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Long Term Disability Claims: The insurance company’s greatest defence are the offsets

I was recently mediating a Long Term Disability Claim on behalf of a disabled client who worked for Canada Post.

She was diagnosed with a wide variety of ailments, including but not limited to:

– Disc Bulges at various levels requiring surgery – Chronic Pain stemming from her back radiating down her legs requiring her to use a can to walk – A Major Depressive Disorder – An Anxeity Disorder – Sleeplessness – Fatigue – Constant Headaches
It was clear to all of the lawyers and staff at our office, that she was completely disabled; not just from her own occupation, but from ANY occupation for which she qualified by reason of education, training and experience. It was clear to her treating doctors and medico-legal experts that she was not a candidate to return to her old job at Canada Post, or work at ANY occupation whatsoever. Nor, was she a candidate for retraining given her age and the nature of her disability which effected her stamina, concentration, memory and abilty to work and interact with others.

We had oodles (yes that’s a legal term for a lot) of reports, records, notes, witness statements all to substantiate the nature of our client’s disability.

The opening statement at mediation from the lawyer for the insurer, which was echoed by the insurance adjuster was that they were sorry about my client’s alleged disabilities, but regardless whether or not they were substantiated, these disabilities were irrelevant to the case.

The only thing which was relevant from the perspective of the insurer was how much money my client was entitled to from other sources outside of her Long Term Disability Benefits Policy.

Why did this matter so much to the insurer?

It’s because under the terms of the LTD policy, the insurer was entitled to a set off of any income owing to my client from other sources. If the amount of income from other sources outside of the LTD policy, exceeded or matched the monthly LTD amount, then the LTD insurer would not be responsible to pay a dime in the case.

Example: Le’ts say that under your LTD policy, that you’re entitled to a monthly LTD benefit of 70% of your gross monthly pre-disability income. After doing the math, we calculate this monthly LTD benefit to be $2,000.

Now, let’s say that you’re also recovering Canada Pension Plan Disability Insurance at a rate of $1,000 per month.

Based on the set off provisions contained in the LTD Policy, you’re not entitled to $2,000 from the LTD insurer, plus another $1,000 from CPP Disability for a gross total of $3,000/month. Instead that $1,000/month CPP Disability Benefit is applied to the LTD policy as an offset to the $2,000/month owing from the LTD insurer. Accordingly, the LTD Insurer would only have top pay a $1,000 monthly benefit to top you up to the $2,000 owing under the policy. You get to that $2,000/month with a $1,000 contribution from CPP Disability, plus the $1,000/month from the LTD insurer.

That’s some simple math.

It gets much more complicated when we add other souces of income such as WSIB, Canada Post Pension Plan, any other disability policies, or any other pension plans.

Here’s an example where the insurer will scream come hell or high water that they won’t owe a dime under the LTD Policy.

The monthly LTD Benefit is calculated at $2,000/month.

You are currently receiving $1,000/month in Canada Pension Plan Disability Benefits.
You are also receiving $550/month in a WSIB benefit You are also receiving $750/month from the Canada Post Pension Plan
You are alsoi receiving $400/month from a separate disability plan which you took out separate and apart from work.

Your total month benefit is $1,000 + $550 + $750 + $400 = $2,700
Your LTD benefit goes to a max of $2,000/month.

In such an example, the LTD insurer, no matter how disabled you are won’t be liable to pay you ANY LTD BENEFITS provided that money from all of the aformentioned sources continues to flow for the duration of your LTD policy.

This happens.

This is very difficult for seriously injured/disabled clients to understand. And we totally understand where they’re coming from.

They are hurt. They are disabled. They can’t work on account of disability. Isn’t Long Term Disability Insurance supposed to protect them in such a situation.RM.jpg

Yes: LTD insurance is supposed to protect them, but it is not intended to put the injured claimant in a better financial position post-disability than pre-disability. Hence: the notion that these set offs are the insurer’s greatest defence holds true in these situations.

The medical records and the nature of your disability will take a back seat to the mathematics of calculating your monthly LTD benefit vs. the applicable set offs to reduce the insurance company’s exposure.

Most of the time the lawyers spend is examining these set offs, and how they do, or don’t apply to your case.

Regretably for clients, understanding how LTD benefits are calculated and quantified is not always so black and white. There are other factors which are taken in to consideration as well such as any Cost of Living Allowances (COLA), the taxability of the benefit (is it taxable or not), along with any potential repayments to Ontario Works or other sources. All of these factors need to be taken in to consideration when assessing and litigating your Long Term Disability Claim.

And don’t forget about the surveillance which the insurance company will conduct on you. I’ll save that for another Toronton Injury Lawyer Blog Post because that’s a topic too long for this piece today.

Enough law talk? Sure.

Congrats to Toronto’s baseball team on spending some money on a Canadian back catcher. I’m looking forward to having 3 Canadians in the starting lineup. Will that equate to a winning team? Probably NOT, but at least it’s a step in the right direction.

Why do people get mad when their favourite sport franchises spend so much money on players? It’s not like these teams are spending your OWN money. It’s their money and they make a ton of it. And if they want to spend oodles and oodles of their own money on a player, then let them. If they make a mistake, it’s not like you’re the General Manager of the team and you’re going to lose your job with team. Make a move. Live with it. Hope it works out for the best.

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