Human Resources and Skills Development Canada
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Human Resources and Skills Development Canada

www.hrsdc.gc.ca

Canada’s Public Pension system

CPP Disability Benefits

CPP Disability - Overview

  • Canada’s largest long-term disability insurance program
  • Provides basic earnings replacement for CPP contributors who cannot work at any job due to a “severe” and “prolonged” mental or physical disability
  • Making application process more client-friendly is an ongoing priority:
    • Telephone contact with each applicant during application process
  • Return to work supports have been significantly expanded
    • Automatic Reinstatement, Fast Track Re-application and Allowable Earnings

Notes 1

CPP Disability Benefits

Monthly benefit for:

  • Eligible contributor
  • Dependent children of a CPP disability beneficiary
    • The CPP provides a monthly benefit for dependent children of a contributor who is receiving a CPP disability benefit
      (Both benefits are taxable)

Notes 2

CPP Disability Benefit – Eligibility

  • Under age 65; and
  • Meet contributory and medical requirement; and
  • Must apply in writing

Notes 3

Contributory Requirement:

CPP contributions in 4 of the last 6 years on a minimum level of earnings ($4,400 for 2008) (Legislative change to be introduced following provincial Governor-in-Council approval: long-term CPP contributors with 25 years and more of contributions will only require contributions in 3 of the last 6 years)

Notes 4

Medical Requirement:
must have a “severe” and “prolonged” disability, defined in relation to the capacity to work, not just the diagnosis/prognosis:

  • Must be unable to do any work (not just previous job) on a regular basis
  • Personal characteristics such as age, education and work experience are considered
  • Socio-economic factors such as availability of work are not considered

Notes 5

CPP Disability Benefit Start and End Guidelines


Starts (later of):

  • 4th month after considered disabled
  • Up to 11 months of retroactive payment

Ends (earliest of):

  • Month after no longer disabled
  • Month after age 65
  • Month after death

 

 

 

Notes 6

Disability Benefit

  • Flat rate + 75% of calculated Retirement pension
  • Flat rate for 2007 is $405.96
  • Maximum Disability benefit for 2007 is $1,053.77
  • Benefit is paid monthly
  • Taxable

Disability Benefit- Eligibility Provisions for Late Applicants

  • Protects eligible applicants who are late applying
  • Must meet the minimum qualifying period at time considered disabled
  • Up to 11 months retroactive payments

CPP Disability – Return to Work (RTW) Incentives

  • Due to the severe and prolonged nature of the disability, most CPP disability recipients are unable to attempt to return to work
  • For recipients who may try to return to work, CPP Disability offers a range of work incentives and supports

CPP Disability Return to Work Incentives Automatic Reinstatement - What is it?

  • A new entitlement that provides a two year safety net during which benefits can be reinstated if the client cannot continue working because their disability recurs
  • This CPP provision came into effect on January 31st, 2005
  • Supports CPP Disability clients who want to try working
  • Client feedback has been positive

Notes 7

Automatic Reinstatement – What is it?

  • Applies to all CPP Disability clients who report a return to work and had their benefits stopped on or after January 31st, 2005
  • No need to qualify on earnings
  • Clients have up to 1 year after stopping work to request benefits
  • Eligible children can also have their benefits reinstated

Notes 8

Automatic Reinstatement - Why is it important?

  • Recognizes that clients who have a severe and prolonged disability face significant barriers to return to work and require extra incentives
  • Fewer than 1% currently attempt return to work - it is hoped that numbers will rise because of availability of Automatic Reinstatement
  • Especially important for clients with episodic and recurring disabilities
  • Extends impact of other CPP Disability work incentives.

Requesting a Reinstatement

  • Two simple forms need to be completed:
    • One by the client, requesting reinstatement
    • Another by the doctor, confirming that the disability has recurred
  • There is no limit to the number of times this entitlement can be used

Notes 9

Automatic ReinstatementClient Contact is Key

Notes 10

Fast Track Re-Application

  • A simpler and faster process than filing a new application
  • Fast-track reapplication is available for up to five years after benefits have been stopped
  • Client must have stopped working because their disability recurred
  • Must also qualify on earnings

Notes 11

CPP Disability – Other Return to Work (RTW) Incentives

On their own, recipients can:

  • Volunteer or attend school while remaining on benefits
  • Work and earn up to $4,400 in 2008, without having to report these earnings to CPP
    • This is not a point when benefits stop, but rather an opportunity for the recipient and CPP disability staff to discuss whether additional assistance could help in a return to work on a regular basis.

Notes 12

In consultation with CPP, recipients can:

  • Participate in a paid work trial for up to three months while still receiving a benefit
  • Participate in CPP's Vocational Rehabilitation Program, a service to help recipients go back to work, by providing individualized return to work planning and support

Notes 13

Disability Benefit – Reassessment

Eligibility may be reviewed when:

  • CRA reports earnings;
  • condition was expected to improve;
  • condition has improved;
  • reviews at random.

What could the recipient be required to do?

  • Answer questions about work or income;
  • Have a doctor complete a medical report;
  • Undergo a medical examination.

Disability Benefit- Continuing Eligibility

Remember:
Recipient must inform the Canada Pension Plan of:

  • Improvement in medical condition
  • When allowable earnings have been exceeded (2008 - $4,400)
  • Successful completion of a school program
  • Returning to work support will be offered

Notes

  1. CPP Disability is the single largest long-term disability insurance provider in Canada in terms of caseload and benefits paid. It is larger than all private long term disability insurance companies combined.

