5 things to know about the CERB to EI transitionOct 19, 2020
Now that the Canadian Emergency Response Benefit (CERB) has officially ended, the federal government has made new announcements that will ease the transition to Employment Insurance (EI). Millions of Canadians are expected to transfer over to the newly revamped EI and will need to understand how it will work and what kind of support they can expect to receive.
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.
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, updated late September, the minimum benefit will be $500 a week, which matches CERB, for up to 26 weeks. 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.
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. Once you have applied and completed your first biweekly report, you should receive your first payment within 28 days of applying. You will then be required to continue to submit biweekly reports that show you are still entitled to receive EI benefits.
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. As with EI benefits, there are reporting requirements that must be satisfied for as long as you continue receiving any of the below benefits.
- 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 42 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 42 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.
Can I work while receiving benefits?
Yes, the new Canada Recovery Benefit is meant to encourage Canadians to find employment where they can. Recipients who meet the 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 recipients of the new EI, you will be able to keep 50 cents of your EI benefits for every dollar you earn, up to 90 percent of the weekly insurable earnings used to calculate your EI benefit amount. This 90 percent amount is called the earnings threshold. If you earn any money above this threshold, they will deduct it dollar for dollar from your benefits. You may read more here.
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.