HUMA Committee Report

Although the CPP(D) is the single largest long-term disability income program in the country, it is not the only source of income support for individuals incapable of regularly pursuing paid employment for a prolonged period of time. Since the inception of CPP(D), federal/provincial/territorial policymakers have always considered CPP(D) as one of several vehicles for meeting the earnings replacement needs of persons who experience a long-term interruption in earnings because of a serious disability. Unlike these other income sources, however, CPP(D)’s universal coverage for working Canadians puts it at the fore in terms of income sources for replacing earnings. The Subcommittee has received a great deal of commentary about CPP(D) being a “first payer.” Some have suggested that it be a “last payer.”

Irrespective of its ranking as a payer, the Subcommittee would like to emphasize that CPP(D) is first and foremost, assuming eligibility conditions are met, a guaranteed payer. Eligible individuals receive CPP(D) benefits regardless of their overall income. And, in our opinion, this is a key characteristic of the program and one we feel should be retained.

So what protections does the Canada Pension Plan afford? There are many of them. We mentioned a very important one at the beginning — the universal coverage of all workers … It’s portable across the country, which means you can work anywhere and you can have the protection when you need it wherever you live ... It’s equitable across the country. You get the same benefit regardless of where you live. It is indexed to inflation, which you can’t say for many of the other benefits … any Canadian who makes the required contributions and who qualifies on the basis of definition is eligible. If you look at some of the other plans, especially private plans, it is not that easy to get in. If you have pre-existing conditions, or if you have any genetic condition in your family, you may not qualify. The Canada Pension Plan doesn’t ask this. (Sherri Torjman, Vice-President, Caledon Institute of Social Policy)¹⁰²

While the payment of CPP(D) benefits does not consider payments made by other disability income support providers, the converse is not true. It is in this context that much of our testimony — both online and the hearings — raised serious concerns about CPP(D)’s interaction with other disability income support providers.

Many participants in our online consultations and public hearings expressed concern over variations in the income protection afforded persons with disabilities across the country. They expressed frustration regarding inconsistencies in benefit levels and the inequitable treatment afforded those whose livelihoods depend on disability income replacement and support. As indicated above, similar persons receiving disability income support are treated differently depending on which programs they qualify for and where they live, and not on the nature of their disability. A vast majority of the stories we received through our online consultations dealt with how some disability income support programs reduce their costs by shifting applicants to other programs. Some persons with disabilities also fall between the cracks if they are shifted from one program to another but denied eligibility in each because of one particular program’s position vis-à-vis another.

The CPP(D) program operates in conjunction with private insurance, workers’ compensation, social assistance, Employment Insurance (EI) and other programs that provide income support. We were constantly reminded that persons with disabilities find it difficult to determine which federal and provincial programs they may be eligible for, which programs to apply for and how to apply. Virtually everyone who addressed this issue suggested that there needs to be a more integrated system to provide people with more help in getting the full range of disability income benefits that they are entitled to receive, particularly when they confront this complex system at a time when they are in difficult circumstances. We totally agree, but the challenge is how do we do this?

6.1       The Incidence of CPP(D) and Other Income Support Programs

The extent of CPP(D)’s interaction with other disability income support providers can be gleaned from the graphic illustration presented in Chart 6.1, which shows the distribution of other types of disability income support received by CPP(D) beneficiaries whose applications were approved between January 2001 and July 2002. According to these data, almost one-half of CPP(D) recipients receive disability income support from another source. Next to CPP(D), payments from private insurers represent by far the second most common source of disability income for CPP(D) beneficiaries. Employment Insurance, Social Assistance and Workers’ Compensation were the next most frequently reported sources of disability income among CPP(D) recipients. Given the high incidence of private disability insurance received by CPP(D) recipients, it is therefore not surprising that much of the Subcommittee’s testimony, both in terms of our online consultations and public hearings, pertaining to CPP(D) integration, or the lack thereof, focused on private insurers.

