This article was last updated: June 10th, 2024

Navigating the complexities of Long Term Disability (LTD) benefits in Canada can be challenging, but understanding how they work is crucial for ensuring financial stability in the event of a prolonged illness or injury. This guide provides a comprehensive overview of LTD benefits, including eligibility, application process, types of coverage, and what to expect once you start receiving benefits.

Summary: Our Ultimate Guide to Long Term Disability covers everything you need to know about long term disability in Canada, from defining and qualifying for LTD, to how to apply, how to handle approvals and denials, and other common questions.

Table of Contents

  • What is Long-Term Disability Insurance?
  • Who Qualifies for Long-Term Disability in Canada?
  • How to Buy Long-Term Disability Insurance
  • How to Apply for Long-Term Disability Insurance
  • Lump-sum Settlements for LTD
  • What to Do If Your LTD Application is Denied
  • What to Do After Your LTD Application is Approved
  • Long-Term Disability and Employment
  • Long-Term Disability and Taxes
  • Long-Term Disability FAQ

What is Long Term Disability Insurance?

Long Term Disability insurance is a type of insurance coverage that provides income protection to individuals who are unable to work for an extended period due to a qualifying disability. Unlike Short term disability insurance, which typically covers temporary disabilities for a shorter duration, Long term disability insurance is intended to provide financial support over an extended period, often until retirement age or until the individual is able to return to work.

What is the Purpose of Long Term Disability?

In today’s fast-paced world, unexpected accidents or illnesses can disrupt your life and livelihood in an instant. Amidst such uncertainties, having a safety net becomes paramount. Long Term Disability insurance serves as that crucial lifeline, offering financial protection and peace of mind when you need it most.

So, what exactly is the purpose of Long Term Disability insurance?

At its core, Long Term Disability insurance is designed to replace a portion of your income if you become unable to work due to a qualifying disability. Whether it’s a severe injury, chronic illness, or mental health condition, this coverage ensures that you can still meet your financial obligations and maintain your standard of living.

Additionally, Long Term Disability insurance often includes resources and support services to facilitate your recovery and rehabilitation efforts. From vocational training to assistive devices and accommodations, these benefits can help you regain independence and return to work when you’re able.

How Much Does Long Term Disability Insurance Cost in Canada?

The cost of Long Term Disability insurance in Canada is influenced by several key factors.

One of the primary determinants is age. Younger individuals generally pay lower premiums than older individuals because they are statistically less likely to experience a disabling injury or illness. Health status is another significant factor. Insurance premiums are often higher for individuals with pre-existing health conditions or who engage in risky behaviors that increase the likelihood of disability.

Occupation also plays a crucial role in determining the cost of Long Term Disability insurance. Jobs that involve high levels of physical exertion or expose workers to hazardous conditions typically carry higher premiums due to the increased risk of disability.

The desired coverage amount and the percentage of pre-disability income that the policy will replace also impact the cost. Long Term Disability policies offering higher income replacement percentages generally have higher premiums. The waiting period, or elimination period, before benefits become payable affects the cost as well. Shorter waiting periods result in higher premiums because they provide quicker access to benefits. The duration for which benefits are payable under the policy—whether it’s a set number of years, until retirement age, or for life—also influences the cost of Long Term Disability insurance.

How Does Long Term Disability Work in Canada?

First, LTD benefits usually begin after an elimination period, a waiting period that ranges from 90 to 180 days from the onset of your disability. During this time, you may rely on Short term disability benefits, employment insurance, or savings.

To qualify for LTD benefits, comprehensive medical evidence of your disability is required. This typically includes medical reports from your doctors and specialists, diagnostic test results (e.g., MRI, X-rays), treatment plans, and a detailed description of how your condition affects your ability to work. Ensure your healthcare providers are aware of your intention to file a claim and can provide detailed, supportive documentation.

Your insurance company will provide specific claim forms that need to be completed. These forms usually include a claimant statement detailing your condition and its impact on your work, an employer statement verifying your job duties and the impact of your condition, and an attending physician’s statement providing medical details and prognosis. Ensure all sections are completed accurately and honestly. Incomplete or incorrect forms can delay the processing of your claim.

Once your claim is submitted, the insurance company will review all the documentation. This process may involve requests for additional information or clarification, independent medical examinations (IMEs), and functional capacity evaluations (FCEs). The insurer will assess whether you meet the policy’s definition of disability and if your condition prevents you from performing the duties of your occupation.

If your claim is approved, you will begin receiving LTD benefits according to your policy terms. Benefits are typically a percentage of your pre-disability income, often around 60-70%. Payments are made monthly and may be subject to taxes depending on how the premiums were paid.

Even after your claim is approved, you may be subject to periodic reviews by the insurance company to verify the continuation of your disability. This can include regular medical updates, additional IMEs or FCEs, and vocational assessments. It’s crucial to comply with these requests to continue receiving benefits.

If your claim is denied, you have the right to appeal the decision. The appeal process typically involves reviewing the denial letter to understand the reasons, gathering additional supporting evidence, and submitting a formal appeal within the specified timeframe. Consider seeking legal advice or assistance from a disability claims advocate to strengthen your appeal.

