IRB Deductibility of EI Maternity Benefits Received & Employer Top-Up Benefits Available

Are Employment Insurance (“EI”) maternity benefits received and employer maternity top-up benefits available, however, not applied for, deductible when calculating an individual’s income replacement benefits (“IRBs”)?

A recent Licence Appeal Tribunal (“LAT”) decision confirms that insurers are entitled to deduct EI maternity benefits and other benefits available, however, not applied for by an insured when quantifying IRBs.

Specifically, the Mary Manuel and Certas Direct Insurance Company (19-008341/AABS) decision concludes that insureds have an obligation to apply for benefits available to them as the insurer is the payor of last resort and failure to do so does not preclude insurers from deducting benefits as if they were being received.

In this decision, the adjudicator states, “The relevant sections of the Schedule are explicit: that where there are benefits available, but an insured fails to apply for them, the insurer is entitled to deduct those benefits from any payable IRBs.”

The adjudicator ruled that the insurer (respondent) was entitled to deduct the EI maternity benefits received and employer top-up benefits available from the insured’s (applicant) IRBs as the applicant did not fulfill their obligation to apply for top-up benefits.

The applicant argued that maternity benefits would be considered temporary disability benefits or other income replacement assistance.  On this basis, EI maternity benefits would not be deductible from IRBs based on the wording of the Statutory Accident Benefits Schedule which excludes benefits under the Employment Insurance Act from the definition of temporary disability benefits.

The adjudicator disagreed with this position as follows, “For M.M. to be successful in this proceeding, I must find that EI for childrearing is a temporary disability benefit paid because childrearing is an impairment.  On a plain reading of the Schedule, I do not find that was the intent of the wording in the regulation.”

The respondent cited Nelson v. State Farm Mutual Automobile Insurance Co. and Veeran v. State Farm Mutual Automobile Insurance Co. from the Financial Services Commission of Ontario and S.W. v. Certas Insurance Company of Canada from the LAT in support of their position to deduct maternity benefits as post-accident income.

The adjudicator considered the S.W. v. Certas Insurance Company of Canada decision to be compelling and stated, “VC Flude agreed with Arbitrator Conroy’s acceptance in Nelson, of State Farm’s position that maternity leave is not unemployment and therefore EI maternity benefits and employer top-up fall within the definition of “gross employment income”.  I also agree with this interpretation.”

Accordingly, the adjudicator concluded that, “For these reasons, I find that Certas is entitled to deduct the EI maternity benefits and employer top-up…”.

Read the decision in full detail here: Mary Manuel and Certas Direct Insurance Company (19-008341/AABS)