Pre-Existing Medical Conditions and Long-Term Disability Entitlement

If you have recently started a new job, you may be surprised to learn that your employer’s insurance plan might not cover long-term disability entitlement for people with pre-existing medical conditions. You may be even more surprised to learn that human rights legislation allows for an employer to exclude some people with pre-existing conditions from disability insurance plans.

Overview

Canada has both federal and provincial human rights legislation prohibiting discrimination on the basis of protected grounds, such as disability. The federal legislation, the Canadian Human Rights Act, applies to federally regulated employers, such as airlines and banks. The Ontario Human Rights Code applies to provincially regulated employers. You can learn more about how human rights legislation applies to federal and provincial employees here.

Both the federal and provincial statutes outline situations in which it is not discriminatory for an employer’s disability insurance plan to exclude people with pre-existing medical conditions. Under the federal legislation, plans can exclude a person with a pre-existing condition, who has received medical treatment for that condition, for the first year the person is insured. Under Ontario’s legislation, a plan can exclude a person with a pre-existing condition if it substantially increases the risk for the insurer. Pre-existing conditions are often defined broadly, so almost any medical condition for which you receive treatment may be defined as a pre-existing condition.

Federal Law

Under a regulation of the Canadian Human Rights Act, it is not discriminatory if an employer’s disability income insurance plan does not pay benefits to an employee who, during the first year an employee is insured under the plan, becomes disabled as a result of a pre-existing condition. An injury, accident or sickness that started before the employee became insured can qualify as a pre-existing condition, so long as the employee received medical care, treatment or services, drug therapy or prescribed medicine during the year before becoming insured under the plan.

Ontario Law

Under the Ontario Human Rights Code, it is not discriminatory for an employer’s disability insurance plan to make a reasonable and bona fide exclusion because of a pre-existing disability that substantially increases the risk to the insurer. Unlike the federal statute, Ontario’s statute does not contain any time limit on the exclusion. However, the Ontario Human Rights Code does outline that if an employee is excluded from a group insurance contract because of a disability, the employer must pay the employee compensation equivalent to what the employer would contribute to the insurance contract for an employee without a disability.

Potential Challenges to the Human Rights Legislation

As of July 2019, no federal courts or tribunals have addressed the pre-existing condition exclusion in disability insurance plans. At that time, in Ontario, only one case, Ontario (Human Rights Comm.) v. North American Life Assurance Co., had assessed the exclusion for pre-existing conditions. In that case, the Ontario Human Rights Commission argued that an insurance plan’s pre-existing condition exclusion clause was discriminatory and requested that the court declare it illegal. However, the Ontario Supreme Court upheld the Board of Inquiry’s finding that the insurance plan’s exclusion clause related to a substantial increase in risk because the complainant had a pre-existing disability. Therefore, the exclusion clause was reasonable and bona fide. The Court found that the Human Rights Code provision relating to pre-existing disability exclusions must be read in the context of the insurance industry, which is a for-profit industry. Therefore, the Court determined that it is not discriminatory for a disability insurance plan to exclude pre-existing disabilities that considerably increase the possibility of future insurance financial liability, so long as the exclusion is reasonable in the insurance industry and made in good faith.

Recently, in Talos v. Grand Erie District School Board, the Human Rights Tribunal of Ontario declared that the provision of Ontario’s Human Rights Code that allowed for employee benefits to be cut off at age 65 was unconstitutional. Perhaps a similar challenge to the provisions allowing people with pre-existing conditions to be excluded from employer disability insurance plans may one day be successful.

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