Who Qualifies for ODSP?
The Ontario Disability Support Program provides income and health benefits to adults with disabilities In financial need. Whether you qualify for ODSP or not depends on the nature and severity of your disability and your financial circumstances.
You must be at least 18 years of age and be a resident of Ontario.
You must satisfy the ODSP definition of disability or be a member of a prescribed class.
You must satisfy the ODSP financial eligibility requirements and restrictions.
ODSP Definition of Disability
The following is an excerpt from the ODSP website
Meeting the definition means that:
- you have a substantial mental or physical impairment that is continuous or recurrent, and is expected to last one year or more and
- your impairment directly results in a substantial restriction in your ability to work, care for yourself, or take part in community life and
- your impairment, its duration and restrictions have been verified by an approved health care professional
Being diagnosed with a disability does not necessarily mean you would satisfy the program’s definition of disability. Your disability must substantially restrict your ability to work or care for yourself or participate in your community. Your disability must also be expected to last at least one year. The duration and severity of your disability must be documented by appropriate medical practitioners.
If you are a member of a prescribed class, you do not need to prove you satisfy ODSP’s definition of disability. If you receive Canada Pension Plan Disability benefits, for example, you are a member of a prescribed class. To qualify for CPP-D, you must satisfy CPP-D’s definition of disability, which is more difficult to satisfy than ODSP’s.
ODSP Definition of Financial Need
Whether you qualify for ODSP from a financial perspective, depends on your assets and income.
If the value of your assets exceeds ODSP limits, you will not qualify. However, not all assets are included in this test.
A single person with no dependents will not qualify for ODSP if the value of their assets exceeds $40,000. This includes money in the bank, cash, investments, and other types of assets. For married or common law couples, the asset limit is $50,000, collectively.
Some types of assets are not subject to the basic asset limits. These exempt assets include:
- A primary residence. If you own your home, regardless of its value, it will not affect your eligibility for ODSP. This exemption does not apply to real estate you may own unless it is your primary residence.
- A vehicle. Owning a vehicle is also allowed. This exemption is for one vehicle, only. If you are a couple, only one vehicle between the two of you is considered exempt. A second vehicle of limited value may also be considered exempt if you can demonstrate it is needed for work purposes.
- Registered Disability Savings Plan. A Registered Disability Savings Plan (RDSP) is a unique type of account available to those who have been approved for the Disability Tax Credit. While there is a limit to the amount you can contribute to an RDSP, money and investments held in this account is treated as exempt by ODSP.
- Registered Education Savings Plan. Any money you have saved in a Registered Education Savings Plan (RESP) is not treated as an asset by ODSP.
- A maximum of $100,000 held in the following, combined:
- Cash surrender value in life insurance policies. Permanent insurance policies often include a savings or investment component, referred to as cash surrender value.
- Segregated Funds. Segregated funds are investments sold exclusively by insurance companies.
- Annuities. Annuities, also sold by insurance companies, provide a guaranteed income stream for life or a defined number of years.
- Inheritance Trust. An inheritance trust can hold the proceeds on an inheritance or the proceeds of a death benefit from a life insurance policy.
Treatment of Income
Unlike assets, ODSP does not maintain specific income limits. None the less, income can leave you ineligible.
The amount of income you can earn and still qualify for ODSP depends on the source or sources of your income and the amount of income support you would otherwise be entitled to from ODSP. In some cases, there are other factors that determine the impact on ODSP eligibility.
Canada Pension Plan Disability Benefits. Some people on ODSP also qualify for Canada Pension Plan Disability benefits (CPP-D), which is a federal benefit. If you are approved for CPP-D, your ODSP monthly amount is reduced by the amount of income you receive from CPP-D. If the monthly amount you receive from CPP-D is greater than your monthly ODSP entitlement, you would no longer qualify for ODSP.
ODSP can insist you apply for CPP-D. If you refuse to apply, your ODSP benefits could be suspended.
In situations where CPP-D benefits renders you ineligible for ODSP, you might be able to increase the amount of your ODSP entitlement so it ends up exceeding your CPP-D monthly benefit. If you qualify for the ODSP special diet allowance, you could receive up to an additional $250 per month from ODSP.
If the person in Example 2 was approved for a special diet allowance of $200 per month, their monthly ODSP entitlement would increase to $1,096. Instead of losing their ODSP, they would receive $96 a month plus their health and dental benefits plus the $1,000 monthly benefit from CPP-D.
