You have likely heard about the Canada Pension Plan (CPP) throughout your working life, but many Canadians do not realize that the CPP also offers Canada Pension Disability Benefits for those who cannot work.
CPP is a program offered by the Canadian government that provides monthly income benefit payments that begin after an individual retires. Working Canadians automatically contribute to their own CPP on earnings over $3,500 per year after they turn 18. You may begin collecting CPP at 60 years of age; however, your monthly payments will be larger if you delay retirement until age 65 to 70 (provided you are physically able to continue working for a longer period of time).
CPP payments are provided to retirees for the rest of their lives, and the monthly amount depends on the individual’s age at application, the amount they have contributed to the CPP throughout their working life, and their average annual earnings. As of 2020, the average monthly amount is $679.16, but the maximum monthly limit is $1,154.58.
If a CPP contributor dies before they are able to begin collecting their benefit payments, their estate may claim a death benefit to receive a one-time, lump-sum payment of $2,500.
CPP Disability (CPPD) is different. It is a federal program that provides partial income replacement payments to Canadians who are suffering a severe or prolonged injury or illness that prevents them from being able to work. These payments are paid monthly and are taxable to those who are approved for the program.
You meet the eligibility criteria to qualify for CPPD benefits if you:
- Are under the age of 65 and are not currently receiving CPP payments
- Have been making contributions to the Canada Pension Plan (CPP) for at least four out of the previous six years or three of the last six years if you have been making regular contributions for at least 25 years
- Meet the minimum level of earnings to contribute to the CPP
- Have a long-term or permanent mental or physical disability that prevents you from working any occupation to which you are suited through qualifications, training, education, or experience
Successful claimants may continue to receive CPPD payments for as long as their disability prevents them from being able to work. If you turn 65 while receiving CPPD payments, the benefit will be switched over to the CPP post-retirement disability benefit.
CPPD benefits are different from long-term disability benefits. They are benefits provided through the federal government, not through a private plan or employer group benefits. To apply for CPPD benefits, you must download and submit a medical form and complete your application online or at a Service Canada location. It may take up to four months for a decision to be made; as such, it’s important to apply as soon as you become disabled.
Common Questions about Applying for CPP Disability
Which Injuries Qualify For CPPD Benefits?
To qualify for a CPP Disability pension you must suffer a disability which has to be both “severe” and “prolonged”, and must prevent you from being able to work at any job on a regular basis.
Section 42(2) of the Canada Pension Plan states that:
“A person shall be considered to be disabled only if he is determined in the prescribed manner to have a severe and prolonged mental or physical disability, and for the purposes of this paragraph:
(i) A disability is severe only if, by reason thereof, the person in respect of whom the determination is made is incapable regularly of pursuing any substantially gainful occupation, and
(ii) A disability is prolonged only if it is determined in a prescribed manner that the disability is likely to be long continued and of indefinite duration or is likely to result in death.”
Severe refers to a total disability that prevents you from performing substantially gainful work within your qualified industry, while prolonged refers to a long-term or indefinite duration. You may also qualify if you have a terminal illness, which is defined as a condition that is incurable or cannot be treated and is expected to lead to death within six months.
How Much CPP Disability Can I Receive?
The basic CPP disability payment amount is $510.85 per month (flat rate benefit). Then, Service Canada will calculate an amount that will be added to the basic amount based on how much you paid into the Canada Pension Plan while you were employed.
The disability pension is calculated on the basis of 75% of an applicant’s retirement pension and the flat rate benefit, which is indexed annually (see indexation at section 43, CPP Act and amount of disability pension at section 56, CPP Act).
As of October 2020, the average monthly CPPD payment is $1,031.55, with a maximum amount of $1,413.66. However, the amount you receive depends on:
- The length of time you have contributed to the CPP
- How much money you have contributed to the CPP
Dependent or Children’s CPP Disability Benefit
If you have dependent children under the age of 18 living in your home, they may also qualify to receive monthly payments via the disabled contributor’s child’s benefit. Dependent children aged 18–25 are also eligible if enrolled full-time in a recognized post-secondary institution. Payments stop upon graduation. As of this year, the flat rate is $257.58 per month.
The Interaction Between Long-Term Disability and CPP Disability Benefits
CPP disability benefits can often be deducted from long-term disability benefits. If you receive LTD benefits, your insurer may require you to apply for CPPD. If you are approved, the insurer may deduct the CPPD amount from your LTD benefit.
This does not reduce your total benefit, but it adjusts the LTD portion. If you refuse to apply, your insurer may still deduct an estimated CPPD amount.
Key points to be aware of:
- Most LTD policies require you to apply for CPPD.
- You may be required to appeal if CPPD is denied.
- CPPD amounts are often offset against LTD benefits.
- Policies vary on deducting children’s benefits and retroactive payments.
Are CPP Disability Benefits Deductible from My Personal Injury Claim?
Yes, particularly in motor vehicle accident claims. O. Reg. 461/96 clarifies that CPPD benefits are deductible from damages for income loss or loss of earning capacity.
Are My CPP Disability Benefits Deductible from My No-Fault Benefits? (Accident Benefits – Income Replacement Benefits)
Yes. Section 4(1)(b) of the Statutory Accident Benefit Schedule allows deductions for CPP benefits that may be available but not received.
If the injured person does not apply for CPP benefits, the insurer may still deduct estimated amounts. However, dependent children’s benefits are not deducted from IRB payments.
If You Have Questions, Our Long-Term Disability Benefit Law Firm Can Help
Matt Lalande specializes in personal injury and disability law in Ontario. He has been practicing since 2003 and is well-versed in CPPD and how it interacts with LTD and accident claims.
We offer free consultations with no upfront cost. We only charge if you win. Virtual and in-person meetings are available.
Book your consultation online or call 905-333-8888 or 1-844-LALANDE (525-2633).