The Canada Pension Plan (“CPP”) is a federal government program that provides income support to individuals who are either disabled or retired. Many people are unaware that CPP provides disability benefits if they become disabled before retirement age.
CPP Disability benefits are tied to the number of years an employed person has been making contributions into the Plan. The CPP Disability benefit is a monthly taxable benefit. The minimum benefit amount payable in 2016 is approximately $800 per month; the maximum benefit amount payable is $1,265 per month. These figures are revised annually. The average CPP Disability payment is $934. Once approved, the benefit increases for inflation each year.
If you become disabled, then you may be eligible for CPP Disability Benefits if you meet certain criteria. If you are receiving or are in the process of applying for long-term disability benefits from a private insurer, it is a good idea to apply for CPP Disability Benefits as well. Most long-term disability policies contain an “offset” provision that allows the long-term disability insurer to deduct any CPP Disability Benefits that the claimant has either received or may be eligible for receiving. There is a similar provision in the Statutory Accident Benefits Schedule in respect of the calculation of an individual’s income replacement benefit.
Eligibility and Application Process
To be eligible for CPP Disability Benefits, the claimant must:
- be under the age of 65;
- have paid into the CPP for at least 4 of the last 6 years OR have made contributions for at least 25 years including 3 of the last 6 years; and
- have a disability that is both severe and prolonged.
The Application forms are available on the Government of Canada website. They are detailed questionnaires and include a medical certificate to be completed by the claimant’s physician. The application form invites the claimant to include medical documents with the application.
Section 68(1) of the Canada Pension Plan Regulations C.R.C.385 states that the following information should be provided as part of the application process:
Where an applicant claims that he or some other person is disabled within the meaning of the Act, he shall supply the Minister with the following information in respect of the person whose disability is to be determined:
(a) a report of any physical or mental disability including
(i) the nature, extent and prognosis of the disability,
(ii) the findings upon which the diagnosis and prognosis were made,
(iii) any limitation resulting from the disability, and
(iv) any other pertinent information, including recommendations for further diagnostic work or treatment, that may be relevant;
(b) a statement of that person’s occupation and earnings for the period commencing on the date upon which the applicant alleges that the disability commenced; and
(c) a statement of that person’s education, employment experience and activities of daily life.
Once completed, the application form must be sent to Service Canada. They usually render a decision within 4 months. If the application for CPP Disability Benefits is denied, the denial may be appealed within 90 days. A reconsideration decision may be rendered within 3 months of the appeal being filed. If the denial is maintained, then the applicant can request an oral hearing before the Social Security Tribunal.
If an individual has a terminal illness, then they can fill out the Terminal Illness application and once submitted, it will be reviewed within 48 hours.
About 60% of applications are denied. A further 43 % of appeals maintain that denial.
If the application is accepted, benefits can be paid retroactively to one year before the date of the application. If the claimant has a dependent child (under the age of 18, or between ages 18 and 25 and attending college or university), then the claimant may also receive a monthly children’s benefit. This benefit must be applied for and is also taxable.
If the claimant is receiving long-term disability benefits, it is important to check the insurance policy to determine if CPP Disability is a contractual offset (that is, a deduction). If it is, then the claimant must advise the insurer right away, and future LTD payments may have to be adjusted. The children’s CPP benefit may also be an offset.
Section 7 of the Statutory Accident Benefits Schedule provides that income replacement benefits payable by an auto insurer is subject to a deduction for CPP Disability benefits paid or payable. If an individual has been in a car accident and is receiving income replacement benefits, then after 104 weeks the auto insurer will usually ask that the individual apply for CPP Disability benefits. The test for receiving post-104 week income replacement benefits is arguably very similar to the test for receiving CPP Disability Benefits.
Quebec is the only province that has its own plan, the Quebec Pension Plan (QPP). The QPP and CPP offer similar benefits and the two plans work together. If the claimant worked in both Ontario and Quebec, they will have contributed to both plans. If the claimant is a Quebec resident at the time of disability, then they should apply to the QPP. The benefit amount is calculated based on the contributions made to both plans.
“Severe and Prolonged”
The claimant must have a disability that is both severe and prolonged. A severe disability is a mental or physical disability that regularly prevents the person from doing any type of work (full time, part-time, or seasonal), and not just the work that they normally do. A prolonged disability means that the disability is likely to be long-term and of indefinite duration, or it is likely to result in death. Generally, the medical adjudicators reviewing the application will not consider illness of less than one year duration.
