The perfect resource for people looking to learn more about short-term disability benefits.
The Ultimate Guide to Short-Term Disability Benefits is full of insights and answers for people who need to manage their own short-term disability claim — from the initial application for benefits to appealing a claim denial.
I wrote this Guide is to give you a comprehensive overview of short-term disability benefits in Canada. I cover all the main topics, so you can easily scan to find the information you need. I include links to more specific articles and content in case you want to take a deeper dive into any topic.
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Table of Contents
- What are short-term disability benefits?
- Types of short-term disability benefits
- Eligibility for short-term disability benefits
- What medical conditions qualify for short-term disability?
- List of short-term disability insurance companies and claim administrators
- Rules for short-term disability benefits
- Applying for short-term disability benefits
- Appealing a denial of short-term disability benefits
- After approval of short-term disability benefits
- Employment rights and short-term disability
- Going for short-term disability to long-term disability
- Short-term disability FAQs
- Final Thoughts
What are short-term disability benefits?
Short-term disability benefits are weekly income-replacement payments made to a person who is unable to work because of short-term illness or disability.
There are two types of short-term disability benefits in Canada — those paid by employers or employer-related insurance plans and those paid by the Federal Government under the EI sickness program.
To be eligible for benefits, you must be a covered person under a disability plan or government program. The disability payment is typically based on 55-100% of your pre-disability weekly income.
Short-term disability is paid for a set period of time after you stop work, usually between 17 to 52 weeks. This period of payments is called the maximum benefit period.
Most short-term disability benefits will not start until you have exhausted all other employment-related sick leave and other paid leave such as vacation pay.
If you become unable to work because of a medical condition, you can apply for benefits from your employment-related short-term disability plan or the Employment Insurance Sickness program.
For employment-related short-term disability plans, you start the process by sending an application to the plan administrator, which is often an outside insurance company or claims management company. This is called making a claim. The insurance company or claims management company will review your application and decide to approve or deny your claim.
For EI sickness benefits, you apply directly through Service Canada.
Types of short-term disability benefits
Before we go any farther, it is important to clarify what I mean by “short-term disability benefits” in this Guide. I am referring to short-term disability benefits paid under an employer funded disability plan or an insurance policy.
I am not referring to EI sickness benefits, CPP disability, workers’ compensation, the disability tax credit, veterans’ disability or provincial income support programs, which each have their own distinct processes and qualifications.
Short-Term Disability Group Insurance Plans
Some employers in Canada provide group benefits for their employees, including medical, dental, and drug coverage. These group plans often include short-term disability benefits. So, if you have group benefits through your employment, it is possible it includes short-term disability benefits.
Employer-funded short-term disability plans
Some employers in Canada choose to fund their own short-term disability plans, rather than provide this benefit through a group insurance policy. There is a range of sophistication of these plans ranging from simply salary continuance plans, which are administered through the payroll system and require only a sick note, to complex benefits programs, that are administered by outside insurance companies and involve extensive claims adjudication and use of rehabilitation consultants.
From the outside looking in, some employer funded disability programs appear to be short-term disability insurance plans because the adjudication of claims, and payment of benefits, is handled by an insurance company. However, the employer is actually paying the benefits (behind the scenes) and the insurance company is acting as its agent.
Eligibility for short-term disability benefits
Most Canadians are not eligible for short-term disability benefits. To be eligible, you must be a member of a group that is covered by a short-term disability plan.
Employees and union members are the most common groups covered by a short-term disability plans. If your employment includes a group benefits, then it is possible that you have short-term disability benefits.
If you are self-employed, you would need to have purchased an individual disability insurance policy from a broker or through your professional association to qualify. Most individual insurance policies only pay for long-term disability, but some do provide short-term disability or critical illness benefits.
What medical conditions qualify for short-term disability
I am often asked what medical conditions qualify for short-term disability. The simple answer is that virtually any condition can potentially qualify if it causes you to experience “total disability” as defined by your policy.
