So you want to know how to apply for long-term disability insurance benefits in Canada?
Are you looking for someone to give you an overview of group disability insurance; tell you what you need to know; and to show you an action plan for applying for benefits?
If so, you have found the right article. Keep reading.
About this Article
This Guide provides you, the person wanting to apply for group disability insurance benefits, with the information you need to prepare your application. I have put warnings throughout the article to help you avoid common mistakes that people make when applying for disability insurance benefits. I have been publishing law blogs since 2005, but this is by far the most ambitious (and lengthy) blog article I have ever written. If I were to follow the “usual” advice given to bloggers, I would have split this article into several separate posts, or published it as a mini-eBook. I didn’t do either of these things because I want to make this information as accessible as possible and believe readers are best served by having the information all in one place.
Given the length of this article, I have organized it into four parts:
Part I: Overview of Group Disability Insurance. In Part I, I start with an introduction to group disability insurance and discuss the common types of benefits. I then give a brief overview of the laws, regulations and rules that apply to disability insurance benefits. I end with an overview of the most important government disability benefits programs and discuss how they may affect you.
Part II: Important Disability Insurance Words, Phrases, and Concepts. The world of disability insurance has its own language. In Part II, I review the most important words, phrases and concepts you need to know when applying for disability benefits.
Part III: Eligibility to Apply for Disability Insurance Benefits. You may have disability insurance, but are you eligible to apply benefits? In Part III, I explain the eligibility criteria so you can see how they apply in your own situation.
Part IV: 6-Step Action Plan to Apply for Disability Insurance Benefits. In Part IV, I set out a 6-step action that you can follow when applying or disability benefits.
Part I: Part I: Overview of Group Disability Insurance
What Is Group Disability Insurance?
There are two types of disability insurance: group disability insurance and individual disability insurance. Of the two, most people in Canada have group disability insurance. Your disability insurance is likely a group insurance plan, if one of the following situations applies to you:
- you get your disability insurance benefits though your employment
- you get your disability insurance benefits from membership in an organization (e.g., professional association, union, Chamber of Commerce, etc)
- you pay for disability insurance on a loan (i.e., mortgages, car loans, lines of credit)
Having group disability insurance simply means that you are insured as part of a group, as opposed to buying your own personal insurance policy. The group shares a common sponsor, which is usually an employer, professional organization, union, or bank. The sponsor buys the group insurance policy for the benefit of members (i.e., you). Members can pay some or all of the premiums associated with the cost of the group plan, but these are paid to the employer, not the insurer.
What Are The Types Benefits Provided By Group Disability Insurance?
There are three types of group disability insurance benefits: 1) short-term disability benefits; 2) long-term disability benefits; and 3) creditor disability benefits. Short-term and long-term disability benefits are provided in a group benefits plan through your employer, union or association. Creditor disability insurance is provided by your bank; financial institution; or credit card.
WARNING: Disability insurance policies are rarely the same. For this reason, you cannot presume to know the details of your benefits based on the experiences others (i.e., friends, family or acquaintances). This is a common mistake.
1. Short-term Disability Benefits
Short-term disability benefits are often (but not always) included as part of a group disability benefits plan. As the name suggests, short-term disability benefits provide disability payments during “short-term” absences from work. The insurance company issues payments to you weekly or bi-weekly. The payment amount is a percentage of your base salary (e.g., 60%, of pre-disability weekly earnings) or a specific amount (e.g., $500 per week). The benefit period (maximum time you can receive payments) is usually between 3 to 6 months.
2. Long-term Disability Benefits
Long-term disability benefits provide monthly payments during longer absences from the workplace. To become eligible for payment, you must be of-work continuously a minimum number of days (e.g., 3 to 6 months). Insurance companies refer to this time off work as the “waiting period” or “elimination period”. Monthly payments are a percentage of your salary (e.g., 60 to 70% of salary) or a specific dollar amount (e.g., $2,000 per month), or a combination of both (e.g. benefits are 66% of monthly salary, up to a maximum of $4,000 per month). The exact amounts or percentages are found in your insurance policy. The benefit period (maximum time you can receive benefits) can be a certain number of years (e.g., 2, 5, or 10 years) or until you reach a certain age (e.g., 60, 65 or 67), or a combination of both (e.g., a maximum of 10 years or to age 65).