How Much Does Long Term Disability Pay?

The amount Long Term Disability (LTD) insurance pays typically varies based on your policy and the terms set by your insurance provider. Generally, LTD benefits are designed to replace a portion of your income if you become unable to work due to a serious illness or injury.

Most LTD policies pay between 60% to 70% of your pre-disability earnings, though this percentage can vary depending on your specific policy. Some policies have a cap on the maximum monthly benefit you can receive, regardless of your pre-disability income. Conversely, there might also be a minimum benefit amount.

The taxation of your LTD benefits depends on who paid the premiums. If your employer paid the premiums, your benefits are typically taxable. If you paid the premiums with after-tax dollars, your benefits are usually tax-free.

LTD benefits can be paid for a specified period, such as 2, 5, or 10 years, or up to a certain age, often 65. The length of time you can receive benefits depends on your policy terms. Additionally, your LTD benefits may be reduced by other sources of income, such as Canada Pension Plan (CPP) disability benefits, workers’ compensation, or other disability insurance policies.

What’s the Difference Between Total Disability and Partial Disability?

When dealing with disability insurance, it’s important to understand the distinction between total disability and partial disability. These terms define the extent of an individual’s impairment and determine the type of benefits they may receive under their insurance policy.

Total Disability

Total disability refers to a condition where an individual is completely unable to perform the essential duties of their occupation or any occupation for which they are reasonably suited by education, training, or experience. This means the person cannot work at all due to their illness or injury. Total disability benefits typically provide a higher percentage of income replacement and are designed to support individuals who are entirely unable to work for a significant period.

Partial Disability

Partial disability, on the other hand, describes a situation where an individual is still able to perform some, but not all, of their job duties, or can work part-time due to their condition. Partial disability benefits are intended to supplement the reduced income that results from being unable to work full-time or perform all job responsibilities. These benefits are generally a smaller percentage of the income replacement compared to total disability benefits, reflecting the partial ability to earn an income.

In summary, total disability implies a complete inability to work, resulting in higher benefit payouts, while partial disability allows for some work capacity, leading to proportionately lower benefits. Understanding these differences is crucial when evaluating disability insurance coverage and anticipating the support you might receive in the event of an illness or injury.

Who Qualifies for Long Term Disability in Canada?

To qualify for Long Term Disability benefits in Canada, you typically need to be employed and covered by an LTD insurance policy. You must provide medical evidence showing you are unable to perform the essential duties of your own occupation (or any occupation) due to illness or injury. There is usually a waiting period (elimination period) before benefits start, and you must continue to meet the definition of disability outlined in your policy. Additional requirements may include regular updates from healthcare providers and participation in rehabilitation programs.

Man on crutches. Symbolizing LTD qualifications.

h3>What Conditions Qualify for Long Term Disability in Canada?

In Canada, Long Term Disability benefits are generally available for individuals who are unable to work due to a severe illness or injury.

Common conditions that may qualify for LTD benefits include:

  • musculoskeletal disorders
  • mental health disorders
  • neurological disorders
  • cancer
  • cardiovascular disorders
  • chronic pain syndromes
  • autoimmune disorders
  • severe injuries resulting from accidents or trauma.

Long Term Disability and Mental Illness

Long Term Disability benefits can be available for individuals with mental illnesses that significantly impair their ability to work. Mental illnesses such as depression, anxiety disorders, bipolar disorder, schizophrenia, and others can qualify for LTD benefits if they meet the criteria outlined in the insurance policy.

Which Condition is Approved for Long Term Disability the Most Often?

Statistics Canada released their Canadian Survey on Disability from 2017 to 2022 which found that “Among the working age population with disabilities, pain-related (63%), mental health-related (46%) and flexibility (36%) were the most common disability types in 2022”. 

These findings generally correlate with the most common conditions approved for LTD in Canada. 

Musculoskeletal disorders such as back pain and arthritis are among the most common conditions approved for Long Term Disability benefits. These disorders can significantly impact an individual’s ability to work, leading to a higher likelihood of approval for LTD benefits.

Mental health disorders, including depression and anxiety, are also commonly approved for LTD benefits, as they can have a profound impact on a person’s ability to function in a work environment.

Other conditions that are frequently approved for LTD benefits include cancer, neurological disorders such as multiple sclerosis, and injuries resulting from accidents or trauma.

What Conditions are not Considered a Disability?

In the context of Long Term Disability insurance, not all medical conditions are considered disabilities. Whether a condition is considered a disability depends on its impact on an individual’s ability to perform essential job functions. Conditions that are not typically considered disabilities for the purpose of LTD insurance include:

Minor or temporary illnesses or injuries that do not significantly impair a person’s ability to work.

Conditions that can be effectively managed with treatment and do not prevent a person from performing their job duties.

Pre-existing conditions that do not worsen or become disabling after the start of the insurance coverage.

Conditions that do not meet the specific definition of disability outlined in the insurance policy.