Short-term disability is based on the seriousness of your symptoms, not the seriousness of the medical diagnosis. The focus is on whether the symptoms cause you to be unable to perform the essential duties of your work.
Your medical condition or diagnosis is still important because it allows for specific treatment plans. If your diagnosis is unknown, then it is harder for doctors to come up with a treatment plan. In these situations, much of the effort is focused on testing to rule out possible diagnoses. It is critical that you cooperate with testing to rule out possible conditions.
Insurance companies do not like it when there is no clear diagnosis or treatment plan. If they don’t see you working to figure it out, then they will deny your claim or stop payment of benefits.
For example, it is common for insurance companies and claims administrators to deny the following types of short-term disability claims:
- Stress leave
- Pregnancy / maternity leave
In these situations, it is critical that you have a more concrete medical diagnosis. For example, stress leave and burnout are better described as depression or anxiety. Pregnancy is not considered a disability on its own, unless there are diagnosed complications that require you to limit or stop working.
Following are common medical conditions that may qualify for disability benefits:
- Back Problems & Conditions
- Bipolar Mood Disorder
- Carpel Tunnel Syndrome
- Chronic Fatigue Syndrome
- Chronic Pain
- Complex Regional Pain Syndrome
- Crohn’s Disease
- Heart Disease
- Headache and Migraine
- Irritable Bowel Syndrome (IBS)
- Knee Disorders
- Lyme Disease
- Multiple Sclerosis
- Neck and Cervical Disorders
- Psoriatic Arthritis
- Sleep Disorders
- Vestibular Disorders
- Visual Disorders
List of short-term disability insurance companies and claim administrators
Short-term disability benefits are provided and administered by a number of different companies in Canada. Below we review the most common insurance companies and claim management companies involved with short-term disability benefits.
Short-term Disability Insurance Companies
Following is a list of insurance companies that provide short-term disability benefits in both individual and group insurance policies:
- ACA Insurance
- Assumption Life Financial Services
- Blue Cross Life Insurance Company
- BMO Life Assurance Company
- Canadian Tire Life Insurance
- Cigna / Life Insurance Company of North America
- Co-operators Life Insurance Company
- Desjardins Financial Security Assurance Company
- Empire Life Insurance Company
- Fenchurch General Insurance Company
- Great-West Life Assurance Company
- IA Excellence Life Insurance Company
- Industrial Alliance Life Insurance
- Industrial Alliance Pacific Life
- La Capitale Life Insurance
- London Life Insurance Company
- Manulife / Manufacturers Life Insurance Company
- Medavie Blue Cross
- Primerica Life Insurance Company
- RBC Life Insurance Company
- Sun Life Assurance Company of Canada
- Standard Life Insurance Company
- SSQ Life Insurance Company
- ScotiaLife Financial
- UL Mutual Company
- Wawanesa Life Insurance Company
Following is a list of short-term disability claim administrators. These are companies that administer group benefits plans, including short-term disability, on behalf of another company that is usually an employer, non-profit disability plan, or insurance company:
- Adminplex Resource Services Inc
- AAS / Automated Administration Services Inc
- AGA Benefit Solutions
- BBD / Benefits by Design
- Belmont Health & Wealth
- D.A Townley
- Dehoney Financial Group
- ECON Group Inc
- Edge Benefits
- Great West Life
- Group Health Benefit Solutions
- Johnston Group
- Johnstone’s Benefits
- Medavie Blue Cross
- Medisys Health Inc
- Morneau Shepell
- Oncidium Health Inc.
- OTIP / Ontario Teachers Insurance Plan
- People Corporation
- RWAM Insurance Administrators Inc.
- Sutton Special Risk
Employers and insurance companies hire third party administrators to act on their behalf in the adjudication and payment of disability claims. The third party administrators act as agents and pay claims on behalf of the benefits plan provider.