Section 42(2) of the Canada Pension Plan Act provides the following definitions of this criteria:
(a) a person shall be considered to be disabled only if he is determined in prescribed manner to have a severe and prolonged mental or physical disability, and for the purposes of this paragraph,
(i) a disability is severe only if by reason thereof the person in respect of whom the determination is made is incapable regularly of pursuing any substantially gainful occupation, and
(ii) a disability is prolonged only if it is determined in prescribed manner that the disability is likely to be long continued and of indefinite duration or is likely to result in death.
The Regulations provide further information on what constitutes “substantially gainful occupation”. Section 68.1(1) states,
…substantially gainful, in respect of an occupation, describes an occupation that provides a salary or wages equal to or greater than the maximum annual amount a person could receive as a disability pension…
Service Canada also defines “incapable” as being unable to work in any substantially gainful occupation. “Regularly” incapable means that the limitations associated with the disability are persistent, continuous and uninterrupted.
In assessing “incapable”, Service Canada employs a test similar to the one used by private insurers — the person must be incapable of performing work for which they have the necessary skills, education or training, or lack the capacity to acquire those skills, education or training.
Essentially, on a strict reading of the statute, regulations and internal policy statements, in order to be eligible an individual must be so disabled that there is absolutely no work that they can perform, even on a part-time basis. The Plan does not determine disability pension eligibility on the basis of a medical condition. It is based on the incapacity or regular inability to work at any substantially gainful employment.
The Appropriate Legal Test for Disability under the Plan
The Federal Court of Appeal has determined that the question of the inability to work in a substantially gainful occupation must be interpreted in a “real world context” that is subjective to the claimant. The Pension Appeals Board in Barlow v. Minister of Human Resources Development CP 07017 and the Federal Court of Appeal in Villani v. Canada (Attorney General) 2001 FCA 248 decision provides a framework for the interpretation of the CPP Disability test:
Is her disability sufficiently severe that it prevents her from regularly pursuing any substantially gainful occupation?
To address this question, we deem it appropriate to analyze the above wording to ascertain the intent of the legislation:
Regular is defined in the Greater Oxford Dictionary as “usual, standard or customary”.
Regularly — “at regular intervals or times.” Substantial — “having substance, actually existing, not illusory, of real importance or value, practical.”
Gainful — “lucrative, remunerative paid employment.”
Occupation — “temporary or regular employment, security of tenure.”
The Board in Barlow concluded that, based on the definitions above, the 57-year old claimant would find it difficult, if not impossible, to find “usually or customary employment” that actually existed in the real world.
The Federal Court of appeal in Villani relied on the Board’s findings in Barlow. The Federal Court of Appeal has endorsed the “real world” test in assessing whether an individual’s disability is severe enough so as to limit their employment potential.
CPP Disabilty claims are often denied on the basis that the claimant can perform “some type” of work. Given the Court’s statements in Villani, this rationale is not enough. The “real world” test requires an assessment of the claimant’s particular circumstances, including his/her age, education level, language proficiency, past work experience and past life experience. As the Court stated in Villani,
It is difficult to understand what purpose the legislation would serve if it provided that disability benefits should be paid only to those applicants who were incapable of pursuing any conceivable form of occupation no matter how irregular, ungainful or insubstantial. Such an approach would defeat the obvious objectives of the Plan and result in an analysis that is not supportable on the plain language of the statute.
CPP Disability benefits are meant to provide a safety net for individuals who become disabled and can no longer work.
All Canadian employees must make contributions into the Plan during their working lives. If they have sufficient contributions, then they must pass the hurdle of proving, on a balance of probabilities, that their disability is severe and prolonged as that criteria has been interpreted by the caselaw. It is important to be as thorough as possible in the application materials and if possible to ask the physician to focus on the impairments suffered by the applicant, rather than the medical diagnosis.
Further, in my experience, the following principles, established by judicial decisions, should be kept in mind when deciding to appeal a denial by the Plan:
- Mental disability is not limited to severe psychiatric illness or endogenous depression
- The definition of disability includes a disability resulting from a cumulative combination of both mental and physical aspects
- Requirement of a supportive employer with a flexible work schedule or productivity requirement not reasonable in today’s competitive marketplace
- The question to be assessed is whether a real employer in the real word, required to deal with the realities of commercial enterprise, would remotely consider hiring the Applicant
- A predictable interruption to a work schedule or the inability to commit oneself to a work schedule from one day to the next because of varying degrees of pain may render an individual unemployable
- “Regularly” means the Appellant must be capable of coming to work as often as is necessary. Predictability is the essence of the analysis.