It’s important to review the specific terms of your LTD insurance policy and consult with a Long Term Disability Lawyer if you have questions about whether your condition qualifies as a disability for LTD purposes.

Does Long Term Disability End at 65 in Canada?

In Canada, Long Term Disability benefits typically do not continue past the age of 65. Most LTD policies have an age limit, often set at age 65 or the normal retirement age specified in the policy, after which benefits cease. This is because at age 65, individuals are typically eligible to receive government benefits such as the Canada Pension Plan (CPP) and Old Age Security (OAS).

When do Long Term Disability Benefits Start?

Long Term Disability benefits typically start after a specified waiting period, known as the elimination period. The elimination period is a set amount of time (e.g., 90 days, 180 days) that must pass after you become disabled before you are eligible to receive LTD benefits.

Once the elimination period is satisfied, LTD benefits will usually start on a predetermined date, such as the first day following the end of the elimination period. However, the exact start date of benefits can vary depending on the terms of your LTD insurance policy.

What Happens After 2 Years on Long Term Disability in Canada?

After receiving Long Term Disability benefits for two years in Canada, some insurance policies may transition to a more stringent definition of disability. This change typically shifts the focus from your inability to perform your own occupation to your inability to perform any occupation for which you are reasonably suited by education, training, or experience.

This change in definition means that to continue receiving benefits beyond the initial two-year period, you must demonstrate that you are unable to work in any capacity that matches your skill set. This can be challenging, as it requires showing that your disability is severe enough to prevent you from performing not just your previous job, but any job that you could reasonably be expected to do based on your qualifications.

LTD insurance companies may require additional medical evidence and assessments to determine if you meet this new definition of disability. They may consider factors such as your education, work experience, transferable skills, and the job market in your area when evaluating your ability to work in another occupation.

It’s important to carefully review your LTD policy to understand how the change in definition of disability may affect your benefits after two years. If you have concerns about meeting this new standard or need assistance with your claim, consider seeking advice from a legal professional specializing in disability law.

Do Most Employers Offer Long Term Disability?

The availability of Long Term Disability insurance varies among employers in Canada. Employers are not legally required to offer LTD coverage. While most medium to large-sized employers offer LTD coverage as part of their employee benefits package, not all employers provide this type of insurance. The prevalence of LTD coverage can depend on several factors, including the size of the company, the industry, and the overall benefits strategy of the employer.

For larger employers and those in sectors with comprehensive benefits packages, LTD insurance is often included to help attract and retain employees. Employers may additionally cover the entirety or a portion of their staff’s LTD monthly premiums, while others may require the employees to pay for their own premiums.

However, smaller businesses or those in industries with less robust benefits packages might not offer LTD insurance. In such cases, employees might need to seek individual LTD insurance policies to ensure they have coverage.

Folders labeled as "LTD insurance".

How to Buy Long Term Disability Insurance in Canada

When considering Long Term Disability insurance, there are different types of policies available:

group disability insurance;

individual disability insurance; and

special purpose disability insurance.

Each type has its own features and benefits, catering to different needs and circumstances.

Group Disability Insurance

Group Disability Insurance is typically offered by employers as part of an employee benefits package. Coverage is extended to all eligible employees, often at a lower cost due to the pooling of risk among many individuals. The benefits of group disability insurance include lower premiums, easier qualification (often with no medical exams required), and convenient payroll deductions for premium payments. However, coverage may be limited and tied to your employment, meaning you could lose coverage if you change jobs or if the employer discontinues the benefit.

Individual Disability Insurance

Individual Disability Insurance is a policy you purchase on your own, independent of your employer. Individual disability insurance offers several advantages, including the ability to customize coverage to meet your specific needs, portability (you can take the policy with you if you change jobs), and potentially higher benefit amounts. Premiums for individual policies are generally higher than for group policies, and you may need to undergo a medical exam as part of the application process. This type of insurance is ideal for self-employed individuals, those without access to group coverage, or those who want additional protection beyond what their employer provides.

Special Purpose Disability Insurance

Special Purpose Disability Insurance This category includes policies designed to meet specific needs or cover unique situations. Examples include:

Creditor Disability Insurance: Designed to help cover your loan or credit obligations in the event that you become disabled and are unable to work. This insurance provides financial protection by ensuring that your debts, such as mortgages, personal loans, credit cards, or car loans, are paid even if you are not earning an income due to a disability.
Overhead Expense Disability Insurance: Designed for business owners, this policy covers fixed business expenses such as rent, utilities, and salaries if the owner becomes disabled and cannot work.

High-Limit Disability Insurance: Provides additional coverage for high-income earners whose standard disability benefits may not be sufficient to maintain their lifestyle. This policy can supplement existing group or individual coverage.

Critical Illness Insurance: Provides a lump-sum payment if you are diagnosed with a serious illness that is covered by the policy. This payment can help you cover expenses related to your illness, such as medical bills, home modifications, or lost income.

Professional Association Disability Insurance: Offered through professional organizations or associations, these policies provide coverage tailored to the needs of specific professions, such as doctors, lawyers, or engineers.

