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Disability benefits are a form of financial assistance or welfare designed to support disabled individuals who cannot work due to a chronic illness, disease or injury. Disability benefits are typically provided through various sources, including government programs, group disability insurance provided by employers or associations or private insurance policies typically purchased through a licensed insurance agent or broker, or directly from an insurance company.
The primary purpose of disability benefits is to offer a safety net for those whose earning capacity is impacted by disability, ensuring they have the necessary support for their living expenses. Benefits compensate for lost income, thus playing a crucial role in helping the disabled maintain financial stability and quality of life in the face of challenging health circumstances.
United Kingdom
In the United Kingdom, disability benefits are covered by Department for Work and Pensions. There are numerous benefits available for people of different ages and different personal circumstances
Children under 16
- Disability Living Allowance is paid to children under 16 who have some degree of care and/or mobility needs. In the past, it was available to adults aged 65 or under, but claims for DLA for adults are now being phased out and transferred to PIP.
Working-Age Adults (aged 16-65)
- Employment and Support Allowance is paid to people who are unable to work because of their disability.
- Personal Independence Payment is paid to people who have some degree of care and/or mobility needs.
- Universal Credit is currently being rolled out, with the intention of replacing Employment Support Allowance, as well as a number of other benefits claimed by both disabled and non-disabled people.
- Working Tax Credit Disability component is paid to people with a disability work 16 hours a week or more, who pass the Work Disadvantage Test and claim another disability benefit.
Industrial Disability Benefits
- Constant Attendance Allowance is paid to people who receive Industrial Injuries Disablement Benefit and who are classed as 100% disabled.
- Industrial Injuries Disablement Benefit is paid to people who have become disabled as a result of an illness or injury caused by work or while completing vocational training. To be eligible, the claimant is assessed to ascertain the level of disability they have, as a percentage. The claimant needs to be at least 14% disabled to receive the benefit.
- Reduced Earnings Allowance is paid to people who work but have reduced earnings as a result of accident or illness caused by their work. It is only available if the accident or illness started before October 1, 1990.
Carers
- Carer's Allowance is paid to people who care for someone who receives the care component of PIP or the higher or middle rate care components of DLA. The carer must spend at least 35 hours a week caring for the person and the carer must not earn more than £120 a week
- Income support is available to people on Carer's Allowance who work less than 16 hours a week and are on a low income.
Veterans
- Armed Forces Independence Payment is paid to former members of the armed forces who were left disabled after being injured while in the armed services after 6 April 2005.
- War Disablement Pension is paid to people who became disabled as a result of an injury or illness that occurred or was aggravated as a result of serving for the armed services. The injury must have occurred before 6 April 2005.
United States
In the United States, disability benefits for most Americans are covered and paid for by the Social Security Administration (a government agency). There are two main programs administered by the SSA: Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI). There is also a specific program for children with disabilities. Five states also provide short-term disability benefits for workers who become temporarily unable to work due to illness or injury: California, Hawaii, New Jersey, New York, and Rhode Island.
SSDI provides benefits to individuals who have worked and paid Social Security taxes. Insurance eligibility is dependent upon Quarters of Coverage (QCs), commonly called "work credits". These are allotted based on the earnings for each quarter the individual has worked. Work credits ensure coverage until they "expire" on the individual's Date Last Insured (DLI). Medical evidence must prove that the onset of disability was before their DLI to receive benefits. SSDI recipients become eligible for Medicare after two years of SSDI eligibility.
SSI provides benefits to low-income individuals who are disabled and unable to work, regardless of whether they have worked in the past. Individuals must meet income and resource requirements. SSI also provides benefits to children under 18 years old, who are disabled and whose parents or guardians have limited income. The monthly SSI payment is calculated based upon the Federal Benefit Rate (FBR), and the individual's income. Most SSI recipients are immediately eligible for Medicaid and Supplemental Nutrition Assistance Program (SNAP), though program requirements vary by state.
Some individuals are eligible for both SSI and SSDI.
Veterans
- Civilian Health and Medical Program (CHAMPVA) is a program that offers cost-sharing benefits designated to cover a portion of health insurance expenses for surviving spouses and children who do not meet the criteria for TRICARE medical insurance coverage.
- The Program of Comprehensive Assistance for Family Caregivers furnishes eligible veterans' family caregivers with a range of support, including financial stipends, access to health insurance, provisions for mental health counseling, and training to enhance caregiving skills. This program is specifically aimed at those caregivers whose veterans sustained serious injuries while in the line of duty.
- The Camp Lejeune Family Member Program caters to the spouses and children of veterans who resided at Marine Corps Base Camp Lejeune for a duration of at least 30 days between August 1953 and December 1987. Eligibility for VA benefits is extended to those who experience specific medical conditions as a result of their time spent at the base.
- Spina Bifida Health Care Benefits Program offers coverage for medical treatment related to birth defects and other medical conditions linked to Spina Bifida.
- Dependency and Indemnity Compensation is a compensation benefit exempt from taxation, provided to surviving spouses, children, and parents of veterans whose service-connected disabilities lead to their demise.
- Combat-Related Special Compensation addresses the situation where disabled military veterans concurrently receive military retirement payments and disability compensation payments. This benefit ensures that some of these veterans receive supplementary tax-free payments if their service-connected disability can be attributed to combat, hazardous duty, war simulation training, exposure to specific weapons or their consequences, or activities resulting in the award of a Purple Heart.
