6 Steps for Surviving on Employment Insurance (EI)Jun 09, 2021
Have you lost your job and need to apply for EI? You’re not alone. This past May, due to a crushing third wave, the unemployment rate in Canada climbed to 8.2 per cent. Many Canadians are also still dealing with job loss from the first wave of the pandemic. It’s why the amount of “discouraged workers,” those who want to find work but are no longer looking, is more than twice the average seen in 2019.
Losing your job is one of life’s most stressful challenges. Many people’s first reaction might be to panic. How will I pay my rent? How long will I be unemployed? How much will I make on EI?
It’s important to keep reminding yourself that you can get through it. And you will.
Surviving the financial burden of unemployment during COVID
If you have lost your job due to COVID-19 restrictions, you have good reason to be optimistic. Employment rates are expected to rebound quickly, as they did after the first wave. The economy will slowly reopen and more opportunities will become available.
Unemployment benefits are also more generous now than in previous years. With the right lifestyle adjustments and resources, your EI benefits will be enough to keep you afloat until you find your next job.
Here are 6 steps for surviving on EI.
1. Apply for Employment Insurance (EI) as soon as you can.
Start your EI application as soon as you have stopped working. If you wait more than 4 weeks, you could get fewer EI payments or even become ineligible for benefits. To apply you need to provide your Social Insurance Number, proof of address, as well as the addresses and phone numbers of your employers over the last 52 weeks, and the reasons why you were let go. If you don’t have your ROE or record of employment from your employers, you can still start your claim. Most employers submit this form electronically. If you don’t have it, check with them to make sure they are following protocols.
2. Know how much you can expect to receive on EI.
A big part of preparing for unemployment is understanding how much financial assistance you can expect to receive. The new, temporary EI, which took over from CERB, is more generous than it was before the pandemic. Normally, if you qualified for EI before the pandemic, you would receive 55 per cent of your average insurable weekly earnings up to a maximum amount. The new, temporary 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. The minimum benefit will be $500 a week, which matches CERB, for up to 50 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.
Worried about eligibility? You can now qualify for EI after working 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 new benefits to cover workers who don’t have access to EI. As with EI, 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 $1,000 per 2-week period for up to 42 weeks.
- The Canada Recovery Sickness Benefit (CRSB) will provide $500 per week for up to four 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.
Please note: these new changes to EI and the recovery benefits are temporary and are set to expire October 23rd, 2021.
3. Create your unemployment budget and cut back wherever you can.
Remind yourself that this is your survival budget, not your forever budget. Get out whatever tools you need: a pen and paper, a worksheet or any range of budgeting applications, and figure out a spending plan.
Take a hard look at your spending and see what you can cut without affecting your quality of life. Your goal should always be to spend less than you earn. If you are running a deficit, see steps 4 and 5.
4. You can still work while receiving unemployment benefits
You can work while you’re on EI and increase your earnings through part-time employment. However, half of what you earn will be deducted from your EI benefits, up to 90 per cent of your insurable earnings. Any earnings above this amount will be deducted dollar for dollar from your benefits. You can read more here.
5. Know your options if EI isn’t enough to cover your bills
Speak with your creditors. If you’re worried about not being able to pay your bills, it’s important to take action as soon as you can. Many financial institutions continue to offer reduced or deferred payment options on a case-by-case basis. The key is to communicate with them early.
Consider a debt consolidation loan. 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, personal loans or other high-interest debts, a debt consolidation loan can simplify bill payments and reduce interest charges. If you are not able to consolidate your debts at a reasonable interest rate, a Licensed Insolvency Trustee can speak with you free of charge to go over all your debt help options.
6. Make the most of your time
Once you have taken care of the paperwork, take some time to breathe. Remind yourself that you have been paying into Employment Insurance since the day you started working. Don’t forget that this stage in your life is temporary. You will eventually get another job, with all of its advantages and disadvantages. Make the most of your free time while you have it.
Job loss can be one of life’s most stressful challenges. But with the right information and resources, surviving on EI is totally doable.
Are you interested in learning more about your debt relief options? Our debt professionals will listen carefully to your concerns, help you make sense of your financial situation and provide sound guidance.