Rules for short-term disability benefits
I am often asked about the rules that apply to short-term disability, but the rules will vary based on your specific circumstances. The rules come from three sources:
- Your disability plan or policy
- The insurance laws and regulations for your province
- The common law of Canada
Every disability insurance policy or plan is unique. This is why it is dangerous to take advice from people who are covered under a different plan from you. The only way to know the rules that apply to you is to get a copy of your short-term disability plan or policy. The easiest way to do this is via your group benefits booklet, which you should be able to get via your employer or union.
Short-term disability benefits are regulated province by province. The provinces have very similar laws, but they are not exactly the same. Beware of taking advice from people who may be referring to the laws of another province.
Finally, the last source of rules is the common law of Canada. The common law refers to judicial decisions in long-term disability disputes that came before the courts. These judicial decisions create precedents that must be followed in subsequent cases.
Applying for short-term disability benefits
The process for how to apply for short-term disability benefits is the same for everyone. This is one area where the insurance companies all follow the same process. You need to follow these steps:
- Exhaust all paid sick leave available through your employer
- Get the form(s) to apply for short-term disability
- Send in the form(s) to apply
- Send in any supporting medical documents
- Wait for a decision from the claims administrator
Exhaust all paid sick leave
Under most disability plans, you will not become eligible for short-term disability payments until you have exhausted all other paid time off benefits from your employer, including paid sick leave and vacation days.
Acquire, fill out and send in the form(s) for short-term disability
You will usually have to send in one or more forms to apply for short-term disability. In most situation you will be dealing with a outside claims administrator or insurance company.
Normally you will need to fill out three forms:
- the Notice of Claim (you fill out);
- the Employers Report (employer fills out); and
- the Attending Doctor’s Report (your doctor fills out).
These forms are essentially the same for all short-term disability plans, but you have to use each claim adiministrator’s own version of the forms or they can reject your claim.
First you fill out the Notice of Claim form and then arrange for your employer and doctor to fill out the others. It is your responsibility to make sure that all three forms are submitted to the claims administrator, along with any other documents they request.
Once the insurance company gets all the completed forms, it will consider your application “complete.” Most insurance companies will not consider your application to be complete until they receive all the forms back.
Appealing a denial of short-term disability benefits
When an insurance company refuses to pay a claim, it is called a denial of benefits. A denial is justified if you do not qualify for benefits; however, if you believe you do qualify for benefits, then the denial can be erroneous.
All claim administrators have a process for people to dispute decisions made about their claim, including claim denials. This process starts with internal appeals and ends with a hearing before a final decision-maker. The final decision-maker will come from outside of the insurance company and will be an arbitrator, judge or jury, depending on your plan.
Let’s review some of the key things you should know about appealing a denied claim for short-term disability.
The Denial Letter
The denial letter is an important document that includes the information you need to make your appeal. By law, claim administrators must put a denial of short-term disability in writing. They do this by mailing or emailing the denial letter to you.
The denial letter will often include the reasons for the denial. The reasons for denial are important because they can serve as the basis for your appeal. A common strategy of appeal is to challenge each reason for denial with new information or medical documents. The reasons for denial can serve as the issues your doctor can address in a new medical letter in support of your appeal.
Finally, the denial letter will conclude by informing you of your right to appeal and giving you a deadline to do so. This deadline may be a specific date (ex. by June 1, 2020) or a period of time (ex. within 60 days).
Deadlines for Appeal
Depending you your disability plan, the deadline to appeal can be soft or hard. A soft deadline is one that doesn’t have legal consequences. For example, the insurance company may say that you have 30 days to appeal, but if you miss that deadline, you do not lose the right to keep appealing. On the other hand, there may be hard deadlines for appeal. Missing these deadlines may forfeit your right to pursue further action.
Levels of Appeal
There are usually two levels of appeal. These include:
- Internal appeals (up to three)
- Appeal hearing or appeal lawsuit
Let’s look at each level in more detail.
Your first appeal is called an internal appeal. This appeal is processed “internally” by the claims administrator. A second employee of the claims administrator will reconsider the denial decision made by the first employee. The new employee has the power to approve your claim.
