# EI Maternity Benefits for Self-Employed



## Longstreet (Dec 27, 2010)

I have a question about EI maternity/parental benefits for my fiancee. We will be married in August and we plan on starting a large family a couple years after the wedding. I earn a decent income in a very secure job with a salary and lots of benefits. She is self employed and makes approximately $50K-$60K per year. We both believe strongly in her being a stay at home mom at we plan on having 4 children around 18 months apart from each other. Once she stops working, she'll remain at home for at least 10 years. 

My fiancee doesn't pay into EI and would not collect maternity benefits at the moment. I understand that if a self-employed person voluntarily pays into EI a year before maternity leave she can collect benefits. Once she collects benefits, she has to contribute into EI for the rest of her life while she's self employed. The maximum a person can contribute to EI is around $750 per year and the maximum entitlement is $468 per week (aka around $24K per year). The numbers state that it would take 32 years of contributions to total the 50 weeks of maternity/parental leave. 

I'm fairly confident that it would be worth it to pay into EI for the year before she gives birth and collect the maternity/parental benefits, even only for our first child. Has anyone have any practical knowledge or experience with this? Am I way off here? Any info or advice would be appreciated. Thanks.


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## I'm Howard (Oct 13, 2010)

Longstreet, give your head a shake, having children is not add, water and stir, things have a habit of not going as planned.

I would wait a tad and see how the universe unfolds, it is called putting the cart in front of the horse.


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## Addy (Mar 12, 2010)

I'm Howard said:


> Longstreet, give your head a shake, having children is not add, water and stir, things have a habit of not going as planned.
> 
> I would wait a tad and see how the universe unfolds, it is called putting the cart in front of the horse.


I disagree absolutely with I'm Howards comments.

It is ridiculous, and irresponsible to NOT plan ahead. Going in blind is stupidity in my opinion. Asking questions such as the OP is asking is smart and pro-active.

Kudos to Longstreet and his fiance for thinking ahead!


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## CanadianCapitalist (Mar 31, 2009)

I don't have personal experience with self-employed EI benefits but I'm not sure about your numbers. When you are self-employed, you also have to pay the employer portion of EI. EI rates for this year are approx. $750. The employer portion is $1,100 for a total of $1,850 per year.


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## HaroldCrump (Jun 10, 2009)

I find it distasteful, to put it quite mildly, that someone who did not consider EI worthwhile for paying into all these years, now suddently wants to do so to get the benefits.
Especially when it is clear from the calculations that their input doesn't contribute even a fraction of the benefits they plan to receive from it.

Which means the rest of the tax payers are expected to foot the bill for their grandiose family planning.

IMHO, distasteful is putting it _very_ mildly.


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## Four Pillars (Apr 5, 2009)

HaroldCrump said:


> I find it distasteful, to put it quite mildly, that someone who did not consider EI worthwhile for paying into all these years, now suddently wants to do so to get the benefits.
> Especially when it is clear from the calculations that their input doesn't contribute even a fraction of the benefits they plan to receive from it.
> 
> Which means the rest of the tax payers are expected to foot the bill for their grandiose family planning.
> ...


Harold, until recently - there was no option of paying into EI if you were self-employed.

I don't understand why this would be a problem - EI is insurance. If you have the option, why wouldn't you get it if you think you might need it? Or decide against it?

@Longstreet:

Here are a couple of related articles:

http://mobile.thestar.com/mobile/NEWS/article/925916

http://network.nationalpost.com/np/...nce-for-self-employment-is-it-worthwhile.aspx


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## MoneyGal (Apr 24, 2009)

CanadianCapitalist said:


> I don't have personal experience with self-employed EI benefits but I'm not sure about your numbers. When you are self-employed, you also have to pay the employer portion of EI. EI rates for this year are approx. $750. The employer portion is $1,100 for a total of $1,850 per year.


CC - I read through the Service Canada main page and the "cancelling your participation" page, but didn't find any reference to whether or not the self-employed would need to pay the "employer" portion of EI or not - so I googled further and found this reference from taxtips.ca: 

_Under the legislation, prior to claiming benefits, self-employed Canadians:

- will pay the same EI premium rate as salaried employees.

