Income Replacement Benefits vs. Non-Earner Benefits

What are Income Replacement Benefits?

In Ontario, if you have been injured as a result of a motor vehicle accident, you may be eligible for accident benefits through your auto insurer under the Statutory Accident Benefits Schedule (SABS). Though there are many benefits available through your auto insurance (some mandatory, others optional), one benefit is in place to provide compensation for lost income. This is called the Income Replacement Benefit (IRB). This benefit is in place to help those who were employed at the time of the motor vehicle accident or for a sufficient period in the year prior and can no longer work as a result of the sustained injuries. Note that if you are self-employed, you are also entitled to receive Income Replacement Benefits (IRBs).

The Income Replacement Benefit (IRB) is payable during the period that you are substantially unable to perform the essential tasks of your employment. In Ontario, the standard benefit pays up to 70% of your gross income, up to a maximum of $400 per week, however, you have the option to increase this amount when setting up your insurance policy.

Your auto insurer does not have to pay this benefit for the first week of the injury, or after 104 weeks unless you are completely unable to engage in any employment that you were reasonably suited for before the auto accident. If this is the case, you could receive the benefit for life (with an adjustment after the age of 65), so long as you continue to meet the disability test.

What are Non-Earner Benefits?

Non-Earner Benefits (NEBs) are in place for those legally considered “non-earners”. This classification includes full-time students, recent graduates, people on disability benefits, the unemployed, and retirees. Though being classified as a non-earner seems pretty straight forward, being eligible to receive Non-Earner Benefits (NEBs) in Ontario can be complex and often considered the last resort in accident benefits if you are not eligible for either Caregiver Benefits (if you have purchased this option) or Income Replacement Benefits (IRBs). According to the SABS, in order to qualify for this benefit, you must have:

1. suffered a complete inability to carry on a normal life as a result of and within 104 weeks after the accident and do not qualify for an income replacement benefit; OR
2. suffered a complete inability to carry on a normal life as a result of and within 104 weeks after the accident and,
   1. Was enrolled on a full-time basis in elementary, secondary, or post-secondary education at the time of the accident, or
   2. You completed your education less than a year before the accident and were not employed or self-employed in a capacity that reflected your education.

If you receive other forms of income replacement assistance, the amount would be deducted from the Non-Earner Benefits’ (NEBs) weekly payment of $185.

There are parameters around when the insurance company doesn’t have to pay Non-Earner Benefits (NEBs). This includes:

• - The first four weeks after your inability to lead a normal life
• - If you are under 18 years old
• - More than 104 weeks post-accident
• - If you are eligible for and elect the Caregiver Benefit or Income Replacement Benefit (IRB)

A recent Campisi case looks at a decision of the Licence Appeal Tribunal (LAT) where we, on behalf of our client, successfully challenged an insurance company’s denial of the Income Replacement Benefit on the basis that our client incorrectly chose the Non-Earner Benefit she was not qualified to get when she was self-represented. The insurer then disputed the LAT’s decision and sought reconsideration.

The Case: Why the Difference Matters

Our client was a woman in her late 40’s who was driving straight through an intersection when she was t-boned by a vehicle turning left causing her car to spin around and impact a third parked car. She required extrication by emergency personnel and transported by ambulance to the hospital. She suffered multiple rib fractures, a concussion, knee, and back injuries, as well as psychological injuries leaving her unable to work.

The client was employed at the time of the accident, therefore, would not be entitled to the Non-Earner Benefit (NEB).

In this claim, the auto insurer advised our client she was eligible to receive both Income Replacement Benefits (IRBs) and Non-Earner Benefits (NEBs) and requested that she choose which benefit to receive. The client chose Non-Earner Benefits (NEBs) despite not actually being entitled to receive them. She was self-represented at this time and did not understand the implications of her choice.

The Insurer is obligated to provide adequate information to assist in election but should not recommend which benefit someone should elect. The SABS dictates that this election is final and can only be changed under very limited circumstances which did not apply to our client.

