Hamilton LTD & CPP Offsets Lawyers

By Matt Lalande

Is CPPD deducted from my long-term disability monthly payment?

Yes, your CPP will be deducted from your monthly long -term disability payment – but remember, everything depends on the working of your policy. Each policy is different and each policy must be reviewed in detail in order to determine what is offset from your long-term disability payment. 99.9% of the time, however, your LTD will be offset by CPP payments.

CPP Disability Information

CPP disability is available to disabled claimants under the age of 65 and who suffer from a severe and prolonged mental or physical disability. In order to qualify for CPP, you must also have sufficient qualifying contributions.

Severe –  in the context of CPP disability legislation, means incapable of regularly pursuing any substantial gainful occupation.

Prolonged – in the context of CPP disability legislation, means that your disability is likely to be long continued and of indefinite duration, or is likely to result in death.

The contribution criteria for CPP disability is four of the last six calendar years or if there is less than six years in a contributory period, at least 4 years:

• in a 25 years period, at least 3 contributory years are in the last 6 years.
• If the application is outside 6 years, then you may be able to rely on the late application provision.

Waiting Period – If approved for CPP disability, there is a four month waiting period from the date of disability. The benefit is paid as long as you remain disabled, or to the age of 65 or death (whichever comes first).

Reassessment – CPP disability can be subject to reassessment in light of new information.

How is CPP disability calculated?

CPPD is 75% of a CPP retirement pension plus a flat rate subsidy. The benefit is indexed annually for CPI and the benefits do not decrease if there is a reduction in CPI.

How much a month can I get?

In 2019 the maximum CPPD benefit was $1362.30. The minimum CPPD benefit was $496.36. The Child benefit was $250.27.

Am I entitled to work if I am on CPP?

Technically you are applying to the federal government for a disability pension because you are incapable of regularly pursuing any substantial gainful occupation. However, once entitled to CPP disability, employment is permitted up to certain income thresholds, as is some volunteer work, part-time studies in CPP sponsored vocational rehabilitation.

What happens if I’m denied CPP?

You have the right to request reconsideration within 90 days of the denial. If you’re denied again, then you can appeal to the social services tribunal general level within 90 days. If denied again, you can apply to the social services tribunal appeals level with leave. If denied again, you can apply for judicial review to a federal court.

Is my LTD reduced by my CPP Benefits?

Once approved by the LTD insurer, claimants are typically advised of the LTD insurer’s expectation they will apply for CPPD in accordance with the policy. Further follow up typically occurs if it becomes apparent the LTD claim will continue into the “any occ” period under the policy – i.e. post-104.  LTD policies invariably include setoff provisions for CPPD benefits.

Courts in general allow these CPPD benefit offsets provided there is no ambiguity in policy wording.  Many group policies contain provisions imposing a positive obligation to make an application to CPPD benefit.  The obligation is in conjunction with the common law duty to mitigate damages. Some LTD insurers will assist claimants with the CPPD application, reconsideration, even going so far as to provide counsel for a tribunal hearing to assist the insured.

It is common for LTD contracts to include integration of benefits or offset provisions to reduce the LTD payment in situations where the disabled claimant has access to multiple benefit sources. Generally the gross monthly long-term disability benefit is reduced by the amount of the CPPD benefit received by the insured. Usually, the entire (gross) amount of a CPPD benefit is an offset to the gross monthly disability benefit. Many LTD policies provide for deduction of the initial CPPD benefit amount only and forgo any deduction for the indexed benefit increment.

What about tax treatment? What about gross vs. net deduction?

An issue related to the interplay between CPPD benefits and LTD is the tax treatment of the two payments. The potential for dispute arises when the LTD benefits are being paid pursuant to a policy that provides for non-taxable benefits. The CPPD benefits are taxable in the hands of the claimant but the LTD insurer is entitled to the full (gross) offset. This creates a situation where the claimant may be penalized for having pursued and obtained CPPD benefits.  That said, assuming no other taxable income, the amount of the CPPD benefits may well fall within the basic personal tax exemption amount, resulting in no tax payable.

Have you been denied long-term disability benefits?

If you have been denied long term disability – or you have been wrongfully cut off your disability benefits, call us today.  Matt Lalande has dedicated his career to helping disabled claimants that suffer injury or chronic illness recover the benefits they deserve. Matt is a well respected trial lawyer that has been published in major newspapers and has spoken at various disability conferences coast to coast. If you have been denied your benefits, call us today at 905-333-8888 or fill in a contact form and we will try our best to get back to you within 1 hour.