Difference Between Short Term and Long Term Disability Explained

Disability insurance is an essential form of support for employees who are unable to perform their job duties due to illness or injury. Both short term and long term benefits are designed to address different needs and durations of recovery. Whether you or a loved one are facing health related work interruption, it is important to become aware of the key differences between short term and long term disability benefits, so you can determine which type of coverage best fits your situation.

What is Disability Insurance?

Disability insurance is a type of coverage that provides income replacement if you become unable to work due to an illness, injury, or medical condition. It serves as a crucial source of financial support during times when you’re unable to earn an income so that you can continue to pay for essential expenses.

These are two main types in Canada:

• Short term disability insurance (STD): Covers a temporary inability to work, usually for a few weeks to several months.
• Long Term Disability Insurance (LTD): Provides extended benefits if your condition prevents you from returning to work for an extended period or permanently.

Disability insurance can be provided through employer group plans, private policies, or government programs like EI sickness benefits or CPP disability benefits. Most policies require medical documentation and may have a long waiting period before benefits begin.

Types of Disability Benefits

Short Term Disability Benefits

Short term disability is used in cases where an employee takes a temporary leave from work due to an unexpected injury, serious illness, or mental health conditions. In scenarios like these, employers may offer short term disability insurance as part of the employees extended health benefits package. Employees can also purchases this insurance by themselves or from a third-party insurance company.

Short term disability benefits covers an employee’s compensation, usually supporting between 60-85% of their normal income for a short period of time (usually up to 26 weeks) in cases where a serious medical condition, such as illness or injury, prevents them from carrying out their job functions.

To be eligible to receive short term disability benefits, an employee must prove that they are unable to fulfill their job responsibilities due to unexpected illness with medical evidence from a doctor or therapist.

What Conditions Qualify for Short Term Disability Benefits

• Cognitive Impairments: Conditions that may affect brain function. They may involve symptoms such as memory loss, difficulty concentrating, impaired decision-making, and identity confusion.
• Chronic Pain: Pain or discomfort that is persistent and lasts for an extended period of time.
• Restricted Body Mobility: Refers to impairment in mobility. For example, it could affect the upper body if someone has limited hand mobility, or the lower body if they rely on assistive devices like a can, walker, or wheelchair.
• Breathing Difficulties: These are often caused by lung diseases such as asthma, lung cancer, tuberculosis, influenza, or pneumonia. These conditions can develop suddenly or over a period of time which can make it extremely difficult to go to work.
• Hearing Issues: These often result from factors such as aging, underlying diseases, or exposure to loud noises for a sustained period of time. Impaired hearing can also happen in scenarios where an employee is exposed to loud noises from machine in a factory/manufacturing unit.

Long Term Disability Benefits

Long term disability benefits are designed to provide extended financial assistance when your illness of injury is prolonged, and you are still unable to return to work after your short term disability benefits or EI benefits have ended.

Typically, most long term disability plans can last 2 years, 5 years, or up until retirement age, depending on your policy. Usually the waiting period is between 90-180 days, and LTD requires extensive medical documentation showing a severe or permanently disabling condition.

Long Term Disability Coverage Supporting Individuals with:

• Severe illness
• Mental health conditions & mental illness
• Chronic diseases (e.g., cancer, MS, fibromyalgia)
• Injuries that result in permanent disability

Key Differences Between Short Term and Long Term Disability

The key differences in short term and long term disability is that short term disability benefits may be on a weekly basis, with a maximum duration of up to 26 weeks, as determined by the policy and province or territory. However, long term disability benefits sometimes also involve monthly payments, starting at the end of short term disability insurance, depending on the plan, and could cover up to an employee’s retirement age.

The coverage for short-term disability (STD) is typically through employee-sponsored group plans or Employment Insurance (EI). In contrast, long-term disability (LTD) benefits are usually available through group insurance plans or individually purchased private insurance policies.

An employee may also qualify for Canada Pension Plan (CPP) disability benefits if they are unable to work due to a long term disability that may last indefinitely causing them to be permanently disabled.

