Employment Insurance (EI) benefits are explicitly included as a component of gross employment income per the Statutory Accident Benefits Schedule (SABS). Subsection 4(1) defines Gross Employment Income as “salary, wages and other remuneration from employment, including fees and other remuneration for holding office, and any benefits received under the Employment Insurance Act (Canada)…”
So, why the need for a blog post?
EI benefits can be more than just a component of an individual’s pre-accident income, they can also be the basis of their eligibility for an Income Replacement Benefit (IRB).
The Many Roles of EI Benefits
Eligibility is the first question that must be addressed when starting to calculate an IRB. EI benefits are important in determining an insured’s eligibility if they are unemployed at the time of the motor vehicle accident. If an insured is receiving EI benefits at the time of the accident, they qualify for an IRB, as per s. 5(1)1.ii of the SABS. Continue reading
Summary: It appears the driving consideration on whether an amount is deductible is whether or not the payment is for loss of income, specifically an indemnity payment, and not how regularly payments are received by the insured, whether or not they cover the entire period of disability, or the length of the waiting period.
These decisions relate to the SABS-1996 (O. Reg. 403/96). However, other than what is explained in our Other Income Replacement Benefit post, it appears the findings in the decisions discussed below will stand.
In considering whether payments are for loss of income, Arbitrator Rogers in Bhola and Personal (FSCO A06 001473) outlined the following factors:
Summary: The Insured received collateral benefits which were deemed to be of a non-indemnity nature, and as such, not payments for loss of income under an income continuation benefit plan. On this basis, they are not deductible from an Income Replacement Benefit (IRB).
This decision relates to accidents which occurred from November 1996 to September 2010.=
Roana Codling-Mokoena and CAA Insurance Company, FSCO A04 B000017, October 17, 2006 – Arbitrator Leitch
Date of MVA – September 20, 2000.
The insurer disputed payment of IRBs, arguing the IRBs should be reduced by the insured’s receipt of benefits under a disability insurance policy she purchased prior to the accident from Crown Life.
Summary: A new term for what was previously called collateral payments for loss of income under the prior legislation, OIRA appears to bring together s.7(1) and (2) of the Old SABS. The only significant change appears to be the addition of “gross”…but does that have an impact?
The New SABS (O. Reg. 34/10) introduces us to “Other Income Replacement Assistance” (s 4(1)). Commonly referred to as collateral benefits, the new definition highlights that OIRA:
- Relates to the current accident
- Is the amount of any gross weekly payment for loss of income that is being received, or that may be available to the person but is not being received as an application has not been made.
- The following are excluded benefits: the Employment Insurance Act (Canada), payments under a sick leave plan that is available to the person but is not being received, and certain payments under a workers’ compensation law or plan that is not being received by the person
The content of this definition, appears to bring together subsection 7(1) and (2) of the Old SABS. As a result, the only significant portion of this change appears to be that “net weekly payments for loss of income” has become “gross weekly payment for loss of income”.
When it comes to calculating Income Replacement Benefits (IRB) for a claimant, we need to look at every financial aspect of the claim, including collateral benefits.
But what, exactly, constitutes a collateral benefit and when is it a factor in calculating the IRB payable?
This post relates to the post-September 2010 legislation. For our blog on the pre-September 2010 legislation, you may find it here.
Under the post-September 2010 legislation, collateral benefits are received by an insured as a result of a prior incident, meaning an incident which occurred prior to the automobile accident.They are deductible from the amount payable for IRBs and Non-Earner benefits (NEB), only if they are being received by the insured and considered temporary when the insured first qualified for the IRB or NEB.