On November 3, 2009 the Government of Canada introduced Bill C-56 which is proposing to extend EI special benefits to the self-employed on an voluntary, “opt in” basis. (Announcement)

If passed, this legislation could become effective as soon as January, 2010 which would allow the self-employed to claim EI special benefits starting January, 2011.

First you should know what EI special benefits are: maternity leave (up to 15 weeks of benefits), parental (35 weeks), sickness (15 weeks) and compassionate care (6 weeks) are included as special benefits.

The self-employed will continue to be ineligible for regular EI benefits so, as a self-employed individual you cannot simply lay yourself off to collect regular benefits.

Since the benefits from the program are limited the government has limited the cost.

Unlike CPP where the self-employed pay both the employee and employer portion, under this system the self-employed are only expected to come up with the employee portion of the cost which would be around $750 for 2010.

A further requirement is that the self-employed person will have earned at least $6,000 in net income in the previous year (so, to be eligible in 2011 one will have had to earn at least $6,000 net in 2010).

Remember, this is an optional program.

A self-employed individual would opt-in presumably because he or she is planning for maternity leave/parental benefits or is concerned about getting sick or having to care for a family member.

The downside is that once the self-employed person opts into the program and receives an EI benefit, he or she cannot opt out of the program.

One has to weigh the possibility of getting up to 35 weeks of benefits that max out around $447 per week versus paying $750 per year for as long as you continue to be self-employed.

If the self-employed person has a working spouse who is an employee then they will have to carefully consider the cost/benefits of this new program, particularly since the 35 weeks of parental leave can be shared between spouses.

It is hard to justify opting into EI only for the compassionate care benefits. Six weeks of benefits may earn you up to $2,682 but if you are going to continue to be self employed for more than four years then you are paying more over the long run to get those short term benefits.

Even opting in for the sickness benefits should be carefully considered – 15 weeks of benefits may be worth up to $6,700. However, at the cost of $750 per year one may be better off buying disability and/or critical illness insurance for better coverage and better benefits.

Regardless of the cost/benefit calculations, this legislation certainly provides more flexibility to the self-employed whether they choose to opt in or not.