- *will not pay the employer portion of EI premiums*, in recognition of the fact that they cannot collect regular EI benefits._

This discussion is very interesting (to me, as someone who will never personally benefit from it) and it is worthy of further exploration. 

For example, as a self-employed person you have a strong incentive to _minimize_ reported income (as has been noted on the discussions about qualifying for a mortgage as a self-employed person). 

However, given that EI income is based on reported income, if you are planning in participating in EI as a self-employed person (and why would you participate unless you were expecting to take benefits?) you now have an incentive to *_maximize_* reported income - at least up to the earnings threshold (around $43K right now). 

I might create some models to explore this a little further. 

Off the top of my head, though; it is probably an optimal choice for the self-employed *if* you have (relatively) high self-employment income, you are going to have a child and want EI income for a maternity leave, you either have work which you can re-establish easily after a one-year leave OR you do not plan on returning to self-employment, and possibly you want to do this one or two times and then never again (because if you remain self-employed, you *must* remit premiums for the entire rest of your self-employed career).


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## HaroldCrump (Jun 10, 2009)

If this is a recent change, then yes, one is entitled to it.
My apologies.


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## MoneyGal (Apr 24, 2009)

In addition, you actually have an incentive to minimize income while your kids are young, via Canada Child Tax Benefits (available under a certain income level). 

In fact, in order to work through the full implications of paying for and receiving EI while self-employed on a maternity leave, you would need to:

(1) calculate the after-tax, present value of the premiums you'd need to pay over your lifetime of self-employment

(2) calculate the after-tax value of the benefits you'd receive 

(3) calculate the change in value (if any) of the income-tested family benefits you would receive with and without EI income during a maternity leave, and then calculate the after-tax, present value of the family benefits in both scenarios

(Side note: if you have unused RRSP room, you could reduce net income by making an RRSP contribution during your year of maternity leave, thus boosting the amount you'd receive from CCTB. Except you'd lose any real benefit of the tax deduction of those contributions if they are otherwise made in a low-income year and in order to reduce income, you must both make and claim the contributions. 

Side note no.2 - there are other income-tested family benefits, too; in Ontario the property tax credit/rent credit comes to mind.)

Hmmm. This would be a no-brainer for people with sufficiently high family incomes (i.e., high enough to NOT qualify for family benefits) but for people with family incomes below about $100K for one child, the decision would not be straightforward.


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## I'm Howard (Oct 13, 2010)

Addy, life is what happens and having Children is not a predictable event.

Planning too much can sometimes become confused with the facts, and rather than planing on having Four children, maybe the better approach is, We plan to have a family.

My niece just spent almost $20,000 at a clinic, they both discovered Pregnancy is not always predictable.

UIC became EI to fit into the Liberal's Political Agenda, it was never supposed to have been used for childcare subsidies.

People who rightfully deserve it are denied, people who choose to have children are subsidised.


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## Longstreet (Dec 27, 2010)

I'm Howard said:


> Longstreet, give your head a shake, having children is not add, water and stir, things have a habit of not going as planned.
> 
> I would wait a tad and see how the universe unfolds, it is called putting the cart in front of the horse.


I'm Howard: I find your comments incredibly distasteful. You don't know me personally, so refrain from making characterizations as though you do. I love my fiancee very much and we care so much about our future children that we do our utmost to provide for them. I'd rather have my wife be a stay at home mom and raise our children then shoving them off to some daycare for 16 hours a day so we can go to Disneyland every year. 

"I find it distasteful, to put it quite mildly, that someone who did not consider EI worthwhile for paying into all these years, now suddently wants to do so to get the benefits.
Especially when it is clear from the calculations that their input doesn't contribute even a fraction of the benefits they plan to receive from it.

Which means the rest of the tax payers are expected to foot the bill for their grandiose family planning.

IMHO, distasteful is putting it very mildly."

HaroldCrump: I have paid and will pay into EI my whole life and will never draw from it. I've just started doing my fiancee's financial planning and this is just a consideration on whether to join. I've served in the army in the most violent region on earth (Afghanistan) and will continue to do so until I retire, so don't lecture me about service to Canada and doing it a disservice. I find _your_ comments incredibly distasteful as well. I don't know you, so I won't bother asking what you've done for Canada lately. My apologies if I came across as excessively greedy.


