5 things to know about the CERB to EI transition

Last week, the federal government announced that the Canadian Emergency Response Benefit (CERB) will transition into a new form of Employment Insurance (EI). With the end of CERB firmly in sight (October 3), the government expects to transfer millions of Canadians over to this newly revamped system. Even though these measures have yet to be voted on in parliament, it’s a good idea to understand how these benefits will change so you can start thinking ahead.

Throughout the COVID-19 pandemic, CERB and its user-friendly application process have been an important safety net in a time of uncertainty. EI will be a different process. The amount you receive and the way you apply will involve more administrative steps. Getting accustomed to the new EI will take some time. To help you make this CERB to EI transition as smooth as possible, here is a Q&A about what’s to come.

  1. How will the CERB to EI transition affect my financial assistance payments?

     

 A big part of preparing for the switch from CERB to EI is understanding how much financial assistance you can expect to receive. CERB was very predictable. Everyone who applied received $2000 a month. Normally, if you qualify for Employment Insurance benefits, you receive 55 per cent of your average insurable weekly earnings up to a maximum amount. The new rules stipulate that earnings for all Canadians can be averaged out over the best 14 weeks of employment (as opposed to 22 or 52). There are also minimum and maximum amounts.

According to the new rules, the minimum benefit will be $400 a week for up to 26 weeks or roughly six months. The maximum will be $573. So you may end up receiving more or less money depending on your past earnings. Like CERB, these amounts are taxable.

If you are worried about EI insurance premium rates, these will be frozen for two years at the 2020 rates. These are the lowest since 1980 according to Deputy Prime Minister and Finance Minister Chrystia Freeland. 

  1. How does the EI application process differ from CERB? 

     

One main difference is that EI applications will go through Service Canada and not the Canada Revenue Agency. If you have already been receiving CERB through Service Canada and are already eligible for EI, you will automatically transition to EI benefits once CERB ends at the end of September. If you are eligible for EI but have been receiving CERB through the Canada Revenue Agency, you will need to apply through Service Canada.

Another major difference you will notice during the CERB to EI transition will be reporting requirements and frequency, but more details about this are expected to come. Recipients will have an obligation to be available for work and look for employment. As of now, EI applicants are required to apply every two weeks and submit biweekly reports that show they are still entitled to receive EI benefits.

  1. How do I know if I qualify for EI under the new changes?

     

 The new EI has much broader eligibility requirements. You can now qualify for EI after working as few as 120 insurable hours, the equivalent of about three and a half weeks, in the last 52 weeks. This is a big difference from pre-COVID EI, which required between 420 and 700 insurable hours.

There are also three new benefits that have been announced to cover workers who don’t have access to EI.

  • The Canada Recovery Benefit (CRB), for the self-employed who are not eligible for EI and cannot resume work, will provide $400 a week for up to 26 weeks.
  • The Canada Recovery Sickness Benefit (CRSB) will provide $500 per week for up to two weeks for workers who are sick and must self-isolate for reasons related to COVID-19.
  • The Canada Recovery Caregiving Benefit (CRCB) will provide $500 a week for up to 26 weeks per household for workers who are unable to work because they are caring for a child, dependent or family member because schools or daycares are closed due to COVID-19.

 

  1. Can I work while receiving EI benefits?

     

 Yes, the new EI is meant to encourage Canadians to find employment where they can. Recipients who meet the EI requirements will be able to earn up to $38,000 in annual net income from employment or self-employment while receiving payments. Beyond that threshold, you would have to repay 50 cents for every additional dollar earned. 

For people who are able to work and are worried about EI insurance premium rates, these will be frozen for two years at the 2020 rates. These are the lowest since 1980, according to Deputy Prime Minister and Finance Minister Chrystia Freeland. 

  1. What do I do if EI won’t be enough to cover my bills?

     

 If you’re worried about not being able to keep up with your financial obligations over the course of the CERB to EI transition, it’s important to take action now. Start by speaking with your creditors. Many companies continue to offer reduced or deferred payment options on a case-by-case basis. The key is to communicate with them early.

If debt repayment is holding you back, there are many options to consider. Downsizing your debt is one of the best ways to free up cash flow. If you have credit card balances, payday loans or other high-interest debts, a debt consolidation loan can simplify bill payments and reduce interest charges.

But when debt consolidation is not enough to help you get by, a Licensed Insolvency Trustee can meet with you to go over your financial obligations and help you explore all of your options.

We know that reaching out for debt help is not easy. Our debt professionals will listen carefully to your concerns, help you make sense of your financial situation and provide sound guidance. Book a free, no-obligation consultation

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