Long-Term Disability Benefits: Key Terms to Understand

Long-term disability (LTD) benefits provide financial assistance to employees who are unable to work due to a prolonged illness or injury. In Ontario, LTD benefits are typically offered through group insurance plans provided by employers or private policies purchased by individuals. Understanding the key terms associated with LTD benefits is crucial for employees seeking financial security during periods of disability.

This article outlines important terms related to LTD benefits and explains how employees can manage the claims process effectively.

Definition of Long-Term Disability (LTD)

Long-term disability (LTD) refers to an employee’s inability to perform work duties due to a medical condition that extends beyond the period covered by short-term disability or sick leave. LTD benefits provide income replacement to qualifying employees, helping them meet financial obligations while they recover or adjust to new circumstances.

LTD policies vary by insurer and employer, making it essential to review the policy terms, coverage limits, and eligibility criteria before filing a claim.

Key Terms in Long-Term Disability Insurance

1. Total disability vs. partial disability

• Total disability means an employee is completely unable to perform the essential duties of their occupation due to an illness or injury. LTD benefits typically cover employees who meet this definition.
• Partial disability applies when an employee can still perform some job functions but experiences a significant reduction in earning capacity. Some LTD policies provide partial benefits in these cases.

2. Own occupation vs. any occupation

LTD policies often define disability under two categories:

• Own occupation coverage applies when an employee is unable to perform the duties of their specific job. Most LTD policies follow this definition for the first 24 months of benefits.
• Any occupation coverage applies after the initial period and requires an employee to be unable to perform any job for which they are reasonably qualified based on education, training, and experience.

Understanding this distinction is crucial, as eligibility for LTD benefits may change after the initial period.

3. Elimination period

The elimination period refers to the waiting period before LTD benefits become payable. This period typically ranges from 90 to 180 days, depending on the policy. During this time, employees may rely on:

• Short-term disability benefits
• Employment Insurance (EI) sickness benefits
• Workplace sick leave benefits

The elimination period must be satisfied before LTD benefits commence. Employees should review their policies to understand their specific waiting period requirements.

4. Benefit amount and duration

LTD benefits typically replace a percentage of an employee’s pre-disability income, often 60% to 70% of their earnings. The duration of benefits depends on the policy terms and may continue until:

• The employee can return to work
• The employee reaches the age of 65 (retirement age in most policies)
• The policy’s maximum benefit period expires

Some policies offer additional coverage options that extend beyond standard benefit periods.

5. Offsets and deductions

LTD benefits may be reduced by other income sources, including:

• Canada Pension Plan Disability (CPP-D) benefits
• Workers’ compensation benefits
• Severance or termination pay
• Other disability benefits received from government programs or private insurers

Understanding potential deductions is critical, as they may impact the total amount of LTD benefits received.

6. Pre-existing conditions

Most LTD policies include pre-existing condition clauses that limit coverage for medical conditions diagnosed or treated before the policy start date. Employees should review their policy’s exclusion periods to determine whether a pre-existing condition may affect their eligibility.

7. Medical evidence and claim approval

To qualify for LTD benefits, employees must provide medical documentation supporting their disability claim. This may include:

• Physician reports detailing the diagnosis, treatment, and prognosis
• Specialist assessments confirming the condition’s impact on work abilities
• Functional capacity evaluations assessing physical or cognitive limitations

LTD insurers may request ongoing medical documentation to reassess continued eligibility for benefits.

8. Independent medical examination (IME)

Insurers may require an employee to undergo an independent medical examination (IME) by a third-party medical professional. This assessment evaluates the severity of the disability and determines whether the employee qualifies for continued benefits.

Employees should be aware of their rights when attending an IME and may consult a disability lawyer if they have concerns about the fairness of the process.

9. Denial of LTD benefits and appeals

LTD claims may be denied for various reasons, including:

• Insufficient medical evidence
• Disputes over the severity of the disability
• Pre-existing condition exclusions
• Failure to meet policy definitions of disability

Employees have the right to appeal a denied claim through the insurer’s internal appeal process or pursue legal action if the denial is unreasonable. A disability lawyer can assist in gathering medical evidence and advocating for fair treatment.

10. Returning to work and rehabilitation programs

Some LTD policies include return-to-work programs or vocational rehabilitation services to assist employees in transitioning back to employment. These programs may offer:

• Gradual return-to-work schedules
• Workplace accommodations
• Training for alternative roles

Employees receiving LTD benefits should consult their policy or a disability lawyer before making decisions about returning to work, as working while on LTD benefits may impact eligibility.

How Achkar Law Can Assist with LTD Claims

LTD claims can be complex, especially when dealing with denials, policy disputes, or insurer demands for additional medical evidence. Achkar Law’s experienced disability lawyers assist employees with:

• Reviewing LTD policies and explaining coverage terms
• Assisting with LTD claim applications and medical documentation
• Appealing denied LTD claims and negotiating with insurers
• Representing employees in LTD litigation when necessary

Contact Achkar Law

If you need assistance with an LTD claim, Achkar Law’s disability lawyers can help ensure your rights are protected.

Call 1 (800) 771-7882  |  Email [email protected]