How Much Does Long-Term Disability (LTD) Pay in Ontario?

If you’re unable to work because of an illness or injury, long-term disability (LTD) benefits are supposed to replace a portion of your income. But many Ontario workers are surprised to learn that what their policy promises and what they actually receive can be very different.

Here’s a clear breakdown of how much LTD pays in Ontario, how insurers calculate benefits, and why payments are often reduced.

What Percentage of Income Does LTD Pay in Ontario?

Most long-term disability policies in Ontario pay:

• 60% to 70% of your gross pre-disability income

This percentage is set out in your insurance policy or employee benefits booklet.

However, this does not mean you’ll automatically receive 60–70% of your usual take-home pay.

What Is the Maximum Monthly LTD Payment?

Most LTD policies include a monthly cap, often between:

• $2,500 to $10,000 per month

If you earn above the policy maximum, your LTD payments will be capped, even if 60–70% of your income would otherwise be higher.

Is LTD Income Taxable in Ontario?

Whether LTD benefits are taxable depends on who paid the insurance premiums:

• Employer paid the premiums → LTD benefits are usually taxable
• You paid the premiums → LTD benefits are usually tax-free
• Shared premiums → Benefits may be partially taxable

This distinction can significantly affect your net monthly income.

What Income Can Reduce Your LTD Payments?

Many Ontario LTD policies allow insurers to reduce (offset) your benefits if you receive other income, including:

• CPP Disability benefits
• Workplace pension payments
• Other disability or income replacement benefits
• Employment income (in some cases)

Some offsets are legitimate. Others are applied incorrectly or too aggressively.

Are Bonuses and Commissions Included in LTD Pay?

Often, no — or only partially.

Many LTD policies:

• Exclude bonuses entirely
• Average commissions over a short window
• Ignore variable income altogether

This is a common issue for:

• Salespeople
• Commission-based employees
• Professionals with performance pay

Does LTD Pay Increase Over Time?

In most cases, no.

LTD benefits typically:

• Do not increase with inflation
• Do not reflect raises you would have received
• Remain fixed based on pre-disability income

Over time, this can create serious financial strain — especially for long-term claims.

Why Ontario LTD Payments Are Often Lower Than Expected

Common reasons include:

• Incorrect income calculations
• Improper offsets
• Misclassification of earnings
• Policy caps
• Tax treatment misunderstandings
• Unclear policy wording interpreted in the insurer’s favour

Can You Challenge the Amount of Your LTD Payments?

Yes.

If your LTD payments are:

• Lower than expected
• Reduced without explanation
• Suddenly changed
• Offset improperly

You may be able to challenge the calculation or seek retroactive payments.

A disability lawyer can:

• Review your policy
• Recalculate what you’re owed
• Identify unlawful deductions
• Take action to recover unpaid benefits

When LTD Payments Don’t Add Up

Understanding how much long-term disability pays in Ontario is only part of the picture. In practice, many people receive less than their policy promises due to offsets, capped earnings, tax treatment, or insurer interpretations that don’t reflect their true income.

In more serious situations, LTD payments may be:

• reduced
• delayed, or
• cut off entirely

…even when a person’s medical condition hasn’t changed. This is a common reason long-term disability benefits are denied in Ontario, often based on technical policy language rather than a fair assessment of someone’s ability to work.

If your LTD payments seem lower than expected, or if benefits stop without clear justification, it’s important to understand what’s driving the insurer’s decision before the situation escalates.

At Samfiru Tumarkin LLP, our disability team helps Canadians across the country challenge unfair LTD decisions and get benefits back on track — starting with clear answers about what their policy should be paying.

Knowing what your policy should pay is the first step. Knowing what to do when insurers don’t follow it is the next.