What Happens When the CERB Ends?

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The Canada Emergency Response Benefit (CERB) is designed to help Canadians cope with the loss of employment as a result of the COVID-19 pandemic. The benefit was about to expire in July for some of the earliest applicants, but it was recently extended by an additional eight weeks.

Despite the extension, the CERB might not exist in its current form for very much longer, and you should begin to prepare for its eventual end.

An overview of the CERB

The federal government rolled out the CERB shortly after companies began to lay off employees as provinces and territories ordered the shutdown of some or all non-essential businesses.

The taxable benefit provides Canadians with $2,000 for a four-week period (or $500 a week) and lasts for up to 24 weeks. The CERB is available from March 15 to October 3, 2020. The payments are retroactive as long as you qualify for the specific period; however, you must apply by December 2 to receive the benefit.

To be eligible for the benefit, you must:

  • Live in Canada and be 15 or older;
  • Have stopped working due to reasons related to COVID-19, are eligible for Employment Insurance (EI) regular or sickness benefits, or used up your EI regular or fishing benefits between December 29, 2019, and October 3, 2020;
  • Have received employment/self-employment income of at least $5,000 in 2019 or in the 12 months before applying; and
  • Haven’t voluntarily quit your job.

But if you earned more than $1,000 in employment or self-employment income for 14 or more consecutive days within the four-week benefit period of the first or any subsequent claims, you’re not eligible to apply for the CERB.

Many students aren’t eligible for the CERB but may be able to take advantage of other student relief programs such as the Canada Emergency Student Benefit (CESB).

The CERB’s future

For the earliest CERB applicants, the program started for them on March 15. Their benefits were originally going to run out during the first week of July. However, the government announced last week that the CERB would be extended for an additional eight weeks. That means they should be covered until sometime in late August or early September.

As of June 4, $43.51 billion has been paid to 8.41 million applicants. The cost of extending the CERB in its current form to 2021 will be another $57.9 billion, according to an estimate by the Parliamentary Budget Office. A proposed extension (for the same amount of time) by Conservative MP Dan Albas, which includes modifications to the program, would cost an additional $64 billion—a difference of $6.1 billion.

The proposal would adopt a clawback for the benefit of $0.50 for every $1 of employment income above $1,000 a month. Currently, the CERB isn’t accessible for anyone earning more than $1,000 per month.

Clawing back benefits is what the Canadian Federation of Independent Businesses supports. The group says some of its members are having trouble finding employees to come back to work on a full-time basis because of the CERB.

For Canadians earning the minimum wage who work 35 hours a week, the weekly CERB payment of $500 is more than what they make in eight provinces. That might be one of the reasons why some aren’t returning to work if they’re asked back.

The C.D. Howe Institute has suggested that the government has two options. It can either expand EI to include those who aren’t eligible for the program but eligible for CERB or keep CERB but adjust it to make returning to work more attractive. The Toronto-based think tank suggests that if there is a higher exemption for earnings, there’s a bigger incentive for people to accept part-time work.

While the government hasn’t decided if it will replace the CERB, it has said it would look at making any necessary changes to the program.

Life after the CERB

If the CERB does end and there aren’t any changes, there are some actions you can take now. Remember that you’re not alone and many others are going through a similar situation.

First, you want to talk to your lenders (such as mortgage providers or credit card companies) as well as your landlord to find out if you can defer payments if you haven’t already.

Second, look at creating a budget to keep track of your spending. This can be done on a piece of paper, in a spreadsheet, or using online budgeting tools. There are two types of expenses, your needs and your wants. While you need food and shelter, a vacation is more of a want than a need. Try to eliminate spending on your wants. Also, look to reduce the amount of any monthly expenses, such and phone and internet bills.

Third, dip into your savings if you must. Ideally, you have an emergency fund to withdraw from and use as a financial cushion. If you happen to have a low-interest line of credit, that’s an alternative but not the ideal option.

Fourth, there’s always part-time or freelance work. It might not be aligned with your career, but there are still companies looking to hire.

While not all of these options are appealing, these measures can help you from having to consider selling your home, getting a consumer proposal, or filing for bankruptcy.

The challenges ahead

The good news is that the CERB was extended by another eight weeks, but it will likely come to an end since the government can’t afford to give $500 a week to everyone who qualifies.

While there’s a lot of uncertainty about the economy and whether or not you’ll find a new job, there are steps you can take now to prepare for the time when the CERB isn’t as generous, or it no longer exists.

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