What Are Long Term Disability Benefits Offsets?

What Are Long Term Disability Income Offsets?

In the Long Term Disability Benefit context, offsets are other sources of employment or employment-like income. Offsets will be deducted from the amount of Long Term Disability benefit allowed to a claimant by an insurance company.

How Does LTD Coverage Work?

Insurers typically design their insurance Long Term Disability coverage contracts so they become ‘payers of last resort.’ This means that other sources of employment income are deducted, or offset from what the LTD insurer would otherwise pay in Long Term Disability benefits.

If you’re a unionized public servant, your LTD coverage is provided by SunLife and if you’re a public service executive, the insurer is Industrial Alliance. For public servants, SunLife and Industrial Alliance are the only alternatives. If you work in the private sector and your employer is providing LTD coverage, the offsets will likely be similar to those in the public service plan. If you’re insuring yourself, you can always negotiate fewer offsets, but they will cost you more money in premiums. If you don’t want any offset, the better alternative might be Critical Illness Insurance, which gets you a specific fixed payment for a specific injury or illness.

Here are some examples of how LTD coverage works:

• Suppose you have LTD benefits which pay you $5,000 per month and you become eligible for a pension or a medical retirement which pays $3,000 per month. The insurer will see this new source of income and reduce the payment of $5000 to $2000 per month. The employee will still have a monthly income of $5,000, but it will consist of two cheques totalling $5,000, of which the insurer will only pay the difference between the pension and the original LTD benefit.
• Suppose you are unable to work and you’re not able to provide the same level of financial support to your family. It’s likely that you think you’re going to get LTD benefits plus Canada Pension Plan Disability (CPPD) and your kids are going to be looked after, at least to some extent. If you are getting $1,000 a month from LTD, but your CPPD gives you $800 a month and there’s a $200 monthly child benefit for each of your three kids, that’s a total of $1,400 a month from sources outside your LTD payment. All that money, including the $200 for the children, are classified as offsets and will reduce your LTD to zero.
• If you are in a car accident and you are paid damages for injuries, that would not be an offset. If you are paid damages for loss of income that would be an offset.
• Savings or registered retirement savings plans (RRSPs), are not considered offsets and cannot be deducted from Long Term Disability benefits.

Can the Insurer Force You to Apply for Long Term Disability Offsets?

The answer will depend upon the language of the particular insurance policy. Frequently, the answer will be yes, particularly for such benefits as Canada Pension Plan Disability Benefits.  If the insured person fails to apply for the CPPD benefits, the LTD insurer will assume they have and will deduct the value of that benefit from the LTD, even if they do not apply.  

In the case of CPPD, that value is approximately $14,000 annually. There may even be an obligation to appeal from a negative ruling concerning CPPD.

For benefits such as pensions, if a person is in receipt of a pension, that amount will likely be considered an offset and deducted.  

If a person is not getting a pension, whether they must apply for a pension will usually depend on the language of the insurance policy.

Severance Pay

Severance is usually considered an offset and the insurance company will deduct 100% of it from LTD.  So, there can be substantial benefits to remaining an employee while you’re on LTD and it may not be necessary to terminate your employment. This is important because many people who lose their job and go on LTD prior to getting a severance package, think they will get to keep both. If maintaining your employment status is not possible, there are strategies that might be available that allow you to keep some or all of the severance package. 

The takeaway here is that you should not assume you are going to have multiple sources of income if you are on LTD because the insurance company will want most of it. The insurance companies say that without offsets, everyone’s premiums would be higher. This is true, but they will not give people the option of paying higher premiums in exchange for greater protection. The complexities of Long Term Disability are not something most people even think about. They get a job, they take the benefits they are offered and forget about it . . . until they are faced with dealing with long-term sickness or injury.

Is Long Term Disability Insurance Mandatory?

No, it is not a legal requirement but you would be unwise not to have it.

The biggest financial asset for most people is not their house but their ability to work. Simply put, if you and your family need income in order to live, you need Long Term Disability insurance, which will give you 50-70 percent of your former income. Without LTD, you are left with the Ontario Disability Support Programme at around $10,000-$12,000 a year and Canada Pension Place Disability which is around $14,000 a year. If you were making a reasonable income prior to your injury, going down to that level is not pleasant. 

Have questions? Reach out to our team of experienced Long Term Disability lawyers to learn more about LTD coverage.

On September 28, 2018, RavenLaw will be hosting a conference at the CUPE 1974 Union Hall (680 Innovation Drive in Kingston’s east end). The conference will focus on successfully assisting individuals and union members in their applications for long-term disability benefits. Featured speakers include highly experienced legal professionals; Dr. Finestone, a pain specialist; and Chantal Pullen, an Occupational Therapist.

The conference is free to attend and will be followed in the new year with a conference on assisting workers in appealing decisions denying LTD benefits.

For more information on how to register, please go to:

https://www.eventbrite.com/e/long-term-disability-conference-kingston-tickets-49908088436?aff=ebdssbdestsearch

On January 27, 2018, Morgan Rowe will present at the Canadian Law and Society Association’s Mid-Winter Symposium. The theme of this year’s conference addresses the different ways that law and technology affect individuals’ lives. Morgan will be presenting on issues related to medical evidence requirements in disability and human rights cases.

For more information or to register, please visit the conference’s event page.

On September 25, 2018, Morgan Rowe will present as part of a CCLA panel on “Effectively Collaborating with, and Representing, Persons with Disabilities”. The panel will discuss issues which arise for lawyers relating to professionalism, disability identity and perception, and how to ensure greater inclusivity for people with disabilities when providing legal services.

