Disability benefits in Canada

October 1, 2012 9:08 PM

In Canada, what kind of (government) disability benefits can a separated, self employed person qualify for and how?

The individual in question has been separated from an abusive partner for a couple of years. She is the parent of two young children, both who have health issues. She also has long-term health issues that are sometimes debilitating. In spite of all this, she has soldiered on with her business. However, this year, her earnings have dropped to below $10,000 -- they have plummeted and that's before she even takes out expenses, let alone stuff like childcare. She keeps thinking that her health will turn around, but it seems to be one thing after another.

She receives both child support and spousal support from her former partner. From what she can tell, she couldn't get provincial disability benefits, because her child support and spousal support would be too high.

The spousal support was calculated based on her earnings a few years ago. She knows she needs to go back to a lawyer and also discuss spousal support with her ex. However, she has asked what her options are for disability from the government.

She's not currently opted into EI through her business, but wonders if it would make sense to do so for this year (although her income is incredibly low and there's probably a one-yer waiting period anyway).

Also, she wonders if she would have to give up her business to get disability. This is frustrating, as she sometimes is very healthy for days, weeks or months. Sometimes, she can still do a small amount of work. And she's hopeful that she can turn things around. Normally, she earns far more than $10k a year and suspects that there is no sort of government disability that would be worth giving up her business for. A friend suggested she could incorporate and keep the earnings in the business and collect disability that way.

To be clear, she is not trying to scam the system. She is just someone dealing with long-term health issues and a lack of benefits (she has had one of her major illnesses since teen years and can't get typical disability through self coverage). She knows she can't get welfare, since she has assets. She just doesn't want to find out that there were options she didn't know about. It would be emotionally devastating to walk away from a business that, in many ways, is very successful, given all the health issues she has worked through.

Thanks for your time. I'll be posting in the thread for her.

posted by Chaussette and the Pussy Cats to health & fitness (15 answers total)

It would be particularly useful to know which province she was in.
posted by jeather at 9:15 PM on October 1, 2012

Oh, sorry. She's in BC. If you need more than that in terms of regional detail, just Mefimail me. Tks.
posted by Chaussette and the Pussy Cats at 9:24 PM on October 1, 2012

Why the one year wait period for EI? I've taken it a couple times and usually it's just two weeks.

Standard EI is between four and five months of benefits, but as I understand it you can then extend with a disability. A friend of mine did this and wound up receiving a total of one year at max EI benefits (I believe somewhere around $450 - $480/week, not sure since they changed things a couple years back) before being cut-off. EI I believe is calculated through your average earnings over the most recent six months though, so your friend would be unlikely to get max (I think min is $250 - $300/week).

All of this was in BC if that helps.
posted by mannequito at 10:12 PM on October 1, 2012

If she is receiving income as spousal support and has other income, she will probably not qualify for EI.
posted by KokuRyu at 10:44 PM on October 1, 2012

If she's self-employed and not paying into EI, that alone would disqualify her.

Has she looked into government grants for her business? If she could get a subsidized part-time employee through a small business program, that might tide her over when she's not personally able to do the job. Business Development Bank of Canada might be a place to start.
posted by Pomo at 10:57 PM on October 1, 2012

She's not talking about regular EI. She's talking about the EI sick benefits program. (I'm not sure exactly what it is called.) She says that you have to pay into EI for a year (she thinks) before you can qualify to receive benefits. She is wondering if she could register for this year, perhaps even retroactively to January, and then apply for sick benefits when the 12 month period expires, for example. Or perhaps there are CPP or other programs out there. She has no idea where to go to find this info. She doesn't qualify for welfare.

Kokoryu, EI is not dependent on household income, as far as she knows. And her other income ($10k) can be pretty much entirely written off or she could leave it "in the business".

Pomo, yes, she did look into government grant programs, but they require you to show the business is stable enough to cover the employee's salary, without the grant. (!) And paying someone to do this level of work would be quite expensive, as, for example, she does the kind of work that pays a very high rate but is quite difficult to sub out. She works in a niche freelance field. So when you see $10k, she only worked a few hours to earn that. The problem is that she can barely work right now and thus can't market her business either or meet with the clients she needs to land. But when work does fall into her lap, it can pay $5k-$10k or even more for not very many hours. It's just that she's too ill to do much of anything right now.
posted by Chaussette and the Pussy Cats at 11:06 PM on October 1, 2012

I've worked extensively in economic dev and government entrepreneurship programs in BC, and there are really no programs that do this, and have not been since around 2009 and some economic stimulous that arose out of the economic meltdown.

