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EI Benefits Extended to the Self-Employed

By Sara Bedal |

It used to be that contributing to employment insurance (EI) was just for employees and employers. But business owners should now take a look at this program sponsored by the feds.

Thanks to the Fairness for the Self-Employed Act, which recently amended the Employment Insurance Act, entrepreneurs may now be eligible to take advantage of EI's "special benefits."

There are four types of EI special benefits:

Maternity benefits are for mothers who give birth. These benefits cover the period surrounding the child's birth (up to 15 weeks).*

Parental benefits are for any parent (mother or father, natural or adoptive). Either parent can receive benefits, or they can share benefits between them (up to 35 weeks).*

Sickness benefits are for people who cannot work due to injury, illness, or the need to be isolated in quarantine because they may be carrying a disease (up to 15 weeks).

Compassionate care benefits are for people who must be away from work temporarily to provide care or support to a family member who is seriously ill with a significant risk of death (up to 6 weeks).
Overall, the special benefits mirror those available to salaried employees and don't include what the federal government calls "regular benefits" or income support for unemployed individuals.

Registering for the program

You can register in the optional program if you run your own business, or if you work for a corporation but previously could not access EI benefits because you controlled more than 40 per cent of the corporation's voting shares. You must also be a Canadian citizen or permanent resident of Canada.
Once registered, you'll pay premiums based on your self-employment earnings. For 2011, the rate is $1.78 for every $100 earned up to a maximum of $786.76, except in Quebec, which has its own parental insurance program. In Quebec, the rate is $1.41 for every $100 earned up to a maximum of $623.22. And because you don't qualify for regular benefits, you won't have to shell out the employer EI portion.

Collecting benefits

Don't think you can automatically start drawing benefits once you've begun contributing. You'll have to wait 12 months to do so (unless you registered on or before April 1, 2010).

The current weekly benefit is 55 per cent of your average weekly earnings in the calendar year before you applied for EI special benefits, up to a maximum of $468 each week. And if you continue to work or your business generates earnings while you're collecting special benefits, the amount you collect could be less.

Buyer beware!

You'll want to consult a financial advisor to determine whether it makes sense for you to sign up for the program and your likelihood of coming out ahead. Once you have registered, you have 60 days to withdraw from the program without paying premiums.

After that, be careful. You can opt out of the program at the end of the calendar year in which you filed a notice of termination but, if you've collected benefits, you're locked in as long as you're self employed--even if the nature of your self-employment changes.

For more information and to help you determine whether special benefits are right for you, see Service Canada's Employment Insurance Special Benefits for Self-Employed People.

* Self-employed residents of Quebec are already covered for maternity, paternity and parental benefits under the Quebec Parental Insurance Plan (QPIP). They may be eligible for sickness and compassionate care benefits only under the revised EI program.

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