Over $45 Million Recovered for Ontario victims Since 2003. No Fees Unless We Win.
Free Consultations Provincewide. Call 905-333-8888 or Send us a Message Today.
Don’t settle for less than you deserve. Contact us today for a free, no-obligation consultation. We work on a contingency basis, which means you don’t pay unless we win your case.
When it comes to disability benefits in Canada, two standard programs often come to mind: Long-Term Disability (LTD) insurance and the Canada Pension Plan Disability (CPP-D) benefit. While both programs aim to provide financial support to individuals unable to work due to a disability, there are significant differences between the two. LTD insurance is typically offered through an employer or purchased privately, and the coverage, eligibility criteria, and benefit amounts vary depending on the specific policy. On the other hand, CPP-D is a federal program that provides a monthly taxable benefit to eligible individuals who have contributed to the Canada Pension Plan and cannot work regularly due to a severe and prolonged disability. Understanding the distinctions between these two programs is crucial for Canadians to make informed decisions about their disability coverage and to access the appropriate benefits when needed.
What is CPP Disability?
CPP disability (CPPD) benefit is a federal program that provides partial income replacement for individuals who cannot work due to a disability. To be eligible, claimants must prove that they suffer from a severe and prolonged mental or physical disability. According to the law, “severe” means that the individual is incapable of regularly pursuing any substantial gainful occupation, while “prolonged” means that the disability is likely to continue indefinitely or until the claimant’s death.
To qualify for CPPD, you must have contributed to the Canada Pension Plan in four of the last six years, with minimal earnings in each of these years. The requirement for those with 25 or more years of contributions is three of the previous six years.
If you have a chronic illness or injury that prevents you from working, it is essential to apply for CPPD as soon as possible. Service Canada typically takes about 3 to 4 months to decide on your application. Upon approval, you will receive a lump-sum payment covering the period from the date your disability began to the date the payment is made. Following this, you will receive a monthly benefit on the first of every month to help with your expenses.
As of 2019, the maximum disability benefit is $1,673.24 per month.
Click here for a CPP disability toolkit. Inside, you will find a complete guide that answers most of your questions, including how the benefit is calculated.
What is Long-Term Disability?
Long-term disability is not a government-sponsored plan. Long-term disability is available through individual policy purchase or a group plan issued through an employer or association. Employer-provided disability plans offer more limited protection but at a lower cost to the employer or the insured. The employee does not require medical evidence at the time of application. If an employer purchases long-term disability through its group plan, each employee is covered, regardless of their medical history. Most policies issued through employers contain a pre-existing condition provision, which means that long-term disability benefits would not be payable for any disability which begins within the employee’s first 12 months of coverage if that disability is due directly or indirectly to a pre-existing condition. A pre-existing condition is usually defined as a condition for which you were treated or attended to by a doctor or was prescribed drugs taken for a certain amount of time before your effective date of coverage.
Long-term disability benefits will have an elimination period, which is also called the “waiting” or “qualification period” under some policies. Typical elimination periods are 60, 90, 120 or 180 days. The most common elimination period is 90 days. After the elimination period, you would apply for long-term disability if your disability prevents you from returning to work. We recommended that you apply for long-term disability before the end of the elimination period to give yourself enough time to gather all of your medical records, give your doctor enough time to fill out the attending physician statement and provide the insurance company enough time to review your claim and then ask or obtain any additional information required to complete their assessment.
Long-term disability (LTD) policies include a specific definition of total disability, which is a crucial aspect of both group and individual contracts. For the initial 24 months of an LTD claim, the policy considers you totally disabled if you, as the insured claimant, cannot perform the substantial duties of your regular occupation due to your disability.
However, after the first 24 months, the definition of total disability undergoes a significant change, often called the “change of definition.” This shift results in a more restrictive interpretation of disability from the insured’s point of view. Instead of being considered totally disabled based on your inability to perform the substantial duties of your own occupation, you must now demonstrate that you are totally disabled from performing any occupation for which you are reasonably suited based on your education, training, or experience.
To continue receiving LTD benefits after the initial 24 months, you must prove that your disability prevents you from working in any job that aligns with your educational background, vocational training, or practical experience. This more stringent definition of total disability is designed to ensure that benefits are provided to those who cannot work in any suitable capacity.
How Does Long-Term Disability Differ from CPP Disability?
While both Long-Term Disability (LTD) and Canada Pension Plan Disability (CPP-D) benefits aim to provide income replacement for individuals who are unable to work due to a disability, they are fundamentally different in their structure, eligibility, administration, and purpose. Understanding the differences is critical for anyone navigating a disability claim, especially since LTD and CPP often intersect.
1. Source of Benefits
Long-Term Disability benefits are typically provided through private insurance carriers, either through a group benefits plan offered by an employer or through an individual policy purchased by the claimant. These benefits are contractual in nature and governed by the terms and conditions of the specific insurance policy.
By contrast, CPP Disability benefits are administered by the federal government of Canada through the Canada Pension Plan, a public social insurance program funded by payroll contributions. CPP-D is not based on a private contract but is instead a statutory entitlement governed by the Canada Pension Plan Act.
2. Eligibility Criteria
Eligibility requirements under each program are markedly different.
-
LTD policies typically define disability in two stages. During the first 24 months, a person is considered disabled if they are unable to perform the essential duties of their own occupation. After that, the definition often changes to “any occupation,” meaning the person must be unable to work in any occupation for which they are reasonably suited by education, training, or experience.
