EI Premium Reduction Program
Canada
Money for employers
grant_single_labels|summary
grant_single|eligibleFinancing
- grant_single|noCondition
grant_single|deadlines
- grant_single|openingDateSeptember 22, 2020
grant_single|financingType
Grant and Funding
grant_single|eligibleIndustries
- grant_single|allIndustries
grant_single|grantors
- Government of Canada
- Employment and Social Development Canada (ESDC)
grant_single|status
grant_card_status|open
grant_single_labels|preview
You could get a premium reduction in the short-term disability benefits you pay to your insured employees.
grant_single_labels|projects
Eligible projects or activities include the implementation and administration of a short-term disability plan that meets specific requirements, as outlined by the EI Premium Reduction Program.
- Provide at least 15 weeks of benefits for short-term disability
- Match or exceed the level of benefits provided under EI
- Pay benefits to employees within 8 days of illness or injury
- Be accessible to employees within 3 months of hiring
- Cover employees on a 24-hour-a-day basis
grant_single|admissibleProjectsExample
$20,000
Calgary
Implementing a short-term disability plan for a new software development startup
$20,000
Ottawa
Establishing a comprehensive short-term disability plan for employees at a non-profit organization
$20,500
Montreal
Implementing a short-term disability plan at a social economy enterprise
$25,000
Vancouver
Introducing a short-term disability program at a financial cooperative
$25,000
Toronto
Implementing a new short-term disability plan for employees at a local manufacturing company
$25,000
Halifax
Introducing a new short-term disability plan for employees at a legal firm
grant_single_labels|admissibility
The eligibility criteria for this grant are specific requirements that employers' short-term disability plans must meet to qualify for a premium reduction.
- Provide at least 15 weeks of benefits for short-term disability
- Match or exceed the level of benefits provided under EI
- Pay benefits to employees within 8 days of illness or injury (elimination period cannot exceed 7 consecutive days)
- Be accessible to employees within 3 months of hiring
- Cover employees on a 24-hour-a-day basis
grant_eligibility_criteria|who_can_apply
Employers of insured employees who remit EI premiums to the Canada Revenue Agency and provide a qualifying short-term disability plan may be eligible for the EI Premium Reduction Program. This includes various types of companies as long as they meet the program's requirements.
- Employers who provide employees with at least 15 weeks of short-term disability benefits
- Employers with short-term disability plans that match or exceed EI benefits
- Employers whose plans pay benefits within 8 days of an illness or injury (with an elimination period not exceeding 7 days)
- Employers whose disability benefits are available to employees within 3 months of hiring
- Employers who cover employees on a 24-hour-a-day basis
grant_eligibility_criteria|zone
The eligibility for the EI Premium Reduction Program is generally not limited to specific geographic zones within Canada, as long as employers remit EI premiums to the Canada Revenue Agency for their insured employees.
- Employers in Canada who provide a qualifying short-term disability plan.
- Employers who remit EI premiums to the Canada Revenue Agency (CRA) for insured employees.
grant_single_labels|criteria
The evaluation and selection criteria for the EI Premium Reduction Program are based on the short-term disability plan provided by the employer and whether it meets specific requirements. Employers must ensure their plans meet the minimum criteria to qualify for a premium reduction.
- Provide at least 15 weeks of benefits for short-term disability
- Match or exceed the level of benefits provided under EI
- Pay benefit to employees within 8 days of illness or injury (the elimination period cannot exceed 7 consecutive days)
- Be accessible to employees within 3 months of hiring
- Cover employees on a 24-hour-a-day basis
grant_single_labels|register
- Step 1: Review the eligibility criteria for the short-term disability plan as outlined in Annex 1 of the program guide.
- Step 2: Complete the application form for Employment Insurance Premium Reduction (NAS5022).
- Step 3: Gather required documentation including:
- a copy of the short-term disability plan(s) provided to your employees
- any collective agreement(s) applicable to the employees covered by the short-term disability plan(s)
- the written mutual agreement between you and your employees regarding the return of their portion of the reduction, if such an agreement exists
- Step 4: Submit your application along with the gathered documentation.
- Step 5: Wait for communication from Service Canada regarding any missing documentation, and provide it within 30 days if requested.
- Step 6: Receive notification in writing about the decision on your application.
- Step 7: If approved, use the reduced EI premium rate for payroll deductions and recalculate employer EI premiums retroactively to January 1 for the current year.
grant_single_labels|otherInfo
Some additional miscellaneous information about the EI Premium Reduction Program is available and outlined below.
- Your reduced rate is determined by your short-term disability plan type and the number of qualifying months within a year.
- Employers must ensure that employees benefit from at least five-twelfths of the total savings from the reduction.
- The maximum savings per employee per year for a category 2 plan in 2024 is $236.05, and $233.96 for a category 3 plan.
