The Canada Pension Plan (CPP) provides many financial benefits and programs to individuals and families, depending on individual circumstances and other qualifying factors, including long term disability benefits.
The disability benefit is a taxable, monthly payment available people who contributed to the plan while they were employed, and then became unable to work regularly at any job because of a physical or mental injury. The benefit is meant to replace employment earnings for people who recently paid into the Canada Pension Plan. Benefits are also available to children if at least one parent is determined to be eligible for the CPP disability benefit.
People who qualify don’t receive a CPP disability benefit due to a particular disease or medical condition, but on how that condition and resulting treatment affects the person’s ability to return to work on a regular basis.
Common Questions about Long-Term Disability Coverage
For people who believe they may qualify for long term disability benefits through the Canada Pension Plan, there are many questions that need to be answered.
- How does the CPP define disability?
The government defines disability as “severe” and “prolonged” and must keep a person from returning to work on a regular basis, or is likely long term and may lead to death.
- How do I know if I’m eligible?
- Disability benefits are for people under 65, those who had to quit work because of a medical condition, someone who paid into the Canada Pension Plan four of the last six years, or someone who paid into the plan for 25 years and made contributions for three of the last six years.
- How can someone apply?
- A person who wishes to apply must fill out an application form, which they can receive through Service Canada. It includes: application forms for the applicant and any dependents, a questionnaire, a medical report to be filled out by a doctor, a consent form, and a child rearing provision form. Keep in mind that all forms must either be mailed to a local office or hand delivered. Emailed forms aren’t accepted.
- How long does the approval process take?
- Generally, CPP will render a decision within 120 days, or within 48 hours if the applicant is terminally ill.
- How much will I receive?
- The most a person can receive through a long term disability benefit is $1,153.57 each month through the age of 65 in 2012. Other benefits also are available to spouses and surviving children.
Your Income and the Canada Pension Plan
A long term disability benefit through the Canada Pension Plan is considered income and is taxable, meaning that people who receive benefits may have to file them as part of their income tax return. But a good idea is to ask Service Canada to withdraw taxes from the monthly benefit, rather than paying at the end of the tax year.
Certain people may be eligible for the Disability Tax Credit, which could reduce the amount of tax that has to be paid.