How to Buy Group Disability Insurance

Group Disability Insurance is purchased directly by your employer and individuals cannot buy it for themselves. However, if your employer offers LTD benefits you may apply for it and pay the premiums through your payroll deduction. To apply for your employer’s group insurance plan, first determine if you are eligible. Eligibility criteria often include full-time employment status, a specific probationary period, or membership in a particular employee category.

Next, determine if and when your employer’s specific enrollment period is. Employers usually have specific enrollment periods during which you can sign up for or make changes to your group insurance coverage. This period often occurs annually, typically coinciding with the start of the fiscal year or during a new hire’s onboarding process. It’s crucial to enroll during this time to ensure you receive coverage.

During the enrollment period, you will need to fill out the necessary forms to apply for group insurance coverage. These forms generally require personal information such as your name, address, date of birth, and Social Insurance Number (SIN). Employment information like your job title, employment start date, and work status (full-time or part-time) is also needed. If you are covering dependents under your plan, you will need to provide details about your spouse and dependents. Additionally, you will designate beneficiaries who will receive the life insurance benefit in the event of your death.

Group insurance plans usually do not require detailed medical information or exams for basic coverage but may require you to fill out a medical questionnaire. Additionally, if you opt for additional or optional coverage, such as higher life insurance limits or supplemental LTD coverage, you may need to provide additional medical information or undergo a medical exam.

Once you have completed the enrollment forms, submit them to your HR department or benefits coordinator by the specified deadline. Ensure that all information is accurate and complete to avoid delays or issues with your coverage. By following these steps, you can secure the comprehensive protection provided by your employer’s group insurance plan.

How to Buy Individual Disability Insurance

To purchase individual disability insurance, you can reach out directly to an insurance company or insurance broker and ask for a quote. Individual disability insurance is sold by various insurance companies and providers. These companies offer a range of individual disability insurance policies with different coverage options, benefit amounts, and premium rates. It’s important to compare quotes and policy details from multiple insurers to find the best coverage for your needs. Upon finding a quote that suits your specific needs you can apply for an individual policy.

When applying for individual disability insurance, you’ll need to provide information about your medical history, including any pre-existing conditions, past surgeries or treatments, current medications, and any disabilities or illnesses you have. You’ll likely need to provide copies of medical records, including reports from doctors, specialists, hospitals, and other healthcare providers you’ve seen. The insurance company may need you to sign authorization forms allowing them to obtain medical and employment information from relevant sources.

You’ll also need to give details about your employment, including your job title, employer’s name and address, salary, and any other sources of income you have. This helps the insurance company assess your financial situation and determine the level of benefits you may be entitled to.

Finally, you’ll need to complete an application form provided by the insurance company, including details of the disability insurance policy you are applying for.

Once your application is approved, you will begin paying premiums for your individual disability insurance policy. Premiums are typically paid monthly or annually, depending on the policy terms.

How to Buy Special Purpose Disability Insurance

To purchase special purpose disability insurance, you can reach out directly to an insurance company or insurance broker who offers the special purpose policy you are looking for and ask for a quote. The availability of special purpose disability insurance policies may vary among individual insurance companies and providers. It’s important to compare quotes and policy details from multiple insurers to find the best coverage for your needs. Upon finding a quote that suits your specific needs you can apply for a special purpose disability insurance policy.

When applying for special purpose disability insurance, you’ll need to provide information about your medical history, including any pre-existing conditions, past surgeries or treatments, current medications, and any disabilities or illnesses you have. You’ll likely need to provide copies of medical records, including reports from doctors, specialists, hospitals, and other healthcare providers you’ve seen. The insurance company may need you to sign authorization forms allowing them to obtain medical and employment information from relevant sources.

You’ll also need to give details about your employment, including your job title, employer’s name and address, salary, and any other sources of income you have. This helps the insurance company assess your financial situation and determine the level of benefits you may be entitled to.

Special purpose disability insurance may also require additional information relating to the specific form of insurance they are providing.

Finally, you’ll need to complete an application form provided by the insurance company, including details of the special purpose disability insurance policy you are applying for.

Once your application is approved, you will begin paying premiums for your special purpose disability insurance policy. Premiums are typically paid monthly or annually, depending on the policy terms.

Who Pays for Long Term Disability?

Long Term Disability insurance can be paid for by different parties depending on the situation. One common scenario is employer-sponsored coverage, where companies include long term disability insurance as part of their benefits package for employees. In such cases, employers often cover a portion or all of the premiums, which can be a valuable perk for employees.

Employees may also have the option to contribute to the cost of their Long Term Disability insurance through payroll deductions or other means. This arrangement allows employees to have a say in the level of coverage they receive and may provide them with a sense of ownership over their insurance protection.

For individuals who are self-employed or do not have access to employer-sponsored coverage, purchasing Long Term Disability insurance directly from insurance companies is an option. While this means that the individual is responsible for paying the premiums, it also gives them the flexibility to choose the coverage that best suits their needs.

How to Apply for Long Term Disability Insurance in Canada

Going on Long Term Disability in Canada involves several steps, including confirming your eligibility, completing the application process, and providing the necessary documentation. Below we will cover how to go on Long Term Disability.