With Campisi’s help, our client applied to the LAT for a finding that her election was invalid and that she was entitled to claim Income Replacement Benefits (IRBs) even though she had chosen Non-Earner Benefits (NEBs), a benefit she unknowingly was not entitled to claim. She was successful! This is a significant win as it opens the door for Plaintiffs to dispute the finality of an incorrect election under certain circumstances. Specifically in this case, the LAT ruling means the Insurer must now calculate and pay the client’s Income Replacement Benefit (IRB) from the date of the accident indefinitely, so long as our client continues to meet the disability test. This could be hundreds of thousands of dollars depending on the person’s income in the period prior to the accident and if they are receiving any other benefits (i.e. Long term disability or other government benefits).

The Dispute; How Campisi’s Team Argued

The insurer disputed the LAT’s decision and sought reconsideration, alleging errors of fact and law. Their arguments were:

1. SABS dictates that election is final

Normally, this is true, however, the Insurer must also request an election within 10 days of receiving an application, here the Insurer significantly passed this date. The insurer was essentially arguing that our client must be held to the SABS provision that elections are final even though they were non-compliant in the same section of the SABS by exceeding the outlined timeframe for election.

2. The LAT erred in fact when finding that the client gave no indication that she may qualify for two or more benefits.

The Insurer pointed to the client’s answer of “no” to the question of “were you able to return to your normal activities following the accident” in her benefits application form as indicating that she qualified for Non-Earner Benefits (NEBs). The LAT rejected that this was an error of fact, noting that there was no dispute that our client qualified for Income Replacement Benefits (IRBs) and that the SABS only qualifies someone for Non-Earner Benefits (NEBs) if they do not qualify for Income Replacement Benefits (IRBs).

3. The LAT erred in fact when finding that the Notice and Election of Benefits provision of the SABS did not apply to the insurer’s notice letter.

The insurer alleged that since the letter identified that our client may qualify for Income Replacement Benefits (IRBs) and Non-Earner Benefits (NEBs) based on her indication that she was unable to complete normal activities, the finality clause should apply. The Tribunal rejected this argument noting that the insurer stated “it has been determined you are not eligible to receive [Non-Earner Benefits]” in an initial letter to our client. The interpretation of this letter the insurer is advocating for is contradictory to that statement and thus the letter would be confusing and non-compliant with the insurer’s notice obligation.

More importantly, our client did not qualify for Non-Earner Benefits (NEBs) because she qualified for Income Replacement Benefits (IRBs), thus there was no legitimate election to be made in the first place.

4. The Tribunal erred in law when they overruled the finality of the election clause entitling our client to receive Income Replacement Benefits (IRBs) despite “electing” to receive Non-Earner Benefits (NEBs).

The insurer argued that the Tribunal made a remedy where none is specified in the SABS and by not imposing consequences on a claimant’s failure to comply shows SABS compliance is “optional”. The Tribunal disagreed ultimately stating the insurer was the one who did not comply and therefore the finality clause is not applicable, and our client should never have been asked to make an election in the first place when she did not qualify for Non-Earner Benefits (NEBs) in the first place.

Conclusion

This decision highlights the arrogance of insurers as they have gone far too long without consequence for their non-compliance with the mandatory provisions of the SABS. It also highlights the importance of an insurer’s compliance with mandatory provisions and attentive adjustment of a claim to avoid misrepresenting to accident victims that they may elect benefits when they do not qualify for them.

Navigating your complex accident benefits claim after an automobile accident can feel impossible when you are recovering from serious injuries. Seeking an experienced personal injury lawyer to help you navigate this legal process will allow you to focus on your road to recovery while getting you the compensation you deserve. If you or someone you love has been in a motor vehicle accident, Campisi can help. Call us at 855-351-1115 for your free consultation.

Click here to view the Full LAT Decision