What are Short-Term Disability Insurance Benefits?

Most common questions and their answers

1- What are short term disability insurance benefits?

Short-term disability insurance benefits are an income replacement for employees while away from work for a brief period and unable to perform their employment duties due to a disability or illness. A “disability” is a physical or mental condition that prevents the employee from working.

2- Who qualifies for short-term disability benefits?

If a person is employed and they have short-term disability benefits coverage at the time they become disabled, then they qualify to receive short-term disability benefits.

3- How can I find out if I have short-term disability benefits coverage?

Some people have a short-term and/or long-term disability policy through group insurance provided by their employer.

Short-term and/or long-term disability insurance can also be purchased separately as a private or individual policy.

The coverage varies depending on the wording of the employee’s particular policy.

Every policy addresses the following points:

  • how much you will receive;
  • how often – in what time intervals – you will be paid;
  • the maximum amount that can be paid in each time interval;
  • how long you will receive benefits;
  • any limitations or exclusions on coverage; and
  • the cost of extra coverage

To understand your short-term disability coverage, then:

  • if you are offered group disability coverage through your employer, you can find out more about your policy by contacting the Plan Administrator, the Human Resources staff or by reading the benefits booklet; or
  • if your employer does not offer short-term disability coverage as part of their group insurance plan, you can consult the Government of Canada’s website for information on whether you qualify for EI.

4- How much does short-term disability insurance pay?

As mentioned above, the amount depends on the employee’s policy. Generally, the amount is calculated as a percentage of the employee’s regular earnings. It could be anywhere between 60% and 100%.

5- How long can you stay on short-term disability?

The answer to this question, as mentioned earlier, also depends on the wording of the employee’s policy. It is usually six months but could be up to one year.

6- What is the difference between short- and long-term disability benefits?

Short-term disability benefits cover expenses for a short period of time after the employee’s sick leave runs out and while they are sick or injured and temporarily unable to work.

Long-term disability benefits, which begin after short-term disability benefits or employment insurance (“EI”) benefits run out, cover expenses for a period of time while the employee is completely unable to work. They usually last for up to two (2) years if the employee cannot work at their regular job or occupation but can continue on afterwards, potentially up to when the employee reaches age 65, if the employee cannot work at any job or occupation.

Note that “regular job or occupation” means the main duties of the job the employee had at the time the disability started whereas “any job or occupation” means the duties of any job for which the employee is reasonably suited, that is, a different job that he/she can work at based on the employee’s training, experience and education.

7- What is a transition plan?

An employee should consult with their doctor about how long they will be unable to work. This can involve formulating a transition plan for how the employee can return to work, such as by taking on less tasks or working part-time.

Note that if the doctor advises the employee to remain off work for more than the period of short-term disability benefits (usually six months), the employee may be required to apply for long-term disability benefits instead.

8- How does one apply for short-term disability benefits?

The application process will depend on your coverage and the particular insurer’s requirements, but takes the following general outline.

The process begins with the employee requesting the application forms from the employer or the insurer (in some cases, the insurer posts the application forms on its website for download).

The employee must complete and submit the following documentation: the Employee Statement (completed by the employee); the Attending Physician’s Statement (completed by the attending physician); and the Employer’s Statement (completed by the employer). The following documents or information may be required: the doctor’s clinical records relating to the employee’s claim; a clear and legible copy of the employee’s birth certificate, driver’s license or government-issued passport; the employee’s social insurance number, banking information (for direct deposit), a current mailing address and the employer’s address; etc.

It is important that the application paperwork is completed in its entirety to avoid delays in the application being processed. As well, it is crucial for it to be complete and accurate because the application is evaluated on the basis of whether it is accurate and comprehensive.

Once the insurer receives the submitted application, they will assign a case manager – an individual who reviews and makes a decision on disability benefit applications.

The case manager may contact the employee for further information that it deems necessary to make a decision, such as about the employee’s symptoms or treatment.

The case manager will either approve or deny the short-term disability insurance benefit application. The decision will be conveyed to the employee in writing.

9- What are my options if my application is denied?

There are many reasons why an employee might be denied short-term disability benefits. An example is that the insurer may not be satisfied that there is enough documentation to prove that the employee is completely disabled and unable to work.

Upon receiving a denial from the insurer, the employee has two options:

  • appeal to the insurer (there is a 90 day deadline, from the date of the denial letter, to pursue this); or
  • bring a lawsuit in court against the insurer for wrongful denial of disability benefits (there is a two-year deadline, from the date of the denial letter, to pursue this)

10- Can I receive both short-term disability benefits and EI sickness benefits?

An employee may qualify for both, but, if the employee receives both, he/she may be required to pay back the EI sickness benefits.

11- Are short- and long-term disability benefit payments taxable?

If you receive disability insurance through group insurance provided by your employer (and your employer pays all of part of the premiums), the benefits will be taxable. If you receive disability insurance through private or individual insurance (and you pay the premiums), the benefits will be tax free.[1]

12- Can I be terminated from employment while I am on short-term disability?

It is possible for an employee to be terminated while they are on short-term disability (e.g. such as in the case of company-wide layoffs). However, if you are terminated due to your disability, that might constitute employment discrimination.[2] The Canadian Human Rights Act requires an employer to accommodate an employee who is disabled up to the point of undue hardship.[3]

If you are employed and became ill or disabled and unable to work, contact Azimi Law. Disability insurance applications and lawsuits can be labor intensive and time consuming. We can explain your policy to you, provide direction on procedure and advocate for your interests, while you can focus on recovering.

[1] Income Tax Act, R.S.C. 1985, c. 1 (last amended on May 6, 2021), s. 6(1)(f)

[2] Canadian Human Rights Act, R.S.C., 1985, c. H-6. 3(1) and 7

[3] Ibid, s. 15(2)

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