Confirm Your Eligibility

Before you can apply for LTD benefits, confirm that you meet the eligibility criteria set by your disability insurance policy or employer’s plan. Typically, you must be unable to perform your job duties due to a serious illness or injury. Additionally, you must determine when your waiting period has ended. Long Term Disability plans have something called a “waiting period,” which is the length of time you must be continuously disabled before you become eligible to receive benefits. The waiting period is also known as the elimination period. This period typically ranges from 90 to 180 days, although it can vary depending on the specific insurance policy.

During the waiting period, you are expected to rely on other sources of income, such as short-term disability benefits, sick leave, or personal savings. It’s important to be aware of the duration of your policy’s waiting period when planning for potential disability, as it impacts how soon you can expect to receive Long Term Disability benefits.

Ensure Your Doctor Supports Your Long Term Disability Claim

Ensuring that your doctor supports your Long Term Disability claim is a critical component of the application process.

Schedule a detailed discussion with your doctor about your condition and your intention to apply for Long Term Disability benefits. Explain the specific aspects of your job and how your medical condition impacts your ability to perform those duties. Providing your doctor with a clear understanding of your job requirements will help them provide relevant and detailed information in their medical reports.

Give your doctor copies of any necessary forms or documents that need to be completed for your LTD claim. This typically includes a physician statement or attending physician’s statement, which outlines your diagnosis, treatment plan, and how your condition affects your ability to work. Ensure your doctor maintains comprehensive and up-to-date medical records that detail your diagnosis, treatment, and response to treatment. This includes documenting all symptoms, medications, therapies, and any changes in your condition. Accurate and thorough medical records are essential for substantiating your claim.

Request a detailed letter from your doctor that specifically supports your LTD claim. The letter should explain your medical condition, the severity of your symptoms, and how these symptoms prevent you from performing your job duties. It should also include an opinion on your prognosis and the expected duration of your disability. A well-written, supportive statement from your doctor can significantly strengthen your claim.

Maintain regular follow-up appointments with your doctor to monitor your condition. Continuous documentation of your medical condition over time can provide compelling evidence of the ongoing nature of your disability. It also shows that you are actively seeking treatment and complying with medical advice.

Notify Your Employer

Informing your employer about your medical condition and your intent to apply Long Term Disability benefits is a critical step in the process. It’s important to approach this conversation with transparency and clarity to ensure that you receive the necessary support and documentation from your employer.

Be prepared to provide a medical certificate or doctor’s note if required, as employers often need documentation to support your claim. This documentation should detail your diagnosis, treatment plan, and the expected duration of your disability. It’s also beneficial to discuss any accommodations that might be necessary in the interim, such as modified duties or reduced hours, if you are still able to work in a limited capacity.

Your employer can play a key role in guiding you through the application process for LTD benefits. They can provide you with the necessary forms, which typically include an employee statement, an employer statement, and a physician statement. The employee statement requires you to provide details about your medical condition, job duties, and how your condition affects your ability to work. The employer statement includes information about your job, salary, and confirmation that you are no longer able to work due to your disability. The physician statement is completed by your healthcare provider, detailing your medical condition, treatment plan, and prognosis.

In addition to providing the forms, your employer can offer information on how to complete them correctly and submit them to the insurance company. They may also provide insights into the timeline for processing your application and receiving benefits.
If your employer offers short-term disability benefits, they can inform you about how to apply for those benefits to cover the waiting period before your LTD benefits begin. Understanding your rights and the resources available to you through your employer’s benefit plan is crucial for ensuring you receive the support you need during this challenging time.

Maintaining open communication with your employer throughout this process can help ensure a smooth application for LTD benefits and provide you with the necessary support during your disability.

Complete the Application Forms

Obtain the application forms for LTD benefits from your employer, disability insurance company, or benefits administrator. These forms usually include:

Employee statement/ Application Form: This is for you to fill out and includes details about your medical condition, job duties, and how your condition affects your ability to work.

Employer statement: This form is for your employer to fill out and includes information about your job, salary, and confirmation that you are no longer working due to your disability.

Physician statement: This form is for your doctor to fill out medical information from your healthcare provider, including diagnosis, treatment plan, and prognosis.

Submit Your Application

Submit the completed application forms and supporting documentation to your disability insurance company or benefits administrator. Ensure you keep copies of all documents for your records.

Accommodate Reasonable Requests for More Information from Your Disability Insurance Provider

As part of the review process, the disability insurer may contact you for additional information or clarification. This could include requesting more detailed medical records, additional physician statements, or further documentation of your job duties and how your condition impacts your ability to perform them. They might also ask for clarification on any inconsistencies or gaps in the information provided.

It’s essential to respond promptly and thoroughly to any requests from the insurance company. Delays in providing the requested information can prolong the review process and potentially impact the decision on your claim. Make sure you have all your documents organized and accessible to facilitate quick responses.

