Clawbacks Series Part 8 - Insurance Clawbacks' Golden Rule: Apples Are Not Apples
This article, the eighth in a series about insurance clawbacks, was written by Steven Muller, Vice President Litigation at Share Lawyers. Click here to read the rest of the series.
I recently read that “an alert consumer is a safe consumer.” I am not sure that statement is true when we are talking about group long term disability policies in Canada.
Employee benefits of a group disability policy pays a non-taxable benefit if the employee paid all the premium. Employee benefits of a group disability policies pays a taxable benefit if the employer pays some or all the premiums. Many public benefit schemes are contribution-based social insurance programs like the Canada Pension Plan Disability Benefit program, and they pay taxable monthly benefits. When the long-term disability insurer claws back the public benefits scheme, their practice is to deduct the taxable public benefit scheme dollars from the non-taxable insurance benefit dollars – dollar for dollar. But I always thought non-taxable dollars are worth more to me than taxable dollars? Doesn’t this sound like double recovery on the part of the disability insurer?
Employers and insurance brokers—you are negotiating these disability policies on behalf of employees who pay all the premiums for a non-taxable benefit. Employees need your protection. Consumer protection means more than just having access to a disability policy for an employee. If the practice is to treat non-taxable monies as taxable monies, we are diminishing the value of the coverage purposefully. It’s time for us in Canada to rethink our archaic approach to clawbacks in a group long term disability scenario.
Denied your long term disability claim?
Contact lawyers for long term disability at Share Lawyers today and put our experience to work for you. Our 35+ years of experience can help you win your case against Canada Life, Desjardins, Manulife, RBC Insurance, Sun Life, and other insurance companies. We offer free consultations and there are no fees unless you win your case. Watch our web show, Your Disability Lawyers, on YouTube, or listen to the podcast on Google Podcasts.