3. Creditor Disability Insurance
It is now common for people to have disability insurance attached directly to debts, including car loans, leases, visa balances, mortgages, and lines of credit. This is called creditor insurance. In these situations, the financial institution is the sponsor (as opposed to the employer, union or professional association) and buys a group insurance policy. You become part of the group when you take the loan from the sponsor (e.g., bank, credit card company) and agree to pay the monthly premiums. Creditor insurance is different from other disability benefits because insurer makes loan payments on your behalf, rather than sending the money to you.
What Laws, Regulations & Rules Apply To Group Disability Insurance Benefits?
You should have a basic understanding of the laws, regulations and rules that apply to disability insurance benefits. Like the old cliche, it’s hard to win if you don’t know the rules of the game. The rules of the game come from three areas: 1) your group insurance policy; 2) your province’s Insurance Act & regulations; and 3) the case-law from your province and the Supreme Court of Canada.
1. Your Group Insurance Policy
Your group insurance policy (also called the master policy) is the most important source for the rules that apply to your disability benefits. Every insurance policy can be different. This is why it is so important for you understand the specific terms found in your group disability insurance plan. The master policy sets out specific rules about your benefits, such as: eligibility criteria; the deadlines for submitting an application; the formula for calculating the amount of your monthly payment; whether your monthly payments are subject to income tax; the maximum time payments can be paid; and the deadline to sue the insurance company after a denial of benefits.
WARNING: Even though the master policy is the most important source of the rules that will apply to you, it is virtually impossible for you to get a copy of it. As a group member, you do not have a legal right to a copy of the master policy, and most employers and insurance companies will refuse to give it to you. You are legally entitled to a certificate or booklet that summarizes the benefits and important deadlines. If the insurance company denies your application, you can get a copy of the master policy in the context of a lawsuit against the insurance company.
2. Provincial Insurance Acts and Regulations
In Canada, insurance is regulated province-by-province. This means each province has its own insurance laws and regulations. It is beyond the scope of this article for me to review each of the provincial Insurance Acts, but it is important that you know they exist. Look for a section of the Act dealing with group insurance benefits.
WARNING: If you do not have legal training, I caution you against trying to interpret provincial insurance laws and regulations. There is both an art and science to interpreting the meaning of legislation and regulations. There are many books written on how to do this. Unfortunately, the common sense interpretation of the words and phrases found in the insurance acts and regulations is not always the proper interpretation.
Many of the principles and rules governing group disability benefits are found in the court decisions of each province and the Supreme Court of Canada. These court decisions interpret common clauses found in insurance policies and set out the rules insurance companies must follow when considering your application for benefits.
WARNING: If you do not have legal training, I caution you against trying to interpret the legal principles that arise from case-law in Canada. Some principles and rules are clear, but others are more nuanced. There are court cases interpreting other court cases. Some cases get changed or modified by higher courts.
Government Disability Benefits Programs
It is important that you are aware of other disability programs that might apply to your situation. All modern group disability insurance policies require you to also apply for disability benefits from other sources, if you are eligible to do so. This is only for the benefit of the insurance company because they get to reduce what they pay you by the amount you receive from another disability benefits providers. There are three other disability benefits providers that may apply to your situation: 1) Employment Insurance Program 2) CPP Disability Benefits Program; and 3) Provincial Workers Compensation Programs.
WARNING: You must apply for disability benefits from other programs if there is any chance that you may qualify. Most group insurance policies allow the insurance company to reduce what it is paying you by what you are “entitled to receive” from other providers, even if you do not actually receive these other payments. If you are not diligent in applying for these other payments, the Insurance Company will simply reduce your monthly payments by what they believe you should receive from the other provider. You can create a real mess if you miss the deadlines for apply for these other benefits.
1. Employment Insurance (EI) Sickness Benefits
The Federal Government’s EI Sickness Program pays short-term disability benefits to people who are unable to work because of illness or disability. Benefits are 55% of the applicant’s weekly income (up to a maximum of $501 per week). You can receive payments for a maximum of 15 weeks. To be eligible for this program, you must have paid into the employment insurance program for a minimum number of weeks; establish your are unable to work because of illness or disability; and, have not already made a recent EI claim.
2. Canada Pension Plan Disability
The Federal Government operates the Canada Pension Plan (CPP) disability program. The CPP disability program is governed by the Department of Human Resources and Skills Development Canada and is administered by Service Canada. You can qualify for CPP disability benefits if you made recent payments to the CPP program; meet the minimum contribution requirements; and prove you are disabled as defined by the CPP legislation.