Canada
In Canada, there are a variety of public Disability Benefit Programs. The largest programs are the Canada Pension Plan and Quebec Pension Plan disability benefits, and provincial workers' compensation and social assistance programs. Some individuals, in addition, have private disability insurance coverage, purchased either individually, or through an employer. Different programs use different rules to decide whether or not someone is eligible for benefits.
Canada Pension Plan Disability Benefits
Canada Pension Plan (CPP) Disability Benefits are taxable monthly payments provided by the federal government to individuals who have contributed to the Canadian Pension Plan and are unable to work due to a severe and prolonged disability. These benefits aim to partially replace lost income and maintain financial stability for eligible Canadians.
To be eligible for Canada Pension Plan (CPP) Disability Benefits, individuals are required to meet specific criteria which include:
- Must be Under 65 years of age - and not collecting a CPP Retirement Pension.
- Meet Contribution Requirements - which generally means that a Canadian worker must have made CPP contributions on pensionable earnings in four of the last six years at minimum, or three of the last six years if they have contributed for 25 years or more.
- Meet the Definition of Disability - the CPP Disability test in Canada is outlined in the Canada Pension Plan legislation, specifically in Section 42(2)(a) of the Canada Pension Plan. The legislative test states that a person shall be considered to be disabled only if they have a severe and prolonged mental or physical disability. A disability must be considered "severe" and "prolonged." A disability is considered severe if, by reason of the disability, the person is incapable of regularly pursuing any substantially gainful occupation. Substantially gainful is defined by the legislation as profitable work that provides a significant source of income or livelihood, not volunteer work or hobbies. A disability would be considered prolonged if it is determined in a prescribed manner that the disability is likely to continue for an indefinite duration or is likely to result in death. Lastly, the term "infinite duration" as defined by the legislation means that the disability is not expected to improve in the foreseeable future, with no specific end date.
- Must Peroperly Complete the Application Process - individual must actively apply for the benefits. This involves completing various forms, including a medical report to be filled out by a healthcare professional. The application is then reviewed by CPP officials to determine eligibility based on the provided documentation and criteria.
These stipulations ensure that CPP Disability benefits are provided to those with significant and long-lasting disabilities impacting their ability to work, and who have contributed to the plan during their working years.
Quebec Pension Plan (QPP) Disability Benefits
Quebec Pension Plan (QPP) Disability Benefits are financial payments provided to individuals in Quebec who are unable to work due to a severe and prolonged disability and have contributed sufficiently to the QPP. Similar to CPP Disability Benefits, QPP is designed to offer income support specifically for residents of Quebec, acknowledging their unique pension plan separate from the rest of Canada. These benefits also help maintain financial stability for eligible individuals and are subject to taxation.
Employment Insurance Sickness Benefit (EI Insurance)
Employment Insurance is a benefit plan that offers temporary financial assistance to those individuals who cannot work due to sickness, injury, or quarantine.
To be eligible to receive EI sickness benefits:
- The individual's earnings have been reduced by at least 60%
- He/She is employed in insurable employment
- A minimum of 600 hours has been accumulated in the qualifying period
People are only eligible for these benefits if they are unable to work due to their sickness, injury, or quarantine, but would be able to work otherwise. To receive EI sickness benefit a medical certificate signed by the doctor is required.
To qualify for EI you must have a required amount of insurable employment hours, which are used to calculate your benefit period, these insurable employment hours must be accumulated throughout the qualifying period.
The qualifying period:
- 52 week period before the EI claim date
- Start date of previous EI benefit period to the start of the new date
It is important to note that each individual's case is different and requirements may vary from case to case. But a general way of calculating EI benefits is 55% of the average insurable weekly earnings. The maximum amount you can be eligible for as of January 1, 2018 is $51,700. Typically EI sickness benefits can only be paid for up to 15 weeks, but can vary depending on how long the individual is unable to work.
Weekly EI sick benefits are calculated based on income before it has been deducted during the individuals "best weeks". Best weeks are the weeks in which the individual earned the most amount, including any tips and commissions, the best weeks are chosen out of the qualifying period.
In Canada, areas with high rates of unemployment will use the best 14 weeks, and in areas with low unemployment rates will use the best 35 weeks.
Private Disability Benefits (Long-Term Disability)
In Canada, there are two main sources of private long-term disability benefits available to the public:
- Individual disability insurance, which offers personalized income replacement benefits to individuals unable to work due to disability. Purchased personally from a licensed insurance broker, it provides tailored coverage based on the individual's income and needs, with benefits paid after a set waiting period. This type of policy allows for flexibility in coverage options and benefit periods.
- Group disability insurance, provided by employers or associations, normally offers standardized income replacement to members unable to perform job functions due to injury or illness. Benefits are consistent across all members, underwritten without medical examination, with generally shorter waiting periods and potentially lower costs. However, coverage is less personalized and depends on the individual's affiliation with the providing group.
Qualifying for individual or group long-term disability (LTD) benefits in Canada typically involves a claimant proving that he or she is unable to perform the duties of his or her own occupation due to a disability caused by illness or injury. Initially, most policies use the "own occupation" provision, which means that a person will be considered disabled if he or she is unable to perform the substantial duties of his or her own employment. This is normally the standard for the first two years of disability within most Canadian long-term disability policies.
After two years, there is typically a change of definition of total disability in which the criteria shifts to that of "any occupation" provision. Under this stricter standard, to continue receiving benefits, a claimant must be unable to perform the duties of any job for which he or she is reasonably suited by way of education, training, or experience. This means that after two years, even if a person cannot return to his or her previous job, he or she might still be deemed capable of performing different work.
Understanding these provisions and how they apply over time is crucial for those seeking to navigate the long-term disability benefits system in Canada.
References
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