Benefits

When adjusting an Income Replacement Benefit (IRB) claim, there are a number of ways to validate financial information and assess a claimant’s employment status on the date of loss.

When an OCF-1 (Application for Accident Benefits) and OCF-2 (Employer’s Confirmation Form) come in, look first at whether the claimant considers themselves an employee, self-employed or perhaps both, suggests Tony Militello, a principal at H&A Forensic Accounting. This information can be found in part 5: applicant status of the OCF-1, he said.

Militello was speaking at the firm’s 15th annual Toronto AB Conference on Apr. 14.

From there, he suggests starting on page 2 of the OCF-2 – employment details and employer information – and working your way backwards; analyze the employment information first and work your way to employment income, Militello says. When reviewing the information, did the person provide any information with respect to self-employment in part 4? If not, then they consider themselves to be an employee of a company and not self-employed. Then move on to the weekly income: Does the weekly average for the four-week period make sense? Compare that to the 52-week period: Is it consistent with the average from the four-week period? From there, consider if there are any employer-paid benefits. This can be found in the OCF-2 on page 2, part 5: other benefits. Did the employer check off yes or no for any of the available benefits. If benefits are paid it will increase the pre-accident income, Militello says.

Employer paid benefits include:

• employer premiums for medical, dental, life and disability
• employer pension contributions

The employer portion of Canada Pension Plan contributions, Employment Insurance premiums and Workplace Safety and Insurance Board premiums are not considered employer-paid benefits, Militello says.

There are certain situations where employer-paid benefits should be included and other situations when they can be excluded. If there are no interruptions – the claimant is receiving the same benefits both pre- and post-accident – then they do not need to be included in the calculation. It is not going to affect the IRB calculation, Militello notes.

If they cease or change subsequent to the accident, then an adjuster will need to obtain the relevant information from the employer.

He cautions that there are two instances where these benefits should always be included:
1.    In the event of a catastrophic case where the adjuster recognizes that down the line the benefits may cease or be reduced. It is always easier to obtain the information at the beginning of a claim than it is to try and find it five or six years down the road.
2.    In the event of an unemployed claimant. Here, a 52-week calculation would be done, and during that 52 weeks they were employed by a company who provided them with employer paid benefits. When included, the claimant’s pre-accident income increases, but it will have no impact post-accident because they were unemployed at the time of the loss.

Employer-paid benefits are not taxable under either the old Statutory Accident Benefits Schedule (SABS) or the new one, Militello says.

If the OCF-2 does not make any sense, the best option is to call the employer to determine why. The form is not always accurate or complete, but the employer might be able to clarify the mix-up in person or over the phone. The form does not, however, normally include vacation pay, nor does it provide the adjuster with any information surrounding bonuses, commission or profit sharing. When speaking with the employer, Militello suggests requesting the following information:

• Payroll records from the first year prior to the accident; this will help calculate the four and 52-week pay period
• T4 slip, which can be used to verify the information on the payroll records
• Record of employment
• STD/LTD information

From the claimant, Militello suggests asking for the following:

• OCF-13 (Declaration of Post-Accident Income and Benefits
• Personal income tax returns
• EI benefit statements for a 52-week period
• Post earnings, payroll records
• STD/LTD information