Disability benefits can be reduced by other benefits received or deemed to be received

May 11, 2016, Kitchener, Ontario

Posted by: Robert Deutschmann, Personal Injury Lawyer

When you have a claim for   long-term disability (LTD) benefits, it is important to understand any potential “offsets” that may exist under your insurance policy. 

Offsets are amounts from other sources (sometimes  referred to as “collateral benefits”)  that will reduce the amount of any long-term disability benefits that you may be entitled to.  All long-term disability policies are not the same.   Accordingly, the type of offsets that may apply in your case will depend on the specific wording in your disability policy. 

One example of potential offsets under  a long-term disability policy are  Canada Pension Plan disability benefits (CPP disability).  Many long-term disability policies will in fact require you to apply for CPP disability benefits.  Some LTD policies  may also require you to appeal CPP’s decision in the event that your CPP disability benefits are  denied.   If CPP disability benefits are an offset under your disability policy, any long-term disability benefit amounts  that you might be entitled to receive  will be reduced by any CPP disability benefit amounts approved  (ex. $2,000 monthly LTD benefit amount - $700 monthly CPP disability benefit   = $1,300 net monthly LTD benefit amount potentially owing under the long-term disability policy).

Another  example of  potential offsets under a long-term disability policy are Worker’s Compensation (WSIB) benefits.  If your disability is the result of a work related accident, you may be entitled to receive WSIB benefits.  Many long-term disability   policies will require you to apply for WSIB benefits, if available.  Some LTD policies may also require you to appeal WSIB’s decision, in the event that WSIB benefits are  denied.  If WSIB benefits are an offset under your disability policy, any long-term disability benefit amounts that you might be entitled to receive will be reduced by any WSIB benefit amounts approved (ex. $2,000 monthly LTD benefit  - $1,300 monthly WSIB benefit  = $700 net monthly LTD benefit amount potentially owing under the long-term disability policy).

Some long-term disability policies may  include an offset for any severance, salary continuation or income amounts you receive from your employer.  Other long-term disability policies may include an offset for any disability related  retirement or pension benefit amounts  that you may be entitled to receive.  In this situation, the long-term disability policy may require you to apply for  any disability related retirement or pension benefits that may be available.

In some cases, your long-term disability policy may allow your insurance company to estimate or  to “deem” an offset amount ,  even though you have not yet applied, appealed or been approved for a particular benefit.  Under this type of disability policy, your potential long-term disability monthly benefit amount may  be reduced by the offset amount estimated by your insurance company.

Many long-term disability policies will  have  more than one offset that applies.  In this situation, any  long-term disability benefit amounts that you might be entitled to receive  will be reduced by all applicable offset amounts that are approved or potentially estimated    (ex. $2,000 monthly LTD benefit - $700 monthly CPP disability benefit  - $1,300 monthly WSIB benefit amount  = $0 net monthly LTD benefit amount potentially  owing under the long-term disability policy).

In light of  the above, it is very important  that you review and discuss your specific disability policy wording with an experienced long-term disability lawyer.  This will help  to ensure that you  understand what offset amounts  your insurance company may or may not be able to take.  It will also help  to ensure that you receive all  disability related benefit amounts that you are entitled to.

About Deutschmann Law

Deutschmann Law serves South-Western Ontario with offices in Kitchener-Waterloo, Cambridge, Woodstock, Brantford, Stratford and Ayr. The law practice of Robert Deutschmann focuses almost exclusively in personal injury and disability insurance matters. For more information, please visit www.deutschmannlaw.com or call us at 1-519-742-7774.

The opinions expressed here, while intended to provide useful information, should not be interpreted as legal recommendations or advice.