How Canada Pension Plan disability benefits impact WHSCC wage-loss benefits
The information in this brochure provides the reader with general information about the Canada Pension Disability Benefit and workers compensation benefits. It does not cover every issue or exception. If you want to interpret the law with respect to this issue, or any other issue, please refer to the relevant legislation and regulations which are printed by the Queen s Printer or visit our website at: www.whscc.nl.ca Updated April,2009
Contents Introduction...2 What are WHSCC wage-loss benefits?...2 What is the Canada Pension Plan (CPP) disability benefit?...3 Does a CPP disability benefit affect the amount of money an injured worker will receive from the Commission?...4 What information does the Commission need to know regarding CPP disability benefits?...4 How does the Commission determine how much money I can receive?...5 Should an injured worker apply for CPP disability benefits?...5 Examples for understanding how CPP benefits affect workers compensation benefits...7-13 What happens if the injured worker has been receiving CPP disability benefits for a while and has not notified the Commission?...13 Can I appeal the Commission s decision regarding CPP disability benefit calculations?...14 Important points to remember...15
Introduction This information is provided by the Workplace Health, Safety and Compensation Commission (the Commission) to explain the rules regarding Canada Pension Plan (CPP) disability benefits an injured worker may receive while also receiving wage-loss benefits due to a workplace injury. This brochure will: answer commonly asked questions about CPP disability benefits; provide sample calculations; and provide Commission contacts for more information. What are WHSCC wage-loss benefits? Wage-loss benefits are payments made to injured workers by the Commission as a result of an injury or illness in the workplace. The benefit rate is set by the Commission based on earnings when a claim is filed. The injured worker is notified in writing to explain how the rate is calculated and the Commission will notify the injured worker when changes are made to this wage-loss rate. Extended earnings benefits are also wage-loss benefits; however, these benefits are established long-term, based on the worker s ability to return to the workforce following injury recovery and any programs to assist in return to work. 2 IMPACT OF CANADA PENSION PLAN DISABILITY BENEFITS
What is the Canada Pension Plan (CPP) disability benefit? The CPP disability benefit is a taxable benefit, administered by the federal government department of Human Resources and Skills Development Canada (HRSDC). According to HRSDC, the CPP disability benefit is available to people who have made enough contributions to their CPP and whose disability prevents them from working at any job on a regular basis. The disability must be long-lasting or severe. HRSDC recommends people apply when they develop a serious, long-term or terminal medical condition that prevents them from working regularly at any job. An application for a CPP disability benefit must be in writing and HRSDC will determine eligibility, based on the information they require. There may also be benefits available to the children of someone who receives a CPP disability benefit. For more information about applying for the CPP disability pension, contact HRSDC directly. Information and contacts are located at www.servicecanada.gc.ca and follow the links; or by calling toll-free: 1-800-277-9914. IMPACT OF CANADA PENSION PLAN DISABILITY BENEFITS 3
Does a CPP disability benefit affect the amount of money an injured worker will receive from the Commission? Yes. If an injured worker is receiving other earnings while also receiving wage-loss benefits, these earnings are usually deducted from the benefits received from the Commission. CPP disability benefits related to a work injury are considered earnings and the Commission subtracts a percentage of this amount from wage-loss benefits. What information does the Commission need to know regarding CPP disability benefits? The Commission needs a copy of the injured worker s approval or rejection letter from HRSDC concerning CPP disability benefits. If approved, the injured worker will receive a Notice of Entitlement from HRSDC and a copy should be sent to the Commission. It is important to send this information as soon as the injured worker receives it so the Commission can establish the correct benefit amount and make any adjustment to the rate as quickly as possible. 4 IMPACT OF CANADA PENSION PLAN DISABILITY BENEFITS