Many of the administrative and financial challenges facing CPP(D) recipients are inter-related with these other disability income support programs. Persons with disabilities can access provincial social assistance after meeting a needs test that varies from province to province. Provinces generally require applicants’ disabilities to be severe and prolonged and render them unable to work. All social assistance systems provide specific disability-related provisions (e.g., higher exemption limits on assets/income, higher benefits, supplementary coverage). Some provinces supplement CPP(D) benefits when these benefits are low relative to the income needs of recipients.¹⁰³ Although some persons with disabilities may be entitled to social assistance benefits, many of those who are also entitled to CPP(D) will likely see their social assistance benefits reduced by the total amount of their CPP(D) benefits. Moreover, the lack of integration between these programs can have serious ramifications well beyond the level of income support provided, such as the loss of a drug card even in instances involving minimal differences in benefits.

Well, I just wanted to mention, first of all … I was faced with the same thing when I was accepted for CPP disability. I was currently on provincial social assistance. I had the drug card. My medication isn’t cheap, but at least with the drug card, I didn’t have to worry about paying for it. My CPP put me two dollars over what I was getting on social assistance, which meant I lost my drug card. (Roy Muise)¹⁰⁴

Individuals who are unable to work because of sickness, injury or quarantine are entitled to 15 weeks of EI benefits provided they have acquired 600 hours of insurable employment in their qualifying period. Given the short duration of these benefits, EI benefits tend to interact with short-term rather than long-term disability income support programs. Income received from a group wage loss indemnity plan is treated as earnings on claim and, as such, serves to reduce EI benefits according to section 19 of the Employment Insurance Act. If a claimant is in receipt of workers’ compensation payments and these weekly payments exceed weekly EI benefits, then the claimant’s benefit period may be extended in these instances up to a maximum period of 104 weeks. While there is no formal link between EI and CPP(D) benefits, HRDC does inform EI beneficiaries about the possibility of obtaining CPP(D) in the event of a serious long-term disability. Because EI benefits are typically offset by other disability income support payments, members of the Subcommittee are concerned that some CPP(D) beneficiaries may not be entitled to EI compassionate care benefits once they are implemented in January 2004. While we recognize that this problem may emerge in a relatively small number of instances, we believe steps should be taken to ensure that these benefits are not offset by CPP(D) benefits.

Workers’ compensation benefits (WCB) provide income support to those who lose employment income as a result of an accident at work. However, WCB varies considerably across the country and this variation carries over into the way WCB interacts with CPP(D) benefits. In a minority of cases, workers receive both WCB and CPP(D) benefits; while in most cases CPP(D) benefits are deducted from workers’ compensation payments either in full (e.g., Ontario) or by some other amount (e.g., 50% in British Columbia). According to data provided by Human Resources Development Canada, Workers’ Compensation Benefits (WCB) and CPP(D) payments are combined (or stacked) in Alberta, Yukon, Northwest Territories and Nunavut. Another major difference between most WCB payments and CPP(D) is that the former are based on some proportion of net (after tax) earnings and are not treated as taxable income; while CPP(D) benefits, as discussed in the previous chapter, are taxable.

I think the first point is that there is an inconsistent treatment across Canada in terms of the offset of Canada Pension Plan. … Also the rate of financial relationship is quite different. In Ontario it’s 100% offset. In British Columbia it’s a 50% offset. In the Yukon and Alberta it’s a 0% offset. So it’s very inconsistent across the country and I think this is confusing because we have workers who travelled and work in different provinces and they may have accidents or exposure to industrial diseases or occupational diseases in different places and sorting all this out in terms of who’s responsible for what, what percentage do you get and all that is often beyond the grasp of the ordinary citizen. (Blake Williams, Director, Workers’ Advisers, Department of Labour, British Columbia)¹⁰⁵

