If you are unable to work due to disability, serious injury, or chronic illness, you may be eligible for disability benefits from a number of sources. In fact, if you have long-term disability (LTD) insurance coverage through a private insurance company, the policy may require that you apply for disability benefits from the Canada Pension Plan (CPP).
Many people are unaware of that requirement, and some people are uncertain about the differences between CPP disability claims and long-term disability claims. It is important to understand the differences so that you know what coverage you are entitled to.
In this post, the team at our Calgary law firm will describe LTD claims and CPP disability claims, explain some of the differences between the two, and when you may want (or need) to apply for both.
CPP DISABILITY CLAIMS
CPP disability benefits are administered by the federal government and are available to Canadians who have made regular contributions to the Canada Pension Plan over their working life.
Usually, CPP contributions are in the form of source deductions from your pay cheque. In addition to age and contribution requirements, to be eligible for benefits under a CPP disability claim, your disability must be both "severe" (a mental or physical disability that regularly stops you from doing any type of substantially gainful work) and "prolonged" (long-term and of indefinite duration or likely to result in death) at the time that you apply.
The disability must prevent you from being able to work at any substantially gainful job on a regular basis. If the eligibility criteria are met, you will receive a taxable monthly payment in an amount that is based on the contributions you made to CPP during your working life.
LONG-TERM DISABILITY CLAIMS (LTD)
As discussed, CPP disability benefits are paid through a federal government program.
Long-term disability benefits, on the other hand, are paid under a private insurance policy such as a group insurance plan through your employment or an individual policy that you purchased from a private insurance company (e.g., Sun Life, Blue Cross, or Manulife).
The definition of disability and the eligibility criteria will depend on the wording of the LTD policy or plan that applies to you. All long-term disability benefits have a waiting period or “qualification period” before benefits will be paid, during which time you may be eligible for short-term disability (STD) coverage or Employment Insurance (EI) sickness benefits.
After the waiting period has passed and assuming you meet all applicable LTD eligibility criteria, you will receive income replacement payments in an amount determined by the policy – typically either a fixed amount per month or a percentage of your usual salary.
The policy will determine whether your LTD benefits are taxable or non-taxable, and it will also set out the duration of benefit entitlement (for example, maximum benefit entitlement under the policy may be limited to a set number of years or may last until you reach a certain age such as 65).
Contact our Calgary law firm for help in interpreting your LTD plan and the process for long-term disability claims.
LTD VS. CPP: APPLYING FOR BOTH
The differences between eligibility criteria for long-term disability claims and CPP disability claims can be confusing.
You may qualify for both LTD and CPP, and in fact, as mentioned above, your LTD policy may require you to make a CPP disability claim.
This is typically referred to as “offset” or “coordination of benefits” in a LTD policy, and if such a provision applies to your long-term disability claim, your monthly LTD benefit payment will be reduced by the amount you receive under your CPP disability claim. You may wonder why you would want to apply for both if it will not result in an overall increase in the monthly payments you receive, but in many cases there are good reasons to apply for both LTD and CPP disability benefits.
One significant reason is that your LTD policy may give the insurance company the power to reduce your monthly LTD benefit payment by the estimated CPP disability payment to which you would have been entitled, even if you did not apply for it.
Another important reason to apply for CPP even if you have LTD coverage is to have a safety net if your LTD provider cuts off your benefits – that way, you can still receive CPP disability benefits while appealing the denial of your long-term disability claim.
GET LEGAL ADVICE ON LONG-TERM DISABILITY CLAIMS AND CPP DISABILITY CLAIMS FROM A LOCAL LAW FIRM
Calgary-based Ludwar Law Firm has over 25 years of experience representing clients with disability claims. Our clients appreciate that we take the time to explain each of their options, what is required to make each type of disability claim, and what to expect during the claims process. Our legal expertise has helped win even difficult claims involving depression, chronic fatigue syndrome, and fibromyalgia. The team at our Calgary law firm will help you determine which benefits you are eligible to claim and guide you throughout the application process. If you have already made a CPP disability claim or long-term disability claim and been denied, our law firm in Calgary can also help you appeal the denial. We welcome you to contact us today to schedule your free consultation. We’ll help you get the benefits you deserve.