Short-Term Income Protection: Weekly Indemnity vs. SUB Plans
For employers, there are several options to consider if you wish to provide employees with short-term income protection in the event that they are unable to work due to sickness or a disability.
Weekly indemnity (WI) and supplement to unemployment benefits (SUB) plans have their own unique pros and cons to consider when deciding which plan is the best for your team. Below, we’ll take you through the points for each:
Pros & Cons of Weekly Indemnity Plans
Pros:
- If the employee’s earning warrants it, earnings on a WI plan can be higher than EI or disability
- Employers who provide WI plans are eligible to apply for EI premium reductions
- Unlike EI sickness and certain disability benefits, WI claims are adjudicated by the insurance company
- Benefits are non-taxable if the premiums are fully paid for by the employee
Cons:
- WI plans can be cost-prohibitive on an ongoing basis
- Premiums are claims-based and may be impacted at renewal
Pros & Cons of SUB Plans:
Pros:
- Can be used to top up EI payouts (EI has weekly maximums)
- SUB plans self-fund at time of claim versus needing to pay ongoing premiums
- There is a higher employee satisfaction with SUB plans as a form of income replacement as it will typically cover a higher percentage of their pay
- The cost is controlled by the employer and the weekly maximums that they set
- Usually the most cost-effective long term in comparison to paying WI premiums on an ongoing basis
- Employers who offer SUB plans are also eligible to apply for EI premium reductions
Cons:
- SUB plans are managed by the employer and are not considered insurance; therefore, claims are not adjudicated
Which one is best for you? There are many factors that come into play when making decisions like these and there is no one size fits all approach. Consulting with a benefits advisor is usually the best course of action as they will take into consideration your business needs and goals before making the recommendation on what route is best for you.
