Questions about long-term disability benefits

Is a worker in prison entitled to long-term disability benefits? • Should an employer continue to pay employer contributions for insured benefits like health care or dental care when the employee is on LTD?

Stuart Rudner
Both reader questions in this issue deal with employees who are receiving long-term disability (LTD) benefits.

There is no obligation on the part of employers to provide benefits such as a long-term disability plan. An employee’s right to LTD benefits does not arise pursuant to any legislation, such as Ontario’s Employment Standards Act.

Rather, such rights, and the corresponding obligations, are contract-based. Where an LTD plan is in place, the benefits will typically kick in after a “disabled” worker (as defined in the applicable plan) has exhausted any accumulated sick leave and any available short-term disability benefits. Such details will be set out in the plan documents.

LTD benefits are typically a percentage of the employee’s salary as it was at the time they became unable to work. Some plans provide for benefits if the employee is unable to perform their “own occupation.” Others will only provide benefits where the employee is unable to perform any occupation.

The vast majority of employers that offer LTD benefits do so through a third-party insurer. Employers may pay some or all of the premiums, or may simply arrange for the plan to be in place, with the employees paying the premiums if they so choose. Some large corporations self-insure, in which case they will typically have a third-party administer the plan but pay any benefits owing pursuant to the plan themselves.



Is a worker in prison entitled to long-term disability benefits?

Question: One of our workers, receiving LTD benefits, has been convicted of a crime and was sentenced to six years in prison. A question has been raised in the office as to whether or not this worker is still entitled to the benefits while in jail. Is he?

Answer: Because LTD plans are created by contract, they are not homogeneous. The specific details, including entitlement to benefits, will differ from one plan to another. It is therefore difficult to make blanket statements or answer this type of question definitively.

Every LTD plan will set out specific requirements or criteria that must be satisfied before benefit payments will commence. Similarly, they will set out obligations on the part of the recipient in order to continue to qualify for benefits. The corollary of this is that the plans will articulate circumstances in which the recipient will no longer qualify for benefits. A typical obligation is that the benefit recipient continue to receive appropriate treatment for their particular condition. A failure to do so may result in termination of benefits.

Most, if not all, LTD plans provide that an individual will not be entitled to benefits if they are incarcerated. In such a case, incarceration can result in the temporary or permanent cessation of benefit payments.

Some creative plaintiff counsel have asserted that their clients are entitled to continue receiving LTD benefits while incarcerated, where the incarceration is somehow attributable to the disability in question. Imagine an individual receiving LTD benefits due to some form of psychological disability. While receiving benefits, they vandalize a property, steal or commit some other criminal offence.

If they are faced with a cessation of benefits, their lawyer might argue the reason they committed the offence in question is that their disability prevented them from exercising proper judgment.



Should employer pay health, dental benefits for worker receiving LTD?

Question:
Should an employer continue to pay employer contributions for insured benefits like health care or dental care when the employee is on LTD?

Answer: This is another question that is difficult to answer in the abstract. An employer’s obligation to contribute to health care plans, dental plans and the like is contract-based. The details of that obligation will depend upon the wording of the specific plan.

Some may specify that the entitlement to coverage only exists for those who are “actively employed,” as opposed to those who are off work on disability leave. Others may simply provide that all “employees” are entitled to coverage. Any employer with an employee on disability should review all applicable plans in order to determine their obligations.

Many employers will continue to pay their contributions toward medical and dental plans for employees that are off on disability, at least for a period of time. Typical LTD plans provide coverage for the first two years if the individual cannot perform their own occupation.

After that, LTD benefits will only be paid if the individual is unable to perform any occupation. Many employers will continue contributing toward medical and dental plans for that first two year period.

After all, it is more likely that an employee in the early stages of LTD will return to work; as the months turn into years, a return to work becomes less and less likely. At some point, many employers will cut their losses and cease their contributions.

Stuart Rudner practices commercial litigation and employment law with Miller Thomson LLP’s Toronto office. He can be reached at (416) 595-8672
or by e-mail at srudner@millerthomson.ca.

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