3. Workers Compensation Boards
Workers Compensation Boards operate as provincial government agencies to provide long-term disability benefits for people injured during the course of their employment. You will qualify for benefits if your employer is covered by the Workers Compensation Program; you were injured in the course of your employment; and you are disabled as defined by your provinces’ workers compensation legislation.
PART II: Important Disability Insurance Words, Phrases, and Concepts
It is important that you understand the language used in the context of disability insurance. Below I have set out the most common words, phrases and concepts:
Plan Sponsor: This is what the insurance company calls the business or organization that buys the group insurance policy. The group insurance policy is a contract between the insurance company and the plan sponsor. The Plan Sponsor is usually an employer, union or professional association that buys the group insurance policy for the benefit of its members.
Onset-Date: The onset dates refers to the date your first noticed symptoms of the medical condition that resulted in you eventually leaving work.
Last Day of Work: This is the last day you reported for work before going off work. This is an important date because it triggers the start of the waiting period for long-term disability benefits.
Waiting Period: The waiting period (also called elimination period) refers to the number of days that you must be off work before you become eligible to apply for long-term disability benefits. The length of the waiting period is different in each insurance policy, but it is usually between three to six months.
Date of Enrolment: This is the date you originally signed-up for the group insurance plan. This date is important because your disability insurance policy sometimes does not cover you for a certain number of days or months (probationary period) following the date of enrollment. The precise number of days is different in each insurance policy.
Benefit Start Date: The benefit start date refers to the first day you would be entitled to receive payment of disability benefits after finishing the waiting period. For example, if your waiting period ends on July 5, then your benefit start date could be August 5, and if you qualify for benefits, you would be paid on the 5th day of each month after that.
Total Disability: Total disability is a general term that essentially means that you are unable to work or hold down a job. The precise wording is different in each insurance policy. Most long-term disability insurance policies have two definitions of total disability: The first deals with total disability from your own job (i.e., own occupation) and the second deals with total disability from any employment (i.e., any occupation). Typically, for the first two years following the benefit start date, you will be “totally disabled” if you cannot perform the essential duties of your own job. After two years, you will only be “totally disabled” if you can’t perform the duties of any job.
Own Occupation: Own occupation refers to the job or occupation that you held at the time you went off work. Depending on the wording of your insurance policy, this can mean your exact job with your employer, or it can mean your job type with any similar employer.
Any Occupation: Any occupation refers to jobs and work other than the type of work you did at the time you went off work. While your disability may prevent you from returning usual job, you many be able to do other types of jobs that are less strenuous or better suited to your disability or limitations. The precise definition of “any occupation” is different in each insurance policy; however, the Supreme Court of Canada has ruled that, no matter the precise wording, the concept of “any occupation” does not literally mean any occupation. The alternate occupation must be suitable based on a number of factors, including your age, education and work experience.
PART III: Are you eligible to receive disability benefits?
Even if you have group disability insurance, you still must be eligible to apply for benefits. Disability insurance plans do not apply in every situation. In addition to being unable to work, there are other conditions you must meet in order to apply for benefits.
Are You Outside Of The Initial Enrolment Probation Period?
Most disability insurance policies include an initial probationary period of a few months following your initial enrollment in the disability plan. This means the policy may not cover any disability you suffer within the first few months after you enroll in the disability plan. This condition is intended to prevent people from running out and buying insurance once they believe they may be sick or will become disabled. The exact duration of the probationary period is listed in each policy. This will usually only be an issue if you have been working with your employer for less than six months.
Are You Unable To Work Because Of An “Accident” or “Illness”?
It is important to understand that the “cause” of your disability will be an important factor in determining if you are eligible to make a claim for disability insurance benefits. Each group insurance policy is different, so it is important to read your own benefits booklet to see what “causes” of disability are covered. For example, some policies will only cover disability arising from “accidents”, but others will also cover disability arising from “accidents or illness”. Disability arising from suicide attempts may not be covered by disability insurance. Some risky behaviors like skydiving may not be covered.
WARNING: It is important to know that the terms “accident” and “illness” have unique meanings within the context of disability insurance policies. The meaning of these words within insurance policies is more nuanced than the ordinary meanings of these words. These phases have a long history of being interpreted by courts. It is important for you to consult a lawyer, experienced in disability insurance law, to help determine if your situation constitutes an “accident” or “illness” as defined by your insurance policy.