6.2       CPP(D) and Private Insurers

Long term disability (LTD) plans, usually sponsored by employers or professional bodies and administered by private insurance companies, replace some portion of pre-disability employment income (typically these policies insure 70% earnings replacement),¹⁰⁶ but the total payout by the insurer is lower when CPP(D) and other disability income support payments are involved. The insurance industry has indicated that the reason for this is that the premiums paid by LTD plan members are based on the assumption that a certain proportion of policy holders would be eligible for CPP(D) (and other sources of disability income support) and that, as a result, these other payments serve to offset or reduce the actual LTD benefits paid by private insurers. In other words, private insurers are joint payers (some say second payers) when these other payments are involved. Some of our online participants and witnesses characterized these reduced payments or offsets as a “subsidy”.¹⁰⁷ Moreover, many called for CPP(D) to be a last payer.

We acknowledge the concern raised in our testimony regarding the LTD offset issue, but relegating CPP(D) to last payer status would fundamentally change the nature of CPP(D) payments and move the program in a direction which, in our opinion, is less appealing than the current situation.

It is an area of concern to us and we do discuss issues with various insurance companies to try and address specific problems when they are brought to our attention and also with the industry association … This idea of the last payer would require a pretty significant legislative change because what we’d have to do is change, as I see it, change the CPP to say that we wouldn’t pay benefits to people eligible for insurance benefits. So you’d have those who contributed and received benefits out of the CPP — and it is a contributory program, as was pointed
out — and then others who contributed would also be eligible for benefits under the same eligibility criteria but because they had a policy with an insurance company would not get the CPP benefits … What we are talking about is something that would be quite fundamentally different. (Susan Williams, Director General, Disability Benefits and Appeals, Income Security Programs, Department of Human Resources Development)¹⁰⁸

Eligibility conditions under LTD plans are typically less onerous than those for CPP(D). In addition, benefits are restricted to those who are unable to work in their own job for two years and, thereafter, in a comparable occupation. This is vastly different from CPP(D)’s requirement that, in addition to having a severe and prolonged disability, one must be unable to be employed in any substantially gainful occupation, a matter that is discussed in greater detail in the next chapter of our report.

The Subcommittee was told that private insurance companies currently provide disability coverage to about 8.4 million Canadian workers, slightly more than one-half of total employment. In 2001, total disability payments by private insurers amounted to about $4.8 billion, a two-fold increase over payments in 1990.¹⁰⁹

The dissatisfaction with the interface between disability income support programs seemed most intense in relation to private insurers.

I think one of the things we have to recognize is that there is a difference of objectives as to what CPP disability benefits are trying to provide. Provincial social assistance ministries are trying to offload clients into the CPP program to avoid paying for it. Private insurers, workers compensation also require people to apply for the CPP disability benefits and yet you pay premiums in the different programs and you pay taxes in the different programs but when it comes time to collect the benefits suddenly you are moved all the way over to different other programs so everybody is the payer of last resort. (Randy Dickinson, Executive Director, New Brunswick Premiers’ Council on the Status of Disabled Persons)¹¹⁰

As discussed earlier in our report, many individuals described how many private insurers force individuals to apply for CPP(D) benefits as a condition of receiving their long-term disability benefits from the insurance company. Some participants told us that they were coerced to apply for CPP(D) even though they knew that it was unlikely that they would meet the eligibility requirements of that program.¹¹¹

The main issue with respect to private insurers, however, relates to a practice known as “off-setting” benefits. In this case, the insurer deducts the actual or anticipated amount of CPP(D) benefits a person is entitled to from the total amount of long-term disability insurance that the person should be receiving. In some cases, this is done prior to determining an individual’s CPP(D) eligibility, a practice which we find unconscionable. Taking into consideration the length of time for processing a CPP(D) application and, if need be, appealing a negative decision, individuals may receive only part of their legitimate benefits for up to three years. To say the least, this can, and does, result in severe financial hardship for some. In our opinion, “some” is still too many.

