The Ontario Disability Support Program (ODSP) is complicated.
To achieve a strong understanding of ODSP, you need to read and understand hundreds of pages of ODSP Policy Directives. My experience is most people on ODSP and their supporting family members are so overwhelmed with daily living, they don’t have the energy or experience to wade through the directives.
It seems they aren’t the only ones.
Many people turn to their ODSP workers for guidance on ODSP policy. One may assume you could explain your situation to an ODSP staff person who would not only accurately explain the rules, but also your options. Over the years, I have come across too many situations that fly in the face of this assumption.
ODSP is a “means tested” benefit. To put it simply, it is there for people with disabilities who can demonstrate they are in financial need. But it is not that simple.
ODSP has a basic rule. You are not allowed to have more than $5,000 in assets to qualify for ODSP ($7,500 if you are married). So, many people think they are not allowed to have more than $5,000 to their name and receive ODSP. But there are exceptions. The Registered Disability Savings Plan is an exception. ODSP recipients can have hundreds of thousands of dollars in their RDSP accounts without jeopardizing their ODSP. The RDSP is not the only exception.
If a single person on ODSP receives an inheritance or gift of cash, they have options. As I have written in other articles, an ODSP recipient is allowed to have up to $100,000 in a combination of cash value life insurance, segregated funds and a government regulated trust. The RDSP is not the only option and it is certainly not always the best option.
I am not surprised that most people on ODSP or who want to apply for ODSP are not aware of these other options. But I am somewhat surprised there are ODSP workers who are also unaware of these exempt assets.
Here is a somewhat typical example. A client of mine in her twenties received over $150,000 from an inheritance about 10 years ago. She was not on ODSP but she and her family thought it was best that she applied because her disabilities prevented her from securing and maintaining sustainable employment. We decided to put $95,000 into a segregated fund account and the remaining amount into an RDSP. When she went to apply for ODSP, the ODSP worker told her she had too much money and was adamant that a segregated fund account was not an exempt asset, despite her and her parents’ insistence that it was. Eventually, I supplied them with a printed copy of the relevant ODSP policy directive stipulating segregated funds are exempt assets up to $100,000 (as long as she didn’t have a cash value life insurance policy or a government regulated trust). The ODSP worker relented in the end.
This was not the only incident. I have come across this type of situation too many times over the years. Now I arm my clients with the appropriate ODSP policy directives before they meet with an ODSP worker and even then some clients still face resistance. I instruct my clients to stand firm and direct ODSP workers to their managers or their legal department, if necessary. We have been successful in every instance.
To an extent, I can understand ODSP workers who do not voluntarily discuss the ODSP the exempt assets I write about. ODSP policy directives are complex and go on for hundreds of pages. As well, I do not think they can be expected to provide financial advice as this could possibly put them in a difficult situation.
I have a much more difficult time when they provide false information. When an ODSP recipient asks a worker if a particular type of asset is exempt or not, should they not be provided with the correct answer? Before they answer, should there not be a duty to review ODSP policy and/or speak to others at ODSP? It can mean the difference between maintaining and losing ODSP income and health benefits. Sadly, I have met people after they have spent down almost all their money because they were told they had no other choice.
It seems to me that ODSP workers walk a fine line. They are there to help their clients and they are there to review ODSP eligibility. I believe ODSP workers want to help, but they are also saddled with the responsibility of making sure program guidelines are followed. On one hand they are advocates, on the other hand, auditors. That is a difficult balance for anyone to maintain.
My advice to people is that they should not view their ODSP workers as the sole source of information and guidance. If they can, I suggest they read relevant policy directives, such as 4.1 — Definition and Treatment of Assets and 5.1 — Definition and Treatment of Income. I personally answer ODSP related questions and provide relevant advice on a highly regular basis. I have helped many clients secure and maintain ODSP without having to make unnecessary financial sacrifices. In some cases, I refer people to lawyers who understand the relevant legislation and pursue legal channels when necessary.
Advocating for yourself, your child, relative or friend is not always easy when faced with the complexities of ODSP, but, no matter how challenging it may be, I suggest you should not accept an ODSP worker’s explanations of ODSP policy and rulings as correct in all situations.
You may also want to read: An Open Letter to ODSP Caseworkers
Like this article? Sign up for the Newsletter.
