INCOME REPLACEMENT BENEFIT
ELIGIBILITY CRITERIA
According to O. Reg. 34/10, the claimant needs to meet one or more of the following conditions at the time of the accident and suffers from injuries sustained in the accident to be eligible for IRB:
- Employed: The claimant has to be employed at the time of the accident.
- Unemployed: The claimant can be unemployed at the time of the accident but has to be employed at least 26 weeks within the 52-week period to be eligible.
- Employment Insurance: The claimant has to receive Employment Insurance benefits at the time of the accident.
- Self-employed/Business Owner: The claimant can be unemployed at the time of the accident but has to be employed at least 26 weeks within the 52-week period prior to the accident to be eligible.
METHODOLOGY
and
70% of gross employment income in 52 week period or last business fiscal year before the accident
FREQUENTLY ASKED QUESTIONS
How much money can the claimant receive?
The claimant is eligible to receive IRB of 70% of their gross weekly income but not more than $400 unless claimant has an upgraded policy as per O. Reg. 34/10 s. 7 (2) 1. i
If the claimant has post-accident income, 70% of that income will be deducted from the entitlement amount as per O. Reg. 34/10 s. 7 (3) (a) (b). If the claimant has a post-accident loss, 70% of that loss will be added back to the entitlement amount as per O. Reg. 34/10 s. 7 (2) 2.
Can the claimant receive benefits for longer than 104 weeks?
The claimant is eligible to receive IRB for more than 104 weeks if as a result of the accident, the claimant is suffering a complete inability to carry out any of the duties of his/her employment or self-employment as per O. Reg. 34/10, s. 6 (2).
Is the claimant eligible to receive IRB if he/she tries to unsuccessfully return to work?
The claimant is still eligible to receive IRB if he/she attempted to return to work but was unable to continue due to injuries sustained in the accident as per O. Reg. 34/10 s. 11.
If the insurer is not willing to pay IRB, what is the next step?
If the insurer refuses to pay IRB, the next step would be to file a Licence Appeal Tribunal (LAT) Application to dispute the insurer’s decision. An application to LAT must be made within the two years of the date of the denial to claim your IRB.
Can the claimant receive IRB for more than $400 a week?
The claimant is eligible to receive IRB for more than $400 a week if he/she has purchased an upgraded insurance policy.
If the claimant incurs self-employment losses prior to the accident can the claimant still receive IRB?
The claimant is eligible to receive IRB as a result of the accident if the self-employment losses incurred after the accident are greater than the losses incurred prior to the accident.
How long does the claimant have to submit an IRB claim to the insurance?
The claimant has a two-year limitation period to make a claim to his/her insurance company from the date of the accident. There is no strict limitation to submit an IRB claim to the insurance company as long as it is done within a reasonable time before the Accident Benefits settlement.
Is ODSP or OW (welfare) deductible from IRB?
As per O. Reg. 34/10 s. 60, if the claimant is receiving ODSP or OW payments after the accident, those amounts are not deductible from IRB entitlement.
Is IRB taxable?
As stated in the Income Tax Act, R.S.O. 1990, IRB is not taxable.
Can the claimant get IRB while getting short-term disability benefits?
- If after the accident the claimant is receiving short-term disability benefits he/she is eligible to receive IRB only if the short-term disability benefits amount is less than the IRB entitlement amount as per O. Reg. 34/10 s. 47 (1) 2.
- If short-term disability benefits exceed the IRB entitlement amount, the claimant can apply for IRB after the short-term disability benefits have been exhausted. The short-term disability benefits that were received will then be deducted from the IRB entitlement amount as per O. Reg. 34/10 s. 47 (1) 2.
Can the claimant get IRB while getting long-term disability benefits?
- If the claimant is entitled to long-term disability benefits but not yet receiving the benefits, he/she is eligible to receive IRB for the time frame that they are not receiving the long-term disability benefits. Once the long-term disability benefit payments commence, IRB payments will then be discontinued as per O. Reg. 34/10 s. 47 (1) 1.
- If after the accident the claimant is receiving long-term disability benefits he/she is eligible to receive IRB only if the long-term disability benefits amount is less than the IRB entitlement amount as per O. Reg. 34/10 s. 47 (1) 1.
Is Employment Insurance deductible from IRB?
Employment Insurance benefits received after the accident are exempt from being deducted from IRB payable under SABS s.47 (3) (f) (i).
What medical disability test does claimant need to meet in order to be eligible for IRB?
In order for the claimant to be eligible for IRB, he/she should suffer substantial inability to perform the essentials tasks of his/her employment after the accident up to 104 weeks as per part 6 of the OCF-3 Disability Certificate Form.
Are WSIB payments deductible from IRB?