In other cases, the insurer pays the insured the full amount of LTD benefits an individual is entitled to on the understanding, and subject to an agreement, that the insured will repay the full amount of CPP(D) benefits once benefits begin. In our opinion, this is a much better situation than the practice of off-setting benefits prior to determining CPP(D) eligibility. Nevertheless, these delayed off-sets have some short-comings as well.

Back in 2000 I turned the magic age of 41 and with it I developed Stenosis of the spine, osteoarthritis, degenerative disc disease and carpal tunnel in addition to my birth disability arthrogryposis (immobility of the joints). … I applied for private insurance and was approved however they deducted the equivalent amount of CPP since they assumed I would be receiving it. I then applied for CPP never thinking that I would be denied. I provided the application form, my specialist detailed 4 page letter, my medical reports and x-rays. I was denied twice. I am now at the tribunal stage. … My private insurance has now stopped and CPP has not been approved due to budget constraints. I am without any source of income and my wife’s income does not cover all of our expenses. We are now living on our line of credit waiting for CPP. (Anonymous, ON, E-Consultation Participant)

I am on permanent CPP Disability due to debilitating mental illness. For years prior to the ‘‘crash’’, signs were there, but as is often the case, not quite obvious or serious enough. Hindsight is, as always, quite useless. I was fortunate, in that the company I worked for had a long-term disability plan. By the time that kicked in, we were teetering on bankruptcy. The retro CPP payment came just in time to cover the accumulated financial nightmare, but caused a great debt to the company plan carriers, who should have received the retro payment. Given my mental state, it’s a wonder that the cheque didn’t wind up as wallpaper, or origami. I was blissfully unaware of any of the goings-on with CPP, the benefit carrier, or pretty much anything that went on. The fortunate part for myself, was a very supportive spouse, NOT falling through the cracks in our medical system re professional help and being, in an ironic sense, lucky. Of course, my job, which I had only had for a short period of time, was a subsistence level one which I had taken basically to pay the rent. My previous professional employment had resulted in maximum CPP deductions for decades, but with the last job, I think it pretty much demolished my pensionable earnings. Sad state of affairs. Someday the overpayment recovery amount to the private carrier will be repaid and if lucky, I’ll be able to have my LIRA, small as it is, cashed out to my spouse as keeper of my Power of Attorney in order to bring my standard of living out of the gutter. (Anonymous, BC, E-Consultation Participant)

Once CPP(D) is approved the Insurance company deducts or "offsets" the total amount of the CPP(D) benefit and any amounts payable to dependants. I have identified two major problem areas with this. First of all the LTD benefit is typically tax free (in my case it was) and the CPP(D) benefit is taxable. …The bottom line is that it can be argued that those people who qualify for LTD as well as CPP(D) can be considered to be more seriously disabled than people who qualify for LTD alone. The big problem is that the more seriously disabled are subject to a potential tax exposure due to the CPP(D) being taxable than the less seriously disabled on LTD only. …The second major problem area I have is that CPP(D) recipients receive a tax free benefit for each child. The Insurance company “offsets” this benefit as well. … First of all a federal government benefit which is designed to give more money to families with children in this case goes directly into the coffers of profitable insurance companies. This is tantamount to a federal government subsidy to the insurance industry on the backs of the children of disabled people. The second problem I have with this is that two employees with the same income, one with children the other with no children, will pay the same LTD premium to the insurance company. However if these employees become disabled and both receive LTD and CPP(D) the person with children will receive a lower LTD benefit from the insurance company. … The third problem is that it is possible for the Insurance company to pay NO benefit at all if a CPP(D) recipient has enough children which could bring the LTD benefit to zero. In this case the Insurance company could receive a premium over many years and yet would not be required to pay a benefit to large families. It should be noted that the total combined LTD and CPP(D) benefit is the same between both LTD only and LTD plus CPP(D) recipients in my illustration however an increased tax liability caused by a taxable CPP(D) and the presence of dependants could create serious financial inequities between different classes of LTD recipients. Coordination of benefits between private insurers and CPP(D) needs a major overhaul to make it fair. (Sig, ON, E-Consultation Participant)

