The Ultimate Guide to Short Term Disability Insurance in Canada

If you work for a living, you probably expect to be able to go to work and do your job every day. However, sometimes things don’t go as planned. You might find yourself in a situation where you can’t do your job due to health issues resulting in a short-term disability.

Fortunately, some financial supports are often in place to help you through this difficult time. Many employers offer short-term disability insurance and long-term disability insurance. The federal government provides Employment Insurance (EI) for sickness as well. In addition, self-employed workers can purchase disability insurance to protect their income if they can’t work.

There are differences between these types of insurance, but they can all play an important financial role. So here, we’ll take a deep dive into short-term disability insurance, how it works and how you can qualify.

What happens if you can’t work?

When you can’t work, you can’t earn a paycheque. Unless you have a lot of savings, you’ll have a hard time covering your expenses. The bills don’t stop when you do. Not having an income will add stress if you have to pay a mortgage or rent,  have loan payments, or need to buy groceries.  

Without an emergency plan in place, a short term disability could cause serious financial anxiety and even trauma – like bankruptcy.

What is short-term disability insurance?

Short-term disability is an insurance plan designed to protect your income if you cannot work for health reasons, usually resulting from an illness or injury.

If you have employer benefits

Short-term disability insurance benefits will vary from employer to employer. For example, some plans offer benefits for only 17 weeks, while others provide benefits for up to a year. These plans typically pay 60-85% of your income while you cannot work.  Many workers have this type of insurance with their employer, but some do not. 

If you don’t have benefits

Many workers don’t have any disability insurance from their employers. Fewer companies are offering workers’ benefits, and many workers don’t qualify for employer benefits. Often, people who are self-employed, contract, casual, part-time, seasonal, on probation, or temporary don’t have short-term disability insurance.

Two ways workers without employer short-term disability plans can get some income protection in the event of an illness or injury are through private plans and Employment Insurance (EI) sickness benefits. Private plans allow you to buy short-term disability, long-term disability, or both. EI sickness benefits are government-run, so you don’t need to pay any additional premiums.

Employer short-term disability plans

The insurance is typically offered as part of a group benefits package. But, of course, some workers have no benefits at work. So in a situation like that, it would be unlikely that they would have insurance coverage for a short-term disability.

The reason for short-term disability is that workers can experience a health issue that impacts their ability to work for a short period of time. Still, they don’t expect the illness or injury to leave them unable to work indefinitely.

While many things can cause this, some examples could be a physical injury like a broken bone, torn ACL, or an issue you might need surgery for, such as acute appendicitis. In addition, short-term disability insurance can cover a wide range of health conditions, including mental health issues such as depression and anxiety.

The short-term disability plan your employer provides may be through a group insurance plan or funded by the employer. As an employee, these plans will look very similar to you. The difference is the insurer makes the benefit payments through a group insurance plan, but the employer funds the plan if there is no insurer.

How do I know if my employer offers short-term disability insurance?

In many cases, if you have benefits, short-term disability will be part of the benefits package. It’s wise to check the types of benefits you have so that you know what to expect from your benefits plan if you need it. 

Employers typically disclose information about your benefits in writing. They may include it with your offer of employment or will give you the information when you are hired as part of the onboarding process. There, you’ll find details about any short-term disability insurance they offer.

You can contact your HR department if you are still trying to determine if you have short-term disability insurance. They will give you the information you need regarding your benefits.

How is short-term disability defined?

Each plan defines “short-term disability” differently. For example, some plans will state that you must be unable to perform any occupation. This means that your disability leaves you unable to work at your regular job or any other job.

Other plans will consider approving you for short-term disability if you cannot perform the duties of your own or regular occupation. If you can’t do the regular functions of your job, you may be eligible for short-term disability benefits even if you could do other jobs.

It’s essential to review the terms and conditions of the policy to find out how it defines a disability, what conditions are covered, how to apply, and what you need to do to keep your claim in force.