How Disability Benefits Are Calculated

Disability benefits in Canada provide critical financial support to individuals who are unable to work due to a medical condition or injury. These benefits are available through a variety of programs, including federal, provincial, and private insurance plans. Each program has its own eligibility criteria and method for calculating payments.

Understanding how disability benefits are calculated in Canada is essential for anyone preparing a claim. This guide outlines how these calculations work for the Canada Pension Plan Disability (CPP-D), private long-term disability insurance (LTD), and provincial programs like the Ontario Disability Support Program (ODSP).

Canada Pension Plan CPP-D Benefits

CPP-D payments are calculated using the following formula:

• Flat rate: A fixed base amount that all recipients receive.
• Earning-based portion: A percentage of the individual’s average earnings during their contributory period.

Private Long-Term Disability (LTD) Insurance

Many Canadians receive LTD benefits through workplace group insurance plans or private providers. These benefits typically begin after short term disability ends or an elimination period (often 90-180 days).

How LTD Benefits Are Calculated

LTD benefits usually replace a percentage of your pre-disability income. Most policies cover:

• 60% to 70% of your gross monthly earnings.

How Ontario Disability Support Program (ODSP) Benefits are Calculated

ODSP payments are based on:

• Family size and living arrangements.
• Shelter costs.
• Income from other sources.

Additional coverage may be provided for dependents, special diets, or transportation to medical appointments. ODSP reduces benefits if you receive income from other programs like CPP-D or employment.

Additional Sources of Disability Insurance

Workers’ Compensation: Based on a percentage of pre-accident earnings and varies by province.

Employment Insurance (EI) Sickness Benefits: Short term disability insurance paying up to 55% of average insurable weekly earnings for up to 15 weeks.

Veterans Affairs: Offers disability pensions and awards depending on service-related injuries or illnesses.

Factors That Can Affect Benefit Amounts:

• Level of disability (temporary vs. permanent).
• Type of disability policy.
• Age at the time of disability.
• Cost-of-living adjustments (for some plans).

Claims and Appeals

Filing a disability claim, whether for STD or LTD, requires providing evidence of your condition, proof of income, and medical documentation. Unfortunately, many claims are denied or prematurely terminated.

Here’s what to expect and how to respond:

1) Filing Your Initial Claim

To apply:

• Complete the employee statement form.
• Have your doctor complete a medical form confirming your condition.
• Submit any employer-provided or insurance company paperwork.

Ensure your documents clearly explain:

• Your diagnosis.
• How your condition affects your ability to work.
• Your treatment plan and prognosis.

2) If Your Claim is Denied

Insurers often deny claims due to:

• Insufficient medical evidence.
• Disagreement over your ability to work.
• Missed deadlines or paperwork issues.
• Surveillance or social media evidence contradicting your claim.

If this happens, don’t panic – you have options.

Appealing a Disability Benefits Denial

If your claim for STD or LTD is denied, you typically have two options:

A) Internal Appeal

Most insurance providers allow one or more rounds of internal appeals, where you can:

• Submit new medical evidence.
• Provide clarifying documentation.
• Respond to the insurer’s reasons for denial.

B) File a Legal Claim

If your internal appeal fails, or you want to skip it, you can sue the insurance company for breach of contract and seek compensation for benefits owed, legal costs, and, in some cases, punitive damages.

How a Personal Injury Lawyer Can Help

With over 40 years of experience, Grillo Law has helped thousands of Canadians navigate the complex disability claim process. We advocate for individuals whose claims have been delayed, denied, or wrongfully terminated.

We help you:

• Understand your policy.
• Build strong medical evidence.
• Appeal a denied STD or LTD claim.
• File a lawsuit, if necessary.
• Protect your rights under Canadian disability law.

Understanding the differences between short term and long term disability benefits is crucial for managing your income while recovering from an illness or injury. Whether you’re just starting your claim or facing a denial, working with an experienced disability lawyer can make all the difference.