Income replacement

Like most people, you probably need your income to pay for basic household expenses such as rent or a mortgage, food, utilities, transportation and all the other necessities of life. For many people, a loss of income can cause significant financial problems.

Therefore, it is important to think about the types of income replacement that can cover your expenses in case you are unable to work due to illness.

This section provides an overview of government income replacement programs as well as private insurance that covers serious health situations.

Sickness Benefits of the Employment Insurance Program

Eligibility

Employees and their employers are required to contribute to the federal Employment Insurance program. You can verify that your employer is paying into the EI program (as well as other government programs) by looking at the deductions on your pay stub. However, there are several other criteria that must be met to qualify for EI benefits. In addition, the criteria change depending on where you live and your previous use of EI. You can view the eligibility criteria here.

Sick Leave

Sick leave benefits under EI only cover 15 weeks. In addition, there is always a first week that is unpaid before the 15 weeks of benefits. This waiting period leaves many people with a financial shortfall from the start of their sick leave that they must cover themselves. In addition, it can take several weeks to process the file. Hence the importance of an emergency fund.

Benefits

Benefits are only 55% of gross income and insurable income is capped at $56,300 per year in 2021. This means that anyone who earns more than this amount and must rely on EI sick leave benefits will experience an even greater drop in income.

However, employers with employees who earn more than the maximum insurable earnings and who are covered by EI can set up a program registered with the Canada Revenue Agency. This program is designed to supplement employees’ sickness benefits. Employers can register for the Supplemental Unemployment Benefit program here.

Social Assistance

It is not uncommon for precarious workers who are unable to meet the eligibility criteria for Employment Insurance to have to turn to the provincial social assistance program when they are on sick leave.

Unfortunately, receiving social assistance due to illness does not necessarily mean that the person is considered unable to work and therefore eligible for a higher amount of assistance.

An illness can be considered a temporary constraint that allows for an amount to be added to the basic benefit for a specified period of time.

It is always a good idea to consult with an advocacy group to ensure you are aware of your rights, especially when it comes to financial support.

Advocacy organizations for people on social assistance:

Organisation populaire des droits sociaux: http://opdsrm.com/

Collectif pour un Québec sans pauvreté : http://www.pauvrete.qc.ca/

Front commun des personnes assistées sociales du Québec : http://fcpasq.qc.ca/

Association pour les droits sociaux Québec métropolitain : http://www.addsqm.org/

Quebec Pension Plan

Has your health condition permanently deteriorated to the point where you can no longer work or work full-time? If you are under 65 and have made sufficient contributions to the Quebec Pension Plan, you may be entitled to one or more disability benefits.

The disability must be recognized as severe and permanent (without any possible improvement) by the medical team of Retraite Québec. For the disability to be recognized, you must be unable to work full-time or to do a job that takes into account your limitations and your total employment earnings exceed $3600 for a period of 3 consecutive months.

For more information, visit the QPP website.

Insurance

Private Insurance: Overview

Insurance companies offer a wide range of policies for serious illnesses, but the most important basic coverage is long-term disability insurance that replaces income in the event you are unable to work.

Group Insurance

If your employer offers group insurance, disability insurance is usually part of the package. Group insurance should also include drug coverage, as well as other types of coverage such as health insurance.

Even if you have disability insurance coverage, it is important to understand the definition of disability included in your policy, the eligibility requirements, coverage and duration. Your employer should be able to provide you with this information and any required documentation.

The health insurance included in a group insurance plan generally covers expenses not covered by the Régie de l’assurance maladie du Québec (RAMQ), such as certain costs related to a hospital stay, ambulance fees, certain prostheses or sometimes fees for the services of physiotherapists, psychologists and other health professionals.

Individual private insurance

If your employer does not offer a group insurance program or if you are self-employed, we recommend that you consider purchasing an individual insurance policy.

Summary Definitions and Additional Information

Disability

The definition of disability in the context of work can vary from policy to policy. For some policies, a person may qualify only if he or she cannot work at a job for which they are qualified; for others, a person may qualify if he or she cannot work in their occupation. Some cover partial disability, but others offer coverage only if the insured person cannot work at all.

Because disability insurance has many variables, it is important to understand how your plan works and whether the level of coverage you have is adequate.

Short-term and long-term coverage

There are two main types of disability insurance: short-term and long-term coverage.

Short-term disability insurance replaces a certain percentage of gross pay, with no additional compensation such as overtime or commissions. It can be paid for a few months to a year, depending on the policy.

Long-term disability insurance generally replaces a lower percentage of gross pay and may have a monthly maximum. However, benefits are paid for a longer period of time. Payments end when the disability ends or, as the case may be, after a certain number of years, or when the person reaches retirement age.

Waiting period

The waiting period is the time between when a person becomes unable to work and when he or she receives benefits.

In the case of short-term disability insurance, the elimination period may be two weeks. For long-term disability insurance, the waiting period can be up to 90 days. It is important to know what the policy says so that you are prepared to cover any weeks without benefits.

Some long-term disability policies require the insured person to first access sickness benefits under the federal Employment Insurance program before receiving benefits from the insurance company.

Additional Coverage

Some long-term disability policies cover other expenses such as training to return to work.

Credit card balance insurance

Most credit card contracts include a balance insurance section, which can be very useful to pay off your cards in case of loss of income.

Tips for finding the right policy

Shop around for insurance with several direct companies and brokers, as they do not all offer the same products.

When using a broker, ask to see a list of quotes they have received from different insurers. Sometimes a broker is tied to only one or two insurers. Ask about the broker’s business relationship with the insurer they recommend.

Don’t focus on price alone. Make sure you have the right insurance coverage for your needs.

Be sure to read the exclusion clauses before choosing your insurance, because not all disability insurance is the same. To learn more or to find out how to defend yourself in the event of a dispute with an insurer, consult the section on questions about disability insurance on the Autorité des marchés financiers website.

Don’t automatically renew your insurance, as premiums can increase significantly from year to year. Shop around regularly.