Our ability to earn an income is – in many cases – our biggest asset. Yet many Canadians rely on government benefits to provide income replacement if they are unable to work due to an illness or injury. In this article we outline the three main sources of government benefits.
To protect your most valuable asset, it’s important to understand the limitations of government income replacement. For most people, group coverage and individual disability insurance would be critical to safeguarding financial security and lifestyle.
Canada offers three main disability benefit programs: Canada Pension Plan (CPP) Disability Benefit, Employment Insurance (EI) Sickness Benefits, and Workers' Compensation. Each program has its own eligibility criteria and provides different types of support.
Canada Pension Plan (CPP) Disability Benefit
The CPP Disability Benefit is a monthly payment for individuals who have made sufficient contributions to the CPP and are unable to work due to a severe and prolonged disability. To qualify, you must:
Be under 65 years old
Have contributed enough to the CPP
Have a mental or physical disability that regularly prevents you from doing any substantially gainful work
Have a disability that is long-term and of indefinite duration, or likely to result in death
As of 2024, the maximum monthly payment for the CPP Disability Benefit is $1,606.78. The actual amount you receive depends on how much you contributed to the CPP while working. There is also a Post-Retirement Disability Benefit available for those who are already receiving a CPP retirement pension.
Employment Insurance (EI) Sickness Benefits
EI Sickness Benefits provide temporary financial assistance to employees who are unable to work due to illness, injury, or quarantine. This program offers:
Up to 15 weeks of financial assistance
55% of your average insurable weekly earnings, up to a maximum amount
To be eligible, you must have accumulated 600 insured hours of work in the 52 weeks before the start of your claim or since your last claim, whichever is shorter. Benefits received are taxable.
Workers' Compensation
Workers' Compensation is a provincial/territorial program that provides benefits to employees who are injured or become ill due to their job. The specific benefits and eligibility criteria vary by province, but generally include:
Wage-loss benefits
Medical treatment coverage
Rehabilitation services
Permanent disability benefits, if applicable
To qualify, the injury or illness must be work-related, and you must report it to your employer and the workers' compensation board in your province.
Considerations
Eligibility: CPP Disability requires long-term, severe disability and CPP contributions. EI Sickness is for short-term illnesses and requires recent employment. Workers' Compensation is specifically for work-related injuries or illnesses.
Duration: CPP Disability can continue until age 65, EI Sickness is limited to 15 weeks, and Workers' Compensation duration varies based on the specific case.
Amount: CPP Disability and Workers' Compensation generally provide higher benefits than EI Sickness.
Application process: Each program has its own application process and required documentation. For CPP Disability, a medical report from a healthcare professional is crucial.
Interaction between benefits: Receiving one type of benefit may affect your eligibility or payment amount for others. It's important to check with each program about potential impacts.
Taking stock of what sources of income would be available to you in the event of an unexpected illness or injury is vital. Contact us today to discuss what you can do to protect your financial security.
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