    CPP Disability has a number of return to work incentives to support CPPD beneficiaries who wish to attempt a return to work or participate in their community.

    Reassessment activity to confirm continuing eligibility

  2. CPP disability benefits are taxable. CPP allows clients to set their own income tax deduction amount (call Canada Revenue Agency at 1-800 959-8281 or visit their website at www.cra.gc.ca)

    $3.0B paid annually to 304,000 clients and their 86,000 children (approx. 13% of CPP benefit expenditures for 2004-05)

    CPP Disability benefit:

    • max. monthly benefit (2007) is $1,053.77
    • average monthly amount is (2006) $763.37
    • average annual benefit is approx. $9,100
    60,000 applications annually

    Who is considered to be a “dependent child”
    A natural or adopted child, or child in the beneficiary’s care and control. To be considered dependent, the child must be either under the age 18 or between 18 and 25 and attending a recognized school or university full-time.
    Child’s benefit is taxable in the child’s name. Since most children do not have sufficient income to file tax return, no T4 is issued for child’s benefit. Disabled Contributor Child’s Benefit - $204.68 /month per eligible child (2007).

  3. Employed Canadians between the ages of 18 to 65 who are not in receipt of their CPP RTR pension and earn more than $3,500 must pay a percentage (4.95% in 2007) of the money earned into the CPP, up to a maximum amount of $1,989.90. For 2007, the maximum amount on which a worker can pay contributions is $43,700. An employee and employer each pay ½ of the contributions. The self-employed pay both portions (9.9%).

    An estate cannot apply for a Disability benefit after the death of a contributor

    Applicants disabled after January 1, 1998

    • Earnings must be at least 10% of YMPE (Disability Basic Exemption - DBE) rounded down to nearest $100
    • YMPE for 2007 is $43,700
    • DBE for 2007 is $4,300

    Applicants considered disabled before 1998

    • 5 of last 10 years; or
    • 5 years, if less than 10 years in the contributory period; or
    • 2 of last 3 years; or
    • 2 years, if only 2 years in the contributory period.
  4. The CPP disability benefit is available to people who contributed recently to the CPP while they worked, and then became unable to work at any job at a substantially gainful level on a regular basis because of a disability. There are benefits for dependent children of a CPP disability beneficiary.

    The individual must have made enough CPP contributions in at least 4 of the last 6 years (indicating “recent” attachment to work force).

    4 years, if there is less than 6 years in the contributory period.

  5. There is no common definition of disability in Canada. Under CPP legislation, Part 2, s. 42(2)(a) and (b), “severe" means that a person is incapable of regularly pursuing any substantially gainful occupation. "Prolonged" means that the disability is long lasting, of indefinite duration, or is likely to result in death.

    CPP considers a number of factors:

    • the nature and severity of the medical condition;
    • the impact of the medical condition and treatment on his or her capacity to work;
    • his or her prognosis;
    • personal characteristics such as age and education.

    Under CPP legislation, socio-economic factors, such as the availability of suitable employment in the applicant's geographical location is not considered.

  6. See CPP legislation, Part 2, s. 42(2) (a) and (b)

    A disability benefit commences effective the month after the month the contributor is deemed to have become disabled in cases where a second or subsequent disability benefit becomes payable to the contributor and the previous disability benefit ceased within five (5) years before the onset date of the second or subsequent disability.

    Up to 11 months of retroactive payment

  7. A March 2005 fact sheet with respect to automatic reinstatement is available on the HRSDC website at: English: http://www.sdc.gc.ca/en/isp/pub/factsheets/reinstateben.pdf
  8. Clients have up to one year from the month they stop working because of their disability to inform HRSDC to reinstate their disability benefits.
  9. CPP Disability recipients receive an Automatic Renewal Departure Kit when leaving benefits.
    The kit consists of an information sheet and automatic reinstatement request forms.
    Some clients have already had their disability benefit reinstated through this new CPP disability entitlement.

    Note: statistics not yet available.

  10. This is not a reapplication or a re-adjudication; the CPP requirements have already been met.

    A simple confirmation from the client and his/her doctor using forms provided in the departure kit will serve to re-start the CPP Disability benefits.

  11. Fast-track reapplications, clients whose same or related disability recurs now have one year rather than six months to reapply using the Fast Track Re-application process.

    Under Fast Track reapplication, applicants need to qualify on earnings and contributions; under Automatic Reinstatement, clients do not need to qualify on earnings and contributions since they are requesting a reinstatement of their benefits.

  12. In recent years, greater efforts have been made to actively support CPP Disability recipients in attempting a return to work. These recipients have diverse needs and require different kinds of supports depending on their individual situations.

    Volunteering can help people feel connected to their communities and, for some people, it can be a valuable first step towards an eventual return to the paid workforce. Recipients can volunteer while remaining on CPP benefits.

    Disability recipients who return to school have to report when they complete their studies.

    In May 2001, HRSDC clarified the amount that clients can earn before having to inform the Department. In 2007, this amount is $4,300. This is a time for the medical adjudicator to engage the recipient in a discussion of his/her individual situation and see if other supports or RTW incentives could be provided.

    The program is voluntary

  13. There is a three-month paid work trial where recipients can work and still collect CPP Disability benefits.

    The paid work trial gives the client and CPP time to evaluate the recipient’s transition back to work.

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Date Modified:
2008-01-07