Ontario Employers No Longer Permitted to Self-Insure Employees’ LTD Benefits

Ontario Employers No Longer Permitted to Self-Insure Employees’ LTD Benefits

Ontario’s 2014 budget, passed on July 24, has called for an amendment to the Insurance Act to prohibit employers from self-insuring their employees’ long-term disability (LTD) benefits.

Employers who self-insure often do so as a cost-saving measure, as paying for employees’ benefits on an as-needed basis can result in significant savings compared to the costs of group plan premiums provided by licensed insurance companies, which insure all personnel in the company.

However, according to the budget: “Recipients of long-term disability payments have seen their payments reduced or eliminated when their corporate employer faced fiscal challenges and the fund was not insured.”

One egregious example that comes to mind is Nortel. This now defunct company’s self-insured LTD plan, underfunded by approximately 75 million dollars, left 350 disabled employees without benefits when the company went bankrupt.

The changes proposed in the 2014 Ontario budget are meant to protect employees by amending the Insurance Act to require that Employers who currently self-fund their employees’ long-term disability benefits switch to an insured plan provided by a licensed and regulated insurance company.

Has your long-term disability claim been denied? Contact Share Lawyers and put our experience to work for you. We offer free consultations and there are no fees unless we win your case.

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