-
CPP Disability, however, applies a much stricter standard. A person must prove that their disability is both “severe and prolonged,” and that it regularly prevents them from pursuing any substantially gainful occupation. There is no “own occupation” test or initial leniency in the standard. CPP-D is always based on the more difficult “any occupation” threshold.
3. Contribution Requirements
To qualify for CPP Disability, the applicant must have made sufficient contributions to the Canada Pension Plan. Generally, this means the person must have contributed in four of the last six years, or three of the last six years if they have contributed for 25 years or more. Without a valid contribution history, an individual cannot receive CPP-D benefits.
LTD benefits, on the other hand, do not require government contributions. Rather, eligibility depends entirely on whether the individual was covered under a valid insurance policy at the time they became disabled and whether they meet the policy’s definition of disability.
4. Amount of Benefits
The financial benefits under each program differ significantly.
-
LTD benefits are usually calculated as a percentage of the claimant’s pre-disability earnings — typically between 60% to 70% of gross income, though this can vary. Some policies offer non-taxable benefits if the employee paid the premiums.
-
CPP Disability pays a fixed base amount plus an amount based on the contributor’s average lifetime earnings. As of 2025, the average monthly CPP Disability payment is significantly lower than the average LTD benefit. Moreover, CPP-D is always taxable.
5. Duration of Benefits
LTD benefits generally last until the end of the policy term, which is often tied to age 65 or recovery, whichever comes first. The benefit may end sooner if the person no longer meets the definition of disability under the policy.
CPP Disability benefits continue until the person reaches age 65, at which point they automatically convert to retirement pension payments under the CPP. Benefits also cease if the person is no longer considered disabled or returns to substantially gainful work.
6. Application Process and Complexity
Applying for CPP Disability involves submitting a government application with detailed medical and employment history. It is not uncommon for initial applications to be denied, requiring reconsideration or appeal to the Social Security Tribunal.
LTD applications are submitted directly to the insurance provider and typically require medical evidence from the treating physician(s). Although the insurer’s assessment is contractual rather than statutory, denials are frequent and may necessitate legal intervention.
7. Interplay Between CPP and LTD
Many LTD policies require claimants to apply for CPP Disability after being on LTD for a certain period — usually around the 12-to-24-month mark. This is because most LTD plans include an offset clause, meaning that CPP Disability payments are deducted from the LTD benefit. This does not reduce the claimant’s total income but lowers the insurer’s liability.
Insurers may also estimate the amount a claimant could receive from CPP and begin deducting that amount from the LTD benefit, even before the CPP decision is made — a practice known as a CPP offset or clawback.
If you’re Long-Term Disability Claim has been Denied, our Hamilton Long-Term Disability Lawyers can Help.
Receiving a denial for your long-term disability (LTD) claim can be a disheartening experience, especially when you are struggling with a condition that prevents you from working and believe you should qualify for benefits. It’s natural to feel overwhelmed, frustrated, and uncertain about your future when you receive a denial letter. However, it is crucial to remember that a disability denial is not the end of the road. You have the right to appeal the decision and fight for the benefits you deserve.
Remember, you are not alone in this journey. Our Hamilton Long-Term Disability Lawyers are ready to stand by your side and help you navigate the complex world of disability litigation. With the right approach and support, you can successfully advocate for your rights and secure the financial assistance you need to manage your condition and maintain your quality of life. Our experienced team understands the challenges you are facing and is committed to providing you with the guidance, representation, and support you need throughout the disability litigation process.
If you have been denied long-term disability, please don’t hesitate to reach out to us for help. Fill out a confidential contact form or call our disability lawyers no matter where you are in Ontario at 905-333-8888. We offer free consultations and will be happy to discuss your case, answer your questions, and provide the information you need to make informed decisions about your future. Let us help you fight for the benefits you deserve and work towards a brighter, more secure future.
Article FAQ
CPP Disability is a government benefit provided by the federal government to individuals who have contributed to the Canada Pension Plan and can no longer work due to a severe and prolonged disability. Long-Term Disability (LTD), on the other hand, is paid through a private insurance policy and is typically offered by employers. It provides income replacement based on whether the individual can perform their own job or any job, depending on the stage of the claim and the policy terms.
Yes, it is possible to receive both types of benefits simultaneously. However, most LTD policies include an offset clause that allows the insurance company to deduct the amount received from CPP Disability from your LTD payments. While this doesn’t reduce your total income, it does reduce what the insurance company pays you directly.
In many cases, you do. Most LTD policies require claimants to apply for CPP Disability after being on benefits for a certain period—typically 12 to 24 months. If you’re approved for CPP Disability, the insurer will likely offset that amount from your LTD payments. Some insurers may even estimate your CPP benefits and reduce your LTD payments in advance.
CPP Disability is usually more difficult to qualify for. To be eligible, you must prove that your condition is both severe and prolonged, and that it prevents you from working in any substantially gainful occupation. LTD policies often begin with a more generous standard, where you’re considered disabled if you can’t perform your own job.
CPP Disability benefits are always taxable income.
Long-Term Disability benefits may or may not be taxable depending on who paid the premiums. If your employer paid the premiums, the benefits are taxable. If you paid the premiums yourself, your LTD benefits are typically non-taxable.