Being a physician is a career in caring for others, but sometimes, it’s necessary to take a break from work to care for your own growing family.
Parental leave for medical professionals isn’t exactly straight forward. Financial benefits depend on how you’ve set up your practice and whether or not you’re an employee who is eligible for government support.
In Canada, parental leave is available to both parents, but physicians should note that only doctors who work as salaried employees in hospitals or clinics, or who work in private practice and pay into the Employment Insurance (EI) program, will receive the same benefits as employees in many other careers.
While these eligible parents can take up to 18 months of leave to care for a newborn or newly adopted child, self-employed physicians may not share the same advantages. That’s why it’s essential to work closely with your accountant to get advice on how you can plan and prepare for any parental leave you hope to take.
How do you know if you’re eligible for EI?
Both biological and adoptive parents may be eligible for parental leave under the EI program, but you’ll be required to meet the following criteria:
• You must have worked for an employer who contributes to the EI program, or have registered as a self-employed business owner to contribute to the EI program. This may include physicians in hospital or clinic settings that resemble other employee/employer structures, but many medical professionals who are self-employed do not meet this requirement.
• You must have accumulated 600 hours of insurable employment during the qualifying period, which is the 52 weeks before the start of your claim or since the start of your last claim, whichever is shorter.
Self-employed physicians may be eligible if they have opted into the EI program and paid premiums for at least 12 months before making their claim. If you qualify, you could receive 55% of your earnings, up to a maximum of $650 per week. You can read about EI benefits on the Government of Canada website.
If you’re concerned that you won’t meet these criteria, it’s a good idea to discuss your financial planning with a skilled accountant as soon as possible. We can identify ways to prepare you for the financial implications of an extended leave from work, helping ease the transition into new parenthood – which is challenging enough all on its own!
Considerations for self-employed medical professionals
Doctors without access to paid parental leave are responsible for their own income and benefits. It’s important to plan ahead to save enough money to cover your expenses during the parental leave period. This will help to ease the financial impact of time off work and avoid having your practice or personal finances go into debt.
Working closely with an accountant can ensure that your finances are in order, and prepare you for additional considerations like whether or not you’ll need to hire a locum physician to cover your practice. You should also be prepared to take time off work for pregnancy-related complications or other unforeseen circumstances.
Financial planning and guidance can help you save for parental leave by:
• Assisting you with your budget, taking into account your current income and expenses as well as any anticipated changes during your leave. This could include areas where you may be able to cut back on expenses to redirect savings towards your parental leave goals.
• Tax-planning services that help you to understand the implications of your parental leave, like any available tax credits or deductions that could help to offset the cost of taking time off work.
• Investment advice that will help to keep you on track long term, so that parental leave doesn’t impact your retirement or other financial goals.
Other financial planning services
In addition to planning for your parental leave, becoming a parent has a number of other financial implications. Your accountant can help you explore opportunities for childcare benefits like the Canada Child Benefit (CCB), a tax-free monthly payment to help with expenses while raising children up to 18 years of age.
You may also want to consider setting up a Registered Education Savings Plan (RESP) as soon as your child is born. This tax-deferred savings plan allows you to invest for your child’s education without paying tax on the gains until your child withdraws the money for school. Your contributions will also be met by the federal government’s Canada Education Savings Grant, up to a $7200 lifetime amount.
It’s always stressful becoming a parent, but physicians who don’t enjoy the parental benefits of EI will need to take extra steps to protect their financial health. At MMT Chartered Professional Accountants, we specialize in assisting medical professionals to plan for their financial futures, reduce their tax burden, and navigate the financial complexities of managing a medical practice.
Don’t feel pressured to return to work early for financial reasons. Book a consultation with us today, and we’ll help you plan for your parental leave so that you can enjoy caring for your own new arrival, just as you care for your patients.