At the recent The People People Group event, someone reminded me of a government program that’s been quietly saving smart employers real money for years — yet almost no one talks about it.

It’s the Employment Insurance (EI) Premium Reduction Program, and if your company offers Short-Term Disability (STD) coverage, you could be leaving serious money on the table.

Here’s why it matters, and how it can benefit both your team and your balance sheet.

Why the EI Premium Reduction Matters

Only about 4% of the companies that Orchard works with offer Short-Term Disability (STD) coverage. For those who do, it often overlaps with EI because both cover short-term income replacement for employees who can’t work due to illness or injury.

That overlap means you might be paying twice for the same type of coverage. The EI Premium Reduction Program exists to fix that.

When an employer provides an STD plan that meets or exceeds EI’s standard benefit, the company can apply to the federal government to have its EI premiums reduced. The savings can be significant, especially for organizations with more than 50 employees.

There is one key condition: 5/12 of the total savings must be reinvested back into employees. This can take the form of additional health spending, enhanced wellness programs, or any initiative that benefits staff directly.

A Real-World Example

At the event, a People & Culture leader from a 150-person startup shared how her team leveraged the program.

Because their organization self-insured their Short-Term Disability plan, they qualified for the EI premium reduction. Over the course of the year, they saved $35,000 on EI contributions. In keeping with the program’s rules, $15,000 of that savings was directed into a Health Care Spending Account (HSA) for employees—money that went directly toward massage, mental health services, and other wellness needs. The remaining $20,000 stayed with the company as net savings.

That’s the kind of creative plan design that keeps employees happy and engaged while giving finance teams a reason to smile.

Eligibility Requirements

To qualify for the EI Premium Reduction Program, a short-term disability plan must:

• Provide at least (15) weeks of benefits.
• Match or exceed the level of benefits offered under EI;
• Pay benefits within (14) days of illness or injury;
• Be available to employees within three months of hiring; and
• Provide 24-hour-a-day coverage.

Both self-insured weekly indemnity plans and cumulative paid-sick-leave plans can qualify, as long as they meet these conditions.

Is It Worth It for Your Company?

This isn’t a program every company can (or should) pursue. Smaller organizations with lean HR teams might find the application process a bit tedious because you need to demonstrate that your STD benefits meet EI’s requirements and complete the federal paperwork.

But for larger employers, the opportunity is compelling. If you already have Short-Term Disability in place—or are considering adding it—it’s worth assessing whether you qualify. For organizations with 50 or more employees, the savings can quickly justify the effort.

The process also sends a positive message to your team: we’re optimizing benefits, not cutting them. By using government programs to stretch the same budget further, you’re strengthening both your financial and cultural foundation.

How to Get Started

If this sounds like something your company could benefit from, here’s a straightforward way to explore it:

• Audit your plan: Review your Short-Term Disability policy to ensure it meets or exceeds EI benefits.
  

• Estimate potential savings: Calculate your total EI contributions and model the annual savings that could result from a reduced rate.
  

• Plan your reinvestment: Decide how to direct the required 5/12 back to employees—common options include topping up HSAs, expanding paramedical coverage, or funding mental-health benefits.
  

• Gather documentation: You’ll need plan details, payroll data, and STD policy documents to apply.
  

• Communicate the value: Once approved, share the news with employees—showing them the extra dollars in their HSA or wellness accounts are the result of smarter plan design.                                            

Smarter Benefits Start With Awareness

The EI Premium Reduction Program is one of those under-the-radar opportunities that many employers overlook. It’s not flashy, but it’s smart.

For larger organizations, it represents a rare opportunity to enhance employee benefits while reducing payroll costs; a benefit that every HR and finance leader can support.

If you’re curious about whether your plan qualifies or would like to estimate potential savings, Orchard Benefits can help you review your current coverage and run the numbers. Sometimes, doing right by your team also means doing right by your bottom line.