Disability insurance, as outlined by the Canadian Life and Health Insurance Association (CLHIA), is a type of coverage that protects you against losing income if you become disabled and are unable to work. Many people receive disability coverage through their employment and may be eligible to receive monthly benefits if they are too sick or hurt to work. LTD benefits typically replace a portion of your regular income, usually around 2/3 or 66%, to make up for your loss.
Long-term disability (LTD) benefits typically commence after a “qualifying period” expires. This period is a wait, often between four to six months, before you’re able to receive any benefits. During this waiting period, you may find yourself wondering how long your LTD benefits will last once you begin receiving them. Many people are unsure of several factors of their LTD policy, but knowing how long you’re eligible to receive LTD benefits is an essential element to prepare for the future.
How Long Do LTD Benefits Last Through an Employer?
Most LTD policyholders receive disability coverage through their employment, and insurance companies pay the benefits. The duration of your LTD benefits will depend on the applicable insurance policy or plan that you are covered by. Looking into the specifics of your LTD insurance policy should give you the answer to when your long-term disability ends. Like life insurance or auto insurance, many types of insurance typically pay out a lump sum for a successful claim.
LTD insurance differs in that it makes smaller payments over a long time, from a few months to a couple of years, or even many decades.
The answer you could find within your insurance plan could vary widely from one plan to another. Some policies have set time frames, such as the availability of benefits for five to ten years. Some plans can last until you are 65 years old, the age when you are eligible for Old Age Security (OAS), the Government of Canada’s largest pension program. Other plans may have what they call a lifetime benefit. You are paid a percentage of your earnings until you are 65 and afterward paid a lesser amount for the next 5, 10, 15 years, or even life.
It’s safe to assume that the longer your LTD plan covers you, the more you can expect to pay upfront. The upfront cost of an insurance policy that provides lifetime benefits could pay off big time, especially if you were a high-earning employee who ends up living a long life.
Many LTD insurance plans contain a rehabilitation clause, a clause designed to help you overcome your disability and ease you back into work. This clause will require you to participate in programs that appropriately aid in your recovery to being capable of returning to your original position.
Working for your Own Occupation or Any Occupation
For your benefits to continue after the first two years of coverage, often called an “own-occupation” period, you must be found to be unable to work in any occupation. After the two years, if you are unable to return, your insurance provider may attempt to have you transition into “any-occupation” so that you are considered to be working and no longer eligible for LTD benefits.
To remain eligible for benefits after the own-occupation period, you must be unable to perform the required tasks of any occupation that you are considered or could become reasonably qualified for. For more information on own-occupation vs. any-occupation, you can refer to our article on the differences between any occupation test and the own occupation test.
Long Term Disability Employer Responsibility
An employer’s duties and obligations come from the common law and statutes. Your employer’s responsibilities include the duty to provide work and a safe work environment, the duty to pay you for work done, and a duty to treat you fairly and give you reasonable notice of termination.
Employment Standards Legislation, Human Rights Legislation, and Occupational Health and Safety Legislation outline the statutory duties your employer must uphold.
For someone on disability leave, long-term disability employer responsibilities to be familiar with include:
- A duty to provide a workplace free of discrimination or harassment
- A duty to provide termination pay (with exceptions and limits)
- A duty to allow you to take sick leave
- A duty to accommodate your disability in the workplace
Do I have to work while on LTD?
You do not have to work while on LTD. The point of LTD insurance is to provide you with a reasonable level of income while you are unable to work so you can maintain a similar quality of life you were used to before your disability.
Some may consider it beneficial to their physical or mental wellbeing to return to some form of paid employment rather than stay sitting at home and collecting LTD. While this may be true, being employed while on LTD, even in a different occupation, could jeopardize your eligibility for benefits.
This can be especially common if you earn as much or even a substantial portion of your pre-disability income. For example, if you were receiving $3000 a month in LTD benefits and another job was paying you $2000 a month, your insurer would likely claim an offset and subtract your new earnings from your benefits, leaving you with only $1000 of your monthly benefit.