You can contact Ron Malis at rmalis@monarchwealth.ca
will receive an inheritance worker does not know that yet need to find out what is best for me investing cannot absorb lengthy information any and all information WELCOMED
I can’t give you financial or investment advice in this reply. I would have to speak to you directly. However, there are investment assets an ODSP recipient is allowed to own without jeopardizing their ODSP. Those include the Registered Disability Savings Plan and segregated funds. It may also be possible to set up a trust. You need to consult with an advisor who understands ODSP as there are different strategies you may be able to use to protect your ODSP. Each strategy has its pros and cons; there are limitations to consider as well. Feel free to contact me directly, if you like.
Ron:My name is Linda and I have a question for you if you do not mind..
What is better honestly and truthfully…ODSP OR CPP DISABLITLIY..There are plus and minus with each one and there will always be –so from the stand point of a person who legitimately needs it—-which one is better.. I would rather not have to choose either of them but sometimes we all have to do things we do not like…………
My e-mail adress is: hi-its-me@wightman.ca ..Thanks again….
Linda
Have a question please, my brother and I own a house together, he was living in the house, it’s now empty, as he has had a stroke and is in a nursing home. So this house becomes his second residence. He’s been on odsp, before and after the stroke. I was thinking of renting the place out or selling it. But, wondering if it will screw up it’s odsp every month. Just not sure how all this works. If I rent it for say 1200.00 a month does odsp get 40% of that, is it before mortgage expenses, or after. Afraid to do anything for fear it will cost me money. Talked to a worker, she was not much help, except saying I should sell it. Were only 2 years into the 5 year term on the mortgage. Any help would be appreciated please. Need some direction on this one. Thanks.
The first major issue is that your brother owns a home that is no longer his principal residence. Because he is not living in it, it is no longer an exempt asset. ODSP generally gives you 6 months to deal with the asset before they possibly revoke his ODSP. I believe you may be able to get an extension on the 6 month time frame if you demonstrate that you have been trying to sell it but have not been successful. However, unless you are somehow able to persuade ODSP that they should continue to treat it as an exempt asset, I don’t know of any other option but to sell it and put his share of the proceeds of the sale of the house into a different ODSP exempt asset.
If you were somehow able to convince ODSP to continue to treat it as an exempt asset and then rent it out, they will treat it as rental income. My understanding is that they would treat 60% of the gross rental income as your brother’s income. However, I am not convinced they will see the house as an exempt asset which would make this issue null and void.
My suggestion is that you contact me directly to discuss your situation. It is not a straight-forward situation so a discussion may help.
Ron I just want to ask a straight question .If you can please answer.Can I be forced to sell my home as I am turning 60 and they are telling me that when I am on disability and I turn 60 I must liquidate.Is this so?
If you are talking about ODSP, I have never heard of ODSP ever trying to force somebody to sell their home. A principal residence is an ODSP exempt asset. As long as you are living in your home, I don’t see why they would ask that you sell it. What age you are is irrelevant. Are there other factors involved in your situation?
I wish I had seen your blog 2 years ago. My brother was badly burned in a house fire in March 2014. At this time we were both the executors/only beneficiaries of my mother’s will, which we were trying to settle. It was severely complicated by a City roadworks project, that should have expropriated my mother’s house. In the meantime, the fire occurred. We were given the run around by ODSP officials in both our own city, and in Toronto, where he was in the burn unit for months. When they were told that he was getting an inheritance, and insurance payout, he was told, sorry, you don’t qualify for ODSP until you use up all of your money. Consequently, he’s gone through about $90K in two years, and even now that he’s applying again for ODSP, they want particulars as to what money he received. Why on earth, would money he doesn’t have anymore, and that they told him to spend matter to his getting benefits now? We are very frustrated. He is broke, and the impression I’m getting is that they are still going to say, “oh, you got way too much money in your inheritance, and should sill have enough left to live on for now.” Do you have any insight/advice on this situation?
This is not the first time I have heard stories about ODSP telling a recipient that they no longer qualify because they have received money from an inheritance or other source and that they must spend down the money before they can qualify. Unfortunately, it probably isn’t the last time either.
My understanding is that the primary reason they want to know how the money was spent is to determine if he either purchased a “non-exempt” asset that would make him ineligible for ODSP or if he dumped any of the money at less than fair market value (i.e. did he give his money away simply to qualify for ODSP). As long as he is able to reasonably explain how the money was spent, I don’t see why he wouldn’t qualify for ODSP again.