Is CERB a Deduction on Long-Term Disability Benefits? (Canadian Emergency Response Benefit)

Is CERB a Deduction on Long-Term Disability Benefits? (Canadian Emergency Response Benefit)

As we enter tax season and the confusing fallout from the COVID-19 pandemic, people will be facing the question of whether any CERB benefits that they received may have to be paid back to the Canada Revenue Agency (“CRA”).

CERB was relatively easy to obtain as the Canadian Government was concerned about people losing their livelihoods during pandemic shutdowns.   

For those who have made a claim for short-term or long-term disability benefits, there is some uncertainty regarding obligations to make repayments to CERB if such benefits were received while you were also claiming  Short-Term Disability or Long-Term Disability benefits in Canada.

We have seen this issue raised now on a number of Long-Term Disability claims in Vancouver and Toronto (and this applies across Canada) in cases where insurance companies have argued that receipt of CERB payments is something they can deduct from their obligations to pay LTD benefits.

For example, say you received CERB payments for four months at the rate of $2,000 per month for a total of $8,000.00. During this period you were also claiming LTD benefits of $3,000 per month. For this period, an insurer may say they are only required to pay $1,000 per month, deducting the CERB payments you received.

However, it is entirely possible, and perhaps even likely, that you may be required to repay the $8,000 to CRA if the basis of your disability claim had nothing to do with an illness related to COVID-19. If you were already off work prior to the onset of the pandemic and your LTD claim was denied or terminated, you may have been able to get CERB payments, but as your disability was not related to the pandemic specifically, CRA may seek repayment.

Each case is unique and these comments are general in nature; however, in any settlement negotiations with insurance companies, we would suggest strong resistance to the insurance company’s attempt to deduct CERB payments on the basis that you may be required to repay these amounts if they were paid in error by the government.

Insurance companies will argue that CERB payments should be treated as an offset, relying upon policy language where applicable, suggesting that any government monies received are deductible either on a direct or indirect basis.

There have not been any court decisions yet on this issue, but it certainly seems that if the CERB you received may have to be repaid, the insurance companies should not be able to benefit from the government’s support for Canadians during the pandemic.

If you have questions about this issue or if your claim for LTD benefits has been denied or terminated, please contact the long-term disability claim lawyers at Share Lawyers to discuss your particular situation to see if we can help.

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