With insurance-based plans, there are no procedures or rules for internal appeals. The denial letter is the only document that explains the deadlines and process. The deadlines are usually soft. You won’t lose your right to appeal if you miss a soft deadline. With nonprofit plans, you are more likely to see formal appeal procedures and hard deadlines. If you miss a hard deadline, you can lose your right to appeal.
Insurance companies and claims administrators allow two to three rounds of internal appeals. If you are unsuccessful with internal appeals, you can move on to the next appeal level: an appeal hearing or lawsuit.
Whether you proceed with an appeal hearing or a lawsuit will depend on your disability plan. Some employer funded plans will require you to do an appeal hearing with an arbitrator, with no option for an appeal by lawsuit. With insurance-based plans, often your only option is to make an appeal by lawsuit.
Lawsuits can get complicated. Sometimes they need to be against the insurance company, or your employer, or both.
Appeal Hearings or Arbitrations
Appeal hearings generally occur with employer funded plans involving unions. Insurance-based disability plans do not have hearings or arbitrations. Those plans use the lawsuit process as the final level of appeal.
If your disability plan has an appeal hearing, it may be your final level of appeal. The decision at the appeal hearing would be final and is binding on you and your insurance company.
Appeal by Lawsuit
The appeal by lawsuit is the final level of appeal for all insurance-based disability plans and employer funded disability plans. This means that your appeal is handled in the context of a lawsuit and a judge or jury will be the final decision-maker. The judge or jury’s decision would be enforced on you and the insurance company.
In a lawsuit, you can sometimes claim other damages in addition to the disability benefits owed under the policy. These other damages may include compensation for mental distress caused by the wrongful denial of benefits. You can also get compensation for other financial losses caused by the denial, including legal costs. Examples include interest paid on loans or losses from the forced sale of a house.
During the appeal by lawsuit, the employer and claims administrator continue to evaluate your claim and can choose to approve you for benefits before your case goes before a judge. If that happens, you can choose to stop the lawsuit, or you could continue to court to ask for compensation for mental distress and other financial losses.
- Short-term disability claim denied: Top 7 questions answered
- My short-term disability claim was denied: What are my options?
- Short-term disability denial: Do I have to return to work?
After approval of short-term disability benefits
You still have to deal with the insurance company after they approve you for short-term disability. The insurance company will monitor your medical condition and treatment. They will ask for regular updates or reports from your doctor. They may require you to see their doctor or enrol in a treatment program of their choosing, but this is more common for long-term disability. It is your responsibility to abide by the rules of your insurance policy.
To keep disability benefits, you must carefully manage your relationship with the insurance company. You will need to do what they ask, even if you disagree with it.
Continuing Medical Review
All disability plans make payment of benefits conditional on you giving them ongoing proof of total disability. The insurance company will continue to monitor your medical condition for several weeks or months to the end of the benefit period. They will require you to send in medical updates and reports from your doctor on a regular basis. They will continue to phone you for updates. Such requests tend to be more frequent the younger you are, or if they expect your medical condition to improve.
The insurance company has a legal right to perform this ongoing medical review. You have to cooperate with them or they have a right to stop your payments.
Treatment and Return to Work Programs
Once you are approved for disability benefits, the insurance company can require you to attend treatment or return to work programs. These are less common with short-term disability and more common with long-term disability. They can’t force you to go, but if you don’t, they can stop your payments. If you have been getting benefits for several months, you should expect your insurance company to require you to attend treatment. Common examples include physiotherapy, occupational therapy, and psychological therapy.
Independent Medical Examinations
Most disability plans allow the insurance company to send you to a doctor for evaluation. These medical evaluations are commonly referred to as Independent Medical Examinations (IME). These are one-time examinations focused on getting a medical-legal opinion from a doctor.
The doctor does not provide treatment and is not a replacement for your own doctor or specialist. After the examination, the doctor will send a report to the insurance company answering their questions and giving opinions on your medical conditions, treatments and ability to work.