Is Your Disability Caused by a Workplace Accident?
Workplace accidents are sometimes not covered by disability insurance. Or if they are covered, the insurance company gets to deduct the payments you are entitled to receive from your province’s workers compensation program, which in many cases will meet or exceed the benefits owing under the disability insurance policy.
Have you Passed the Waiting Period?
All long-term disability insurance policies require you to be off work continuously for a certain period of time before you become eligible for benefits. Insurance companies call this the “waiting period” or the “elimination period”. There is no standard length for the waiting period, but it usually is between 3 to 6 months.
PART IV: Your 6-Step Action Plan to apply for disability benefits
Parts I, II and III of this article focused on teaching you what you need to know about group disability insurance and how to determine if you are eligible to apply for benefits. In Part IV, I will take you though a 6-Step Acton Plan to apply for disability benefits.
Step 1: Educate Yourself & Gather Information
If you are reading this article, you are already on Step 1. If you choose to prepare your own disability insurance application (without consulting a lawyer), read your disability benefits booklet and try to learn as much as you can about disability insurance benefits. Many people charge blindly ahead. This approach means you will be more likely to make mistakes that will hurt your application.
Get a copy of your group benefits booklet from your plan sponsor, which will be your employer, union or professional organization. Most often they will give you a paper booklet, but sometimes this information is only available online, so they may direct you to a website Once you have your benefits booklet (or have found the online information) read though it and try to answer the following questions:
- Do I have short-term disability benefits? If yes, how much is paid per week? What is the maximum number of days or weeks paid?
- What is the waiting period for long-term disability benefits? What is the formula for calculating the long-term disability monthly payment amount?
- What is the benefit period for long-term disability benefits? Is it a specific number of years (i.e., 2, 5, or 10), or is it payable to a certain age (i.e., age 65), or is it some combination of both (e.g., payable for 5 years or to age 65, whichever happens first).
- What is the definition of total disability?
- Is there an “own occupation” clause? If so, how is it defined? How many months or years will the occupation criteria apply?
- Is there an “any occupation” clause? If so, how is it defined? Are there any other restrictions on payment of benefits?
Step 2: Get A Medical Note From Your Doctor
Once you leave work, arrange for your doctor to give you a medical note or letter confirming you are unable to work because of illness or disability. This does not need to be a lengthy letter or report (that will come later). A simple handwritten note on a prescription pad will do, as long as it says that you will not be reporting for work because of a medical illness or disability. Ideally, your doctor should give some explanation for how long he or she expects you to be out of the workforce (e.g., off work indefinitely, but to be re-assessed in one month).
WARNING: Do not leave work until you have a doctor supporting your decision to do so. If your doctor does not support you, and you truly believe you cannot work, then you must seriously consider switching to a new doctor. Sometimes you may have to delay leaving work, and continue to struggle, until your doctor is convinced you really have done all you can do to keep working. On the other hand, there is a wide range in competence and attitudes between doctors in Canada. Just because your current doctor doesn’t support you, does not mean he or she is right or being fair. Your doctor may lack an understanding of your illness or condition, or her or she may simply be biased or prejudiced against anyone who applies for disability benefits. Such doctors are rare, but I have certainly encountered them in my law practice and they create problems for you.
Step 3: Inform Your Employer (In Writing) That You Require An Extended Leave From Work For Medical Reasons
Once you have the medical note from your doctor, the next thing you need to do is write a letter to your employer telling them you will be absent from work because of illness or disability. You should attach a copy of your doctor’s note (from Step 2) to this letter. Under the terms of your employment, you have a duty to advise your employer that you can no longer do your job. You also have to provide them with medical evidence (i.e., doctor’s note) to support what you are saying. Once you have informed your employer you can’t work because of disability (your letter & doctors note), your employment will be protected under provincial labour laws and human rights codes. From a legal point of view, there is a big difference between resigning (or quitting) your job and having to leave of absence from work for medical reasons. While on medical leave you continue to have the status as being “employed”, which continues your participation in your medical and dental plan, pension plan, and other workplace benefits.