How much does short-term disability pay?

Since plans differ between employers, the payments of various plans vary too. For example, some plans offer 50% of your gross wages, while others can cover 100%. Typically though, the amount ranges between 60-85% of your regular wages.

Plans sometimes pay percentages based on the amount of time you are off. For example, your plan may pay 100% for the first 6 weeks and 65% after that. Therefore, getting the information regarding your specific plan is essential so you’ll know what to expect if you need to access your short-term disability insurance.

How long are payments made?

The number of weeks you can receive short-term disability benefits is another feature that varies. Your plan may cover you for 17 weeks or make payments for up to 12 months. Many plans offer 6 months of coverage. You’ll find the length of your short-term disability plan disclosed in your benefits package.

How do I qualify?

Short-term disability insurance provides financial support for workers who cannot perform the regular duties of their occupation due to illness or injury. You will need to apply for approval to receive benefits.

Proof of disability

Insurance plans typically want a doctor’s confirmation of your condition or symptoms to support your claim. Additionally, the insurer may require an Employer’s Statement that details your job’s responsibilities, hours, and wages. You might also need to submit a Claimant Statement. You can get any forms you need from your HR department.

Employment details

Your plan will have the details regarding how you qualify for short-term disability insurance. In some cases, you will need to have completed probation and be considered a permanent employee. In addition, the plan may require you first to use any sick days, vacation days, and paid days off you’re entitled to before receiving insurance payments.

Provincial regulations

Insurance benefits are regulated by your province and by Canadian common law. While provinces have many similar rules, they may be somewhat different. Your benefits booklet will outline the rules that apply to your province.

Can I receive employment insurance while I am on short-term disability?

If you are receiving short-term disability payments, you cannot get Employment Insurance (EI) sickness benefits at the same time. There may be an oversight where you receive payments from both short-term disability and EI sickness. However, if this happens, you will have to repay your EI sickness benefit payments.

You may qualify for EI sickness benefits if you use all your short-term disability benefits and cannot return to work. EI sickness benefits last up to 15 weeks, so they can provide an additional source of income if your short-term disability benefits run out.

Can my claim be denied?

Your claim could be denied for several reasons. Each plan will have specific criteria allowing the insurer to deny a claim. Some examples are participating in high-risk activities such as bungee jumping, pre-existing conditions as outlined in the policy, or still being on probation at work. Therefore, it’s important to become familiar with the exclusions of your policy.

One common reason that insurers deny claims is the applicant didn’t complete the necessary forms. The insurer will contact you to let you know if your claim is or isn’t approved. If it has been denied, they will tell you why.

What can I do if my claim is denied?

Your claim could be denied for several reasons. Some common ones are:

• The insurer requires the correct paperwork from you and your physician. If you don’t provide it, they can deny your claim.
• The policy may have exclusions, and your disability falls under one of them. 
• You don’t follow up with treatment or communicate with the insurer.
• The insurer determines you can still perform the duties of your occupation despite your disability.

Find out why

The insurer will let you know if your claim is approved, delayed, or denied. The first step in challenging a delayed or declined claim is to find out why you were not approved. Sometimes it’s simply a matter of providing the insurer with the correct information. If you’re struggling with this, your Human Resources department or the insurer can often help.

If the insurer denies your claim, you have three choices. The first is to accept the decision and let it go. Next, you can file an internal appeal. Finally, you can consult a lawyer to see if you have a case to pursue legal action.

Take action

Some people will accept the insurer’s denial because they don’t have the energy or don’t feel knowledgeable enough to challenge the decision. Others may not want to raise the issue because they think it might jeopardize their employment. Unfortunately, people in this position could miss out on the benefits they are entitled to receive.

File an appeal

A second option is to launch an internal appeal. Sometimes, you must begin the appeal by the deadline stated in the denial letter. The insurer conducts the appeal, and you may have two or three rounds of appeals available if your claim is not approved on the first appeal. If these also fail to get approval and you are in a union, you can have an appeal hearing. The decision of the appeal hearing is final.

