The Ontario Disability Support Program (ODSP) provides a monthly income as well as health benefits to people with disabilities. But it takes more than having a disability to qualify. Your financial status is also considered.
Fundamentally, ODSP is for people with disabilities who are in financial need. Assuming you have a disability that qualifies you for ODSP, the real question is, can you qualify from a financial perspective? You would think this would be a fairly straight-forward question – it isn’t. You would think they could just tell you how much money you are allowed to have and how much you are allowed to earn to qualify. The rules are not that simple.
How much income can you earn before you no longer qualify? It depends on how much you would receive from ODSP (and some other factors but let’s leave those factors aside for now). If you are on ODSP and you are earning employment income, your ODSP benefits will be reduced by a certain amount, depending on the amount of income you earn.
The first $200 of net income you earn in a month does not affect your ODSP. Every dollar of net income you earn above and beyond the $200 reduces your ODSP benefit by 50 cents. If you are eligible for $1,100 per month from ODSP and you earn $1,000 of net income per month, your ODSP would be reduced by $400 to a total of $700. The first $200 of net income does not affect the amount you receive from ODSP. The remaining $800 will reduce your ODSP by $400. ODSP would continue to pay you $700 per month.
If you earned $3,000 per month instead of $1,000, your ODSP would be reduced by $1,400. If you are eligible for $1,100, your entire ODSP benefit is reduced to zero, effectively making you ineligible for ODSP.
There are other factors that affect the amount of income you can earn and still remain on ODSP, but this should help you understand how employment income affects ODSP eligibility.
But what about assets? How do assets affect ODSP eligibility? This is where things quickly become much more complicated. A single person with no dependents is not allowed to have more than $40,000 in assets to qualify for ODSP, but there are exceptions. The $40,000 asset limit is easy to understand. It is the exceptions that make things confusing.
While you are not allowed to have more than $5,000 in assets, there are a number of assets that are exempt from this rule. For example, you are allowed to own your primary residence and a car. You are also allowed to have money in a Registered Disability Savings Plan, cash value life insurance, segregated funds, annuities, and certain types of trusts. Each of these exempt assets have limits and/or restrictions, but they are options to be considered.
You can’t have more than $40,000 in your bank account and most types of investment accounts. You can’t have art hanging on your wall, a fishing boat, or a second car if the value of those assets puts you over the $40,000 asset limit. But this does not mean you are not allowed to have more than $40,000 in assets.
There are people who believe they are not allowed to have more than $40,000 in assets, full stop. They are not aware of exempt assets that could help them qualify, so they stop pursuing ODSP and end up burning through the money they have much faster and sooner than they want.
Here is a story I hear all too often. It may be your story. You acquire a disability and decide to apply for ODSP benefits. Until you acquired your disability, you were working and saved money in an RRSP. When you apply for ODSP, you are told you have too much money in your RRSP account to qualify for ODSP. You are led to believe you must live off your RRSP money and reapply for ODSP once you have less than $40,000. If you are 45 years old, the idea of spending your retirement savings decades before you planned is a tough pill to swallow. The reality is that it isn`t a pill you have to take.
There are a number of options you could pursue to fix your RRSP problem so you can qualify for ODSP without spending all your savings first. Aside from using the money to by a home to live in, you may be able to put some of that money in an RDSP – you might have to pay income tax to do that, but the benefits could outweigh the costs. You could also move at least a portion into segregated funds, which does not have to trigger any income tax. There could be other options, but the point is that there are options.
If you do not qualify for ODSP because you have, “too much money,” don’t resign yourself to living off your own savings until they run out. But who should you talk to? You can’t expect ODSP will lay out your options. An ODSP employee may share ideas and options with you, but you can’t expect they will.
ODSP workers are not trained to give financial advice. They may tell you about some of the options you have, but giving advice about what you should do with your assets without the appropriate training is a somewhat dangerous place to go.
Also, you would think ODSP workers are aware of all the options, but that is not the case. ODSP policies are hundreds of pages, making it impossible to commit them all to memory. Being an ODSP case worker is not an easy job. They have large caseloads and deal with a wide variety of issues. Right or wrong, you can’t expect them to be experts in all areas. This is not to make excuses for them or the system. Just don’t assume an ODSP employee has all the right answers simply because they work for ODSP.
The question of eligibility is an on-going issue. As with many complex systems, there are rules, but there are legitimate exceptions to those rules as well. Don’t accept the rules at face value. Look for the exceptions. You may be able to put them to good use.
Reading your article is making my blood boil. This is exactly what happened to me. I worked for many years and then ended up on ODSP. I had almost $90,000 in RRSPs. ODSP told me I had to live off that before I could apply. I spent all that money over a few years and then applied for ODSP. I am so mad. If I knew I could have done something so I could go on ODSP and not spend the money I would have done it.
Unfortunately, this is the story I have heard too many times. At the very least, I think ODSP workers would be better off just telling people what assets they have that disqualify them for ODSP and then refrain from telling them how to deal with the issue. It is very easy to think they have the expertise to provide this kind of guidance, but you need an understanding of the relevant aspects of ODSP and financial expertise. It would be great if they could suggest where applicants and recipients can get this advice or some helpful information, but I think they can end up in dangerous waters when they try to provide this type of guidance.
Exactly, the system is dishonest if you ask me. Another reason one has to be their own damn advocate! So much bs and it deliberately set up that way to confuse you so you will give up. I’m told I have to use my savings until my bank account(s) are below 40,000. Meanwhile a guy that has blown his money for years and is broke gets everything handed to him. What a joke of a system!!
Larry, I agree how important it is to advocate for yourself and/or have someone you trust and is skilled and knowledgeable to assist you with navigating ODSP. I don’t know if I could say the system is dishonest, though…although I am not sure exactly what you mean when you say it is dishonest or what exactly you deem to be included in the system. ODSP regulations and policies are complex and confusing. There is no doubt about that and that definitely creates a how mess of issues. But I don’t believe the system was designed with the actual intent to deceive or confuse people. When you have a social assistance program that is based on constantly refining who qualifies and what is allowable and what is not, rules, restrictions and yes even exemptions to those rules are added on and modified over many years. Layers of rules that build up over time. And…not only is it confusing for the person on ODSP to understand, but the case workers as well. The policy directives are hundreds of pages long and my sense is that case workers don’t receive comprehensive training. My guess is that there are some case workers that have put in the effort to really understand the directives but I also wonder how many of those move on to better paying jobs.
It is too easy to assume the case worker is the best person to go to when you have a question about ODSP. Why wouldn’t people assume they would know the answer to a question about ODSP rules? Unfortunately, it is not a great assumption to make. There are aspects of ODSP policies they must deal with on a regular and routine basis, but there are other areas of ODSP policy, including some aareas that I deal with, that an ODSP case worker rarely or maybe never ends up dealing with because it just doesn’t come up for any of their clients. They know what the basic asset limits are, but they may not know segregated funds can be treated as an exempt asset and just assume they know all the exemptions because they have never been told about them. Not saying that is right, but I don’t think it is necessarily the case worker’s fault or solely their fault.
If a complex, confusing system is created over time, it becomes complex and confusing to administer. No one person, or one elected government is responsible for the system. They all have managed it and made changes to it at one time or another. There are lots of issues with it. I just don’t think it was created or is managed to intentionally deceive people.