It is common for people to not want to attend these medical examinations. Common objections are that it may be too far to travel; that the doctor’s speciality doesn’t fit with your condition; that the doctor will say negative things about you or that the doctor has terrible reviews online.
While these are valid concerns, you still need to attend the examination. The insurance company has the right to choose the doctor, even if you disagree with their choice. Failing to attend an examination will result in them stopping your payments.
Again, these types of assessments are less common with short-term disability than long-term disability. Go to the medical examination in good faith, even if the doctor has bad online reviews. You may be pleasantly surprised by the results. Sometimes the doctors will give opinions that support your keeping disability benefits.
Many people are surprised to learn that insurance companies hire private investigators to spy on people getting benefits. The younger you are, and the higher the amount of your disability payment, the more likely you are to be put under surveillance. Surveillance is more likely if you are getting long-term disability benefits, but can happen with short-term disability.
In my experience, surveillance rarely shows dramatic evidence a person is lying about being unable to work. However, if you are not careful about how you describe your physical and mental limitations, then the video can show discrepancies between what you have said you can do, and what you are shown to be doing on a video. Such discrepancies undermine your credibility, which is often the goal of the insurance company.
Video surveillance is legal as long as it is done in public spaces or from a public space. For example, an investigator can record you on your property as short as they are on the public sidewalk or road in front of your house. Online surveillance is limited to the investigator viewing information that is publicly available online.
Interaction with Employment Insurance (EI) Sickness Benefits
You cannot receive both EI sickness benefits and short-term disability benefits in the same week. If you received EI sickness payments, and were later approved for short-term disability benefits for the same period of time, then you would need to pay back the EI Program for any weeks where the short-term disability and EI payments overlapped. In these situations, you would receive a lump sum payment for “back payments” of short-term disability. You would refund the EI program through that back payment.
Employment rights on short-term disability
Two of the most common questions we get are: “Can my employer terminate me while I am on short-term disability?” and “Is my job is protected while I am on short-term disability?”
Generally speaking, employers have the right to fire a person who is on sick leave, but for practical reasons, most employers will not do this. For a firing to be legal, the employer must give the employee reasonable notice of termination, or pay severance in place of reasonable notice. This applies equally to people on sick leave as it does to people who are actively working.
As an employee on a sick leave, you may be protected by human rights laws that prevent discrimination for disability. However, protection under these laws is not absolute. Not all illnesses or sick leaves would qualify as a “disability” as defined by the human rights laws, especially if you are expected to recover in a few weeks or months.
If you are protected under human rights laws, then your employer will have a duty to accommodate your disability. In practical terms this means your employment will be protected, but not necessarily your specific job. The employer would have a duty to accommodate your permanent disability by modifying your job, allowing you to work reduced hours, or moving you to a different job within the company.
If you are on an extended sick leave that goes well beyond the short-term disability period, then your employer will eventually have the right to stop your employment without notice of termination, or having to pay severance in place of notice.
To learn more, check out our page on employment rights and disability benefits.
Going from short-term disability to long-term disability
Short-term disability benefits are meant to cover temporary absences of work because of illness or disability. The amount of time varies from plan to plan, but is generally between 17-52 weeks. The maximum number of weeks payments is called the short-term disability benefit period.
If you reach the end of the short-term disability benefit period, and still are unable to work because of illness or disability, then you may be eligible to apply for long-term disability benefits. Many group plans that include short-term disability benefits will also include long-term disability benefits.
Often the claim administrator handling your short-term disability claim will also handle your long-term disability claim. In that case, you will be given forms to transition from short-term disability to long-term disability.
If the long-term disability is handled by a different insurance company or claim administrator, then you will need to do a complete application, which would include forms for you, your employer and doctor.
Short-term disability FAQs
Let’s conclude with some quick answers to the most common questions people ask us about short-term disability benefits:
Does short-term disability cover maternity leave?
Pregnancy on its own does not qualify for short-term disability; however, medical complications associated with the pregnancy do qualify for short-term disability.