Again, the amount of income you can earn from employment or self employment , depends on the amount of your monthly ODSP entitlement.
Unlike CPP-D, employment income does not claw back ODSP on a dollar for dollar basis. The first $200 of income you earn after taxes and deductions each month does not affect your ODSP amount. Each dollar you earn above and beyond the initial $200 amount, reduces your ODSP monthly amount by 50 cents.
One thing important to point out is ODSP provides an additional $100 per month employment benefit if you are working. If you are entitled to $1169 per month from ODSP and you are working, your total monthly entitlement would be $1,269.
If you have a part-time job that pays you $500 a month after taxes and deductions, your ODSP would be reduced by $150. Here’s the math:
A person entitled to $1,269 per month from ODSP, would have to earn $2,738 from employment to lose their ODSP.
Often times, employment income is not the same amount each month. If you are paid on a bi-weekly basis, there are two months of the year where you receive three paycheques instead of two. The third paycheque in each of those two months could result in a clawback of your entire ODSP cheque for that month. You would not lose your ODSP health benefits, though, and your ODSP income benefits would resume the following month.
If you are a full-time post-secondary student on ODSP and earning employment income, your ODSP amount is not clawed back at all. Employment income for full-time post-secondary students is exempt.
Gifts and Voluntary Payments
Gifts are also considered income. A gift is what you what you assume it would be…a monetary gift…but it could also be an item or service purchased for you by another person. As well, in some cases, an inheritance is considered a gift, depending on how it is structured.
Money from particular sources made to a person on ODSP, such as a trust or segregated fund accounts, are voluntary payments. Money from a formal trust, such as a Henson Trust, is a voluntary payment. It is a “voluntary” payment because the trustee issues that payment, voluntarily.
ODSP recipients are allowed to receive up to $10,000 in gifts and voluntary payments over a 12-month period for non-disability related expenses. But there are exceptions to this rule too. Gifts and voluntary payments used to cover the cost of disability related expenses are not subject to the $10,000 limit. If you need a computer because of your disability and the cost is covered by a gift or a voluntary payment, the amount is not included in the $10,000 tabulation. Note: whether something is considered a disability related expense or not is not always self-evident. A computer may be considered a disability related expense for one person but not another person. ODSP determines whether an expense would be treated as a disability related or not. It’s advisable to get ODSP approval in advance, especially for larger disability related expenses.
Gifts and voluntary payments used as a contribution to an RDSP account, for the cost of first and last month’s rent, the purchase of a primary residence or a vehicle are also exempt from this rule.
What If You Have “Too Much Money” To Qualify?
One thing important to note is ODSP first evaluates your financial eligibility before they determine if you satisfy the program’s definition of disability. If you do not meet the financial requirements, they will not evaluate you from the disability perspective.
If your current financial circumstances prevent you from qualifying for ODSP, there are options you should consider, especially if the value of your assets exceed ODSP limits.
Those already approved for ODSP must continue to abide by the financial restrictions and limits. Financial circumstances can change. Receiving a large gift, an inheritance, selling your home, or receiving a legal settlement can result in the suspension of your ODSP benefits, depending on how you manage those situations.
Having “too much money” to qualify for ODSP, does not mean you must spend enough of it before you can reapply. Depending on your situation, you may be able to move enough of your assets into exempt assets to qualify.
Do not give some of your money to a family member or friend to reduce the value of your assets. This is not allowed by ODSP. It may seem like a logical thing to do, but it is not a legitimate strategy and can create serious issues for you.
There are legitimate strategies you can and should explore before you conclude ODSP is not a possibility.
Unfortunately, you cannot expect ODSP workers will provide you with sound, comprehensive advice. Even if your caseworker does provide you with some guidance, it may not be comprehensive or suit your financial needs. Their job is to determine whether you are abiding by the program’s policies or not. They are not trained to financial advice to address financial eligibility issues and they are not encouraged to assist clients in this respect.
Ron Malis is the founder of Reegan Financial, which focuses exclusively on serving people with disabilities and their family members.
You are encouraged to contact Reegan Financial if you need assistance with navigating ODSP, estate planning if you have a child with a disability, managing formal trusts, or Registered Disability Savings Plans.