According to O. Reg. 34/10 s. 47 (1) WSIB payments are deductible from IRB as WSIB’s are considered a, “temporary disability benefit.”
Can the claimant apply for IRB if he/she received cash income prior to the accident?
If the claimant received cash income prior to the accident, he/she can apply for an IRB if the cash income can be proven through invoices, bank statements and tax filing.
Can the claimant apply for IRB if he/she is the owner and/or a shareholder of a corporation?
A claimant who is the owner and/or a shareholder of a corporation is considered to be self-employed. Therefore, the income from the corporation will be calculated the same as self-employment income and added to the grand total net income for the claimant.
What is the difference between IRB entitlement and payable amounts?
The IRB entitlement is the amount that is calculated based on pre-accident income. The IRB payable amount is the amount which should be paid to the claimant after all the necessary post-accident adjustments have been made to the IRB entitlement amount. Such adjustments can include adding post-accident losses and/or deducting post-accident income, temporary disability benefits and IRB received to the entitlement.
Who can prepare IRB accountant’s report?
As per O. Reg. 34/10 s. 7 (4) 2 an IRB report can be completed by a member of a designated body within the meaning of the Public Accounting Act, 2004 such as a CPA.
How long does IRB application usually take?
Once all the documents required have been obtained from the claimant, the completion of the report takes around 2-3 business days. The report is then sent to the insurance company with all the supporting documentation.
When can the claimant expect to receive the first payment from the insurance company after the IRB Report is submitted?
The insurance company gives a time frame of 30 days from the date of receipt to review the report and approve it. In some cases, the insurance company can hire another accounting company to review the IRB report that was prepared by S&T Accounting or to prepare their own IRB report, which takes additional time.
What if the claimant becomes entitled to receive IRB on or after the age of 65?
According to O. Reg. 34/10 s. 9 (1) (a) if the claimant is 65 years of age or older at the time of the accident, he/she is entitled to receive IRBs for 208 weeks. The claimant’s IRB entitlement calculation is multiplied by the factors set out below as per O. Reg. 34/10 s. 9 (1) (b):
| Number of weeks since Entitlement Arose | Factor |
|---|---|
| Less than 52 weeks | 1.0 |
| 52 weeks or more but less than 104 weeks | 0.8 |
| 104 weeks or more but less than 156 weeks | 0.6 |
| 156 weeks or more but less than 208 weeks | 0.3 |
If the insurance completed their own IRB calculation, is it possible to dispute it?
The claimant has a right to dispute the insurance company’s IRB calculation as per O. Reg. 34/10 s.7 (4). If claimant’s IRB calculation was denied, he/she can file a LAT application to dispute the decision.
Can the claimant hire S&T Accounting to complete an IRB report if the insurance company has hired another accounting company?
According to O. Reg. 34/10 s.7 (4) claimant has a right to hire an independent accounting company to complete the IRB report. S&T Accounting makes sure that the claimant receives the maximum benefit that he/she is entitled to.
Is the post-accident income deductible from IRB if the claimant is 65 years of age or older?
According to O. Reg. 34/10 s. 9 (2) for the claimant that is 65 years of age or older the post-accident income is not deductible.
REGULATIONS
In Ontario, income replacement benefits methodology of calculations and eligibility requirements are outlined in O. Reg. 34/10 sections 4-11. You can find a full citation of the relevant sections below for your convenience.
Cited sections 4-11 of SABS
4. (1) In this Part,
“gross employment income” means salary, wages and other remuneration from employment, including fees and other remuneration for holding office, and any benefits received under the Employment Insurance Act (Canada), but excludes any retiring allowance within the meaning of the Income Tax Act (Canada) and severance pay that may be received; (“revenu brut d’emploi”)
“gross weekly employment income” means, in respect of an insured person, the amount of the person’s gross annual employment income, as determined under subsection (2), divided by 52; (“revenu brut hebdomadaire d’emploi”)
“other income replacement assistance” means, in respect of an insured person who sustains an impairment as a result of an accident,
(a) the amount of any gross weekly payment for loss of income that is received by or available to the person as a result of the accident under the laws of any jurisdiction or under any income continuation benefit plan, other than,
(i) a benefit under the Employment Insurance Act (Canada),
(ii) a payment under a sick leave plan that is available to the person but is not being received, and
(iii) a payment under a workers’ compensation law or plan that is not being received by the person because the person has elected under the workers’ compensation law or plan to bring an action and is not entitled to the payment, and
(b) the amount of any gross weekly payment for loss of income, other than a benefit or payment described in subclauses (a) (i) to (iii) that may be available to the person as a result of the accident under the laws of any jurisdiction or under any income continuation benefit plan but is not being received by the person and for which the person has not made an application. (“autre assistance au titre du remplacement du revenu”) O. Reg. 34/10, s. 4 (1).