I'm self-employed, and have investigated getting disability insurance for just this very reason - if I get hit by a bus and can't work, I will have few options for generating income.

There are probably some programs administered by the local health authority (or a non-profit affiliated with the local health authority) that can provide assistance with things like chores and getting the groceries, but it really sounds like the ex-husband ought be stepping in to help somehow.
posted by KokuRyu at 11:07 PM on October 1, 2012

he says that you have to pay into EI for a year (she thinks) before you can qualify to receive benefits. She is wondering if she could register for this year, perhaps even retroactively to January, and then apply for sick benefits when the 12 month period expires, for example.

Yeah, but if you are self-employed you do not contribute to EI and therefore cannot qualify for EI.
posted by KokuRyu at 11:29 PM on October 1, 2012

KokuRyu, the rules changed a while back. Self employed people can now opt in.
posted by Chaussette and the Pussy Cats at 11:33 PM on October 1, 2012 [1 favorite]

EI rules changed sometime around 2008/2009 and will change again on Jan. 1st. So overall it's pretty hectic and confusing - my gf currently is a law student who does some volunteer work advising people on these matters and she doesn't really understand, and according to her dinnertime stories the people at EI she talks to everyday are just as confused. If your friend is thinking of going that route she really needs to go into their main offices on East 10th (assuming you're in Vancouver) and talk to someone directly.
posted by mannequito at 12:00 AM on October 2, 2012

KokuRyu, the rules changed a while back. Self employed people can now opt in.

Cool. I did not know that. This is something I would talk to my accountant about (rather than a lawyer) plus the Service Canada folks, who are pretty helpful.
posted by KokuRyu at 12:41 AM on October 2, 2012

KokuRyu, the rules changed a while back. Self employed people can now opt in.

You need to be registered and waited 12 months in the new self-employed EI stream and the minimum income for the year for her to qualify will be a little over $6,000. Not sure how much below $10,000 she is. Her benefits would've been much better if she'd opted in during a better year, as it only takes into account the previous calendar year's earnings in generating her weekly amount. There's no "retroactive" illness clause that allows her to claim earnings much higher than her actual ones.

Further, she does not have to give up her business persay to stay on EI, but she can make up to 25% of her EI before it starts going dollar for dollar vs. her income. Especially given the paltry earnings she's at now, it sounds like if she's able to work a little and make $10,000, she's going to be better off in the short term.
posted by Rodrigo Lamaitre at 3:09 AM on October 2, 2012

She could try working through the BC self-assessment form, possibly using a pseudonym. That page also has a link to the benefit rates.
posted by Heart_on_Sleeve at 6:10 AM on October 2, 2012

She needs to first get a motion to vary her spousal/child support up to date with the 2012 T4 assessment from both of them as well as medical documentation that she has exceptional needs. It is relatively simple and can be done without involvnig lawyers unless her ex is difficult. She should only be paying a proportionate amount of the childcare relative to her income so that cost should go down as well. She needs current figures for when she is applying for governemnt programmes and some programmes may put her application on hold until she has exhausted her legal claims to increased support before signing her up for government programmes.

She most likely IS eligible for BC disability; there is an exemption of $800 per month for earnings and the money she recieves for spousal, child support and child care may not be counted dollar for dollar.

There is also CPP disability, but as that affects her future pension (and has stricter application guidelines) it may not be a reasonable option.

My understanding of the EI opt-in programme for self-employed is that it really is not a very useful system for them, especially if there is a chance of remission and higher earnings in later years.
posted by saucysault at 9:22 AM on October 2, 2012

Thank you. These are good answers. I will pass them along (and maybe look into applying to pay into EI for myself, too, now that I've seen the situation she's in).
posted by Chaussette and the Pussy Cats at 9:41 PM on October 2, 2012