As an insurer with signed consent/authorization from disability claimants to contact CPP regarding the status of their CPP Disability application, it is extremely frustrating to call and be told CPP cannot release information. Quite often CPP does not acknowledge our company’s Assignment of Benefit form and pays out retro CPP Disability benefits to our claimant, leaving us to attempt reimbursement from the claimant directly, when it should have come from CPP. There must be a better line of communication between CPP and Insurers. (Anonymous, E-Consultation Participant)

Many more private insurers withheld an estimated portion of their LTD payments with the expectation that beneficiaries would become eligible for CPP(D) prior to 1993, than today. Since this situation resulted in financial hardship for many LTD recipients, the government enacted changes to the CPP in June 1993 to create the conditions that would encourage private insurers not to offset LTD payments until CPP(D) eligibility was determined. Today, some private insurers, under agreement with the Minister of Human Resources Development Canada, offer recipients of LTD an opportunity to enter into an assignment agreement specifying that CPP(D) benefits, including amounts advanced by a private insurer during a beneficiary’s CPP(D) assessment period, would be paid by Human Resources Development Canada (HRDC) to the private insurer. For LTD recipients who enter into an assignment agreement, the CPP(D)-equivalent portion of their LTD benefits is paid while their CPP(D) eligibility is being determined. Members of the Subcommittee were told that these LTD advances represent something akin to interest free loans; we accept this characterization, but note that the assignment of benefits also serves to reduce private insurers’ collection and administration costs.

… our policy is if a person is eligible to receive Canada Pension Plan, that’s a part of their income replacement and CIBC wraps around that and tops that up to the level that we choose. You know ultimately this isn’t a windfall situation. We have to make sure that people are really just meeting the income replacement level set as policy to be appropriate. I think the integration with CPP is important and necessary. (Gretchen Van Riesen, Vice-President, Pension and Benefits, Canadian Imperial Bank of Commerce)¹¹²

Overall, the arrangements for integrating disability insurance benefits and CPP(D) benefits works very well in the vast majority of cases both in terms of going forward benefits and retroactive payments. Infrequently though there may be cases in which some unanticipated taxes are owing as a result of the integration of benefits. (Mark Daniels, President, Canadian Life and Health Insurance Association Inc.)¹¹³

The philosophical issue is simply what is the significance when we say CPP(D) should be the first payer? On one hand this means that it retains its status as a universal program because we know that this is a program that guarantees coverage as a right for all of those who have made the required contribution. It’s not a means-tested program. What would the effect be of making CPP(D) a second payer? Would this turn it into a residual program? It’s an important question, but at the same time what is the implication when this public social security program links with private insurance as a result of this first payer principle, resulting in a reduction of benefits overall to recipients … (Sue Lott, Lawyer)¹¹⁴

The Subcommittee was told that many LTD plan members are unaware of how their plans are integrated with CPP(D) and other disability income support payments and the Subommittee believes that it is incumbent upon private insurers and employers who purchase these plans to better inform plan members of their plan’s interaction with other forms of disability income support in the unfortunate event that they become LTD beneficiaries.

We were also told that, despite the benefits to those who enter into an assignment agreement with an LTD provider, an unknown number of individuals encounter an unanticipated tax problem arising from the different tax treatment afforded some LTD benefits and CPP(D).