Can my employer terminate employment while I am receiving LTD benefits?
There are some exceptions, but employers can generally fire an employee whenever they want unless it is for discriminatory purposes. An employee must receive reasonable notice of termination, or paid severance in place of reasonable termination. If you were actively employed when you became disabled, your employment being terminated should not affect your eligibility for LTD benefits. However, be aware that any severance or termination payments could be deducted from your LTD benefits.
Most employers will not terminate the employment of an employee newly on disability leave because the termination clearly points to discrimination against their disability. While employers do have the right to do so, cautious employers usually allow the two-year own-occupation period to pass and allow the claimant to remain employed for that time.
After the own-occupation period, employers commonly will terminate an employee if they are determined to be permanently incapable of returning to work and fulfilling their previous duties. In this scenario, the termination is based on something called the doctrine of frustration of employment contract. In most cases, based on the doctrine of frustration, an employer can terminate your employment, although there are some exceptions. Under this rationale, termination does not require reasonable notice, so an employee might not have any right to receive severance pay.
Your Duty to Continue Medical Treatment
The termination of your employment may result in the loss of your health insurance coverage. Without health insurance, it may be challenging to continue to see your specialists regularly. However, many LTD policies require you to maintain consistent treatment with a physician, and if you do not, your benefits could be terminated. You must continue treating your disability to remain in compliance with your insurance policy.
Return to Work Incentives
Within many LTD policies, there are “Return to Work Incentives”. This provision makes it so an insured person cannot receive benefits and wages that total more than 100% of their pre-disability gross earnings. The “incentive” is not an incentive in the way one usually thinks, instead, it is a tactic insurance companies have to use to make sure you’re not “taking advantage” of the situation by increasing your income beyond what it was pre-disability.
Under some own occupation policies, it is possible to work in another job without losing all or some of your LTD benefits. Taking a new job while receiving LTD compensation should be done so carefully. It is vital to understand your entire insurance policy and consider the implications that going back to work might have. An experienced disability lawyer can help you make sense of your complicated contract to ensure you’re receiving the maximum amount of LTD benefits for the longest time possible.
What happens when LTD benefits end?
It is essential to understand what happens and what it means for you when your policy changes from following an own-occupation definition to an any-occupation definition. If your claim is approaching the 2-year mark, you should be prepared for the new provision that will determine your LTD eligibility. After the own-occupation period, a claimant must be considered “totally disabled” from doing any job, not just unable to perform the responsibilities of the occupation they were previously employed for.
Once the any-occupation stipulation begins, the insurer will likely investigate you and your claim to prove you are no longer eligible for LTD benefits under the new provision. Living with a new disability is already frustrating, worrying about losing your benefits, being surveilled and interviewed by your insurance company, and being unreasonably cut off is unnecessary stress that an experienced disability lawyer can help you combat. If you are worried about what will happen to your long-term disability after 2 years, contact Valent Legal for expert advice to help you understand your future.
What should I do if I am fired while receiving group LTD benefits?
If you have recently been fired with receiving LTD benefits, you should talk to a disability lawyer as soon as possible. If you were fired before your own-occupation period is up, we can help put a case together so you can continue to receive the benefits you’re entitled to.
If your own-occupation period is coming to an end, we can help you prepare for the future and help you fight for continued LTD benefits under the any-occupation provision. The adjusters from your provider will ask a variety of new questions a lawyer can and should help you answer. Our experienced lawyers can also help you prepare all the necessary, updated statements from medical and vocational professionals to make sure your new claim is in order. There are many other avenues an insurance company will explore to deny your disability claim and force you to go back to some form of work, even if you feel you are not mentally or physically able.
If you have been fired while receiving LTD benefits or cut off from your benefits, our lawyers at Valent Legal can provide the resources and legal expertise to help navigate your claim and get your disability benefits back.
We have represented LTD claims at every stage and thoroughly understand the many challenges thrown at claimants, especially during the fight of a wrongful denial. There are many options and actions you can take.
Contact our LTD lawyers so they can shed light on the pathway to obtaining the benefits that are rightfully yours.