How does the Commission determine how much money the injured worker can receive? Commission staff follow two guidelines to determine how much money an injured worker will receive if they are receiving WHSCC benefits and CPP disability benefits at the same time. The Workplace Health Safety and Compensation Act (the Act) establishes the law which must be followed in deducting CPP disability benefits from any wage-loss benefits paid by the Commission. Commission staff also follow policies to make sure the injured worker gets the right amount of compensation and the CPP disability benefits deduction is correctly calculated. The Commission s website contains both the Act {Sections 19, 43.1, 74, 80 and 81(3)} and relevant policies, including, EL-01 - Earnings Loss Benefit Calculation; EN-02 - Proportionment; and EL-03(R) - Canada Pension Plan Disability Benefits to be Deducted (1993). Should an injured worker apply for CPP disability benefits? Applying for CPP disability benefits is the injured worker s choice. Depending on individual situations, there may be advantages to applying. Although the Commission considers CPP as earnings, it only deducts 75% of the CPP disability benefit amount from the Commission s wageloss rate. When combined, the total amount could be higher than wage-loss benefits alone. IMPACT OF CANADA PENSION PLAN DISABILITY BENEFITS 5
Dependants could also benefit financially because the Commission does not deduct CPP dependency benefits from Commission wage-loss benefits. The Commission will only deduct the portion of CPP disability benefits that the injured worker is entitled to receive. By receiving CPP disability benefits, it is possible for the injured worker to prevent a reduction in CPP retirement benefits because there are no contributions while in receipt of CPP disability benefits. The injured worker may also protect their CPP contributory period and entitlement to future CPP benefits, including CPP retirement benefits. 6 IMPACT OF CANADA PENSION PLAN DISABILITY BENEFITS
Examples for understanding how CPP benefits affect worker s compensation benefits. Each injured worker has his/her own unique situation. The next few pages show examples of common situations and the calculations which may help in understanding how receiving CPP disability benefits will affect wage-loss benefits. Example 1 In calculating the wage-loss amount, the Commission deducts 75% of the net CPP disability benefit from the injured worker s net average earnings prior to the injury. These are the same net average earnings used to set up the wage-loss benefit rate. IMPACT OF CANADA PENSION PLAN DISABILITY BENEFITS 7
Example 1 Receiving wage-loss benefits $687.54 (gross weekly pre-injury earnings) - $152.28 (contributions EI, Income tax, CPP) = $535.26 (net weekly earnings) X 80% (WHSCC pays 80% of net) $428.21 Commission weekly rate Total payment= $428.21 Receiving CPP disability benefits and wage-loss benefits $687.54 (gross weekly pre-injury earnings) - $152.28 (contributions EI, Income tax, CPP) = $535.26 (net weekly earnings) X 80% (WHSCC pays 80% of net) = $428.21 $148.17 (weekly CPP disability benefit) X 75% = $111.13 ( weekly CPP amount to be subtracted) $428.21 - $111.13 = $317.08 WHSCC weekly rate + $148.17 Weekly CPP disability benefit = $465.25 Total combined payment of CPP and WHSCC benefits = $465.25 8 IMPACT OF CANADA PENSION PLAN DISABILITY BENEFITS
Example 2 Some injured workers have net average earnings higher than the maximum compensable earnings amount used to set a wage-loss rate. In 2009, this amount is $50,379. No matter how high the earnings prior to injury, the Commission can only use the maximum amount to set a wage-loss rate. The following example demonstrates how the Commission deducts 75% of the CPP disability benefit component from the established rate (based on $50,379) and not the injured worker s actual net earnings. IMPACT OF CANADA PENSION PLAN DISABILITY BENEFITS 9
Example 2 Maximum extended earnings benefit $1,295.47 (gross weekly pre-injury earnings) $968.83 (maximum earnings used by the WHSCC) - $253.01 (contributions-ei, Income tax, CPP) = $715.82 (net earnings) X 80% (WHSCC pays 80% of net) $572.66 WHSCC weekly rate Total payment = $572.66 Maximum extended earnings benefits and receiving CPP disability benefits $1,295.47 (gross weekly pre-injury earnings) $968.83 (maximum earnings used by WHSCC) - $253.01 (contributions-ei, Income tax, CPP) = $715.82 (net earnings) X 80% (WHSCC pays 80% of net) $572.66 COMMISSION weekly rate $235.43 (weekly CPP disability benefit) X 75% = $176.57 (weekly CPP amount to be subtracted) $572.66 - $176.57 = $396.09 (WHSCC weekly rate) + $235.43 Weekly CPP disability benefit = $631.52 Total combined payment of CPP and WHSCC benefits 10 IMPACT OF CANADA PENSION PLAN DISABILITY BENEFITS
Example 3 In some cases, following recovery from an injury, the Commission determines the average weekly net earnings that an injured worker is estimated to be capable of earning at suitable employment and establishes extended earnings loss (EEL) benefits. In the following situation, a person may be considered capable of earning some money and these earnings are deducted from the wage-loss rate. 75% of net CPP may be higher or lower than this estimated earnings amount. The Commission will only deduct the CPP disability benefit if it is higher than the earnings the injured worker is considered capable of earning. If the CPP disability benefit combined with other earnings such as an employer sponsored pension plan makes the amount higher than the considered earnings, the Commission will deduct the higher combined amount. IMPACT OF CANADA PENSION PLAN DISABILITY BENEFITS 11