Call me OCD or maybe it's the result of planning skills from work, but I like to evaluate the implications of whatever decision I make as thoroughly as possible. I'm a meticulous planner, for example, I'm in my 20's and I'm designing my retirement home.

I sincerely thank those who made positive contributions to the discussion and imparted your knowledge on me.


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## MoneyGal (Apr 24, 2009)

I hope my comments were helpful. 

I did a LOT of tax arbitrage planning when I was starting my own family. I was self-employed and EI was not available to me at that time - I would totally have been building a model then to work out whether it was worth it for me to contribute.


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## HaroldCrump (Jun 10, 2009)

Longstreet said:


> I have paid and will pay into EI my whole life and will never draw from it. I've just started doing my fiancee's financial planning and this is just a consideration on whether to join. I've served in the army in the most violent region on earth (Afghanistan) and will continue to do so until I retire, so don't lecture me about service to Canada and doing it a disservice. I find _your_ comments incredibly distasteful as well. I don't know you, so I won't bother asking what you've done for Canada lately. My apologies if I came across as excessively greedy.


As a result of your contributions to EI, you are fully entitled to paternal leave.
I certainly didn't imply that someone who has contributed isn't entitled to the benefits.
It was perhaps the wording of your original post that elicited such response from both myself and _I'm Howard_, although in different aspects.
Your post did come across as an attempt to take unfair advantage of the social benefits, at least in my tax-averse mind.
I already apologised for misunderstanding the rule upthread.

I hope you found the information and pointers you were looking for.

Good luck with your upcoming wedding and family planning.


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## marina628 (Dec 14, 2010)

Great post money gal ,almost makes me want to have another kid lol


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## CanadianCapitalist (Mar 31, 2009)

MoneyGal said:


> _Under the legislation, prior to claiming benefits, self-employed Canadians:
> 
> - will pay the same EI premium rate as salaried employees.
> 
> - *will not pay the employer portion of EI premiums*, in recognition of the fact that they cannot collect regular EI benefits._


Thanks for clearing that up MoneyGal. I stand corrected.


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## OhGreatGuru (May 24, 2009)

Longstreet said:


> I have paid and will pay into EI my whole life and will never draw from it. I've just started doing my fiancee's financial planning and this is just a consideration on whether to join. I've served in the army in the most violent region on earth (Afghanistan) and will continue to do so until I retire, so don't lecture me about service to Canada and doing it a disservice.


You have pointed up the peculiarity of our system of tying maternity benefits to EI. I believe you may actually be able to take some of the maternity leave yourself, but that serves no purpose if your plan is for your fiance to be a stay-at-home Mom (Which I heartily endorse by the way. Thank you for not expecting the rest of the taxpayers to raise your children.)

As MoneyGal suggests you should work out the financial payback. But I suspect it will be expensive - otherwise it would be too good a loophole. You might be as well off just borrowing money and paying it back over time.


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## onomatopoeia (Apr 8, 2009)

As a federal employee have you concidered taking paternity leave for 35 weeks instead of having your wife pay into EI? Unless I'm wrong, they will top up your paternity leave to pretty much your full salary for the time you stay home.

Just a question.


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## Longstreet (Dec 27, 2010)

*EI and Maternity Benefits*

The reason why I mentioned that I pay into EI and will never draw it was to make the point that our family will still be a net contributor to EI over our lifetimes rather than selfishly jumping at cash.

This isn't meant to be an ideological issue or start an argument, but we believe it is better off for our (future) family if I continue to work as normal and my wife stays at home full time. I could take time off, but my wife will be more than capable of being a stay at home mom. 

As for the long term benefits, I think they will work out. My wife won't work for at least 10 years, so that leaves her working 25 years max. Since the max EI contribution is around $750 per year, the amount of EI she'd pay back would be $18750. She'd pay it anyway if she got a job and wasn't self employed. The total benefits (without taxes) is around $24K. Even if her future EI contributions are maxed, I think it's still a net benefit. 

Once again, thank you all for your posts.


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## I'm Howard (Oct 13, 2010)

longstreet, how do you possibly know how many children you will have, do you have some secret formula?