Additionally, the insurance company may schedule independent medical examinations (IMEs) or functional capacity evaluations (FCEs) to gain a more comprehensive understanding of your condition. These evaluations are conducted by healthcare professionals chosen by the insurer to provide an objective assessment of your disability. Cooperation with these evaluations is crucial, as failure to attend or participate can result in delays or denials of your claim.

Wait for Approval

The disability insurance company will review your application and supporting documents thoroughly. This process can take several weeks to months, depending on the complexity of your case and the volume of claims the insurer is handling. During this review period, the disability insurance company will assess all the information you have provided to determine your eligibility for Long Term Disability benefits.

During this period, maintain regular contact with your healthcare providers to ensure that your medical documentation remains up-to-date. Continuous treatment and regular medical appointments provide ongoing evidence of your condition and its impact on your daily life and work capabilities.

Receive Benefits Decision

Once the review is complete, you will receive a decision regarding your LTD benefits. If approved, you will start receiving monthly disability payments according to the terms of your policy. If your claim is denied, you will receive an explanation for the denial and information on how to appeal the decision.

Be prepared for the possibility of initial claim denials, as some disability insurers may deny claims on the first submission. If this happens, you have the right to appeal the decision. An appeal typically involves submitting additional medical evidence, detailed explanations, and possibly legal assistance to strengthen your case.

Maintain Ongoing Communication

Once your LTD benefits are approved, maintain ongoing communication with your insurance company and healthcare providers. You may need to provide periodic updates on your medical condition and undergo regular medical evaluations to continue receiving benefits. These updates usually involve providing recent medical reports from your healthcare providers that detail your current health status, treatments you are undergoing, and any progress or setbacks.

Its important to continue to see your healthcare providers regularly. This not only ensures that you receive the necessary medical care for your condition but also provides ongoing documentation of your disability. Regular appointments and treatments help to create a continuous record of your health status, which is important for proving the persistence of your disability.

Lump-sum Settlements for Long Term Disability

A lump-sum settlement for Long Term Disability is a payment made by an insurance company to settle a disability claim in a single, one-time payment. This type of settlement provides immediate access to a larger sum of money. These settlements generally occur during a disputed disability claim, and often involve a lawsuit between the disabled party and the insurance provider. To avoid the costs of going to trial, the insurance provider will offer a settlement amount to resolve the issue and close the claim.

One of the primary advantages of a lump-sum settlement is the immediate access to funds, which can help cover medical expenses, living expenses, or other financial obligations. Additionally, a lump-sum settlement can provide closure, as it resolves the disability claim and eliminates the need for ongoing communication and paperwork with the insurance company.

However, there are considerations to keep in mind when contemplating a lump-sum settlement. One important factor is that the lump sum is typically less than the total value of the remaining monthly payments. This means that by accepting a lump-sum settlement, you may receive less money overall compared to if you continued to receive monthly disability payments. Another consideration is the potential loss of future benefits. Once you accept a lump-sum settlement, you may no longer be eligible for future disability benefits from that claim, even if your disability persists or worsens in the future.

The negotiation process for a lump-sum settlement involves evaluating the offer from the insurance company, negotiating a higher amount if necessary, and ultimately reaching an agreement on the settlement amount. It’s advisable to consult with a disability insurance lawyer before accepting a lump-sum settlement. A lawyer can help you understand your rights, evaluate the settlement offer, and negotiate a fair settlement that meets your financial needs.

If you are in need of legal advice or representation for your Long Term Disability claim and would like assistance in settling your claim for a fair amount, our lawyers are here to help. Contact us today and tell us more about your Long term disability claim.

What to Do If Your Long Term Disability Application is Denied

If your Long Term Disability application is denied, it can be a frustrating and stressful experience. However, there are steps you can take to appeal the decision and improve your chances of obtaining the benefits you need.

Carefully read the denial letter from the insurance company. It should provide specific reasons for the denial, such as insufficient medical evidence, not meeting the policy’s definition of disability, or missing documentation. Understanding the exact reasons for the denial is crucial for preparing a strong appeal. Contact the insurance company and request a complete copy of your claim file. This file contains all the documents and evidence the insurer used to make their decision. Reviewing your claim file can help you identify any missing or inadequate information and understand the insurer’s rationale.

Each insurance company has its own appeal process and deadlines. Make sure you understand the specific procedures and timelines for filing an appeal. This information is usually outlined in the denial letter or your policy documents. Missing an appeal deadline can result in the loss of your right to contest the denial.

You can strengthen your appeal by gathering additional medical evidence and documentation. This may include obtaining more detailed medical records, additional statements from your healthcare providers, or new diagnostic tests. Ensure that your healthcare providers understand the specific requirements of your LTD policy and can provide evidence that directly addresses the insurer’s reasons for denial. Draft a comprehensive appeal letter that addresses each reason for the denial and provides evidence to counter the insurer’s decision. Explain why you meet the policy’s definition of disability and how your condition affects your ability to work. Include any new medical evidence and documentation that supports your claim.

