Long-term disability benefits are a type of benefit, most commonly provided to employees by their employer through a group benefits plan, that pays a portion of the person’s income in the unfortunate event that they cannot work for an extended period due to an injury or illness.
This article looks at age requirements for long-term disability policies. We also take a look at a recent employment arbitration decision where a union challenged an employer’s provision of long-term disability insurance coverage to employees under the age of 65 only.
Long-term disability insurance provides benefits to policyholders with “total disabilities”
Long-term disability benefits are a type of insurance that provides the policyholder with a portion of their normal income in the event they suffer a disability and cannot work. Benefits generally begin after a significant period of being unable to work, such as six months.
While each long-term disability benefits plan is different, making the specific terms and conditions of the policy important, most policies require the person to be suffering from a “total disability” in order to claim long-term disability benefits, which generally means being unable to engage in employment.
Benefits may be payable until the policyholder reaches a specific age
Depending on the terms of the particular policy, long-term disability benefits are often paid for a specified period in which the policyholder is unable to engage in their “regular occupation”, that is the job they held prior to sustaining the injury. Following this period, it is common for insurance companies to only continue to pay benefits if the person is unable to engage in “any occupation”, normally defined as any occupation the person may reasonably become qualified to perform, having regard to their education, training and experience.
In addition, most long-term disability insurance policies will stop paying benefits after a particular period. For example, under many policies, the insurance company will stop paying benefits when the policyholder turns 65.
Union claimed employer discriminated against employees on the basis of age
In Rayonier v Unifor, Locals 256 and 89, the terms of a collective agreement required an employer to fund a long-term disability plan for employees. The agreement stated that benefits would cease on the earlier of the date the employee ceased to be disabled, died, retired or reached the age of 65.
The union commenced an arbitration proceeding under the collective agreement. It argued that limiting long-term disability coverage to employees under 65 was discriminatory.
Due to Human Rights Code carve-out, union claimed agreement breached the Canadian Charter of Rights and Freedoms
Under the Ontario Human Rights Code (Code), every person has a right to equal treatment with respect to employment without discrimination on enumerated grounds, including because of age.
However, the Code has a carve-out for “an employee benefit, pension, superannuation or group insurance plan or fund” that complies with the Employment Standards Act (ESA) and its regulations. Under a regulation of the ESA, employers are permitted to differentiate on the basis of age for short and long-term disability plans.
As a result of this, the union argued that this carve-out contravened section 15(1) of the Canadian Charter of Rights and Freedoms (Charter), which provides that every individual has the right to equal benefit of the law without discrimination, in particular based on grounds including age. Section 1 guarantees the rights and freedoms of the Charter subject only to such reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society.
Arbitrator found the 65-age limit reasonable and demonstrably justified
The Arbitrator started by noting that:
- pegging 65 as the age to terminate long-term disability coverage does discriminate, contrary to section 15(1) of the Charter; and
- therefore, any limit imposed on this right must be of sufficient importance to warrant overriding it and the means chosen must be reasonable and demonstrably justified.
In considering the age limit justified in the context of this collective agreement, the Arbitrator concluded:
“I have concluded that the Parties’ choice of age 65 as the limit on LTD coverage has been demonstrated to be reasonably justified because it is rationally connected to and consistent with the age at which government pensions are unreduced and it coincides with the age at which this Collective Agreement provides an unreduced pension. The age cut-off impacts as little as possible on individuals, given the host of other benefits available to workers aged 65 and older and the demographics of this workforce.”
As a result, the Arbitrator dismissed the union’s challenge.
Case does not necessarily rule out long-term disability benefits for older people
While the evidence in this case showed that “99% of the available plans have a cut-off at age 65”, the decision does not necessarily rule out future challenges arguing that older people should be entitled to claim long-term disability benefits.
The Arbitrator explained that the reality of the particular workplace was necessary context for the decision. Not only were employees over 65 able to access pensions and other benefits, but given the demanding nature of the work at this employer, almost all employees retired by age 60, meaning the cost increases for long-term disability coverage for a very small number of workers would impact the compensation package available to all employees covered by the agreement.
Contact the Personal Injury Lawyers at Tierney Stauffer LLP in Ottawa, North Bay, and Eastern Ontario for Advice on Disability Benefits
At Tierney Stauffer LLP, we understand being denied disability benefits can cause financial ruin for injury victims. We recognize no two claims are the same, which is why we give each client the personal attention needed to bring about the best possible resolution.
Our personal injury lawyers can provide advice to those who believe they have been unfairly denied insurance benefits. If you are injured in an accident, it is critical to receive knowledgeable legal advice. Contact us at 1-888-799-8057 or reach out online to set up a consultation today.