers administer COVID-related claims in the same way. Processes regarding waiting period and required application for available government benefits vary and are subject to change as the pandemic evolves. It is very important that you review the most current guidance provided by your insurance provider to be aware of unique definitions of disability and understand the administrative practices that will be applied when a COVID-related disability claim is made. 
Special Provisions for Temporary Lay-off
Some insurers have adapted existing options to extend coverage in the event of a temporary layoff in the context of COVID-19. Your Aon advisor can work with you to determine what is available for your plan.   

 

Government Income Replacement Programs

Employment Insurance benefits

Beginning September 27, 2020 and ending on September 25, 2021, workers can qualify for benefits with fewer insurable hours of work through a credit of insurable hours made retroactive to March 15, 2020.
  • EI Regular Benefits during COVID-19 - For employees who have lost their jobs, through no fault of their own (for example, shortage of work, mass lay-offs) and are available for and able to work, but can't find a job
    • 120 insured hours to qualify (instead of 420-700 hours)
    • 26 weeks of benefits regardless of regional unemployment rate
    • Minimum benefit of $500 per week before taxes
  • EI Sickness Benefits during COVID-19 - For employees who are unable to work for medical reasons including illness, injury, quarantine
    • 120 insured hours to qualify (instead of 600 hours)
    • Up to 15 weeks of sickness benefits
    • Minimum benefit of $500 per week before taxes
    • A medical certificate is not required and the normal one-week waiting period does not apply during the COVID-19 period

 

Government Income Replacement Programs

Canada Recovery Benefits (new - available through CRA)

  • Canada Recovery Benefit (CRB) - For workers who are not eligible for EI, mainly the self-employed, who have had a reduction of 50% of earnings, have not quit their job voluntarily, are available and looking for work 
    • 26 weeks of benefits
    • $500 per week before taxes (10% is withheld at source - $450 payment)
    • Claimants need to repay $0.50 for each dollar of their annual net income above $38,000 up to a maximum of the amount of benefit they received
  • Canada Recovery Sickness Benefit (CRSB) - For workers (employed or self-employed) who are unable to work (50% reduction) because they are sick or must self-isolate due to COVID-19 
    • 2 weeks of benefits (maximum), not necessarily consecutive
    • $500 per week before taxes (10% is withheld at source - $450 payment)
    • No medical certificate required
  • Canada Recovery Caregiving Benefit (CRCB) - For workers (employed or self-employed) who are unable to work (50% reduction) because they need to provide care to children (under 12) or other dependents who had to stay home 
    • Up to 26 weeks per household
    • $500 per week before taxes (10% is withheld at source - $450 payment)
    • For closure of schools and daycare related to COVID-19, if child/dependant contracted or might have contracted COVID-19 or is in isolation because of COVID-19 or would be at risk of having serious health complications if the child contracted COVID-19

1 “Second wave” indicates the period on or after September 27, 2020 when modified Employment Insurance and new recovery benefits came into play. Claims adjudication practices will vary per insurance carrier. Limitations may apply. See the section entitled How are insurance carriers administering claims related to COVID-19? for more information. 


Aon is not providing legal or other professional advice by forwarding this information and this should not be considered as such. Although the information has been produced and processed from sources believed to be reliable, no warranty express or implied is made regarding its accuracy, adequacy, completeness, legality, reliability, or usefulness.  Aon will not be liable for any loss or damage suffered as a result of the use of this information. We recommend you consult a lawyer or a professional as needed.

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