Get legal advice

Finally, you can hire a lawyer to review your case. Your lawyer can launch a lawsuit, allowing either a jury or a judge to decide your case. Complainants sometimes ask for additional compensation to cover expenses incurred because their initial claim was denied.

What happens when my short-term disability ends?

When your short-term disability ends, you may have a few options available. The first is to return to work if you are able. If you cannot perform the duties of your previous job, your employer may be able to make accommodations for you so you can return to work or find another position in the company for you.

Government benefits

If you are unable to return to work, you can apply for Employment Insurance sickness benefits. This government plan will pay a maximum of 55% of your salary for up to 15 weeks. There are specific criteria you need to meet in order to qualify.

Long term disability

You can apply for long-term disability if your injury or illness is still present and your employer offers long-term disability benefits. Like short-term disability, long-term disability insurance pays a percentage of your income. But, again, you’ll need to check with your employer regarding the benefits available and how you can apply.

Can my employer fire me if I’m on short-term disability?

Your employer can terminate your employment if you are on short-term disability, but they cannot fire you for being disabled. There are many reasons why an employer might terminate your employment, and they can do so if you are on short-term disability as long as they follow the applicable employment laws.

Can I apply for short-term disability benefits if I am pregnant?

If you cannot perform your job duties due to complications from your pregnancy or other health-related reasons, you can apply for short-term disability. It’s best to talk to your doctor first, so you know what to expect.

Can I travel out of the country if I’m receiving short-term disability?

You can, but it’s not usually a good idea. If you’re on short-term disability, the insurer expects you to focus on recovering and not taking vacations. They could terminate your benefits if they find out you have been travelling while on short-term disability.

What are other types of short-term disability insurance available?

Many employers don’t offer benefits. Many employees are also in work arrangements that don’t have benefits, such as contract, seasonal, or casual workers. Additionally, people who are self-employed don’t have employer benefits either.

If you have no benefits and experience an injury or illness that leaves you unable to work, you won’t have any income from your employment or an insurer. However, all is not lost. Two potential sources of short-term disability are private plans and EI sickness.

Private plans

If you have no short-term disability insurance, you can look at purchasing a plan from a private insurer. Many companies offer both short-term and long-term disability insurance. You can buy one or both, depending on your needs.

Each insurer has specific criteria you need to meet in order to qualify. Also, prices are different, so it’s best to compare features, benefits, and prices to get the right plan for your situation.

One advantage of a private plan is that it stays with you regardless of where you work. If you have short-term disability insurance at work but leave that employer, you will lose that insurance. If you go to another employer, they may not offer it, or you may not qualify for a period of time.

Employment Insurance sickness benefits (EI)

Employment insurance sickness is a government program that offers short-term income assistance for those who can’t work due to illness or injury. It provides up to 55% of your income to a maximum of $638 a week for up to 15 weeks.

While you can’t get EI sickness benefits if you are receiving short-term disability, it’s an excellent option for uninsured workers. For example, suppose your employer offers short-term disability, but you don’t qualify because of your employment status (for example, you’re on probation, casual, or contract). In that case, you can apply for EI sickness benefits. 

Like all insurance plans, you will need to apply and meet their requirements. The rules to qualify can be subject to change, so it’s best to find out what you need to qualify before applying.

The importance of short-term disability insurance

Income protection is extremely important because it can provide a financial lifeline for you should you sustain an injury or illness that leaves you unable to work. Of course, it’s best to find out the details of your short-term disability insurance before you need your benefits.

Check with your HR department to confirm whether you have short-term disability insurance. If you don’t, you may consider getting a private policy to protect your income if you can’t work because of health-related issues. Knowing you have income protection can give you peace of mind and reduce your stress should you experience an unexpected health issue.

FAQs About Short Term Disability Insurance in Canada