As part of the 2014 Ontario budget, which was passed on July 24,
2014, the Ontario government proposed to amend the Insurance
Act (Ontario) by requiring mandatory insurance of long-term
disability ("LTD") benefits provided by employers. The
amendment prohibits the provision of LTD benefits by Ontario
employers unless the benefits are provided through an insurance
arrangement with a licensed insurer.
The purpose of the amendment is to protect recipients of LTD
benefits from reductions in their benefits when their employer
faces financial challenges. This change will be effective on a
future date to be proclaimed. Terms and conditions, including
limitations, restrictions and exemptions, may be set out in
regulations to come.
The requirement to insure LTD benefits is not new. The federal
government introduced a similar requirement for federally-regulated
employers in 2012, which came into effect on July 1, 2014. The
federal requirement is prospective meaning that LTD benefits that
were in pay to employees on that date do not have to be
Ontario employers with self-insured LTD benefit plans should
consider insuring their plans in the near future, in anticipation
of the change.
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