Ontario Long-Term Disability Rates: What You Need to Know

Ontario Long-Term Disability Rates:
What You Need to Know

According to RBC Insurance, Long Term Disability (LTD) rates are on the rise. They are expected to increase by 4.7% in 2018 compared to 2017. There are several reasons for this.

The Canadian economy is much stronger. According to RBC insurance, as the Canadian GDP accelerates, so does the value of LTD claims. Insurers have to charge higher premiums to cover themselves from these higher claims.

Employers have been hard hit by the increased costs of LTD claims. According to John Carinci, the vice president/head of operations and client experience at RBC, “Businesses in Canada spent $7.5 billion for LTD coverage in 2016, which is the third-largest cost to a group benefits plan after health and dental. Knowing that LTD rates are expected to rise is important information that businesses can use to help manage those costs, support their employees and ensure their operations continue to run smoothly.”

There has been an increase in LTD incidences in 2017 compared to 2016. According to RBC forecast, this could be attributed to feelings of stress and job security concerns during tough economic times, but when the economy starts recovering, workers who had failed to take time off to recover following injuries or illness are more willing to do so now.

What can Ontario Employees do in light of the higher rates?

You need not worry about filing your claim. Most businesses today, because of the higher insurance rates, have contingency plans in place. According to Julie Gaudry, the senior director of group insurance at RBC, “With the anticipated rise in LTD claims, businesses should proactively create awareness of the support available to employees and create contingency plans to ensure adequate staffing. While employees must deal with the significant emotional and financial stress of being off work, business owners can be particularly hard-hit as they lose employees during times of strong economic activity.”

How are Monthly Long Term Disability Premiums Calculated?

LTD premiums are expressed per $100 of benefit volume. To calculate your monthly premium you multiply the benefit volume by the rate per $100 of coverage. As an example, if you make $5,000 per month, a 66.7% Long Term Disability benefit schedule and a rate of $1.50 per $100, your premiums would be $5,000 * 0.667 / $100 * 1.50 = $50.25

Factors that determine the Value of a Claim

• The monthly LTD benefit value
• The age of the claimant
• When are the benefits payable (at 65 or earlier?)
• If back payments/arrears were paid out by the insurer
• Set offs that the LTD insurer may be entitled to under the policy such as WSIB, CPP, or otherwise
• If there is a source maximum deduction to be considered
• The nature of the injuries that caused the disability and the likelihood of the injuries to heal
• What your doctor has to say about your ability to return to work
• What your insurer’s doctor has to say about your ability to return to work
• The results of any surveillance (video, online, cyber) that the insurer may have performed and their outcome
• Your training, experience, and work experience
• Your employability potential following the LTD claim
• If there has been any bad faith during the handling of your LTD file, the nature of the bad faith and how it impacted your entitlement to your LTD benefits

Note that unlike with accident and injury cases, LTD claims are largely assessed based on a mathematical calculation. In general, you get the value of LTD benefit minus off sets multiplied by the number of months owing in arrears and future benefits owing by the insurance company.

For more information about your entitlement to LTD benefits and the law, contact an experienced LTD lawyer at Grillo Law for a free consultation.