If you are receiving long term disability benefits (“LTD”), your insurer may ask you to apply for Canada Pension Plan Disability Benefits (“CPP-D”). Do you have to apply and how will CPP-D affect your LTD benefits? The following is an overview of the interaction between CPP-D and LTD benefits.

CPP-D Benefits:

The CPP-D is a monthly payment you can get if you:

• are under the age of 65;
• have made enough contributions into the Canada Pension Plan (“CPP”);
• have a mental or physical disability that regularly stops you from doing any type of substantially gainful work, and
• have a disability that is long-term and of indefinite duration, or is likely to result in death.

The basic amount for CPP is $583.32. Your benefit amount will be this amount plus an amount based on how much you paid into the CPP while you were working. Your monthly CPP-D amount is called the primary contributor benefit.

The monthly maximum disability amount was $1,606.78 in January 2024. In October 2023, the average monthly amount for new beneficiaries of CPP-D was $1,127.30. Service Canada can tell you the amount  of your monthly CPP-D if your application is approved:  1-800-277-9914. Canada Pension Plan disability benefits: How much you could receive – Canada.ca

If you are receiving a disability benefit, any of your dependent children can get a monthly payment if they are:

• under 18, or
• between 18 and 25 and attending school full time.

In 2024, the maximum monthly CPP-D children’s benefit amount was $294.12 per child.

How Does CPP-D Affect Your LTD?

The CPP-D benefit may be deducted from your LTD payments. CPP-D may be a direct benefit reduction/offset. A direct offset means that your LTD monthly benefit will be reduced by the amount of CPP-D paid to you. Given that you will receive the same monthly amount of benefits in total, it may seem like a lot of extra work for no benefit to you. CPP-D children’s benefits could be a direct benefit offset or could indirectly reduce your LTD benefits. So why should you apply if it just reduces your LTD benefits?

Reasons to Apply for CPP-D:

Many group insurance LTD policies require the disabled person to apply for CPP-D benefits. Often LTD insurers will ask you to apply for CPP-D as your definition change date under the policy approaches. If you refuse to apply when asked, the insurance policy may allow the insurer to estimate the amount that you would have received and reduce your LTD by their estimated amount.

Several positive reasons to apply for CPP-D:

1. if you are approved, you will receive some much-needed income to support you while you are unable to work;
2. if you are approved, CPP will not include the months that you receive CPP-D when it calculates the base amount of your CPP retirement pension – this will increase your CPP pension amount at retirement;
3. Both your CPP-D and your CPP-D children’s benefits will increase each year in accordance with the cost of living. Usually those increases will not result in a further benefit reduction of your LTD benefits.

The Application Process:

For a general overview of CPP-D and the application process, visit the Government of Canada website:  Canada Pension Plan disability benefits: Overview – Canada.ca

You can apply online through your My Service Canada account or you can submit a paper application by mail  or by dropping it off at a Service Canada office. You will also need to submit a medical report completed by your family physician or nurse practitioner.  The application form and medical report form are found here: Canada Pension Plan disability benefits: Apply – Canada.ca

Why Apply Now?

After your LTD insurer has asked you to apply for CPP-D, they will continue to ask you to do so until you apply. If you ignore them or refuse to apply, they may be entitled to reduce your LTD benefits by the amount they estimate you will get for CPP-D.

There is a 4 month waiting period before you will start receiving benefits. You could also receive up to 11 months of retroactive payments depending on when Service Canada determines that your disability was severe and prolonged as defined in the CPP legislation.

While Service Canada advises that they intend to make a decision within 4 months, they are often delayed in making that decision and it may take much longer than that. Finally, if Service Canada denies your application, you can submit a request for reconsideration within 90 days of receiving the decision letter. It will then take Service Canada approximately 4 months to determine the reconsideration request. Information on the reconsideration process is found on the Government of Canada website: Canada Pension Plan disability benefits: After you apply – Canadhappa.ca

Conclusion:

CPP-D is an important benefit and it can have a significant impact on your LTD benefits. There is no disadvantage to applying for CPP-D benefits and you are probably required to do so under the LTD policy.

For advice please text 613-777-0992 or contact us through our website to schedule a meeting with one of our lawyers.  We provide a free consultation, in French or English, to ensure that your rights are protected.   In most cases, we can offer to represent you on a contingency fee basis.  This means that you do not pay legal fees unless you win or achieve a settlement on your case.