Extending EI sickness benefits would cost $1.1 billion, says Parliamentary Budget Officer

Thestar.com
April 5, 2019
Jolson Lim

Canada’s fiscal watchdog says increasing the duration of employment insurance sickness benefits from 15 weeks to 50 weeks would cost an additional $1.1 billion or more annually and increase employee premium rates by 6 cents per $100 of insurable earnings.

In a report published Thursday, the Parliamentary Budget Officer estimated the additional cost to be $1.1 billion in 2020. By 2025, the cost of extended sickness benefits would grow by about $200 million annually.

The federal NDP, among others, have long proposed extending EI sickness benefits from 15 weeks to 50 weeks, given that many Canadians take longer than 15 weeks before returning to work due to serious illness.

The NDP, among others, have long proposed extending EI sickness benefits from 15 weeks to 50 weeks, given that many Canadians take longer than 15 weeks before returning to work due to serious illness.

These benefits offer temporary financial assistance to workers who are unable to work due to sickness, injury or quarantine.

EI sickness benefits replace 55 per cent of income up to a maximum annual amount of $53,100 as of this year. That translates to about $562 weekly.

Canada’s fiscal watchdog estimated that increases in the cost of the EI program would cost an additional 6 cents being paid by employees in premiums per $100 worth of insurable earnings. That increases the current baseline rate of $1.62 per $100. Employers pay 1.4 times that amount in premiums.

EI is self-funded through premiums collected in Canadians’ paycheques. Canada’s EI program began in 1940, with sickness benefits introduced in 1971. The program has remained more or less unchanged since then.

Nearly half of all Canadians develop cancer in their lifetime, with an average treatment length of a full year.

EI sickness benefits cost about $1.6 billion in 2017, making up 40 per cent of all EI-related spending.

About 400,000 Canadians were provided sickness benefits that year, with about 36 per cent receiving the full 15 weeks, although many Canadians take longer to recover from an illness and return to work. Some Canadians return to work while still ill.

The PBO based their costing on estimates that out of those who used the full 15 weeks, 77 per cent do not return to work after 41 weeks or more. It averages out to an average of an additional 26 weeks of receiving EI sickness benefits for those claimants under the 50-week proposal.

In February, Liberal MP Mark Eyking put forward a House of Commons motion to debate extending EI sickness benefits. Eyking, who isn’t running for re-election, has made it his goal to extend such benefits for people suffering from serious illnesses.

While in opposition, Prime Minister Justin Trudeau voted in favour of a private members’ bill to extend EI sickness benefits to 50 weeks.

Another PBO report released Thursday also projected that reducing the work hours eligibility threshold from 600 hours to 360 hours would cost an additional $258 million to $338 million annually, averaging out to a two-cent premium increase per $100 of insurable earnings.

To claim EI benefits, a person must also have worked at least 600 hours of insurable employment during the year before the claim is made.