Long-term disability benefits with a long waiting period still “continuing income” to be deducted from IRBs: FSCO

A long-term monthly disability payment featuring a significant waiting period is still an income continuation plan under Ontario’s Statutory Accident Benefits Schedule (SABS), and is therefore deductible from income replacement benefits (IRBs) paid to auto injury victims, an Ontario arbitrator has ruled.
Subsection 7(1) of the SABS provides that IRBs are reduced by net weekly payments for loss of income being received under any income continuation plan.
In Intact Insurance Company and Joseph Anton Marianayagam, the claimant, Marianayagam, argued a long-term disability benefit offered by a collateral insurer, the Equitable Life Insurance Company of Canada, does not count as an income continuation benefit plan, since it only pays benefits on the 120th consecutive day of disability.
Essentially, Marianayagam argued that since the waiting period for the long-term disability benefit is long and the payments are monthly (not weekly), the Equitable Life policy is not an income continuation plan.
A Financial Services Commission of Ontario (FSCO) arbitrator noted receiving IRBs in addition to indemnity payments (such as an income continuation plan) counts as a form of “double recovery.” Therefore the issue is whether the Equitable Life Policy counted as an indemnity payment – which is intended to compensate a victim in whole or in part for a loss (i.e. employment insurance) – or a non-indemnity payment, which is payable upon proof of an event, regardless of whether or not there has been a pecuniary loss.
“Income continuation benefit plans do not have to provide for the entire period of disability,” the FSCO arbitrator found. “In this case, the [120-day] waiting period [of the Equity Life Policy] would seem to be more indicative of a differentiation between a long-term indemnity plan from a short-term indemnity plan, rather than a distinction between an indemnity and non-indemnity policy.”
The arbitrator thus found the long-term disability payment was an income continuation plan and should therefore be deducted from IRBs.