Last updated: June 17 2013
Advisors should be aware of and discussing income replacement opportunities with their client families if disability has entered into the picture.
These income sources can pay medical bills and assistance; however, they may be instrumental in ensuring that other investments stay intact. Here are some basic components of EI Disability supports:
You may be entitled to receive benefits from Employment Insurance as a result of your inability to work for up to 15 weeks. These benefits are taxable. They can amount to up to 55% of your average insurable earnings to a dollar maximum. Lower income families can receive up to 80% of the average insurable earnings. However, applying for them involves a qualification process with Service Canada, including health information with a doctor’s certificate, as well as detailed employment records. If you are eligible the payments will start in 28 days, after a two-week waiting period.
Complications arise when EI is received in conjunction with other income. For example, any money you receive during the two-week waiting period will be deducted from the benefits you are entitled to receive for the first three weeks, dollar for dollar.
Likewise if you work while receiving EI sickness benefits, or receive commissions, compensation under a work accident plan, group health or group wage loss replacement plan, payments under an accident insurance plan, or retirement income under a public or private plan, the amount you earn will be deducted dollar for dollar.
The good news is that the following types of income noted on the EI benefits website have no impact on EI:
Repayments of EI and CPP. Because there is often a multi-year process to sort out repayments of those various income sources that overlap in the onerous qualification process and waiting periods. If a repayment is necessary, it is claimed as a deduction on Line 232 Other Deductions, in the year the repayment took place.
Legal Fees. Paid to object to or appeal a decision under the Income Tax Act, the Unemployment Insurance Act, the Employment Insurance Act, the Canada Pension Plan Act or the Quebec Pension Plan Act are deducted here, too.
NEXT TIME: Other Income Sources
LAST TIME: Tapping Into the CPP Disability Benefits
Excerpted from Jacks on Tax, by Evelyn Jacks. © All rights reserved.