Understanding and Navigating the Long-Term Disability (LTD) Insurance Plan for Executives

Introduction

This document was developed by APEX for information purposes and does not constitute an authoritative document. It is important to always verify with Government of Canada sources before making a decision.

In situations where there is a difference between the information contained in this document and the official information available from Government of Canada sources, the latter will take precedence.

The authoritative source for information regarding Long-Term Disability Insurance for executives is the Public Service Management Insurance Plan (PSMIP) Executive Plan Booklet, found at: https://www.canada.ca/en/treasury-board-secretariat/services/benefit-plans/management-insurance-plan/public-service-management-insurance-plan-executive-plan-booklet.html#toc2-8

What is Long-Term Disability Insurance

As an executive in the federal public service, you are provided with Long-Term Disability (LTD) insurance benefits under the Public Service Management Insurance Plan (PSMIP) if you become totally disabled and are unable to work.

Coverage under the LTD Plan is mandatory if you are a full-time and part-time employee who is appointed for more than 6 months (part-time employees must work more than one-third of the normal work week) or if you have completed 6 months of continuous employment. Coverage is effective on the date you become eligible.

• LTD benefits are payable after 13 continuous weeks of total disability, or when your paid sick leave is exhausted, whichever is later;
• LTD benefits are reduced by your other sources of income;
• LTD benefits are indexed up to a maximum of 3% annually to reflect cost of living;
• LTD benefits continue if you are participating in an approved program of rehabilitative employment (refer to Rehabilitation Services below) ;
• The existence of a pre-existing condition may exclude entitlement to LTD benefits if the disability commences within the first 24 months after you become eligible for coverage;
• No benefits are payable beyond your 65^th birthday; and
• Coverage ends automatically when your employment terminates

The Cost

The Government of Canada pays 100% of premiums for coverage available to you. If you are a member of the PSMIP, disability coverage continues during all periods of Leave Without Pay with premiums collected from your salary when you return to duty.

The Benefit Payment

Should you become disabled and approved for benefits under the LTD plan, you receive a taxable monthly benefit equal to 70% of your monthly pre-disability salary (excludes performance pay) with a total offset of other disability benefits paid in respect of the same disability. The following examples illustrate the most common types of income that would be deducted from your LTD benefits:

• disability benefits under the Canada Pension Plan (CPP) or the Quebec Pension Plan (QPP), excluding benefits payable to, or on behalf of, your dependants as a result of your disability;
• benefits received under the Government Employees Compensation Act, or similar benefits under a plan of the federal government or any other government;
• disability benefits paid or available to you under another group insurance plan, or under a policy issued to you as a result of membership in a Public Service employee union or association;
• disability insurance benefits received under the legislation of any government, such as income replacement benefits under a no-fault automobile insurance plan; and
• loss-of-income benefits received under a third-party damage award.

The following are examples of income that would not be deducted from your LTD benefits:

• increases related to the cost of living under the Public Service Superannuation Act (PSSA), Canada Pension Plan (CPP), or Quebec Pension Plan (QPP);
• return of superannuation contributions where no pension entitlement is available;
• benefits received under a purely private and personal insurance policy, or under a policy issued as a result of membership in a professional association not restricted to the Public Service; and
• severance pay.

Your benefits begin after an ‘elimination period’ of 13 continuous weeks of disability or after the expiry of your paid sick leave, whichever comes later. The commencement date of approved LTD benefits will be affected if you are granted Special Sick Leave, which is described in article 6.3 of Appendix C in the Directive on Executive Compensation (https://www.tbs-sct.gc.ca/pol/doc-eng.aspx?id=14220&section=html#secC.6).

In most cases, the elimination period will consist of a complete absence from work for a minimum period of 13 weeks. In certain circumstances, however, periods of absence due to illness which occurred within the year immediately prior to the date total disability is considered to have begun can be used in calculating the elimination period. The first such prior period of absence must have been for a continuous period of at least one month. These are special circumstances which must be referred to the Insurer for a decision on a case-by-case basis.

Your net benefit (i.e., the amount payable to you after other income has been deducted as an offset), will be subject to an annual increase related to increases in the cost of living, up to a maximum of three per cent.

Any retroactive salary increases approved after the date your LTD benefits become payable affects your insured salary and benefit level only when the effective date of the increase precedes the date that payment of your LTD benefits began.

You are not eligible for LTD benefits:

• if your disability is the result of a mental or physical impairment that existed before you became insured. This exclusion is lifted if you complete a continuous period of 90 days of active employment while insured for LTD, or after you have been insured for LTD coverage for two years, whichever comes first;
• if your disability results from, or is related to, a normal pregnancy (without severe complications), commission of a felony, self-inflicted injury, attempted suicide, or a mental or physical impairment suffered while on active duty with any armed force; or
• if your disability results from, or is related to, an act of declared or undeclared war. This exclusion does not apply to persons who become totally disabled in this way while outside Canada at the direction of the employer.

While you are receiving LTD benefit payments, you must be under the active care of a physician who is a registered specialist in the field of medicine related to your disabling condition. You must also be receiving medical treatment or participating in a program of rehabilitation approved by the Insurer.

While receiving LTD benefit payments, you may participate in a rehabilitation program that the Insurer has approved in writing. This could be a program of vocational training or a period of work for the purpose of rehabilitation. Depending on the circumstances, you may be able to remain in such a program for up to 24 months and still receive some LTD benefits. Normally, the amount of your rehabilitation earnings will not be deducted from your monthly LTD benefit payments unless your total income while working, together with any benefits you are receiving under the LTD Plan, exceeds the current salary of your former position.

