This is a disability plan that is meant for the persons who will be totally disabled and, therefore, be unable to continue working normally. The plan is, however, eligible after a period of 26 weeks after disability. These persons are entitled to get a sum of 55% of their initial monthly earnings which happens to be taxable. The disabled person will get a maximum of $10000 a month.
- be medically unable to perform any routine duties in ones occupation;
- be unable to perform any other duties that may necessarily not be ones own;
- provide the insurer with medical proof to show the disability.
Amount of benefit earned per month
The amount earned is equivalent to a 55% of the normal monthly earning of the disabled person. It will, however, not exceed a total of $10000 per month. This amount is subject to reduction in such instances that there was an Indirect offset income that may have resulted in ones total monthly income exceeding 85%. The income can be reduced by both Direct and Indirect offsets. Directs offsets are quite a number ranging from Canada Pension Plan, workers pension benefits, government benefits and even any disability insurance amounts.
This is another feature of the disability plan that requires the subject to participate in a programme of retraining for him/ her to become capable of full-time employment. The person thus qualifies for the rehabilitation income.
The disability plan outlays a definite procedure in which a disability payment plan wont be executable. This includes instances like a disability that resulted as a result of drug and alcohol abuse, a period of formal maternity leave agreed by the employer, a period in which the subject is not receiving appropriate treatment and even times in which one is absent due to mental causes or even the person is in prison.
The premiums paid to the insurer are waived once you have proven to be totally disabled.
The plan design features tend to be biased in some way towards the elderly. It is portrayed by the fact once a person reaches 65 years he or she is not eligible for the monthly payment. Another thing to also note is the fact that the disabled person is subject to taxation to what he or she earns from the disability plan. It will be prudent in such a scenario to eliminate the tax on the persons income.
Suggestion to improve the Plan
The insurer has waived the premiums that the disabled person pays to the company. I suggest in this case that the initial employer to this disabled person be liable to pay the premiums on behalf of the employee who has been incapacitated due to a medically proven disability.
My suggestion in the scenario of the 65 years age limit is: the plan should not restrict the payment to the disabled person no matter their age. Let the person benefit from the scheme to the point where he/ she will meet his or her demise.
Another suggestion to improve the plan is to include an organic disease that may result in a person being incapacitated in his ability through one way or another. If the plan includes diseases like Cancers, Polio and even Guillain-Barre Syndrome (GBS) that result in total disability of persons, this plan will show much improvement.
The Taxation of Disability Benefits
From the sample Disability Plan, it is shown that the amount of money earned by the disabled- which is 55% of their normal monthly income- is subject to taxation. My take on taxing persons with disability is that they should always be exempted from taxation. The exemption will act as goodwill and a show of care to their health status.
These persons are earning a fraction of what they used to earn monthly, why would there be a further deduction from the fraction that they are getting each month? Allow them to enjoy fully the 55% benefit they get from the insurer without minting some tax from what they get.
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