Sickness benefits need an overhaul for aging workforce: study

Only about 56 per cent of Canadians are covered by private disability insurance, a situation that leaves a large number of workers exposed to a confusing and often inadequate system of coverage, according to a new study.

Only 56% of Canadians have private disability insurance, the rest have an inflexible public system

Cancer has no predictable course, but employment insurance sickness benefits are cut off after 15 weeks. (CBC)

Only about 56 per cent of Canadians are covered by private disability insurance, a situation that leaves a large number of workers exposed to a confusing and often inadequate system of coverage, according to a new study.

The report for the Montreal-based Institute for Research into Public Policy calls on government and insurers to fill the big gaps in the disability income system.

Among the problems:

  • Differences among the provinces on job protection and sick leave entitlement.
  • Public sector programs that leave workers to fend for themselves for significant periods of time.
  • Rigid definitions of "disability" which don't accommodate people with chronic or recurring conditions.

As the workforce ages, employees are more likely to experience periods of sickness as older workers are more likely to suffer from diabetes, cancer and other conditions.

That means higher costs for employers, who are already trying to keep benefit costs in check, says Tyler Meredith, research director for IRPP and co-author of the study.

"It's important to point out that employers go above and beyond what is required as the minimum expectations, but there is no co-ordination between the way labour laws are designed and on the other side, the employment support system," he told CBC News.

In 2010, Canadian governments and insurance carriers provided $29 billion in direct income support to individuals dealing with a personal illness or disability. That figure stands to grow over the next 10 years as the Baby Boomers who dominate the workforce age.

Meredith suggests some kind of federal-provincial discussion on sick leave laws and the design of the employment insurance sickness benefit system. And he recommends talking with the insurers to try to design private sector products that dovetail more effectively with public benefits.

Inflexible public system

"It's fine to say we should expect people to have private insurance, but if we're going to do that, we have to make sure people in the labour market have access to private insurance and there's a lot of individuals who don't," he said.

People who are part-time or in insecure employment frequently don't have these benefits and the public system is so inflexible, they're unlikely to be covered, he said.

The requirement to qualify for employment insurance sickness benefits is 600 hours, anywhere in the country, a very high standard.

Individuals who become sick are frequently left to navigate the disability benefits system on their own and it can be a tough slog, Meredith said.

EI sickness benefits don't allow for a gradual return to work after recovering from cancer, or for mental illnesses which may recur, meaning an employee dips in and out of the workforce.

Need to have consultation

People are thrown back on family, their own financial resources or, as the last resort, welfare, he said.

"We need to have a conversation – if everybody needs basic insurance and I think the answer would be yes, how do we do that?" Meredith said.

"Do we look at bringing the public system closer to the standard of the private market and making it more accessible? Or do we say everyone should get private insurance and we're going to mandate that?"

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