Employment Insurance for business owners, is it worth it?

By Randall Orser | Personal Income Tax

Young stylish businessmanThe government in its infinite wisdom (or maybe because it’s so broke) decided to allow self-employed persons to apply for the employment insurance benefit. The benefits you would get are limited to maternity, parental, sickness, compassionate care, and care of critically ill children.

Sorry, but you can’t lay yourself off and collect benefits. Oh, and you have to wait 12 months before you can ever claim any benefits. So, if you’re pregnant now, you’re too late.

What are the Eligibility requirements?

You can enter into an agreement, or register, with the Canada Employment Insurance Commission through Service Canada if you:

  • Operate your own business, or if you work for a corporation but cannot access EI benefits because you control more than 40% of the corporation’s voting shares;
  • Either a Canadian citizen or a permanent resident of Canada.

You will qualify for EI special benefits if:

  • You have reduced the amount of time devoted to your business by more than 40% because:
    • Your child was born;
    • You are caring for your newborn or adopted child or children;
    • You are ill, injured, or in quarantine;
    • You need to provide care or support to a gravely ill family member; or
    • You need to provide care or support to your critically ill or injured child
  • You have earned a minimum amount of self-employed earnings during the calendar year preceding the year you submit a claim. This amount may change from year to year. If you want to apply for benefits in 2014, for example, you would need to earn at least $6,515 in 2013; and
  • For EI sickness claims – you have provided a medical certificate as proof that you are unable to work because of illness, injury, or quarantine; or
    • For compassionate care benefit claims – you have provided medical proof showing that a gravely ill family member who is at risk of dying within 26 weeks needs your care or support;
    • For EI maternity or parental benefit claims – you have provided the expected date of birth of the child and the actual birth date once it has occurred, or the official placement date in the case of adoption; or
    • For parents of critically ill children claims – you have provided a medical certificate completed by a specialist medical doctor stating that your care or your critically ill or injured child requires support.

As you can see it’s quite a bit of work to actually get the benefits and you have to have income to get any kind of benefit. So, if you’re business isn’t making a profit, you’ll be hard pressed to ever collect any employment benefits.

Is it worth doing Employment Insurance (EI)?

I don’t believe in the end it’s worth the hassle to do employment insurance. There are much better ways to deal with a crisis, such as critical illness insurance, disability insurance and other avenues. With the EI program, you’re just contributing into the pool, and it goes out for everyone in that pool to use. You may never use, or if you do there’s a limit to how long and how much you get paid. In the end, you need to setup a savings/insurance program for those times when you’re going to be off work.

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