CPP Disability and Long-term Disability FAQ

Often insurance companies will try to get claimants to apply for Canada Pension Plan Disability (CPPD) benefits. But should you do it? If you do apply and you’re approved, what does that mean for your long-term disability (LTD) benefits?

The experienced disability lawyers at Samfiru Tumarkin LLP have created the FAQ below to answer commons questions about long-term disability claims and CPPD. Read on to learn more about what it is, and what you should do if your insurance company asks you to apply for CPPD.

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What is CPP Disability (CPPD)?

CPPD stands for Canadian Pension Plan Disability. It is a federal government program designed to provide partial income replacement to individuals who suffer from a severe and prolonged disability.

• You can read more about the program through the federal government’s website here.
• The qualifying criteria for CPPD can be found here.
• You can apply for CPPD here.
• The amount of CPPD you can expect to get, if you qualify, is outlined here.

CCPD is not to be confused with the Canada Disability Benefit (CDB), a new benefit that the federal government is currently developing.

Can my LTD insurer force me to apply for CPPD?

No, but it is a good idea to apply for a variety of reasons. One of those reasons is that, if you do not apply for CPPD, your insurer may estimate how much you ought to receive from CPPD (had you applied for it) and then reduce your monthly LTD benefits by that estimated amount.

In more rare instances, LTD insurers sometimes take the position that failure to apply for CPPD (which is an obligation contained in most LTD policies) constitutes a breach of the terms of the LTD policy, which may lead to the termination of your LTD benefits. If that happens in your case, contact us immediately and we will help.

What are some other reasons I should apply for CPPD?

One of the primary reasons or benefits of applying for CPPD is that, if you are approved, it is much more difficult down the road for the insurance company to prematurely end your benefits on the basis that you are not disabled, since you have been recognized as disabled by the Canadian Government.

Moreover, if you are approved for CPPD and start receiving it monthly, if and when your insurer does cut off your LTD benefits, CPPD is an additional source of income that you will continue to receive, which will be very helpful for you while we help you fight the insurance company for the benefits they owe you.

If my CPPD application is approved, does that mean that I get CPPD plus LTD?

No. Your LTD benefits will be reduced by whatever amount you receive from CPPD.

Example

If you receive $2,000 per month for LTD and you are approved for CPPD in the amount of $1,000 per month, you do not get $3,000 (LTD + CPPD). You will continue receiving $2,000, except that now your LTD insurer will only have to pay you $1,000 because they get a credit for the amount you are receiving from CPPD.

What happens if my LTD payments are non-taxable, but my CPPD payments are taxable?

If your LTD payments are non-taxable and you begin receiving CPPD payments which are taxable, many insurers take the position that they are entitled to a credit for the entirety of the CPPD amount, including the taxable portion. This means that you may actually end up receiving less money per month because the taxable portion of your CPPD payments, which your LTD insurer is claiming credit for, goes to the government and not you.

If this happens to you, ask your LTD adjuster to show you where exactly in your LTD policy it allows your insurer to claim credit for entire CPPD amount, including the taxable portion. Unless this is specifically stated in your LTD policy, there is an argument that your LTD insurer cannot and should not claim credit for the full amount, which would leave you in a worse off financial position as a result of being approved for CPPD.

WATCH: Disability lawyer and partner Sivan Tumarkin answers 5 common questions about LTD and CPP Disability on Season 3 Episode 21 of the Disability Law Show.

If I am approved for CPPD and get a lump sum retroactive payment, who gets that lump sum?

Assuming that the lump sum retroactive CPPD payment is for a period of time that overlaps with when you were owed LTD or when you were paid LTD, your insurer is owed that money.

Do my LTD payments stop if my CPPD application is denied?

No. Your LTD should not stop if you are disabled from working and your doctors support you being off work. The fact is that many CPPD applications get denied, for various reasons.

Some CPPD applications are approved on appeal, but regardless, your LTD should not stop just because your CPPD application has been denied. LTD and CPPD are different processes, and your LTD insurer should not use your CPPD denial as a basis for denying your LTD claim or stopping payment of your LTD benefits. If that happens, you should contact us immediately and we will help.

Should I appeal a CPPD denial?

You do not have to appeal a CPPD denial unless your LTD policy specifically states that you do.

To clarify: your LTD insurer has no right to force you to appeal a CPPD denial, unless your LTD policy requires you to do so. Most LTD policies, in our experience, do not require claimants to appeal CPPD denials.

Does my CPPD stop if my LTD claim is denied or settled?

No. That is one of the benefits of settling your LTD claim. Once your LTD claims settles or stops for any reason, that should not affect your CPPD payments.

Do I have to tell my LTD insurer if I have been approved for CPPD?

You should let your LTD insurer know if you have been approved CPPD because they will likely be entitled to some or all of the retroactive amount you will receive from CPPD. The insurance company will also likely be entitled to a credit for your ongoing monthly CPPD payments that you receive.

If you do not tell the insurance company, they will demand that you repay them what they are owed.

Questions? Concerns? Contact Us!

If you are experiencing an issue anywhere in Canada (excluding Quebec) with your long-term disability claim, your employer or the insurance company, we’re here to help. Call our team at 1-855-821-5900, email Help@DisabilityRights.ca, or contact us online for a FREE consultation.

You can also post your specific question about your long-term disability claim online for a quick answer by a disability lawyer at Samfiru Tumarkin LLP, at MyDisabilityQuestions.com.

As Canada’s most positively reviewed disability law firm, we have the experience, tenacity and determination required to provide you with the advice you need, and the compensation you deserve.