The lawyers at Aaron Waxman & Associates are experienced with Disability, Personal Injury and Employment claims.
Ontario’s budget that was introduced after the June 2014 election brought with it a proposal for mandatory insurance of long term disability benefits (LTD). The proposal comes under a proposed piece of legislation, Bill 14, known as the Building Opportunity and Securing Our Future Act (Budget Measures, 2014), which would amend the Insurance Act. The amendment would make it so that employers cannot provide group long-term disability benefits without having them insured by a licensed insurer. The budget and bill have been passed in the Ontario Legislature.
The Bill is similar to legislation from 2012 that made it mandatory for federally regulated employers to obtain insurance for any LTD plans they offer employees. This came into effect this July.
The reasons for these provisions is to protect employees who are receiving disability benefits, in the event that employers become bankrupt. Legislation that calls for mandatory insurance of LTD disability benefits enhances benefit security.
When Nortel filed for bankruptcy in 2009, approximately 400 employees were on long-term disability leave and receiving benefits. Nortel’s group benefits were self-insured. Nortel employees were under the impression that they were receiving benefits from Sun Life and unfortunately as a result of the bankruptcy filing, these employees lost their disability benefits.
This arrangement between an employer and an insurer is known as an “administrative services only” arrangement (ASO). The insurance company handles the communications with the employee and the administration of the benefit. The benefit is paid by the employer.
Once Bill 14 comes into force in Ontario, employers that provide long-term disability benefits using administrative services only agreements may no longer be able to continue such arrangements.
If you have questions about your long term disability benefits, it is important to seek legal advice from a qualified lawyer. As an insured person, it is necessary to know your rights and it is your right to understand how your insurance policy works.
* This blog is for informational purposes only and is not meant to substitute legal advice. Please read our disclaimer for further information.
* All of our lawyers are licensed by The Law Society of Upper Canada
* Office in Toronto and able to represent people in the province of Ontario