Example 3 EEL benefits after being considered capable of earnings $887.67 (gross weekly pre-injury earnings) - $227.25 (contributions-ei, Income tax, CPP) = $660.42 (net weekly earnings) $528.00 (gross considered earnings per week) - $102.70 (contributions-ei, Income tax, CPP) = $425.30 (net considered earnings) $660.42 net weekly earnings - 425.30 net considered earnings = $235.12 revised net earnings x 80% WHSCC pays 80% of net $188.10 WHSCC weekly rate EEL benefits after being considered capable of earnings and receiving CPP disability benefits $887.67 (gross weekly pre-injury earnings) - $227.25 (contributions-ei, Income tax, CPP) = $660.42 (net weekly earnings) $528.00 (gross considered earnings per week ) - $102.70 (contributions-ei, Income tax, CPP) = $425.30 (net considered earnings) $660.42 net weekly earnings - 425.30 net considered earnings = $235.12 revised net earnings x 80% WHSCC pays 80% of net = $188.10 WHSCC weekly rate + $171.42 CPP disability amount = $359.52 12 IMPACT OF CANADA PENSION PLAN DISABILITY BENEFITS
Example 3 continued EEL benefits after being considered capable of earnings continued Total payment = $188.10 The $171.42 CPP disability amount is less than $425.30 net considered earnings and although entered on our system in case of future earnings, it does not get factored into the current extended earnings rate. $188.10 WHSCC weekly rate + $171.42 CPP disability benefit Total combined payment of CPP and WHSCC benefits = $359.52 What happens if the injured worker has been receiving CPP disability benefits for a while and has not notified the Commission? The Commission may have been paying too much in wage-loss benefits if the injured worker: has been receiving CPP disability benefits and has not notified the Commission; and IMPACT OF CANADA PENSION PLAN DISABILITY BENEFITS 13
a lump sum has been paid which dates back to the date of application to CPP. CPP disability benefits related to the work injury are considered income and must be subtracted from wage-loss benefits for any time that an injured worker receives both benefits. This means, the Commission may have overpaid the injured worker s wage-loss benefits and it will recover this overpayment. The Commission is sensitive to situations where the injured worker owes money to the Commission and will work with the injured worker to set-up a suitable repayment plan. When an overpayment occurs, there are a number of re-payment options and Commission staff takes care not to cause financial hardship while the money is repaid. Can I appeal the Commission s decision regarding CPP disability benefit calculations? All injured workers have the right to fair treatment in their dealings with the Commission and have a right to appeal any decision. Commission staff follow the rules that guide the delivery of service to injured workers and their families. If an injured worker disagrees with a Commission decision regarding CPP disability benefit calculations, the injured worker has the right to appeal that decision. Appeals must be sent to the Commission in writing within 30 days of receiving the decision. The injured worker can also use a Request for Internal Review form available at all Commission offices or from the website, under Forms at www. whscc.nl.ca 14 IMPACT OF CANADA PENSION PLAN DISABILITY BENEFITS
Please give us the reasons why you do not agree with the decision, and make sure you have sent it within 30 days to the following address: Administrative Officer, Internal Review Division Workplace Health, Safety and Compensation Commission P.O. Box 9000 146-148 Forest Rd. St. John s, NL A1A 3B8 Fax: 1-800-778-1586 Important points to remember If an injured worker applies for and receives CPP disability benefits or receives a denial letter, please send a copy to the Commission. When contacting the Commission, injured workers should have their six digit claim number handy and added to all correspondence. CONTACT INFORMATION For further information regarding CPP disability benefit offsets, please call one of our regional offices and ask for the Client Service Assistant responsible for the claim. Refer to the back page of the brochure for our regional offices. IMPACT OF CANADA PENSION PLAN DISABILITY BENEFITS 15
The Commission has three regional service offices St. John's 146-148 Forest Rd. P.O. Box 9000 St. John's, NL A1A 3B8 Telephone (709) 778-1000 Fax (709) 738-1714 Toll-free 1-800-563-9000 Grand Falls-Windsor 26 High Street P.O. Box 850 Grand Falls-Windsor, NL A2A 2P7 Telephone (709) 489-1600 Fax (709) 489-1616 Toll-free 1-800-563-3448 Corner Brook Suite 201B, Millbrook Mall 2 Herald Avenue P.O. Box 474 Corner Brook, NL A2H 6E6 Telephone (709) 637-2700 Fax (709) 639-1018 Toll-free 1-800-563-2772