Employment Insurance for Self-Employed Launched

January 1, 2011, is launch day for E.I. special benefits for those who run their own business or work for a corporation and control more than 40% of the voting shares. Independent workers who are eligible for regular E.I., including taxi drivers, hair dressers and fishers, are not eligible. Maximum coverage of 15 weeks maternity, 35 weeks parental, 15 weeks sickness and 6 weeks compassionate care benefits will be offered. Parental benefits in Quebec are already offered separately. Only Canadian citizens and permanent residents may apply.

Special E.I. benefits for the self-employed can be accessed once 12 months has passed from the date of registration. If you registered before April 1, 2010 you are eligible as of January 1, 2011. In order to receive benefits you must experience at least a 40% reduction in the time devoted to your business as a result of childbirth, newborn care, your own illness or care of a gravely ill family member. At the moment the minimum amount of self-employment earnings that you would have had to have earned in the calendar year before your claim is $6000. There is a two week waiting period to receive benefits in most cases.

Some people have employment and self-employment earnings. You can apply for either as long as you qualify for both. To apply for self-employment special benefits your income from both sources will be considered. When applying for regular benefits only your employment earnings will be included.

The premium rate currently is $1.73 per $100 of insurable earnings everywhere but Quebec to a maximum of $747.37 (based upon maximum insurable earnings of $43,200). No matter when you register for special EI benefits for the self-employed you will have to remit deductions based on your full year's earnings! Unlike CPP premiums for the self-employed, you do not have to remit the employer's portion.

Weekly special benefits are 55% of average weekly self-employment earnings for the calendar year before your claim. For benefits calculated from the 2010 tax year the maximum weekly benefit is $457. Benefits may be lower if you continue to work or your business has earnings. Self-employment earnings are defined as gross earnings minus operating expenses. For sickness or maternity benefits deductions are dollar for dollar of earned income. For parental or compassionate care benefits in excess of $200 per week you can earn 25% of your weekly benefit before your earnings are deducted dollar for dollar. The amount that you can earn per week before claw back when your weekly benefit is less than $200 per week is $50. You must file bi-weekly reports during the entire benefit period and all earnings must be declared.

If you cancel your participation in the program within 60 days of registering you do not have to pay any premiums. You can leave the program after the 60 days as long as you have not collected benefits; there will be no refund of premiums and you must pay until the end of the calendar year in which you terminate participation. Your eligibility will extend to that date as well. Once you have made a claim and collected special E.I. benefits for the self-employed you will have to continue paying premiums for the duration of your self-employed career.

Are E.I. Special Benefits for Self-Employed Persons for you? Every situation is unique so do your homework before you decide. Consider the nature of your business ñ do you have a key employee who can keep the income flowing in your absence? What about your own financial situation ñ is there more than one wage-earner in the household? Is there a spouse with employment income who may choose to take parental leave? Look at the risk management measures that you have in place such as life, disability, critical illness and office overhead insurance and buy/sell agreements. Does special E.I. for the self-employed fill a gap in your planning and is the cost/benefit ratio reasonable? Your financial planner, accountant or book keeper may be able to assist you with these questions.

ADDITIONAL EDUCATIONAL RESOURCES: The Distinguished Advisor National Workshop Tour January 11-20 will cover these and other 2011 changes.