CPP and Long Term Disability (LTD) Insurance Payments – Toronto Disability Lawyer

What are CPP Disability Benefits?

Canada Pension Plan (“CPP”) disability is a Federal program administered by Service Canada. If you have paid into CPP, then you may qualify for CPP disability benefits in the event you become unable to work due to an injury, illness or medical condition. If you are approved, you will receive monthly disability benefit payments to replace your income.

Who can Apply for CPP Disability Benefits?

Do you suffer from a disability and you find yourself unable to work? You may be eligible for CPP disability benefits. Below are the qualifying criteria:

1.    Minimum Qualifying Period
You need to have worked 4 out of the last 6 years before you can go on disability.

2.    Doctor’s Support
You need to have your doctor support your absence from work. Your doctor will need to fill out a medical report form as a part of your application for CPP Disability, therefore his or her support is crucial.

How to Apply for CPP Disability Benefits

To apply, you need to meet with your family doctor or treating physician, complete the appropriate forms and send them to your Service Canada processing centre.

If your application is approved, you will receive a retroactive payment for all benefits owing to a maximum of twelve (12) months prior to the receipt of your application. You will also be eligible to receive a payment each month until you reach the age of 65, or until you are no longer disabled.

If your application is denied, then you will be able to appeal the denial within Service Canada. 

What are LTD Insurance Benefits?

Many companies provide Long Term Disability (LTD) insurance benefits coverage to their employees. That was if you become too disabled to work due to injury or illness for a sustained period of time, you would have some income to support yourself and your family.

Under these plans either your company will cover the cost of these monthly premium payments, or they will be deducted from your paycheque. If you pay the premiums any benefits you receive will be non-taxable income.

In order to reduce the monthly payments, two common clauses in LTD insurance policies are the requirement to apply for CPP Disability benefits and the allowance of a deduction for any CPP disability benefits received.

However, if you are in the position where you want to use your LTD insurance benefits and apply for CPP disability, how does this work?

Let’s assume you are receiving $2,500 per month in disability benefits and you are approved for CPP disability benefits of $500 per month.

You will still receive $500 per month from CPP disability, but your monthly insurance benefit is reduced to $2,000 per month. You will receive two cheques and your total monthly income is unchanged, meaning, you will still receive a total of $2,500. 

Why You Should Always Apply for CPP Disability Benefits if you are receiving, or might receive, LTD Insurance Payments

1. Additional Support for Your LTD Insurance Benefits Claim

CPP Disability benefits require a severe and prolonged disability, which is usually a higher standard than the requirement of a disability found in most LTD plans. 

If you are found totally disabled by the CPP disability program, this is further evidence in support of your claim, which will make it more challenging for your insurer to prove you are able to return to your own or any occupation. 

In addition, when you receive CPP disability, this reduces the insurance company’s financial obligation to you, but allows you to receive the same amount of compensation. 

2. CPP Disability Will Be Your Safety Net

It may be difficult to get approved for CPP disability benefits, however, once you are approved you are likely to keep receiving payments as long as you are too disabled to work. This is even the case in the event your insurance company stops paying you benefits.

By obtained support from two sources, you are better protected. 

3. LTD Policies Require You To Apply

Nearly all LTD insurance policies require you to apply for CPP Disability benefits. Failure to comply with this policy requirement may result in a deduction or suspension of benefits. 

You should always make good faith efforts to apply for CPP Disability benefits. 

4. Approval for CPP Disability May Equal Higher CPP Retirement Pension

Winning CPP disability payments can actually result in you getting a higher CPP Retirement pension when you turn 65. While you receive CPP disability, you are not penalized for not contributing to the CPP program. 

However, if you do not apply for CPP disability, you will be assessed as providing a zero contribution each year going forward, resulting in a lower retirement CPP payment. 

5. CPP Inflation Increases Not Subject to Clawback

Each year, your CPP disability payments increase according to inflation. However, most disability insurance policies will continue to deduct just your original CPP payment amount. These increases are not clawed back from the insurance company.

Monkhouse Law Can Help You

At Monkhouse Law, we encourage all of our LTD clients to apply for CPP disability benefits. Even though it may seem like your insurance company gets all of the benefits, in reality, getting approved for CPP disability benefits you in the long run. Please contact us for a free consultation over the phone with a legal professional.

Call us for a FREE 30 minute phone consultation at 416-907-9249 or submit a callback request

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