If your appeal is denied, you have the option to file a lawsuit against the insurance company. This step should be taken with the guidance of a disability lawyer, as litigation can be complex and time-consuming. A lawyer can help you navigate the legal process and work towards a favorable outcome. By being proactive in gathering evidence and communicating with the insurance company, you can improve your chances of overturning the denial and securing the Long Term Disability benefits you need.

If you are in need of legal advice or representation for your Long Term Disability claim and would like assistance in settling your claim for a fair amount, our lawyers are here to help. Contact us today and tell us more about your claim.

To learn more about what to do if your LTD claim is denied check out our video here.

What to Do After Your Long Term Disability Application is Approved

Once your Long Term Disability benefits are approved, there are several issues you may encounter that require ongoing attention and management.

Periodic Medical Reviews

The disability insurance company will likely require regular updates on your medical condition to ensure you continue to meet the criteria for LTD benefits. This can involve submitting updated medical records, attending additional medical evaluations, or providing progress reports from your healthcare providers. Ensuring you keep detailed and current medical documentation is essential to avoid interruptions in your benefits.
Changes in Health Condition: Any changes in your health, whether improvements or deteriorations, can impact your eligibility for LTD benefits. It’s crucial to promptly inform your insurance company of any significant changes in your medical condition. Failure to report such changes can result in complications with your claim, including potential benefit termination.

Compliance with Treatment Plans

You are generally required to follow prescribed treatment plans and attend regular medical appointments. Non-compliance can lead to a reduction or termination of your benefits. Ensuring that you adhere to your treatment plans and documenting your compliance is critical for maintaining your LTD benefits.

Income and Work-Related Changes

If you attempt to return to work, even on a part-time basis, or if you have any changes in income, you must inform your insurance company. Some LTD policies have provisions for partial disability benefits if you can work in a reduced capacity, but not reporting these changes can lead to overpayments or termination of benefits.

Rehabilitation and Vocational Programs

The insurance company may require you to participate in rehabilitation or vocational programs aimed at helping you return to work. These programs are designed to assess and improve your ability to re-enter the workforce. Cooperating with these programs is typically necessary to continue receiving benefits.

Long Term Disability and Employment in Canada

Navigating Long Term Disability and employment in Canada involves understanding the interplay between your disability benefits and your work situation. Here’s a comprehensive look at how these elements interact.

Am I Still Employed While on Long Term Disability in Canada?

While on Long term disability in Canada, your employment status can vary depending on your employer’s policies and the terms of your LTD plan. Here are some common scenarios:

Employment Status Maintained

Some employers maintain your employment status while you are on LTD. This means that you are technically still an employee, even though you are not actively working. In this case, you may retain certain benefits associated with employment, such as access to group insurance plans or pension contributions. Your employer may also have a policy that allows you to return to work if your condition improves.

Temporary Leave

In some cases, being on LTD is considered a temporary leave of absence from your job. Your employer may hold your position for you while you are on leave, with the expectation that you will return to work once you are able. During this time, you may continue to accrue seniority and other employment-related benefits.

Termination of Employment

In other cases, especially if your disability is expected to be Long term or permanent, your employer may terminate your employment after a certain period of disability. This can happen if it becomes clear that you will not be able to return to work in the foreseeable future. In this situation, you would typically receive a severance package or other termination benefits as outlined in your employment contract or collective agreement.

It’s important to review your employment contract, collective agreement, and LTD policy to understand how your employment status is affected while you are on LTD. If you have questions or concerns about your employment status, consider seeking advice from a disability lawyer who can provide guidance based on your specific situation.

Are Long Term Disability Benefits Considered Earned Income in Canada?

No, Long Term Disability benefits are not considered earned income in Canada. Unlike employment income, which is earned through active work, LTD benefits are payments received due to a disability that prevents you from working. As such, LTD benefits are typically not subject to employment insurance (EI) premiums or Canada Pension Plan (CPP) contributions, and they do not count as earned income for tax purposes.

However, LTD benefits are generally considered taxable income, so you may need to report them on your tax return.

Can I Work While on Long Term Disability in Canada?

Yes, you can work while on Long Term Disability in Canada, but there are important factors to consider. Review your LTD policy to understand any restrictions or guidelines regarding employment while receiving benefits. Some policies allow for limited work, while others may restrict any form of employment. Working while on LTD can affect your benefits. Your LTD benefits may be reduced based on the income you earn from employment. The exact amount of reduction will depend on your policy and the terms of your LTD plan. Working while on LTD could prompt a reassessment of your disability status by your insurance provider. If they determine that you are no longer disabled or that your disability has improved, they may terminate your LTD benefits.

Can I be Fired While on Long Term Disability in Canada?

Yes, you can be fired while on Long Term Disability in Canada, but there are legal considerations and protections in place to prevent unfair dismissal. Each province and territory has its own employment standards legislation that sets out rules for termination, generally prohibiting firing someone solely because they are on LTD. Human rights laws protect individuals from discrimination based on disability. If terminated while on LTD, you are entitled to reasonable notice or pay in lieu, as well as any severance pay owed. Some LTD policies require attempting to return to work if able; refusal without valid reasons could lead to termination. If unfairly terminated, seek advice from a lawyer to understand your rights and options.