What happens however as well — we talked about the length of time it takes to get to that stage — is now the tribunal says “Well, I guess that you are disabled, and the date we’re picking for your disability is from your minimum qualifying period and everything technically” — I don’t have to go into that — “July 1999.” It’s almost three years since July 1999. Now what happens, and this is a very practical reason, HRDC issues a cheque through the assignment that they’ve signed directly to the insurance company for, say, $24,000. It happens in November of a year. They open their mail in February — and remember they’ve been getting non-taxable money for all these years — in February they open their mail and there’s a T4 from the Canada Pension Plan for $24,000 to be added to their income, which they didn’t, in their minds, receive. It was the insurance company that got it. One of our prime recommendations is that what occurs be a tax neutral situation. In other words, with respect to that lump sum, it should at least be staggered over a few years, and most certainly the insurance companies should only receive the net amount after the tax has been paid. This operates as a tremendous disability on top of another disability which they have suffered. (Lyle Smordin, Chair, CPP/Disability Insurance, Office of the Commissioner of Review Tribunal)¹¹⁵

Pursuant to paragraph 6(1)(f) of the Income Tax Act, if a long-term disability plan involves employer contributions, then the benefits paid under this plan are taxable and the contributions paid by employees may be deducted for tax purposes. In this case, the tax treatment of LTD payments is the same as CPP(D). This is not the case, however, involving employee-pay-all-plans, because the benefits paid to recipients under these plans are not taxable and plan premiums may not be deducted for tax purposes. This difference in tax treatment can represent a financial hardship for some LTD beneficiaries who receive non-taxable LTD advances, under an assignment of benefits agreement, but end up repaying these advances with CPP(D) benefits that are taxable. If individuals in this situation do not set aside enough income to cover this eventual tax liability, a financial hardship can most certainly result.¹¹⁶

While Subcommittee members realize that LTD recipients are responsible for their own tax matters, we believe that HRDC could play a larger role in explaining, in plain language, the tax issues associated with the different employer-sponsored LTD plans and the arrangements that HRDC has with various private LTD insurers. Notwithstanding our recommendation to make CPP(D) benefits non-taxable, we think that the current situation would be greatly improved if a standard amount of tax was withheld on CPP(D) payments (especially in terms of CPP(D) reimbursements) made under an assignment of benefits agreement.

Another potential shortcoming associated with the interaction between CPP(D) and LTD (as well as other disability income support payments) relates to the treatment of increases in CPP(D) benefits arising from cost of living adjustments. CPP(D) benefits are fully indexed to inflation so that payments can keep up with changes in the cost of living, as measured by changes in the Consumer Price Index. If LTD or other disability income support payments that are integrated with CPP(D) are not similarly indexed, individuals could experience some erosion in the real value of their integrated payments over time. Moreover, there is no doubt that this produces a benefit transfer to other disability income support providers (i.e., private insurers, provincial social assistance and workers’ compensation) whose payments do not keep pace with inflation. The Subcommittee is unsure as to the extent of this potential problem, but wants to ensure that this issue is fully examined by HRDC as it relates to all disability support payments, irrespective of any arrangement HRDC may have with another provider. The full impact of CPP(D) indexation must be realized by CPP(D) beneficiaries.

I recently and rather suddenly became disabled due to MS. I was diagnosed in May 2002 and found myself in a wheelchair and very ill by August. Although I had never expected to be in the position I find myself in I was very thankful to have insurance through my work place. My insurance covers 50% of my wages, which is a considerable drop in income for anyone but finding out it was not taxable helped somewhat. It was VERY upsetting to then learn that my insurance company requires me to apply for CPP benefits and if I qualify, the gross amount of any benefit I receive from CPP is deducted from my insurance benefits, however CPP is taxable. Basically if I qualify I lose. Also a benefit of CPP over private insurance is supposed to be that CPP is indexed, however any increase again goes to the insurance company, but is taxed in the hands of the disabled! Therefore the insurance company benefits from the CPP indexing but the increase becomes an additional debt in the way of taxes to the disabled. Obviously, the only winner here is the insurance company. One of the "program principles" stated on this website is that CPP is a supplement to private insurance, however, it’s the insurance companies that are being supplemented not the disabled. My expenses have sky-rocketed, my income is severely diminished and the government and insurance companies have developed a system to make sure I get as little as possible out of the payments I made over the years towards my "income security". I also understand if I’m turned down by CPP I’ll be required to appeal.... and appeal.... and appeal. I’m wondering who pays for the costs of the appeals — the insurance company who benefits if the appeal is won, or me, who loses if I "win". I am 50 years old. I have worked and paid taxes most of my adult life and I’m now wondering who has been benefiting from those taxes. The money isn’t going where I thought it was. (Anonymous, E-Consultation Participant)

