The Ontario Disability Support Program (ODSP) has been a feature of the province’s social assistance package of programs for many years. It is administered by the Ministry of Community and Social Services.
To receive payments under the ODSP program, a recipient must be: 18 years of age; a person with a disability; and have insufficient means (income and/or available assets) to support him/herself.
As with other social assistance programs, the philosophy of the ODSP legislation is to provide basic financial support to persons until such time as they are able to receive payments or earn income from other sources. In the case of ODSP recipients, this time may never occur.
Eligibility and reporting
Once a person has become eligible to receive ODSP payments, he or she must then meet relatively complicated sets of means testing, depending on the person’s disability and needs. Generally, the different components to the means testing are: the sources of income receivable and by whom; required needs; and assets. These components are carefully monitored by the Ministry through its local offices. It is a prerequisite to receiving ODSP payments Ihat any change in a recipient’s financial or asset status must be reported to his or her case worker as soon as possible.
Commencing a permanent relationship with a non-ODSP recipient, receiving support or payments from other sources and gifts/inheritances received must all be reported. This information will be measured against the Ministry’s current policies and the recipient’s ODSP payments will either be maintained or altered. Failure to report any changes can result in the Ministry making a decision to reduce or even eliminate payments to an ODSP recipient and now always in equal measure to the non-reported change.
Other sources of income
Depending on how the non-ODSP payments are categorized, a dollar that is received by an ODSP recipient from a non-ODSP source means a dollar that is reduced from the ODSP payment to that recipient. Child support, including Ontario Child Benefit payments, Canada Pension Plan (retirement or disability), Employment insurance and WSIB benefits normally will reduce ODSP payments.
Part-time or full-time employment income and payments received during a retraining or apprentice program will also reduce ODSP payments. Depending on the level of a recipient’s disability, the recipient is expected to make reasonable efforts to apply for and obtain anyone or more of these other sources of income.
If a recipient is considered by the Ministry to not be making reasonable efforts to obtain a non-ODSP benefit that he or she may be eligible for, ODSP payments can be suspended. Care should also be taken in that other members of an ODSP recipient’s family who are over 18 years of age may also be required to obtain outside employment or take part in other assistance training programs if they do not have a disability or caregiving responsibilities.
Those ODSP recipients who have dietary or other needs as a result of their disabilities may also be eligible for further assistance and possible exemption from some of the income/asset requirements that would apply to other recipients. In this period of government austerity, this eligibility is very fluid and should be carefully understood so that all available benefits are applied for and received.
Surprisingly, the ODSP guidelines allow recipients to own a wide range of assets and still maintain their eligibility for ODSP support. Ontario court cases have expanded this asset base. Surprisingly as well, there is no definition of “assets” in the ODSP legislation. The common law definition assumed by the Ministry is that an asset is any property of value that is available for support.
The important concept to understand for an ODSP recipient is how available the asset is to be converted into cash. The more available it is, the more the Ministry will suspend or reduce payments to the recipient until the recipient uses up the asset to the Ministry acceptable levels or reduces the availability of the asset used by the recipient and his/her family. Generally, a recipient and his/her spouse and dependants will not be eligible for support for so long as their total assets exceed the current asset limit. Currently, that limit is $5,000 for the recipient, $2,500 for any spouse and $500 for each dependant. The Ministry, however, can increase this limit as required to allow for the purchase of an item or service that the Ministry considers necessary for the health of the recipient or a member of higher family or for approved disability related items or services.
Some funds held for the educational purposes of dependants can be exempt provided that they are kept separate from other family assets. An ODSP recipient and members of his/her family can own a principal residence members of his/her family can own a principal residence have an interest in more than one real estate asset unless the Ministry is satisfied that it is necessary for the health or well-being of the recipient or his or her family.
Houses can be sold and the proceeds can be used to purchase a new house without affecting ODSP payments. An ODSP recipient or his/her family can own one vehicle. A second vehicle may be owned by a recipient or a family member if it is to maintain employment outside of the home. This is subject to some financial and other limitations. Tools necessary for the employment of a recipient’s family members are exempt from the ODSP asset restrictions. Assets used for the operation of a business by the recipient or family are exempt to certain levels, but are subject to extensive scrutiny and guideline approval. Student loans (provided that the recipient stays in the education program) and prepaid funerals are also exempt assets.
Personal injury awards (pain and suffering) and Family Law Act awards are exempt assets provided that they do not exceed $100,000. Again, these awards as well as Statutory Accident Benefits and various payments under the Hepatitis, Walkerton and other Government Relief Programs are potentially exempt but are subject to guidelines and require a more in-depth review than this article can provide for exemption thresholds.
Loans for first and last month’s rent and to purchase exempt assets are also exempt. An RESP held by a member of an ODSP recipient’s family as well as Registered Disability Savings Plans are also exempt assets. There are other assets and payments that are also either partly or fully exempt from ODSP clawback/payment suspension but are very specific to the recipient and his/her situation.
Inheritances of $100,000 or less are exempt assets provided that they are transferred to a Support Trust for the benefit of the ODSP recipient within six months of the testator’s death and provided also that no more than $56,000 per year is paid from the trust to the ODSP recipient.
The 1987 court case of Ontario v. Henson expanded the exempt status of certain types of testamentary trusts (trust established in a Will) for the benefit of a disabled beneficiary. These are now famously called “Henson Trusts”. The Ontario court ruled that the assets of a completely discretionary trust established in a Will for a disabled beneficiary is a fully exempt asset for the purpose of the ODSP program.
While the Court’s ruling was good, the court also ruled that this exemption was available only if the trustee of the trust had both comp lete discretion as to what, if any, income or capital was to be paid out of the trust in any year to the ODSP recipient, and further that there was no direction at all in the trust wording that required any of the trust income or capital to be used or paid to or for the benefit of the ODSP recipient. Later court cases interpreted any wording in a Will which directed the trustee to use the trust for the benefit of the ODSP recipient as being fatal to the exempt status of the trust assets. In those cases, the trust assets were included as assets available to the ODSP recipient.
On the surface, the wording of a Henson Trust appears to be very harsh. Both the deceased testator and the ODSP recipient must have complete faith that the trustee will benefit the recipient and not simply allow the trust assets to accumulate to benefit a residuary non-disabled beneficiary after the ODSP recipient’s death.
The ODSP program fills a need. There are well over 800,000 ODSP recipients currently benefiting from the program. The program, however, is filled with rules that must be a carefully read and fully understood. A mistake could possibly cause the recipient’s benefits to be temporarily curtailed or revoked.
John Peart is a partner with the Ottawa law firm of Nelligan O’Brien Payne LLP (www.nelligan.ca) and is a member of its Wills and Estates Group. John is Certified as a Specialist (CS) in Estates and Trusts Law by the Law Society of Upper Canada and is also a member of the International Society of Trust and Estates Practitioners.
[This article originally appeared in the October 2013 issue of Fifty-Five Plus Magazine.]