If you earn money from any employment that the Insurer does not consider rehabilitative, your LTD benefit payments will be reduced by the total amount of those earnings.

If you were in receipt of LTD benefit payments, recovered from your illness, and then become totally disabled again, the elimination period will be waived if you were back at work for no more than:

• 1 month, if the two periods of disability are due to unrelated causes;
• 6 months, if the two periods of disability are due to related causes; or
• 12 months, if the two periods of disability are due to the same cause.

The Claims Process

The Insurer, currently Industrial Alliance, is expected to make prompt and proper payment of any LTD benefits to which you become entitled. If you are totally disabled and think the disability will last long enough to qualify for benefits, your first step, if your organization is served by the Public Service Pay Centre (see the list of organizations served by the Pay Centre: https://www.tpsgc-pwgsc.gc.ca/remuneration-compensation/services-paye-pay-services/paye-centre-pay/calendrier-schedule-eng.html), is to notify your manager and ask that they complete the Employer’s portion of the LTD forms. These forms are available from your departmental Compensation services or the Public Service Pay Centre (https://www.tpsgc-pwgsc.gc.ca/remuneration-compensation/services-paye-pay-services/paye-centre-pay/cn-cu-eng.html). Following this, your manager submits the forms, along with a pay action request (PAR) form (found at: https://www.tpsgc-pwgsc.gc.ca/remuneration-compensation/services-paye-pay-services/form/html/446-5-eng.html) via a trusted source, to the Public Service Pay Centre.

If the department is not served by the Public Service Pay Centre, then the Employer/Public Service Pay Centre portion of the LTD forms, once completed by your manager, should be forwarded to your Compensation / Human Resources organization so that they can send them directly to Industrial Alliance.

Your responsibility, as the employee, is to complete Part I of the LTD claim form and to arrange for completion of the Attending Physician’s Statement. It is important for both you and your doctor to complete these statements as clearly and completely as possible. If you or the doctor wish to add extra information to help explain your case, this is perfectly acceptable.

Claims for benefits are adjudicated by Industrial Alliance only on the basis of the objective medical evidence provided regarding your condition. To substantiate a disability claim, the medical information provided must be sufficiently complete and supported to the fullest extent possible by objective test results and clinical findings, so that an independent physician, possessing the appropriate medical qualifications, would, on the basis of that information, be able to arrive at a conclusion.

For the first 24 months of LTD benefits, you must satisfy Industrial Alliance that you are totally disabled to the point where you cannot perform substantially all of the essential duties of your job due to a medically-determinable physical or mental impairment.

After the first 24 months, you must satisfy Industrial Alliance that your medical condition prevents you from earning more than two-thirds of the current salary of your former job.

Accordingly, you should ask your doctor to provide a full, well-documented report that clearly shows the objective medical evidence supporting your diagnosis and prognosis. If more than one doctor is involved in the assessment or treatment of your disabling condition, all doctors should supply the Insurer, Industrial Alliance, with full medical reports. The onus is ultimately on you to provide the Insurer with sufficient medical proof of total disability. It is important to note that any omissions or unclear statements could result in a delay in settling your LTD claim.

The completed forms should be returned to your Compensation / Human Resources organization, which is responsible for completing Part 2 of the claim form and passing the claim on for processing. If you prefer, the Attending Physician’s Statement can be detached and mailed directly to Industrial Alliance at the following address:

Industrial Alliance Insurance and Financial Services Inc.
Group Life and Disability Claims Department (PSMIP)
522 University Avenue
Toronto, Ontario
M5G 1Y7

It is your responsibility to follow-up with your physician to ensure that the medical report is completed in a timely manner and that it is forwarded to Industrial Alliance without delay. This series of steps should be completed within 90 calendar days of the date that you became totally disabled.

The Insurer has the right to request additional medical information from your doctor(s) as often as may be reasonably required. In addition to these supplementary reports, the Insurer frequently uses independent medical consultants with medical expertise relevant to your case, to provide the necessary additional objective medical evidence. This is often the only objective for the Insurer to assess, or monitor the course of, a disability and to ensure that LTD benefits are not paid to persons who are not eligible or who have recovered to the point where they no longer qualify. It is important to note that failure to co-operate in the advancement of your LTD claim through the approval process may result in its rejection.

If Industrial Alliance is unable to retain independent medical specialists with the relevant expertise in your community or region, you may be asked to travel to another location for a medical examination. If this is necessary, all of your reasonable travel expenses, including the cost of necessary medical assistance, will be paid by the LTD plan. You are expected to cooperate in this process.

The Appeal Process

If you are not satisfied with the Insurer‘s decision on your LTD claim, two levels of appeal are available to you.

You may ask your attending physician(s) to provide Industrial Alliance with additional medical information, supported by objective medical data so that they can reconsider their decision.

If the provision of additional medical information and data does not result in a reversal of the decision to deny your LTD claim, you may ask the Board of Trustees of the PSMIP to review Industrial Alliance’s decision. If you choose to proceed in this manner, you must authorize Industrial Alliance to release to the Trustees, all of its records on your LTD claim. The Trustees will review your file to confirm if a fair process was applied to your case with a fair result.

The Board of Trustees has power only to make recommendations to the Insurer and cannot overrule decisions the Insurer has made. However, the Insurer supports the principle of this review procedure and is expected to fully cooperate in all respects.

If you wish to have your case reviewed by the Board of Trustees, you should provide all the details of your case to your Human Resources organization, or write directly to:

The Secretary
Board of Trustees
Public Service Management Insurance Plan
Treasury Board Secretariat
5th Floor, West Tower
L’Esplanade Laurier
Ottawa, Ontario
K1A OR5

Rehabilitation Services