Disability benefits in Canada can come from various sources, both private and public (and when dealing with public benefits there are different sources at the Federal and Provincial levels). That being said, the primary source for disability benefits for most people dealing with disabilities in Canada comes from the Canada Pension Plan (CPP) Disability benefits and private long-term disability insurance. While both of these sources provide financial support for individuals unable to work due to disability, they operate under different frameworks, eligibility criteria, and benefits. It is important to understand how CPP Disability works alongside long-term disability benefits, even when those Long-Term disability benefits have been denied.

What are CPP Disability Benefits?

The Canada Pension Plan Disability (CPP-D) program offers financial assistance to individuals who have contributed to the CPP and are unable to work due to severe and prolonged disabilities. The program is designed to ensure that those who qualify can maintain a basic standard of living despite their inability to earn an income.

Eligibility for CPP Disability Benefits

To qualify for Canadian Pension Plan disability benefits, you must meet certain criteria, the most important of which are the following:

• Severe and Prolonged Disability – Your condition must significantly impair your ability to work and be prolonged in nature. This is often a much higher threshold test for a definition of disability than those found in a majority of long-term disability contracts.
• Contribution Requirements – You must have made sufficient contributions to the CPP during your working years. Typically, this means you should have contributed for at least four of the last six years or three of the last six years if you are under the age of 65.

The Interaction Between LTD and CPP Disability

If you are receiving long-term disability benefits, it’s essential to understand how Canadian Pension Plan disability benefits may affect your long-term disability coverage. Many long-term disability policies include a “CPP offset,” which means your insurer will be able to reduce your long-term disability payments by the amount you receive monthly from Canadian Pension Plan disability after your application is approved. Due to this most long-term disability policies require benefit recipients to apply for Canadian Pension Plan disability.

While people often get annoyed when their long-term disability provider reduces their monthly payment by what they receive from Canada Pension Plan disability benefits, the reality is it is often better to receive the payments from the Canadian Pension Plan as they are far more reliable and far, far less likely to interrupt your payments once you have been found to be disabled.

Retroactive CPP Disability Lump Sum Payments

Often applications for Canadian Pension Plan disability will result in a retroactive payment by Canadian Pension Plan, which is a lump sum amount representing the Canadian Pension Plan disability benefits you should have been receiving prior to applying for those benefits. The Canadian Pension Plan will pay you retroactive benefits based on the date of your application and the date they found you to be disabled pursuant to the Canadian Pension Plan definition.  However, there is a limit to how far back the Canadian Pension Plan will go with respect to a retroactive payment, so it is often better to apply sooner rather than later as if you wait too long there will potentially be a period of time where you are recognized as disabled by the Canadian Pension Plan but will not receive benefits for that period because you applied too long after the fact.

These lump sum retroactive payments of Canadian Pension Plan disability benefits are also deductible from most long-term disability benefits. Often an insurance company will want to receive the lump sum amount to offset what they have already paid you, or they could freeze your ongoing long-term disability benefits until the benefits they should have been paying you match the lump sum amount received from the Canadian Pension Plan.

Implications of CPP Disability on Denied Long-Term Disability Claims

Getting approved for CPP disability benefits can be extremely helpful to people going through denied long-term disability claims.

Perhaps most importantly, it provides a stream of income at a time when most people desperately need money. However, another reason why getting approved for Canadian Pension Plan disability can be helpful is that more often than not the definition of disabled under Canadian Pension Plan is a more stringent test than that of private long-term disability policies. This makes it difficult for an insurance company to argue that someone who was found to be disabled pursuant to the Canadian Pension Plan disability definition does not meet the long-term disability policy definition of disabled. This can help make negotiations to resolve your denied long-term disability claim easier or help your case at trial.

The ability of insurance companies to reduce the amount of long-term disability benefits they owe you by the amount you receive from the Canadian Pension Plan survives a denial of your benefits, and when it comes time to resolve your claim, the insurance company will want to reduce the amounts they owe you for denied benefits by whatever lump sum amounts and received and ongoing benefits you can expect to receive from the Canadian Pension Plan.

Experienced Long-Term Disability Denial Lawyers

The interaction between Canadian Pension Plan disability and managing a denied long-term disability claim can be complex, especially if your long-term disability was denied shortly after you became disabled. Deciding when to apply for Canadian Pension Plan disability can require a careful evaluation of the nature of your disability and the medical evidence to ensure that you meet the requirements to meet the definition of Canadian Pension Plan disabled. Getting denied by Canadian Pension Plan for applying before it’s clear that your disability is prolonged in nature can impact your claim for denied long-term disability benefits.

The experienced insurance denial lawyers at Taylor & Blair LLP can assist you with your denied long-term disability claim and guide you through the process, including with respect to Canadian Pension Plan disability. Contact us today for a free consultation.