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Employment Insurance For Self Employed Individuals (Canada)

In January, 2010 the Federal Government extended Employment Insurance benefits to self employed individuals/small business owners. The following represents some of the key details:

* You will not be able to claim weekly income replacement benefits in the event that you become unemployed, however you will be entitled to the following benefits (these are the same benefits available to Canadians who are employed):

Maternity benefits up to 15 weeks parental benefits up to 35 weeks sickness benefits up to 15 weeks compassionate care benefits up to 6 weeks

* You will need to wait for one year from the time of registration and payment of premiums before initiating any claims

* For 2010 the rate of EI premiums is 1.73% (1.36% in Quebec) upto a maximum of $43,200 i.e. maximum premiums payable are $747.36 (Quebec = $587.52)

* The benefit is calculated at 55% of the insured (earnings) amount. The maximum weekly benefit is $457, which is subject to reduction if there are earnings from other sources.

* Once you have received benefits, you can not opt out of the program; you will have to pay premiums for as long as you earn self employment income. Prior to receiving benefits you can apply to terminate the agreement.

* In order to make a claim, you will need to have earned a minimum of $6,000 (and paid premiums) in the previous calendar year.

You can register online with Service Canada with a Service Canada Account

Opting into the plan is probably most beneficial if you are planning to start a family, and you anticipate a significant reduction or cessation of your self employment income. If you do not intend to take advantage of the maternity and parental benefits, it may not be worth initiating coverage since you cannot opt out of the plan once you have started to receive benefits. Alternatives include contributing to a private health and disability insurance plan or simply setting up a savings account earmarked for rainy days.