What is the difference between Long Term Disability and Canada Pension Disability?
Understanding that there is a high possibility that your LTD insurer could take or deduct your CPP-D benefits is important. However, it is also important to understand the difference between a private LTD insurer and a public CPP-D.
Your private LTD insurance will typically be contracted by your employer, and both you and the employer will pay monthly premiums to the insurer for the LTD insurance they will provide. The public CPP-D program is connected to Canada’s national pension program, and it requires all employed Canadians to make contributions. You will be entitled to CPP-D as long as you have made the required number of contributions and your disability has been severe and prolonged.
How much of my benefit can the insurance company deduct each month?
The question that commonly follows “can my LTD insurer take my CPP-D benefits” is “how much can they take”. Again, to answer this question you must look at your LTD policy. In most cases, the amount “taken” will be a deduction of your LTD benefits equal to the amount of CPP-D benefits you are now entitled to. Another thing to be conscious of is that if you receive a lump sum retroactive payment from the CPP-D, your LTD may be entitled to some of that money.
In practice, you will get a cheque (or direct deposit) from Canada Pension Plan for the monthly benefit amount and the disability benefit insurance company will provide the other portion. Together, both sums will equal the amount of the benefit owed to you each month you quality for long term disability benefits.
Can I refuse to apply for Canada Pension Disability?
When there is an LTD policy that requires you to apply for CPP-D benefits a common response is, “what if I just don’t apply”. As discussed above, when you are approved for CPP-D benefits the LTD insurer will commonly reduce the benefits they pay to you by the amount you gain from CPP-D. If you ignore the LTD policy and don’t apply, often the insurer will just treat you like as if you did apply (and were accepted). Meaning they will estimate how much money you would have received in benefits from the CPP-D (had you applied)and deduct that from the benefits they are paying you.
It is usually recommended to apply to CPP-D regardless of your LTD policy. There are multiple reasons that an LTD insurer can cancel their benefit payments to you.
Need help calculating your Long Term Disability Benefit?
Jeff Mitchell and the team at Freedom Disability Lawyers are very familiar with long-term disability policies and how the terms and definitions will impact your right and access to benefits. It is very important to know how your LTD policy works before applying for benefits, and especially before appealing a denial decision.
Jeff Mitchell offers free consultations for all long-term disability benefits cases. Contact 1-833-633-3585 or jeff@fdlawyers.ca to arrange for a free case review with Jeff today in Toronto,Ontario, and the rest of Canada.