My Wife stayed home for almost 10 years with our Children and in those days, you did not get subsidised by the workforce for your decision to have children.

How sure are you that your wife won't say, two is enough, i want to resume my career?

My point is that you cannot possibly lay out a future plan with the detail you have.

All people who get married generally love their Fiancee, but 50% of them divorce their wives.


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## kcowan (Jul 1, 2010)

Longstreet said:


> ...Call me OCD or maybe it's the result of planning skills from work, but I like to evaluate the implications of whatever decision I make as thoroughly as possible. I'm a meticulous planner, for example, I'm in my 20's and I'm designing my retirement home.
> 
> I sincerely thank those who made positive contributions to the discussion and imparted your knowledge on me.


The is nothing wrong with being a meticulous planner! A good plan is a base for tracking what real life will do to you along the way. All measure of unanticipated things might happen. But if none of them do, then you are good to go.

We have a plan to live until we die financially and the value is that it creates a base for "what if?" questions. In some ways, we have exceeded the plan and in other ways we are nbhind. But we know at any point what the likely impact will be.

I spent five years as a professional planner for a big corporation. Making the plan is a fluke. But having a plan will make you better off than 99% of your peers.


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## Longstreet (Dec 27, 2010)

I'm Howard said:


> longstreet, how do you possibly know how many children you will have, do you have some secret formula?
> 
> My Wife stayed home for almost 10 years with our Children and in those days, you did not get subsidised by the workforce for your decision to have children.
> 
> ...


You're right, I don't know exactly how many children I will have nor do I have a crystal ball that can tell me. I said my fiancee and I are planning on having 4 kids. I plan to retire to western Alberta and travel the world when I'm 58. Will it turn out like that? Maybe. As long as I have a pretty good idea about what I want, I can make decisions now to achieve them. People say that you can't plan 30 years in the future. Making a monthly budget when I'm retired is impossible, however, I know generally what kind of lifestyle I want to have so I created a plan to achieve it. It's much easier to deviate from a plan you've created rather than having no plan at all. My point is that I can create a plan based off educated assumptions now and continuously modify it based on changing conditions.

I'd like to think that my fiancee and I are not people who marry for convenience or money or if it's fashionable. We hold similar values and want the same things out of life. I would personally like to thank you for casting doubt on the prospects of my marriage succeeding by citing the well known %50 statistic. Most people wish me well when I tell them I'm engaged, you, however, are a different story. If you said that in person, this conversation would be going much differently. This line of thought ends now.


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## I'm Howard (Oct 13, 2010)

Don't shoot the messenger, and as someone who has been married for over forty years, raised a family, achieved material success, rather than throw a tantrum , I suggest that you reflect that maybe the issues I have raised bear thought, and try to live life as it comes.

All wish young people the best, not sure why you took it so personally, Good Luck with your future, amd there is hope it goes 100% to your plan.


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## Longstreet (Dec 27, 2010)

I'm Howard said:


> Don't shoot the messenger, and as someone who has been married for over forty years, raised a family, achieved material success, rather than throw a tantrum , I suggest that you reflect that maybe the issues I have raised bear thought, and try to live life as it comes.
> 
> All wish young people the best, not sure why you took it so personally, Good Luck with your future, amd there is hope it goes 100% to your plan.


I learn from those around me who have more knowledge and experience than I do; my job requires it. 

The reason why I took issue with you is because you made it personal and deviated from the questions I posed at the start of thread. I didn't make it personal, you did. Using words like 'tantrum' only incites further animousity. Your posts have hints of condescension and one would think you'd realize that with your apparent wisdom. If you don't have any advice relating to EI, I thank you for the advice previously given and ask that you refrain from giving me anymore in the future.


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## marina628 (Dec 14, 2010)

Longstreet ,
It is nice to see somebody plan for a large family and hope it works out for you.We see many people having a kid every year or two and not able to afford them.I wanted many kids but it took 10.5 years to get pregnant the second time.
Howard brings up legitimate stats ,no need to take it personally.My old neighbor came over two days ago to tell us they are divorcing as his wife of 16 years was screwing around on him.It happens in life ,if anything your plan allows for four kids and 10 years for her to stay home.If you have two kids and she is back to work in 5 years then that will work out for you as well.