Does Long Term Disability Affect My Pension in Canada?

Long Term Disability benefits can impact your pension in Canada, depending on the type of pension you have and the terms of your LTD plan. If you have a defined benefit pension plan, your pension benefits may be reduced by the amount of LTD benefits you receive. Some plans allow concurrent receipt of both pension and LTD benefits, up to a certain limit. Defined contribution pension plans are generally not affected by LTD benefits.

Government pensions, such as Canada Pension Plan (CPP) or Quebec Pension Plan (QPP) disability benefits, may be reduced based on your receipt of LTD benefits. Both LTD benefits and pension income are typically taxable. It’s important to review your plan documents and consult with a disability lawyer to understand how LTD benefits may impact your pension.

Long Term Disability and Taxes in Canada

The potential tax implications of going on Long Term Disability in Canada can be confusing, it is important to understand how going on LTD may affect your owed taxes and the tax credits you are eligible for.

Are Long Term Disability Benefits Taxable in Canada?

Long-Term Disability (LTD) benefits in Canada are generally subject to taxation, depending on who paid the premiums for the insurance policy.

If your employer paid the premiums for your LTD insurance or if the premiums were paid through a group insurance plan funded by your employer, then the benefits you receive from this policy are considered taxable income. This means that you will need to report these benefits on your income tax return, and they will be included in your total taxable income for the year.

On the other hand, if you paid the premiums for your LTD insurance policy yourself, using after-tax dollars, the benefits you receive are typically not taxable. This scenario often applies to individual insurance policies where you bear the full cost of the premiums. Since you have already paid taxes on the money used to purchase the policy, the benefits received from it are not subject to additional taxation.

Am I Eligible for Tax Credits While Receiving Long Term Disability Benefits?

Yes, you may be eligible for certain tax credits while receiving Long Term Disability (LTD) benefits in Canada. These tax credits can help reduce the amount of tax you owe. Below are some key tax credits that you might be eligible for.

Disability Tax Credit (DTC)

The Disability Tax Credit is designed to help reduce the financial burden for people with disabilities. To qualify, you must have a severe and prolonged impairment in physical or mental functions, as certified by a qualified medical practitioner. Being approved for the DTC can also open up other benefits, such as the Registered Disability Savings Plan (RDSP).

Canada Caregiver Credit (CCC)

If you are supporting a spouse or common-law partner, or a dependent with a physical or mental impairment, you may be eligible for the Canada Caregiver Credit. This credit is designed to help caregivers offset some of the financial costs of providing care.

Provincial and Territorial Credits

In addition to federal tax credits, many provinces and territories offer their own tax credits for individuals with disabilities. These can vary widely, so it’s important to check with your provincial or territorial tax authority to see what additional credits may be available to you.

Long Term Disability FAQ

Below are the answers to some frequently asked questions people have about Long Term Disability benefits.

How Do I Qualify for Long Term Disability Benefits?

Qualification for LTD benefits usually requires a medical condition that prevents you from performing the essential duties of your job. You will need to provide comprehensive medical documentation, including doctor’s notes, medical records, and possibly undergo independent medical examinations.

How Long Do Long Term Disability Benefits Last?

LTD benefits can last until you recover, retire, or reach the end of the benefit period specified in your policy. Some policies provide benefits up to a certain age, such as 65, while others may have a maximum duration of benefits, like two or five years.

How Long Does it Take to Receive Long Term Disability Benefits?

The approval process for LTD benefits can take several weeks to months. The insurance company will review your application and supporting documents and may contact you for additional information or clarification.

What Happens if My Long Term Disability Claim is Denied?

If your LTD claim is denied, you can appeal the decision. This typically involves providing additional medical evidence or clarification to support your claim. Consulting with a lawyer specializing in disability claims can help navigate the appeal process.

Does Long Term Disability Affect My Pension?

LTD benefits can impact your pension depending on the type of pension plan you have and the terms of your LTD policy. Defined benefit plans may reduce your pension benefits based on LTD payments, while defined contribution plans are typically unaffected. Government pensions like CPP disability may also be affected.

Am I Eligible for Tax Credits While Receiving Long Term Disability Benefits?

Yes, you may be eligible for tax credits such as the Disability Tax Credit (DTC), Canada Caregiver Credit (CCC), and Medical Expense Tax Credit. These credits can help reduce your tax liability. Consult with a tax professional to understand your eligibility and how to apply for these credits.

Contact Nova Injury Law Today & Get Support for Your Long Term Disability Claim

Navigating the complexities of Long Term Disability (LTD) insurance in Canada can be challenging, but understanding your rights and the processes involved is crucial for ensuring you receive the support you need. LTD benefits provide essential financial assistance during periods when you are unable to work due to a serious illness or injury. Knowing how to qualify, apply, and manage your LTD benefits, including understanding the tax implications and your rights under employment law, can help you make informed decisions and safeguard your financial stability.

If you have more questions or face challenges with your LTD application or benefits, call Nova Injury Law today to book your free case review and learn more about your Long Term Disability claim!