For more information or to register, please visit the conference’s event page.

On February 21, 2018, RavenLaw will be hosting a conference on long-term disability claims in the federal public service.  This conference will provide information on how to increase the chances of making a successful LTD claim, including insight from highly experienced legal and medical professionals.

Please contact info@ravenlaw.com for registration information.

Chronic Pain and Disability Claims

Ravenlaw gratefully acknowledges the contribution of this post by articling student Megan Fultz

Recent estimates indicate that about 6 million people in Canada (approximately 19% of our population) experience some form of chronic pain. Because chronic pain is experienced differently by each individual, and can present itself in many different forms, it is difficult to diagnose. Individuals living with chronic pain often face significant barriers to appropriate treatment and accommodation in all aspects of life, including the workplace. Chronic pain can make it difficult or impossible to continue working, leading to a claim for long-term disability (LTD) benefits. The LTD claims process is challenging for those with chronic pain, because it can be hard to prove that the individual meets the requirements for LTD benefits due to his or her chronic pain.

What is Chronic Pain?

Chronic pain is hard to define because pain itself is experienced at such an individual level. Pain for one person resulting from an injury or condition may be manageable, whereas pain from that same injury or condition may be totally disabling for another. Chronic pain is often defined as pain lasting longer than the average timeline for healing. When the pain someone experiences has outlived the expected time period for healing affected tissues, the pain has become chronic and the individual is experiencing Chronic Pain Syndrome (CPS). Unlike acute pain that is associated with a specific injury, chronic pain is long-lasting and persistent, and sometimes does not respond to medical treatments.

Chronic pain can stem from many causes. Sometimes people experience chronic pain as a symptom of another existing or acquired condition. Other times, Chronic Pain Syndrome is the condition, developing out of an injury or other physically traumatic event.

What is Fibromyalgia? 

Fibromyalgia is a condition characterized by chronic, widespread muscular-skeletal pain and other associated symptoms, including fatigue, difficulty concentrating, memory problems, and mood fluctuation. Fibromyalgia is an example of a prevalent, but difficult to diagnose, chronic pain condition. Many of the characteristics of Fibromyalgia will not show up in a medical test or scan and yet the condition itself can be incredibly debilitating.

Making a long-term disability benefits claim for chronic pain 

In order to make a successful claim for long-term disability benefits on the basis of chronic pain, it is important to work closely with your doctor in discussing possible causes of the pain and potential treatment options. If your chronic pain results from an injury or condition known to cause pain, it may be easier to identify and confirm this through medical testing. If you are living with Fibromyalgia, Chronic Pain Syndrome or another condition that is difficult to diagnose through medical testing, it may be more challenging to succeed in your claim. Either way, it is vital to demonstrate that you are pursuing any options available to you and following the treatment plan recommended to you by your doctor.

It is important throughout the LTD claims process to be diligent in keeping records of the pain you have experienced and the treatments you have undergone and their intended/actual effect. Especially if the cause of your pain is hard to identify and confirm, it is crucial that you are recording how it has progressed, so that any possible patterns may be identified and/or correlations with other factors (environment, sleep, diet, activity level, etc.) In all cases, it is very important to be honest and candid about your pain levels, and to keep lines of communication open with your doctors.

Throughout the LTD claims process, you and your doctor will need to be able to comment on several important areas: your symptoms, their impact on you (the limitations and restrictions they create in your life), any progress or regression you experience, any treatment accessed and its impact, and future plans to manage your condition.

Chronic Pain and Mental Health 

While chronic pain is primarily physical in nature, it can also have a substantial effect on an individual’s mental health and wellbeing. Living with pain for long periods of time – and sometimes for the entirety of a person’s life – can take a significant toll on an individual’s psychological state. When the cause of pain is unknown, but the symptoms persist, it can be even more frustrating and stressful for the affected individual. It is important to be aware of the effects of chronic pain on mental health, to document any mental health symptoms you are experiencing, and to work with your doctors to manage these symptoms as well.

Chronic pain affects millions of Canadians and continues to be a very challenging condition to manage. In order to successfully apply for LTD benefits for chronic pain and related conditions, it is important to document as much information as possible about your daily symptoms and treatments, and remain in open communication with your doctors throughout the process. 

[This article is for informational purposes only and does not constitute legal advice, which cannot be given without consideration of your individual circumstances.]

On March 1, 2018, James Cameron presented as part of the Advocates Society’s 2018 Courthouse series, speaking on complex motions and applications. James also presented a guest lecture to law school students at Queens University that same day, addressing issues arising in legal negotiations.

On September 19, 2018, Morgan Rowe presented as part of the Union of Postal Communications Employees’ National Education Session. Morgan’s presentations addressed the most effective ways to represent union members in cases involving the duty to accommodate for human rights reasons and in harassment complaints.

On March 8, 2018, Morgan Rowe presented as part of a panel discussion in honour of International Women’s Day, hosted by CUPE 2626. The panel discussed challenges for women and gender minorities in the workplace, including addressing issues related to precarious work, domestic workers, and unpaid labour.

On September 20, 2018, James Cameron and Morgan Rowe presented as part of the Union of Postal Communications Employees’ National Education Session. James and Morgan’s presentation addressed how to assist union members in successfully filing long-term disability applications and strategies for effective LTD benefit appeals and litigation.