Canada Pension Plan And Disability Benefits
Disability benefits from the Canada Pension Plan (CPP) are government-sponsored and administered benefits available to all Canadians who make contributions into the plan, usually through source deductions from your pay cheque.
CPP is not to be confused with LTD (long-term disability) which is private insurance available through Group Insurance Benefits, usually through a workplace, or group association or by purchasing a private policy from an insurance company.
Is CPP Deductible from LTD?
Most Group LTD policies provide for CPP benefits to be deducted from the gross amount they are required to pay. Many insurance policies say they can estimate the amount you are entitled to and deduct the amount if you never apply for the benefit, so you should apply for them if you’re on LTD, in most cases.
Most Private policies that you have purchases through an insurance company do not deduct CPP from the amount they are required to pay.
Are CPP And LTD Taxable or Non-Taxable?
- CPP is a taxable benefit
- Long Term Disability benefits can either be taxable or non-taxable depending on the specific policy.
How Can I Get CPP To Approve My Claim For A Disability Benefit?
- Submit the necessary forms available online.
- Provide medical information from your treating physicians that satisfy the CPP that you are suffering from a severe and prolonged disability that prevents you from being gainfully employed.
- Your disability need not be permanent in order to qualify for a CPP disability benefit.
Can You File Disability Claims With CPP And A Group Insurance Plan?
Yes, you can definitely submit applications for both. As to the timing of the applications, that may depend on the nature of your disabling condition and the prognosis for future recovery.
Why Would My Insurance Company Tell Me To Apply for CPP Benefits?
You may be obligated to apply as part of your policy requirements.
- You should check the wording of your policy just to be sure.
- The outcome of your application to CPP Disability should not affect your LTD claim.
- If you are denied CPP disability benefits, your insurer must continue to pay your benefits.
- If you are approved for CPP disability benefits and your insurance company has the right to deduct these payments, the monthly benefit amount you receive will be reduced. This means that the amount of money you received each month will not change; you will simply be getting the funds from two sources. Note: the tax treatment may differ between your LTD and your CPP benefits.
IMPORTANT TIPS TO REMEMBER:
- Under most LTD policies there is a period when benefits are paid based on disability from your own occupation, followed by a period where it is based on disability from any occupation.
- Under CPP guidelines, you must be suffering from a severe and prolonged disability (not likely to return to gainful employment in the foreseeable future).
- Receipt of disability benefits from the CPP should not affect the amount you are entitled to receive at age 65, however, this is something that you ought to discuss and/or confirm with the Canada Pension Plan directly, or with a knowledgeable financial planner/advisor.
In some cases, the interrelationship between the LTD industry and the CPP rules can be confusing and it may be difficult to know whether your insurance company is handling potential to CPP entitlement correctly. It is important to discuss this with one of our experienced lawyers. Here at Share Lawyers, we have experience with both CPP and LTD.
Has your long-term disability claim been denied? Contact Share Lawyersand put our experience to work for you.
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