Finally, some individuals who participated in our study, mainly through our online consultations, expressed concern over the practice of “off-setting” children’s benefits paid by the CPP(D) program. In a circumstance where an individual has more than one child, this could result theoretically in an insurer not paying any LTD benefits to an insured person who has paid LTD premiums. In this situation, we can appreciate fully the inequity of not being paid something that is owed. We find it very difficult to accept and believe that the setting of premiums for private LTD plans actually consider potential CPP(D) payments to children of CPP(D) beneficiaries. Aside from the fact that these payments represent less than 10% of total CPP(D) payments, the number of dependants among plan members is constantly changing. Hence, we think that it would be very difficult for private insurers to capture the effect of children’s benefits in a meaningful way when they are setting premiums for their own plans. Moreover, we understand that private insurers who have assignment of benefits agreements with HRDC have, as one of the conditions of the agreement, agreed not to offset children’s benefits.¹¹⁷ Because these payments are made to children and not the policy-holders, the offsetting of CPP(D) benefits paid to children of CPP(D) recipients should, in our opinion, be unlawful. Rendering this practice unlawful might also prove to be beneficial in creating the conditions that are necessary for encouraging more private insurers to enter into an agreement with HRDC to delay the offsetting of LTD payments until CPP(D) eligibility is determined.

This chapter has clearly indicated that there are significant shortcomings in our disability income replacement and support systems across the country. While much remains to be done to improve the interface between all of the disability-related programs in this system, this issue extends well beyond the scope of this report. We will continue to examine these important program integration issues in the months to come, as discussed in the context of “next steps” in the last chapter of this report. In the meantime, there are some measures that can be taken now to improve what we all believe to be is a poorly structured and fragmented pan-Canadian disability income and support system.

Recommendation 6.1

The Committee recommends that Human Resources Development Canada, in conjunction with the Canada Customs and Revenue Agency, prepare a plain language brochure that outlines the tax treatment afforded long-term disability earnings replacement plans. This brochure should also indicate how these plans operate vis-à-vis the CPP(D) with, and without, an assignment of benefits agreement between Human Resources Development Canada and private insurers.

Recommendation 6.2

The Committee recommends that:

Recommendation 6.3

Until such time that CPP(D) benefits are non-taxable, (see Recommendation 5.3), the Committee recommends that all payments made under any assignment of benefits agreement, particularly those pertaining to re-imbursement payments, be paid in after tax funds using a standard deduction.

Recommendation 6.4

The Committee recommends that Human Resources Development Canada examine comprehensively the impact of cost of living adjustments made to CPP(D) benefits that are integrated with other disability income support plans. If it is determined that the benefit of indexation on CPP(D) benefits is not being realized fully by CPP(D) beneficiaries, the Government of Canada must ensure that the full impact of cost of living adjustments flows directly to CPP(D) beneficiaries.

Recommendation 6.5

The Committee recommends that the Government of Canada enact the necessary legislative amendments to render illegal the offsetting of CPP(D) benefits paid to dependent children of a CPP(D) recipient.

Recommendation 6.6

The Committee recommends that the necessary amendments be made to the Employment Insurance Act and Regulations to ensure that CPP(D) benefits are not treated as earnings in instances where CPP(D) beneficiaries are entitled to Employment Insurance compassionate care benefits.