The Link between CPP and LTD Disability Insurance

I often receive phone calls from individuals who are applying for CPP disability at the request of their private insurance companies. The insurance companies usually require that their clients make application to CPP disability, as CPP is first payer on most disability insurance policies (also many WCB programs, Provincial disability programs, Auto insurance programs etc.) When these individuals are denied CPP, the insurance companies require that they appeal and often I get called because there is a level of fear that if the client is denied again, the insurance company will also deny them as well. Most insurance companies do not provide the resources their clients need to handle these appeals, and if I may be frank, many of the disability insurance adjudicators do not understand themselves the procedure a client has to go through when appealing the denial of CPP disability benefits.

So it is a no brainer that I get panicked calls from private insurance clients who are now facing CPP appeals and the added stress and worry that because CPP has denied them, that their insurance company may shortly do the same.

I am not trying to malign insurance companies here, as getting their clients CPP disability saves them a large amount of money over the life span of a claim, so they are entirely motivated to get their clients on CPP disability. I recently made a presentation to the disability adjudicators at a large insurance company and at the end of the presentation it was clear to me that the adjudicators now had a better appreciation and understanding of the complexity of the CPP disability program. Although the adjudicators had received "outreach services" from the Feds - I believe sorry to say - their presentations may not accurately portray what is really going on in the trenches!

As I have said previously, CPP disability benefit is viewed as the "first payer" by most private insurance plans. This means that most insurance plans take CPP disability benefits into account when calculating a claimant's entitlement to disability benefits. Most private long-term disability plans require a claimant to apply for CPP disability and to appeal a denial. Many agreements also indicate that noncompliance with these terms can result in withholding or reduction of long term disability benefits by the estimated amount of the CPP disability benefit. This is standard practice and part of standard form agreements of most private insurance policies.

If you have been denied a CPP disability benefit and you have been asked to appeal by the insurance company, then make sure you follow their recommendations. I believe most insurance companies are aware that CPP disability has a fairly measurable denial rate and so they may expect that you will denied on application. Do not be fearful of the denial from CPP disability. Next make sure you send in for your reconsideration within the 90 day appeal period and ask your adjudicator if the insurance company has some resources available that can help with your appeal. Also ask the insurance company if they can provide you with the medical information that is on your file - that way you do not have to pay for photocopying charges from your doctor's office. Most insurance companies have collected medical evidence on you in order to support your LTD claim - so as collecting CPP disability is in their best interests - I really think they should help you out by providing you with this information. If there is an issue with this I would ask for a supervisor and explain your motivation for wanting to collect this information.

Also, if there are insurance company staff who read this blog - I would like to ask them to consider having someone who works in the trenches, explain to them and their disability adjudicators the reality of managing a CPP disability appeal so they can help their clients secure the benefits that will offset their bottom lines.

Often I am asked by someone who has to appeal the denial of a CPP disability benefit who is receiving LTD private insurance what is the point to receiving CPP disability?

Although the income received from a CPP disability benefit is taxable and reduces your non-taxable long-term disability benefit, there are advantages to receiving a CPP disability pension:

· it places a freeze on your financial earnings as of the date of disability. This prevents CPP from establishing a record of zero of nil earnings to average into your future retirement or disability income calculation for the period you are disabled from working and not contributing to the CPP fund. Without this earning freeze your future entitlement to CPP benefits, including retirement benefits could be adversely affected.

· there is a federal tax credit available when a individual completes and submits the Disability Tax Credit Certificate (Form T2201) with their income tax.

· if you are in receipt of CPP disability benefits at the time of your death, CPP survivor benefits will be paid at the full level as though you have been working until the date of your death.

· CPP benefits provide a cost of living allowance every year. Any COLA increases will not be deducted from long-term disability benefits.

· if you have children they may be eligible for a children's benefit as long as you are receiving a CPP disability benefit. CPP pays benefits for children if they are:

a. under 18 years of age. These benefits are paid to the individual who has the care and custody of the children; or,

b. between the ages of 18 and 25 years old and attending school on a full-time basis. This benefit is paid directly to the child