In the last few weeks, plan sponsors have received a series of emails from insurance carriers regarding changes to their Long Term Disability (LTD) benefit. In turn, we have received a flurry of concerned questions. Here’s what you need to know about recent changes to the Quebec Pension Plan (QPP) Disability benefit and how this affects your group insurance plan.
About the Quebec Pension Plan (QPP)
QPP provides various benefits to Quebec workers, and their families, who have sufficiently contributed to the Plan including:
- The Retirement Pension and Pension Supplement
- The Disability Pension, Pension for a disabled’s person’s child, and Additional disability amount for persons receiving a retirement pension
- The Death benefit, Surviving spouse’s pension, and Orphan’s pension
What’s changing with the QPP disability benefit?
The QPP disability pension benefit currently includes a fixed portion and a variable portion. The variable portion is calculated based on the person’s reported employment income.
As part of Bill 17, the Government of Quebec announced changes to the QPP disability pension for persons 60 years and older. Starting January 1, 2024, the QPP disability pension benefit will include only the fixed portion. The variable portion will be separated out and paid automatically as QPP retirement pension.
More information regarding changes to the disability pension can be found on the QPP website.
Response from insurance carriers
Today, insurance carriers reduce employees’ LTD benefit by the total QPP disability benefit received (both fixed and variable portion).
To align with recent QPP changes, insurance carriers will now be reducing LTD benefits by the QPP disability pension and the QPP retirement pension, even if the employee choses to defer their retirement pension.
These changes will only affect plan members that begin a LTD claim on of after January 1, 2024.
Read the announcements from major insurance carriers
Changes to group disability contracts with Canada Life
Changes to group disability contracts with Empire Life
Changes to group disability contracts with Manulife Financial
Changes to group disability contracts with Sun Life Financial
Impact of changes to QPP disability benefit in a nutshell
Contractual changes recently announced by insurance carriers are simply an alignment to the QPP changes which ensure sustainability of LTD plan costs over time. Employees will not receive a lower LTD benefit than they would have prior to the change. However, employees that decide to defer their retirement pension must understand that the combined amount received from QPP and their insurance carrier will be lower.
