Changes to 2022 Maximum Insurable Earnings for Canadian Employment Insurance (EI)
By Cindy Danielson
December 14, 2021
Effective January 1, 2022, the Government of Canada announced some important changes to the maximum insurable earnings for Employment Insurance.
Below are the highlights of the changes, but please refer to the Government of Canada website for further details. EI pays 55% of the employee's income with a maximum weekly benefit as described.
EI Change Highlights:
Maximum Insurable Earnings (MIE) - increases from $56,300 to $60,300. This means that an insured worker will pay EI premiums in 2022 on insured earnings up to $60,300.
Employee EI Premium Rate - will be $1.58* per $100. This premium rate and the MIE increase means that insured workers will pay a maximum annual EI premium in 2022 of $952.74 compared with $889.54 in 2021.
*Premium rate for Quebec workers will be $1.20 - rate is lower than rest of Canada because the province of Quebec has been collecting premiums from workers since January 2006 to administer its own maternity, parental, and paternity benefits under the Quebec Parental Insurance Plan.
Maximum Weekly Benefit Amount - will increase from $595 to $638 per week (minus taxes) in January 2022.
These changes also impact EI Sickness Benefits for employees unable to work due to medical reasons.
Do you offer Short Term Disability Insurance?
As an employer, you are likely aware that EI also provides Sickness Benefits to employees that need to take time away from work for medical reasons. For eligible employees, (see Do You Qualify?) EI Sickness Benefits provide financial support for up to 15 weeks and a maximum of $595 per week (in 2021) or $638 per week (in 2022) minus taxes.
EI Sickness Benefits provide an excellent safety net for eligible employees. Something to consider is that for those employees earning more than $60,300 per year (in 2022), their cash flow will be impacted as their weekly benefit is maxed out at $638 per week (minus taxes). Let's explain below:
55% of an employee earning $59,500 per year = $32,725 / 52 weeks = $629.32 per week, which is under the maximum of $638 per week.
55% of an employee earning $95,000 per year = $52,250 / 52 weeks = $1,005, HOWEVER, $1,005 is over the maximum of $638 per week. This means that even though this employee typically makes $95,000 per year, they will still only be eligible to receive the EI Sickness Benefit on the maximum insurable earnings of $60,300. It is important to note, therefore, that those employees earning more than $60,300 per year will have their monthly cash flow impacted in the event of an unexpected medical absence.
If you are an employer concerned about providing protection to employees (including higher-earning employees), contact your Benefits Advisor to get a quote for adding Short Term Disability (aka Weekly Indemnity) benefits to your plan.
Did You Know?
If you provide short term disability coverage to employees, employers receive these benefits too:
EI Premium Reduction: Employers that provide an STD plan (and meet the EI eligibility requirements), can apply to receive an EI premium reduction. The EI Premium Reduction Program offers savings to both the employer and employees. If you are granted an EI premium reduction, you will calculate your EI premiums using a rate that is lower than the standard employer rate of 1.4 times the employees' EI premiums. The amount saved is the difference between what would have been paid at the standard rate and what is now payable at the reduced rate.
Additional Employer Support: Employers that provide Short Term Disability get additional support from their insurer to help employees return to work healthy and as quickly as possible.
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