Effective Jan. 1 Employment Insurance premiums will drop for employees and employers

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Effective Jan. 1, 2020, the Employment Insurance (EI) premium rate for employees will be reduced to $1.58 per $100 of insurable earnings - a decrease of four cents compared to the 2019 rate of $1.62 per $100 of insurable earnings.

According to Service Canada this represents a reduction of 30 cents from the 2016 rate of $1.88, meaning that a single worker who earns $48,000 annually in 2020 will pay $144 less in EI premiums compared to 2015. For employers who pay 1.4 times the employee rate, the 2020 rate will decrease by six cents to $2.21.

The following changes will also take effect:

The Maximum Insurable Earnings for 2020 has increased to $54,200 from $53,100 in 2019. The MIE is indexed on an annual basis and represents the ceiling up to which EI premiums are collected and the maximum amount considered in applications for EI benefits. The maximum annual EI contribution for a worker will decrease by $3.86 to $856.36 (down $5.41 for employers to $1,198.90 per employee).

The government claims that the Premium Reduction Program (PRP) will provide approximately $1.049 billion in premium relief in 2020 to registered employers and their employees in recognition of savings generated to the EI program by employer registered short-term wage-loss plans.

For self-employed Canadians who have opted in to the EI program, the annual earnings required in 2019 will increase to $7,279 for claims filed in 2020. The level of earnings required by self-employed Canadians to be eligible for EI special benefits is indexed annually to growth in the MIE.

Each year, the Canada Employment Insurance Commission (CEIC) sets the premium rate based on the seven-year break-even rate, which is a rate forecast to balance the EI Operating Account over a seven-year horizon, including the elimination of any cumulative surplus or deficit, as forecast by the EI Senior Actuary.

The Senior Actuary’s report on the EI premium rate and the EI Commission’s summary of that report are available online. To learn more visit Senior Actuary’s report and CEIC’s summary of the Actuarial report.

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