WARNING: Do not quit or resign from your job. Most people are better off taking a medical leave from work, as opposed to resigning or quitting. There are some situations where it makes sense for you to resign, but your need to carefully consider such a decision. Impulsively quitting or resigning your job can cause all kinds of unnecessary problems for you: You may un-necessarily lose entitlement to other workplace benefits, like your medical and dental plan. You open the door for the insurance company to deny your application on the basis that you quit your job for reasons other than disability. You want to avoid all of these problems.
Step 4: Apply For Short-term Disability Benefits Or EI Sickness Benefits
Once you tell your employer that you will be absent from work because of disability, you should apply for short-term disability benefits or EI sickness benefits as soon as possible.
1. Sick Leave
Some employers provide paid sick leave benefits in addition to short-term disability benefits. Usually people only have a several days of paid sick leave, but in some cases people have weeks or months of “banked” sick time available to them. You need to use all paid sick leave before you can receive disability insurance payments.
WARNING: You should not delay submitting your application for disability insurance benefits just because you are being paid sick leave benefits. Many people wrongly assume that they should just apply for apply for disability insurance benefits only after exhausting all sick leave benefits. This is a big mistake. There are deadlines to apply for disability benefits. You can easily miss a deadline if you stop paying attention to your disability insurance policy because receiving sick leave benefits for several months. Many employers are unaware of these deadlines and will not warn you about them, or even worse will tell you delay your application for disability benefits.
2. Short-term Disability Benefits
Get the application package for short-term disability benefits as soon as possible. Depending on your situation, you will get the application package from your employer, your union or your professional association. All packages are different, but usually contain the same types of forms. There will be a notice of claim form (for you to fill out); an employers report form (for your employer to fill out); and a medical report form (for your doctor to fill out). You need to complete these forms and return them to the insurance company as soon as possible. The insurance company will not process your application until it has received all of the forms.
3. EI Sickness Benefits
If you don’t have short-term disability benefits, and have less than 15 weeks of paid sick leave, then you will want to apply for EI sickness benefits as soon as possible. Service Canada’s website has information about EI Sickness benefits and you can download the application forms from their website. You can apply online for EI Sickness benefits, but you will still need to get a medical report from your doctor and a Record of Employment from your employer. Service Canada will not process your application for EI sickness benefits until it has received your medical report and the ROE from your employer.
Step 5: Cooperate With Reasonable Requests By The Insurance Company
Once you are approved for short-term disability benefits, the insurance company will stay in touch with you. Some insurance companies will just want monthly updates on how you are doing, but others will ask you to attend appointments with their doctors or to enroll in their a return-to-work program. The terms of most group insurance policies allow the insurance company to require you to attend medical appointments and enroll in return-t0-work therapy programs. You should co-operate with any reasonable request to attend such appointments or programs, even if you personally believe they are a waste of time. You should only refuse to participate in medical appointments or programs if your doctor believes you are medically unable to do so, or if doing so would cause your health to worsen.
Step 6: Prepare And Submit Your Application For Long-term Disability Benefits
The last step is to submit your application for long-term disability benefits. You should start preparing your application for long-term benefits at least a two months before the end of your benefits from short-term disability benefits or EI sickness. Getting your application to the insurance company early will facilitate a smooth transition from short-term disability to long-term disability, without disruption in monthly payments. The application forms for long-term disability are basically the same as those used to apply for short-term disability benefits. There is a notice of claim form (you fill out); an employers report form (that your employer fills out) and a medical report form (that your doctor fills out). It is your responsibility to make sure these forms are filled out properly and sent to the insurance company.
WARNING: It is important for you to review the employers report for accuracy, before submitting it to the insurance company. You employer will be asked to describe your job duties in the Employers Report. Make sure what the employer says is accurate. Some employers fill these forms out based on job descriptions that many not reflect your actual job duties. If you disagree with your employer’s description of your job duties, you should point this out to your employer, and hopefully they will make corrections on the Report. If your employer refuses to change what is written, then you should attach a sheet saying why you disagree with the Employers Report.
If I can leave you with one piece of advice, please take the time to teach yourself some of the basics of group disability insurance so you can better understand your group insurance plan and do a better job in preparing your application for benefits. In theory, the insurance system in Canada is designed to make it easy for people to apply for benefits though insurance policies. The law requires insurance companies to act in good faith; explain what benefits you are entitled to; and to help you though the application process. The reality is quite different. Some insurance companies or insurance representatives will take advantage of your lack of understanding.