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## MoneyGal (Apr 24, 2009)

marina628 said:


> Howard brings up legitimate stats


The idea that one in two marriages in Canada will end in divorce is a true oversimplification. The current stats show that about 38% of marriages that last 30 years will end in divorce. The rate of divorce for every year of marriage *less than* 30 years is less than 30% and the overall rate of divorce has been falling in Canada. 

In addition, the divorce "rate" is influenced highly by the fact that a significant proportion of people who get divorced actually divorce more than once...so those people "overcontribute" to the divorce rate. 

In addition, the rate of cohabitation is increasing across Canada...so some people are forming potentially long-lasting, marriage-like relationships which are excluded from the marriage statistics. As the number of people forming these types of relationships increases, the divorce rate "increases" relative to marriages. 

The study I linked to explores these issues in some depth. But the main point is that no one can predict whether any individual marriage will end in divorce, and the idea that "one in two" marriages will end in divorce is just not true.


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## Four Pillars (Apr 5, 2009)

I think Longstreet is doing the right thing. 

There is nothing wrong with planning. Do you plan to get divorced? Sure, you might a bit - but you have to assume that your marriage will work out and then you deal with it, if it doesn't.


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## Berubeland (Sep 6, 2009)

I too have considered this program and I am self employed. 

The top benefit is $1600 per month, as a sole income earner for my family this is not enough. 

Second if I try to work part time, my gross income will be used to calculate my earnings. It will come off dollar for dollar...

Third as Money Gal noted there is a significant incentive for self employed people to claim everything they can. So...the benefit I would collect would not even be the maximum. 

For those of you who don't understand this, income support for mothers is extremely important. In today's dual income family where for the most part both partner's salaries are needed to make it it becomes even more important to subsidize the process. 

Women get penalized for having children...

I can't be the only woman who is extremely uncomfortable with the "dependance" problem. I don't really trust anyone to support me. 

Women who take maternity leave or take multiple years off to raise their children take a significant salary cut on top of the already existing inequity in wages. 

Personally if they want Canadian women to have children they should think of a program that deals with these issues, in countries where women are unconditionally supported when they have children, women have more children.


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## Four Pillars (Apr 5, 2009)

Berubeland said:


> Women get penalized for having children...





Berubeland said:


> if they want Canadian women to have children



Perhaps they don't? Or more accurately, perhaps the gov't is happy with current birth rates.


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## MoneyGal (Apr 24, 2009)

Berubeland said:


> For those of you who don't understand this, income support for mothers is extremely important....[snip]
> 
> Women get penalized for having children...


If there is a penalty for having children, I do not believe it accrues solely to women but that women often (for various reasons) bear it. 

My husband and I have each traded off being at home with our kids and right now he's the stay-at-home parent, dropping them off and picking them up from school, and taking them to all daytime appointments, etc. 

His earnings and career are taking the hit right now (to the extent that they are affected by this), not mine.


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## Berubeland (Sep 6, 2009)

Four Pillars said:


> Perhaps they don't? Or more accurately, perhaps the gov't is happy with current birth rates.


Not sure they are... that's why this program was implemented.


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## Berubeland (Sep 6, 2009)

MoneyGal said:


> If there is a penalty for having children, I do not believe it accrues solely to women but that women often (for various reasons) bear it.
> 
> My husband and I have each traded off being at home with our kids and right now he's the stay-at-home parent, dropping them off and picking them up from school, and taking them to all daytime appointments, etc.
> 
> His earnings and career are taking the hit right now (to the extent that they are affected by this), not mine.


My husband is the stay at home parent as well. But you see no matter how well meaning he is there's no way he can spend 10 months making the actual child and another year breast feeding it  

Yes I worked during that time, but it was far from full speed ahead


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## MoneyGal (Apr 24, 2009)

BR: I hear you. I was extremely ill during my pregnancy with my second child and was in bed for several months. And I was self-employed and this was not considered a long-term disability by my insurance provider. 

I do believe that families should be able to manage one parent being out of the workforce for *whatever* reason for at least several months, if not permanently. 

And I understand that having children has a big financial impact on families but I do not believe that beyond the basic income supports that are already available, anything more should be added (but you probably knew I was going to say that...).


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