Extending Benefits for Laid off Employees

helping advisors with extending benefits for laid-off employees

As the global economy continues to fluctuate, several companies have been faced with the difficult decision to reduce their employee headcount until the market resettles. An unfortunate reality of any pandemic is that many people will – and many already have – experience temporary or permanent layoffs. The unemployment rate in Canada has climbed to 13% as more than one million Canadians have been laid off since March 2020.

As an advisor, ensuring the financial security of your clients during these times is paramount. With the uncertainty around when the economy will begin to recover, it’s important to stay up-to-date on government and employer-provided benefit packages available to clients that may have been laid off. 

Extended benefit packages for laid off employees could be covered by the employer, or alternatively, your client may be required to seek external assistance. Either way, our team at Finaeo has put together a list of frequently asked questions to help advisors navigate the current employment realities and available resources.

Frequently Asked Questions:

What type of employer-sponsored coverage is extended during a temporary layoff? 

If a client ceases work due to leave of absence, strike, lock-out or temporary layoff, the continuation of coverage for full benefits, including Life, Disability Health and Dental may continue to be available. The majority of group benefit plans offer benefit extensions to a certain degree. In general, employers may elect to continue insurance coverage for the maximum period indicated below (although some plans may vary):

  • Short-Term Disability and Long-Term Disability benefits can be continued for one month from the end of the month in which employment was interrupted.
  • All Life benefits can be continued up to six months from the end of the month in which employment was interrupted.
  • Health and Dental benefits can be continued up to 6 months (longer if requested and approved).

If the employee decides not to continue premium payments during a layoff, does the employer terminate their benefits and reinstate when they return to work?

Premium is required to be paid to continue benefits, so if the employee does not continue with their share, then the employer either has to pay both shares or cancel the benefits.

It’s important to note that the employer must treat everyone the same as it relates to extending benefits during a layoff. The process and eligibility requirements should be consistent for everyone.

 What information do advisors require from employees that are temporarily laid off (i.e. last day of work, expected return to work date, etc.)?

Advisors will need to collect the employee’s name and Cert #, last day worked and expected return-to-work date (although this one may still be uncertain). If an advisor is dealing with multiple employees, it is easiest to put all of this information into a spreadsheet and submit it to their assigned group benefits administrator.

For additional government relief programs (see below) advisors will also need to collect the client’s personal contact information, Social Insurance Number and confirm that they meet the eligibility requirements associated with that specific program.

What other government programs are available for employees in the event of a temporary layoff?

The Government of Canada has introduced a number of programs available, including the Canadian Emergency Response Benefit (CERB) for Canadians whose employment status has been affected during COVID-19. Those who have stopped working because of reasons related to COVID-19, or are eligible for Employment Insurance regular or sickness benefits, or have exhausted their Employment Insurance regular benefits could be eligible for this program.

In addition, there are a number of other programs for individuals, such as mortgage payment deferrals, extended timeline to file income taxes, increase in child care benefit, to name a few.

It is recommended that clients apply for any eligible programs as soon as possible after they stop working. It is not necessary to wait for a record of employment.

Can clients still leverage CERB if they continue to receive coverage from their employer?

In addition to employer-sponsored benefits, CERB could provide another source of income for clients who have been laid off. Eligible clients can expect to receive $500 a week for up to 16 weeks.

However, it’s important to note that some relief programs are handled on a case-by-case basis, depending on the client’s employment situation, the unemployment rate in the region they live in or their overall household income. With that in mind, it might help to bookmark this page as a point of reference in your conversations with clients, or use this quiz to help identify which programs clients might be eligible for.

Resources and Support

As advisors, many of our clients may be experiencing a difficult transition and will be looking to us to help them re-evaluate their financial situation. Feel free to check out this post about how carriers are implementing solutions, like accelerated underwriting, to help advisors service their clients faster during these particularly challenging times.

Additionally, if you need any support in navigating the resources and services available to clients, or any of the programs mentioned in this article, please contact our team. We’d be happy to help!