LTD BENEFIT PAYMENTS
The amount of LTD benefits you will be paid is based on a percentage of your normal salary at the time you became disabled.
Payments are made by direct deposit bi-weekly.
Your LTD benefit will be reduced by other sources of income, such as:
CPP disability benefits (see information below)
disability payments from other government plans (such as Workers' Compensation)
disability benefits from other insurance plans sponsored by your employer
retirement benefits paid to you by your employer from a pension plan
other employment income, including self-employment
income you receive while participating in a gradual or return-to-work program
insurance benefits paid to you as a result of a claim filed against a third party (see subrogation)
You must report all sources of income to Manulife when your claim is first approved, and on an ongoing basis. Failure to report can result in an over-payment, which you will be required to pay back.
Canada Pension Plan (CPP) Disability Benefit
If you contributed to, and qualified for, the CPP disability benefit, Manulife will require you to apply for that benefit.
Any amount you are paid from CPP disability will be deducted from your LTD benefit you receive under the Plan.
Note: Any CPP disability benefit you receive on behalf of a dependent child will not be deducted from your LTD benefit.
Manulife will require you to sign an assignment form that directs CPP to reimburse Manulife any retroactive-owing CPP disability benefit.
Your earnings history will be frozen as of the date of disability. This means CPP will not have a record showing that you earned no money and made no contributions to CPP during the time you are disabled. This protects your future CPP benefit, including retirement benefits.
Contact Manulife as soon as you are approved so your LTD benefit can be recalculated.
If you receive a CPP disability benefit payment before Manulife has recalculated your LTD benefit, you may owe a portion of that payment to Manulife.
Your LTD benefit is subject to income tax. You will receive a T4A from Manulife on an annual basis.
You will also receive a T4 from your employer noting any union dues or pension contributions you may have made while receiving LTD benefits.
If you are a CUPE or NSGEU member, Manulife will deduct your union dues from your LTD benefit and forward to your union on your behalf.
Public Service Superannuation Plan and LTD
If you are a member of the Public Service Superannuation Plan (PSSP), your membership continues while you receive LTD benefits.
You will continue to make contributions as if you were still at work based on the current rate of pay for the position, class, and step you held prior to becoming disabled.
Manulife will deduct these contributions from your LTD benefit and make the contributions to the PSSP on your behalf.
Your deductions will continue until otherwise directed by PSSP.
You will continue to collect years of pensionable service while you are receiving LTD benefits and your employer will continue to match those contributions so your pension, when you retire, will be the same as if you had continued working.
Benefit Calculation Example
Below is an example of how an LTD benefit is calculated for someone with an annual salary of $65,780 (assume a member of NSGEU & PSSP). All values are rounded.
Regular biweekly pre-disability earnings $2,530
Gross biweekly LTD benefit $1,644 ($2,530 @ 65%)
Union dues $ 20 (1.25% of LTD benefit)
(deduction amount based on current salary) $ 220
Income tax $ 220
Net biweekly LTD benefit $1,184
**disclaimer- the above is a basic example, it does not include all possible benefit reductions (offsets).