(2) The gross annual employment income of an insured person is determined as follows:
1. In the case of a person referred to in subparagraph 1 i of subsection 5 (1) who was not a self-employed person at any time during the four weeks before the accident, the person’s gross annual employment income is whichever of the following amounts the person designates:
i. The person’s gross employment income for the four weeks before the accident, multiplied by 13.
ii. The person’s gross employment income for the 52 weeks before the accident.
2. Subject to paragraph 3, the person’s gross annual employment income is his or her gross employment income for the 52 weeks before the accident if,
i. the person qualifies for a benefit under subparagraph 1 i of subsection 5 (1) and was a self-employed person at any time during the four weeks before the accident, or
ii. the person qualifies for a benefit under subparagraph 1 ii of subsection 5 (1).
3. If the person described in subparagraph 2 i was self-employed for at least one year before the accident, the person may designate as his or her gross annual employment income the amount of his or her gross employment income during the last fiscal year of the business that ended on or before the day of the accident. O. Reg. 34/10, s. 4 (2); O. Reg. 370/10, s. 1.
(3) A self-employed person’s weekly income or loss from self-employment at the time of the accident is the amount that would be 1/52 of the amount of the person’s income or loss from the business for the last completed taxation year as determined in accordance with Part I of the Income Tax Act (Canada). O. Reg. 34/10, s. 4 (3).
(4) A self-employed person’s loss from self-employment after an accident is determined in the same manner as losses from the business in which the person was self-employed would be determined under subsection 9 (2) of the Income Tax Act (Canada) without making any deductions for,
(a) any expenses that were not reasonable or necessary to prevent a loss of revenue;
(b) any salary expenses paid to replace the self-employed person’s active participation in the business, except to the extent that the expenses are reasonable in the circumstances; and
(c) any non-salary expenses that are different in nature or greater than the non-salary expenses incurred before the accident, except to the extent that those expenses are reasonable in the circumstances and necessary to prevent or reduce any losses resulting from the accident. O. Reg. 34/10, s. 4 (4).
(5) If, under the Income Tax Act (Canada) or legislation of another jurisdiction that imposes a tax calculated by reference to income, a person is required to report the amount of his or her income, the person’s income before an accident shall be determined for the purposes of this Part without reference to any income the person has failed to report contrary to that Act or legislation. O. Reg. 34/10, s. 4 (5).
(6) The amount of a person’s gross annual employment income and the amount of the person’s income or loss from self-employment may be adjusted for the purposes of this Part to reflect any subsequent change in the amount determined by the Canada Revenue Agency under the Income Tax Act (Canada) or by the relevant government or agency under the legislation of another jurisdiction that imposes a tax calculated by reference to income. O. Reg. 34/10, s. 4 (6).
Eligibility criteria
5. (1) The insurer shall pay an income replacement benefit to an insured person who sustains an impairment as a result of an accident if the insured person satisfies one or both of the following conditions:
1. The insured person,
i. was employed at the time of the accident and, as a result of and within 104 weeks after the accident, suffers a substantial inability to perform the essential tasks of that employment, or
ii. was not employed at the time of the accident but,
A. was employed for at least 26 weeks during the 52 weeks before the accident or was receiving benefits under the Employment Insurance Act (Canada) at the time of the accident,
B. was at least 16 years old or was excused from attending school under the Education Act at the time of the accident, and
C. as a result of and within 104 weeks after the accident, suffers a substantial inability to perform the essential tasks of the employment in which the insured person spent the most time during the 52 weeks before the accident.
2. The insured person,
i. was a self-employed person at the time of the accident, and
ii. suffers, as a result of and within 104 weeks after the accident, a substantial inability to perform the essential tasks of his or her self-employment. O. Reg. 34/10, s. 5 (1).
(2) Despite subsection (1), an insured person is not eligible to receive income replacement benefits if he or she is eligible to receive and has elected under section 35 to receive either a non-earner benefit or a caregiver benefit under this Part. O. Reg. 34/10, s. 5 (2).
Period of benefit
6. (1) Subject to subsection (2), an income replacement benefit is payable for the period in which the insured person suffers a substantial inability to perform the essential tasks of his or her employment or self-employment. O. Reg. 34/10, s. 6 (1).
(2) The insurer is not required to pay an income replacement benefit,
(a) for the first week of the disability; or
(b) after the first 104 weeks of disability, unless, as a result of the accident, the insured person is suffering a complete inability to engage in any employment or self-employment for which he or she is reasonably suited by education, training or experience. O. Reg. 34/10, s. 6 (2).
