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Page 14 March 12, 2018 • Law TiMes www.lawtimesnews.com Changes are 'extremely significant' New ODSP regime lifts cap on exemption for damages BY MICHAEL MCKIERNAN For Law Times S weeping changes to the Ontario Disability Sup- port Program have freed up recipients to structure more of their settlements and worry less about affecting their entitlement to benefits. Before the Aug. 1 chan- ges took effect, only the first $100,000 of a pain and suffering damages award was exempted from the ODSP's strict income and asset limits for determin- ing eligibility. However, the new regime lifted the cap on the exemption for pain and suffering damages and relaxed the rules on future medical care settlements awarded under the Statutory Accident Benefits Schedule. As a result, structured settle- ments brokers say a much small- er portion of personal injury settlements will have an impact on ODSP eligibility for accident victims, such as those amounts related to income loss, includ- ing income replacement and non-earner benefits. Kyla Baxter, president of Bax- ter Structures in Toronto, says the changes are "extremely sig- nificant." "Previously, ODSP guide- lines were a stumbling block to addressing the specific needs of the injured party," she says. "We are now able to focus each plan on the claimant's actual needs, without risking his or her ODSP eligibility." Over the past three decades, structures have established themselves as an increasingly popular alternative to lump sum payouts in Ontario, particularly in cases involving catastrophic injuries. However, Baxter says, ODSP recipients unfortunate enough to be seriously injured in acci- dents would often find them- selves faced with a binary choice between taking advantage of the products — which divide high- value court settlements into regular tax-free installments — or holding on to their disability support payments. "Prior to the changes, it was simply more favourable for an in- dividual to opt out of the ODSP payment and just structure the settlement. Now, we have the op- portunity of tailoring the plan to address the specific needs of the claimant, while also taking advantage of the ODSP income supplement. This can have a sig- nificant effect on the quality of life and care for our injured cli- ents," Baxter explains. She says some of her clients who were previously denied ODSP eligibility due to a struc- tured settlement have even ap- plied for a reassessment in the hopes of changing the verdict in light of the new rules. "The ability of individuals to access previously denied ODSP payments will have a significant- ly positive impact in the quality of care and the lives of our in- jured clients," Baxter says. Brittany Gillingham, a law- yer and principal at Guelph, Ont.-based McKellar Structured Settlements, says the old cap on exempt funds may have made sense in theory, but it was not borne out in practice. "I think the government bought into the myth that if someone has received a $1- million settlement, then they don't need additional help," she says. "Eliminating the cap is in line with what we and counsel see in reality, which is that the amount of money received by plaintiffs is typically not enough to meet the needs related to the injury without also covering pre-existing issues that were al- ready in place, such as the basic living assistance that ODSP is intended to address." Under the old rules, Baxter says, her firm had developed a special structure designed spe- cifically to satisfy ODSP eligi- bility, but she admits it was "not always the most ideal plan for the survivor's life." In addition, lawyers for per- sonal injury claimants were also able to obtain "director's exemp- tions" to structure amounts of more than $100,000, as long as they could show the extra mon- ey was to be put toward future medical care. But Gillingham says the ODSP's strict reporting require- ments to maintain the director's approval meant many plaintiffs quickly lost their rights to spe- cial exemptions, putting their support benefits in jeopardy. However, she says, the new ODSP changes have eliminated the need for director exemp- tions. "It gives individuals more f lexibility because they won't have to account for the specific items they spend their money on," Gillingham says. In a statement unveiling the changes, Helena Jaczek, On- tario's minister of Commun- ity and Social Services, who is responsible for ODSP, said the provincial government "wants to make sure those who receive social assistance and have, un- fortunately, experienced loss or injury are able to fully utilize the compensation award they've re- ceived. "These improvements will help ensure vulnerable indi- viduals and families have the f lexibility to use their awards in a way which best meets their needs," she added. Claire Wilkinson, president of the Ontario Trial Lawyers Association, says her organiza- tion originally began advocating for changes to the ODSP rules on behalf of sexual assault vic- tims who were losing out as a result of discrepancies between piecemeal legislative exemp- tions granted to various injured people in the province. "For instance, survivors of sexual abuse who were part of certain government settle- ments were able to exempt the entire pain and suffering dam- ages component of their settle- ment without interrupting their ODSP benefits," she says. "In contrast, survivors of sexual abuse suing parties that were not involved in these government settlements were only able to ex- empt the first $100,000. "Although the original im- petus for approaching the gov- ernment related to a disparity in the treatment of sexual abuse claims, we are pleased that the changes to ODSP will now ben- efit all people in Ontario who have been injured and require the assistance of the ODSP, in- cluding those injured in car crashes," Wilkinson adds. Still, given the intricacies of ODSP eligibility and structured settlements, she says, injured parties are best advised to con- sult a broker of the products when making decisions over the future management of their money. Gillingham says there are likely to be some growing pains as the changes take effect and differences in interpretation are ironed out and that structured settlement brokers can help guide both injury victims and their representatives through the process. "There are some misconcep- tions out there among lawyers and advisers," she says. "Lawyers need to have all the information in order to get informed consent from their clients. Once the set- tlement documents are signed, you can't go back and say you would have settled differently if you'd known it was going to have an impact on your ODSP." Although accident victims have the option of receiving their settlements in the form of a lump sum, Gillingham explains that any interest generated on money deposited in a bank account or invested in more conventional ways is counted toward income and assets for the purposes of ODSP eligibil- ity, even if the principal amount originated from ODSP-exempt funds. Baxter says the tax-free sta- tus of structure payments also makes them a more attractive option than lump sums, even in a relatively low-interest-rate en- vironment. Should an individual find an investment opportunity with a potentially higher rate of return than the current rates for struc- tures, Baxter says, they need to consider the f lip side of the coin: the risk of losing their capital. That's not an issue with struc- tures, where payments are guar- anteed for the rest of the recipi- ent's life, she adds. "Most of our clients who are on or applying for ODSP need ODSP," Baxter says. "They also need the safety and secu- rity of a structured settlement, including the tax-free status of the periodic payments, in order to move on in life. These clients cannot afford risk in their in- vestment portfolios." When settlements are struc- tured, ODSP considers all pay- ments exempt from consider- ation as assets or income until the cumulative total surpasses the initial investment amount. Baxter says the f lexibility of structures allows recipients to avoid any impact on their ODSP status by timing payments to hit that original investment level at age 65, when ODSP eligibility ends. LT STRUCTURED SETTLEMENTS Brittany Gillingham says that, under the Ontario Disability Support Program, the old cap on exempt funds may have made sense in theory, but it was not borne out in practice. HENDERSON STRUCTURED SETTLEMENTS LP Our dedicated legal, brokerage, financial, and administrative teams provide the most thorough and expedient service to each and every client. We invite you to contact us today. You can count on us! THE MOST THOROUGH & EXPEDIENT SERVICE GUARANTEED. 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