Long-term disability (LTD) benefits are crucial for individuals who are unable to work due to illness, injury or disability. Below is a comprehensive guide to LTD claims in Ontario for 2024 to 2025.
- What is Long-Term Disability (LTD) Insurance?
LTD insurance is a type of insurance coverage that provides income replacement for individuals who are unable to work due to a serious illness, injury, or medical condition. It is typically available through employer benefit packages, but can also be purchased independently.
- Eligibility for Long-Term Disability
Eligibility for LTD benefits depends on several factors:
- Employment status: You must be employed and typically have been working for a period of time before qualifying – this will depend on the policies of your employer.
- Injury or illness: The illness or injury must be severe enough to prevent you from performing the essential duties of your job.
- Waiting period: Most LTD policies have a waiting or elimination period, typically ranging from 90 to 180 days, during which you must be unable to work before benefits kick in.
- Medical evidence: You must provide medical documentation that supports your inability to work for your treating doctor(s) and/or specialist(s).
- Types of Long-Term Disability Insurance
LTD insurance in Ontario can be divided into two broad categories:
- Employer-Sponsored Plans: Many Ontario workers receive LTD insurance as part of their employee benefits package. The terms of coverage, such as the percentage of income replaced and duration of benefits, vary by employer and insurance provider.
- Individual Plans: These are purchased by individuals independently. They may offer more flexibility but tend to have higher premiums.
- How Long-Term Disability Benefits Work
Once you become eligible for LTD, the insurance company typically replaces a percentage of your income. This can range from 60% to 85% of the pre-disability income, depending on the terms of your insurance policy. Benefits generally begin after the waiting period and may continue for a number of years. Depending on the nature of your disability, it can even be paid up to the age of retirement, depending on the policy.
- Are Long-Term Disability Benefits Taxable?
Whether LTD is taxable depends on who paid for it. If paid by your employer. LTD benefits are taxable. If the premiums were paid by the employee with after-tax dollars, the benefits are generally non-taxable.
- The Claim Process
- Filing a claim: To file a claim for LTD benefits, you must submit an application to the insurance company, often with the help of your employer or union. The application will include:
- A statement of disability;
- Medical records and reports from treating healthcare professionals; and
- A completed claims form.
- Insurer’s review: Once the claim is submitted, the insurer reviews the medical evidence and other documentation to determine whether you qualify for benefits.
- Approval or denial: The insurer may approve, deny, or request additional information. If the claim is denied, you has the right to appeal.
- What Happens After a Claim is Approved?
If your LTD claim is approved, you will begin receiving monthly benefits after the elimination period.
Insurers may periodically review (or re-assess) your medical condition to ensure that the disability persists. If there are significant improvements, benefits could be reduced or terminated.
Some insurance policies include vocational rehabilitation services designed to help you return to work, if possible. Participation is mandatory unless your medical provider deems your participation harmful to your disability.
- Common Issues and Denials
LTD claims are often denied or discontinued due to:
- Insufficient medical evidence: The insurer may claim that the medical documentation is insufficient to prove you are unable to work. This is usually rectified by asking your medical provider for more information as requested by the insurance company.
- Pre-existing conditions: Many policies exclude pre-existing medical conditions, which may lead to a denial of coverage.
- Non-compliance with medical treatment: If you fail to follow prescribed treatments or cooperate with medical evaluations, the insurer may argue that you are not genuinely disabled.
At Matthews Abogado Disability Lawyers, we’ve seen that the most consistent reason insurers deny or terminate LTD benefits is based on their belief that you fail to meet the policy’s definition of disability. In this case insurers may argue that you are still capable of performing some form of work, even if it’s not your prior occupation. Insurer will often rely on the “change of definition” clause in your policy of insurance at the 2 year mark to terminate your benefits because the test for disability changes after 2 years of receiving LTD benefits.
Disability is therefore assessed based on 2 major criteria:
- Own Occupation (for the first 2 years): You are considered disabled if you can’t perform your usual job.
- Any Occupation (after 2 years): After the initial period, you must prove you can’t perform any occupation for which you are suited for based on education, experience, and training.
- Appealing a Denied or Terminated LTD Claim
If your LTD claim is denied at the outset or terminated after some time, there are typically two avenues you can pursue. The first is to file an internal appeal with the insurance company by providing additional medical or other evidence to suggest that you remain disabled and/or by challenging the insurer’s interpretation of the policy.
The second and most effective way is to issue a legal action against the insurer. You do not need to appeal the denial or termination first in order to sue the insurer. You are free to skip right to this step unless you are prevented from doing so because you are unionized and the applicative collective bargaining agreement specifically prohibits you from doing so. If legal action is pursued, it should be done within 2 years of the date of termination of the benefit.
- Legal Rights of Claimants
Insurance companies have a legal duty to act in good faith when dealing with claims, which includes processing claims in a timely manner and not unfairly denying valid claims.
If a claim is unfairly denied or delayed, you may have grounds for a lawsuit, which could result in not only the payment of LTD benefits but also additional compensation for damages caused by the insurer’s conduct.
- Long-Term Disability vs. Workers’ Compensation
Workers’ compensation benefits are distinct from LTD benefits and are intended for individuals who are injured at work. If an individual qualifies for both LTD and workers’ compensation, they may receive benefits from both, but one may offset the other.
- Resources for LTD Claimants in Ontario
There are typically 3 types of resources available for anyone who is receiving LTD or whose LTD claim has been denied or terminated.
The first is the Ontario Disability Support Program (ODSP). If the amount of the LTD benefits are not sufficient or are terminated, you may be eligible for ODSP, which provides financial assistance to those with disabilities.
There is also the Canadian Pension Plan Disability (CPPD) Benefits. Nearly all insurers will want you to apply for CPPD benefits once you’ve been denied or terminated. While the insurer can deduct any benefits paid to you by CPPD, your claim for LTD is made stronger if you are approved in the event that you decide to sue the insurer.
Finally, you will always have access to legal advice and you should seek such advice if your LTD claim is denied or terminated or if you’re simply having trouble navigating the insurance process. At Matthews Abogado Long-Term Disability Lawyers, we specialize in insurance and disability law and can provide assistance with either the appeal process or initiating a lawsuit against the insurer.
