How can you reduce the rate of your EI premiums if you have a short-term disability plan?

Some employers provide a wage-loss replacement plans for short-term disability to their employees. If the plan meets certain standards established by Service Canada, the employer's EI premiums could be paid at a reduced rate (less than 1.4 times the employee's premiums).

To benefit from a reduced employer premium rate, you have to apply for the EI Premium Reduction Program by submitting:

• a completed Form NAS-5022, Application For Employment Insurance Premium Reduction or a request in writing using company letterhead
• a copy of the short-term disability plan provided or that you will be providing to your employees.
• how you intend to return the employee's portion of the savings

You can get the guide here, at your Service Canada Centre or by contacting:

Service Canada
P.O. Box 11000
Bathurst NB E2A 4T5

Telephone: 1-800-561-7923
Fax: 506-548-7473
Web site: www.servicecanada.gc.ca/prp

The employer's EI premiums are reduced only in respect of employees covered by the approved plan (this includes employees serving an eligibility period under the plan of three months or less). These employees will continue to be reported under the current payroll account number, which will be set at a reduced rate. An officer of the EI Premium Reduction Program will ask you to open, under your business number, an additional payroll  account number to make a separate remittance for employees not covered by the plan.  This is normally only a new RP000X extension. You have to file a separate T4 information return for each payroll account number under your BN.

For employees covered under an approved plan, report their income and deductions using your payroll deductions account at the reduced EI premium rate (for example, RP0001). For employees who are not covered by the plan, report their income and deductions using your payroll deductions account at the standard rate of 1.4 times the employee's premiums (for example, RP0002). Where an employee was reported under both payroll accounts numbers in the same calendar year, file a separate T4 slip for each period.