- Employers who qualify for a premium reduction must recalculate employer EI premiums retroactively to January 1 upon receiving notification of the new rate.
- Once granted, the EI premium reduction entitlement continues until the employer changes or cancels the approved plan.
- Employers must notify the program of any changes to the plan, address, payroll deductions account, ownership, or organizational structure.
Apply to this program
EI Premium Reduction Program Overview
The EI Premium Reduction Program allows Canadian employers who provide an approved short-term disability plan to their employees to qualify for a reduced rate on Employment Insurance (EI) premiums. Eligible employers must meet specific requirements and return five-twelfths of the savings to their employees.
Detailed Explanation of the EI Premium Reduction Program
The Employment Insurance (EI) Premium Reduction Program is an initiative by the Canadian government aimed at incentivizing employers to offer short-term disability plans to their employees. By participating in this program, employers can reduce their EI premiums, thereby benefiting from cost savings while ensuring their employees have enhanced disability coverage.
Basic Requirements
To qualify for the premium reduction, employers must offer a short-term disability plan that adheres to the following criteria:
- Minimum Benefit Duration: The plan must provide at least 15 weeks of benefits for short-term disability.
- Benefit Level: The plan must match or exceed the level of benefits provided under EI.
- Elimination Period: Benefits must be paid within 8 days of the employee's illness or injury, with an elimination period not exceeding 7 consecutive days.
- Eligibility Period: The plan must be accessible to employees within three months of their hiring date.
- Coverage Hours: The plan must cover employees on a 24-hour-a-day basis.
As of December 18, 2022, the maximum number of weeks for EI sickness benefits increased from 15 to 26 weeks, but the requirements for the premium reduction program remain unchanged.
Employer Commitment
Employers must demonstrate their commitment to maintaining a short-term disability plan. An undertaking is required to ensure that five-twelfths of the savings from the premium reduction are returned to the employees covered by the plan. This shared savings model ensures that both employers and employees benefit from the program.
Categories of Qualified Plans
The program categorizes short-term disability plans into four types, each with specific requirements and corresponding rates of premium reduction:
- Category 1: Cumulative paid sick leave plan allowing for a minimum monthly accumulation of 1 day and a total accumulation of at least 75 days.
- Category 2: Enhanced cumulative paid sick leave plan allowing for a minimum monthly accumulation of 1.67 days and a total accumulation of at least 125 days.
- Category 3: Weekly indemnity plan with a benefit period of at least 15 weeks.
- Category 4: Weekly indemnity plan with a benefit period of at least 52 weeks (available only to public and para-public employers in a province).
Application Process
Employers can apply for the EI Premium Reduction at any time. The application must include:
- A copy of the short-term disability plan provided to employees.
- Applicable collective agreements covering the employees under the plan.
- A written mutual agreement between the employer and employees regarding the distribution of the premium reduction, if available.
If all documentation is not available at the time of application, employers can still submit their application, and Service Canada will request missing documents within 30 days.
Determining the Reduced Rate
The reduction rate is influenced by the type of short-term disability plan and the number of qualifying months within the year. For 2024, the best reduced EI rate available is for an enhanced cumulative paid sick leave plan (Category 2) at 1.175, leading to maximum savings of $236.05 per employee. The rate for a weekly indemnity plan (Category 3) is 1.177, with maximum savings of $233.96 per employee.
Non-Qualifying Employees
If some employees are not covered by the short-term disability plan, employers cannot apply the reduced rate for those employees. These employees must be reported under a separate payroll deduction account.
Ensuring Employee Benefit
Employers must ensure that covered employees receive their portion of the premium reduction, equating to five-twelfths of the total savings. This requirement emphasizes the mutual benefit aspect of the program.
Notifications and Appeals
Upon qualification, employers receive a notification letter with the reduced rate for the entire year. If an employer does not qualify, they will receive a non-entitlement decision specifying the reasons. Employers can appeal decisions to the Canada Employment Insurance Commission within one year of the notice date.
Impact on Payroll Administration
Once the reduced rate is granted, employers must recalculate their EI premiums retroactively to January 1. This may involve financial adjustments in the next remittance of source deductions. Employers must clearly segregate the payrolls of covered and non-covered employees.
Ongoing Compliance
Employers do not need to reapply annually for the EI premium reduction; the entitlement continues unless the plan is changed or canceled. However, any changes such as coverage extension to new employee groups, plan modifications, or organizational changes must be reported to Service Canada promptly.
In Summary
The EI Premium Reduction Program is a strategic initiative by the Canadian government to support employers in offering comprehensive short-term disability coverage to employees. By adhering to specific requirements and sharing cost savings, both employers and employees benefit from reduced EI premiums and enhanced coverage. This program not only promotes better workplace well-being but also aligns with the broader objectives of social security in Canada.