So, if you have a diagnosed complication that requires you to limit or stop work, then you can qualify for short-term disability. The key thing is to make sure your doctor explains the medical complication in detail, otherwise the insurance company will deny this claim.
Read about this in more detail here:
Pregnancy, Maternity Leave, and Disability Benefits: 6 common questions
Does short-term disability cover stress leave?
Yes and No. Short-term disability will cover a stress leave if you have a specific diagnosis of anxiety or depression and you are receiving treatment for those conditions. If your doctor just says needs time off work for stress leave, then your claim will most likely be denied.
What is the difference between short-term disability and sick leave?
Sick leave is a term usually used to describe your employment status. For example, you are an employee on “approved sick leave”. This is opposed to an employee “actively at work”. Short-term disability is a term used to describe disability benefits payable to a person on sick leave from work. A person on sick leave can receive a number of disability benefits, including short-term disability, long-term disability and Canada Pension Disability.
Can I travel out of country or go on vacation while on short-term disability?
Technically you may be able to travel while receiving short-term disability, but I would advise against it. You need to show that you are 100% committed to your recovery and traveling out country or taking a vacation will send the wrong message to the insurer or claims administrator.
Vacations and travel out of country are more appropriate when you are on long-term disability and your disability and treatment plan are established.
How much does short-term disability pay?
The amount paid by short-term disability is different from plan to plan. The amount of pay ranges from 55% of weekly income up to 100% of weekly income depending on the plan. You would need to review your own short-term disability plan to see how much you would get.
Are short-term disability benefits taxable as income?
Yes, almost always. It depends on your plan. If you are self-employed and have a private disability policy, then it is not taxable as income. If you have a group plan through your employment, then your plan will be taxable if your employer pays more than 50% of the monthly premiums for your benefits or if the employer is funding the short-term disability benefits.
When does short-term disability begin?
Everyone wants to know how long it takes to get short-term disability benefits. Benefits can start very soon after you stop work because of illness or disability. You usually have to use up any paid time off (e.g. sick leave, vacation pay) before short-term disability payments can start.
Can I be fired while on short-term disability?
With very few exceptions, employers have the right to fire an employee at any time. So, yes, in theory you can be fired or laid off while you are on short-term disability.
However, when an employer fires an employee on sick leave, the employer risks being in violation of human rights laws that prevent discrimination. For that reason, most employers will not fire people on short-term disability, unless the employee would be one of several people being laid off at the same time (and the other people are not on sick leave).
When you are laid off or fired while on sick leave, you continue to have rights to notice of termination or severance pay. There are exceptions to this rule, so you should always get specific legal advice, rather than just rely on general information found online.
Can an employer contact an employee on short-term disability?
Yes, you continue to be an employee while you are on sick leave. The employer continues to have the right to contact you for updates on your readiness to return to work or for other legitimate work-related reasons.
How much about my medical condition do I have to tell my employer?
Your employer does not have a right to know details about your medical condition or illness. The employer is not allowed to get information about your personal medical information without your consent. The one exception is when you are ready to return to work and need accommodations from the employer. In that situation, the employer needs to know enough about your medical limitations so it can figure out if it can accommodate you with a different job, reduced hours, change in duties, etc.
Do I have a right to the doctor’s medical report from the Independent Medical Examination (IME)?
Not really. The law recognizes that you have a right to a complete copy of any medical records created in a doctor-patient relationship. Independent Medical Examinations, however, do not create a doctor-patient relationship. Therefore you do not have an absolute right to the records. Under privacy laws in Canada you have a right to access your personal information, including the personal information arising from the IME. The doctor’s opinions and observations are not considered your personal information. In this case, the doctor could give you the report, but choose to black out or redact the portions that do not constitute your personal information.
Still feeling unsure about your short-term disability claim? Sometimes a quick call with us can help you move forward with confidence. Call us at 1-888-732-0470 or click on the help icon to start a conversation with our support team.