Group Disability Insurance Questions to Ask Your Advisor

2 min read

In light of recent Work Safe guidelines that emerged as a result of COVID-19, many employers in Saskatchewan are rethinking their disability leave and absence management policies. A big part of that is the group disability insurance that comes as a component of your employee benefits package. It is an employer’s duty to ensure that their employees have adequate disability coverage. In order to do so, it’s crucial for businesses to have a good understanding of their group disability policy. Here are some questions that employers should be discussing with their benefits advisor:

What does the definition of “Earnings” include?

“Earnings” is the amount that the disability insurance payout is based on. The definition of earnings can differ between policies depending on your carrier and/or your specific contract provisions. What type of income is “earnings” based on in your contract? Traditionally, this would include employees’ salaries. Today, it is possible for some plans to cover bonuses and/or dividends, rather than just T4 earnings.

Does your group disability insurance contract include Partial Disability?  

Most traditional group benefits disability contracts have a “total” disability definition. This means that a claimant must be completely disabled in order to qualify for a disability insurance payment. It is also possible for a benefit plan to include a “partial” disability definition. Most disabilities in Canada are related to pain, flexibility, mobility, and mental health. With so many disabilities today coming from illnesses, partial disability has become a vital component to have.  For example, a person who has been disabled and is now ready to return to work, may not be able to return to full time immediately. Rather, she would return to her duties on a gradual basis.  The partial disability clause can accommodate this common situation by allowing an employee to return to work part-time, while still receiving partial disability benefits.

What type of Offsets does your group disability plan have?

Carriers expect a person on a Long-Term Disability (LTD) claim to apply for the Canada Pension Plan (CPP) disability benefit as well.  If they are accepted by CPP, then the amount the carrier pays is reduced by the amount of the CPP benefit.

Do your LTD benefit offsets include the secondary CPP benefit, or only the primary CPP benefit?

There are both primary, and secondary CPP disability benefits. Primary benefits include the amount an employee would receive for himself. Secondary benefits are those amounts that a person would receive on behalf of his dependent children. If the offset is for primary CPP benefits only, this is positive for the claimant. In other words, contracts that have both primary and secondary LTD offsets, have less coverage than those with a primary offset only provision.

Not all disability products are created equal

Group benefits disability plans can vary significantly between carriers. Moreover, same carrier can have different disability options available to clients. Today more than ever, it’s critical for both employers and employees to understand the details of their group disability coverage. Our recent article in the April 2020 issue of the “Benefits & Pension Monitor” magazine has additional tips on what both employers and employees should know. Additionally, we wrote another blog here that covers the basics on how disability benefits work and why they’re important.  

Have questions about your disability benefits? Get in touch with us – we’d be happy to help!