Amount of weekly income replacement benefit
7. (1) The weekly amount of an income replacement benefit payable to an insured person who becomes entitled to the benefit before his or her 65th birthday is the lesser of “A” and “B” where,
“A” is the weekly base amount determined under subsection (2) less the total of all other income replacement assistance, if any, for the particular week the benefit is payable, and
“B” is $400 or, if an optional income replacement benefit referred to in section 28 has been purchased and applies to the person, the amount fixed by the optional benefit. O. Reg. 34/10, s. 7 (1).
(2) For the purposes of subsection (1), the weekly base amount in respect of an insured person is determined as follows:
1. Determine whichever of the following amounts is applicable:
i. 70 per cent of the amount, if any, by which the sum of the insured person’s gross weekly employment income and weekly income from self-employment exceeds the amount of the insured person’s weekly loss from self-employment, if the weekly income replacement benefit is for one of the first 104 weeks of disability, or
ii. the greater of the amount determined for the purposes of subparagraph i and $185, if the weekly income replacement benefit is for a week for which the person is entitled to receive an income replacement benefit after the first 104 weeks of disability.
2. To the amount determined under paragraph 1, add 70 per cent of the amount of the insured person’s weekly loss from self-employment that he or she incurs as a result of the accident. O. Reg. 34/10, s. 7 (2).
(3) The insurer may deduct from the amount of an income replacement benefit payable to an insured person,
(a) 70 per cent of any gross employment income received by the insured person as a result of being employed after the accident and during the period in which he or she is eligible to receive an income replacement benefit; and
(b) 70 per cent of any income from self-employment earned by the insured person after the accident and during the period in which he or she is eligible to receive an income replacement benefit. O. Reg. 34/10, s. 7 (3).
(4) The insurer shall pay an expense incurred by or on behalf of an insured person for the preparation of a report for the purpose of calculating the person’s income from employment or self-employment if all of the following conditions are satisfied:
1. The insured person is applying for an income replacement benefit under this Part that is based on the employment or self-employment considered in the report.
2. The report is prepared by a member of a designated body within the meaning of the Public Accounting Act, 2004.
3. The expense is reasonable and necessary for the purpose of determining the insured person’s entitlement to an income replacement benefit. O. Reg. 34/10, s. 7 (4); O. Reg. 289/10, s. 2.
(5) The insurer is not required to pay more than a total of $2,500 for the preparation of one or more reports under subsection (4) in respect of an insured person. O. Reg. 34/10, s. 7 (5).
Adjustment after age 65
8. (1) If a person is receiving an income replacement benefit immediately before his or her 65th birthday, the weekly amount of the benefit is adjusted, on the later of the day of the person’s 65th birthday and the second anniversary of the day the person began receiving the benefit, to the amount determined in accordance with the following formula:
C × 0.02 × D
in which,
“C” is the weekly amount of the income replacement benefit that the person was entitled to receive immediately before the adjustment, before any deductions permitted by subsection 7 (3),
“D” is the lesser of,
(a) 35, and
(b) the number of years during which the person qualified for the income replacement benefit before the adjustment is made.
O. Reg. 34/10, s. 8 (1).
(2) Despite section 6, an income replacement benefit that has been adjusted under subsection (1) is payable, without any deductions under clause 7 (3) (a) or (b), until the person dies. O. Reg. 34/10, s. 8 (2).
If entitlement first arises on or after 65th birthday
9. (1) If an insured person becomes entitled to receive an income replacement benefit on or after his or her 65th birthday,
(a) subject to clause 6 (2) (a) and despite clause 6 (2) (b), the insured person is entitled to an income replacement benefit for not more than 208 weeks after becoming entitled to the benefit; and
(b) the weekly amount of the benefit is the weekly amount of the income replacement benefit otherwise determined under section 7 before any deductions permitted by subsection 7 (3), multiplied by the factor set out in Column 2 of the Table to this subsection opposite the number of weeks that have elapsed since the person became entitled to receive the benefit.
| Number of weeks since Entitlement Arose | Factor |
|---|---|
| Less than 52 weeks | 1.0 |
| 52 weeks or more but less than 104 weeks | 0.8 |
| 104 weeks or more but less than 156 weeks | 0.6 |
| 156 weeks or more but less than 208 weeks | 0.3 |
O. Reg. 34/10, s. 9 (1).
(2) No deduction may be made under clause 7 (3) (a) or (b) from an income replacement benefit determined under subsection (1). O. Reg. 34/10, s. 9 (2).
No violation of Human Rights Code
10. The age distinctions in sections 8 and 9 apply despite the Human Rights Code. O. Reg. 34/10, s. 10.
Temporary return to employment
11. A person receiving an income replacement benefit may return to or start employment or self-employment at any time during the first 104 weeks for which he or she is receiving the benefit without affecting his or her entitlement to resume receiving any benefits to which he or she is entitled under this Part if, as a result of the accident, he or she is unable to continue the employment or self-employment. O. Reg. 34/10, s. 11.