By Matt Lalande in Long-Term Disability on September 13, 2021
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 a 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:
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 re benefits provided through the federal government, and not through a private individual plan or through employer group benefts. 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.
If you suffer from a mental or physical condition which prevents you from working regularly at any job, your condition is deemed to be long-term and of unknown duration, or is likely to result in death, you should apply for CPP disability benefits right away.
Unfortunately in most cases you do. Your long-term disability policy more likely than not states that you are to at least apply, and if approved, you are to give your long-term disability carrier credit for the amount you recive.
Unfortunately your long-term disability carrier can probably estimate the amount you would receive had you applied and been approved, and set-off that “estimated” amount from your long-term disability benefits….which can really be a problem if you are relying on and budgeting your LTD every month to pay your expenses.
You can apply for CPP benefits two ways. You can apply online or you can submit a paper application. To apply online you must first create a “My Service Canada account (MSCA).” After you create your MSCA, log into your account and complete the application form. If you prefer to print out and fill in an application, you need to download application form (ISP-1151) (non-terminal illness) or Terminal Illness Application form (ISP-2530A) (terminal illness only) Then mail the your application or drop it off at a a local Service Canada near you.
Yes, your doctor needs to submit medical report. The report that you will ask your doctor for depends on whether or not you suffer from a terminal illness. Your family doctor would either need to submit a Medical report (ISP-2519) (non-terminal illness or a Terminal Illness Medical Attestation form (ISP-2530B) (terminal illness only)
No! Please don't wait for your doctor to complete your medical report or medical attestation form before sending your completed application to Service Canada.
It depends, but you will more likely than not hear from Service Canada with a decision within 120 days of your application.
Service Canada will first call you with their decisions. They will then mail you out their decision.
If you suffer a terminal illness, Service Canada will try to get back to you within receiving your complete Terminal Illness Application, including a complete Terminal Illness Medical Attestation form (ISP-2530B).
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 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 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.
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 that is based on how much you paid into the Canada Pension Plan while you were employed (the contribution amount).
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 of money you receive through your CPPD benefit payments depends on a few factors:
If you have dependent children under the ages of 18 living in your home, they may also qualify to receive monthly payments via the disabled contributor’s child’s benefit. Dependent children ages 18 through 25 are also eligible to receive this payment if they are enrolled full time at a recognized post-secondary institution; however, the payments are only provided until the child graduates. As of this year, the flat rate for the child benefit payment is $257.58 per month.
A common question that we get is whether CPP disability benefits can be deducted from long-term disability benefits…and the answer is most likely . If you receive long-term disability benefits, your disability carrier can more likely than not require you to apply for CPP Disability and if you are approved, set-off the monthly amount of CPP disability you receive from your monthly long-term disability benefits.
This does not mean you will receive a reduction in long-term disability, it simply means that your LTD will be set-off or lessened by the amount of CPP that you recevie. If you refuse to apply for CPP disability, your LTD policy probably states that your disability carrier can set-off an “estimated” amount that you would receive in CPP disability benefits had you been approved.
In summary, some factors to be aware of when it comes to the interaction between CPP and LTD are:
CPP benefits are deductible in most personal injury claims, particularly motor vehicle claims.
In terms of car accidents, a certain piece of legislation – O. Reg. 461/96 – has clarified that CPP disability benefits are deductible from damages for income loss or loss of earning capacity.
Yes, Section 4(1)(b) of the Statutory Accident Benefit Schedule provides for a deduction for CPP benefits that may be available but are not being received and for which the person has not made an application.
It is important that if the injured person does not apply for CPP benefits, your no-fault benefit insurer may be entitled to deduct what you may have been entitled to or benefits that “may be available”.
Again, a dependent child’s portion of your CPP benefit may also be deducted under your LTD policy, but this benefit is not deducted from IRB payments.
Matt Lalande specializes in both personal injury law and disability law in Ontario, and has been practicing both since 2003. He is extremely familiar with the CPPD program and has an extensive working knowledge of the options available for disabled Canadians and how the benefits relate to claimants on long-term disability or hurt in an accident.
We are happy to meet with you in a free consultation to provide you with transparent and helpful advice, outline the options available to you, and get you set up on your personal injury claim if you are eligible to make one. All consultations are free, at no cost to you, and we do not charge until you win your case. If you are not able to travel, we can come to you or you can meet with us virtually.