As the problem of disproportionate poverty among individuals with disabilities became increasingly serious, Canada introduced a poverty reduction strategy and proposed the Canada Disability Benefit (Bill C-35) in 2021. Although the bill aimed to establish the benefit, its progress was halted by the 2021 federal election. Then in 2023, the Canada Disability Benefit Act (Bill C-22) was proposed again (CDB). The Bill is designed to provide income-based supplemental support for low-income working-age Canadians with disabilities, complementing existing provincial support systems. However, it faces a significant hurdle: the potential clawbacks of existing benefits due to those complementary provincial programs.

For instance, the provincial social benefit programs like the Ontario Disability Support Program (ODSP) already provide financial assistance to individuals with disabilities in Ontario. ODSP offers income support of up to $1,300 per month to help with essential living expenses. The introduction of the federal CDB could potentially overlap with these existing provincial benefits. As a result, provincial governments might reduce their support in response to the new federal benefit, which will effectively nullify the intended additions. This could bring about a situation where the net benefit to the individual remains unchanged, despite the introduction of the new federal program. Moreover, the process for individuals could become more complicated with dual applications before both federal and provincial systems.

The ODSP, like many provincial disability support programs, has income and asset limits that determine eligibility. The introduction of the CDB could potentially push some recipients over these limits and conversely render them ineligible for provincial benefits they currently rely on. This creates a challenging scenario where a program intended to provide additional support could inadvertently lead to a loss of existing benefits for some individuals.

Another concern is the potential clawback from insurance companies. This issue arises because many individuals with disabilities receive long-term disability (LTD) benefits from private insurers as part of their employment benefits or personal insurance policies. These LTD policies often include provisions that allow the insurer to reduce their payments if the beneficiary receives other forms of income, including government benefits. Thus, the CDB could trigger these offset clauses and allow insurance companies to reduce their payouts by the amount of the new federal benefit.

The potential for clawbacks by insurance companies undermines the primary goal of the CDB, which is to provide additional financial support to people with disabilities. It also raises questions about the fairness of allowing private companies to benefit from a public program intended to support vulnerable individuals. In fact an amendment was proposed regarding a specification that the benefit cannot be clawed back by insurance companies. This was refused by Parliament because it raised the issue of the division of powers, as regulating the insurance industry falls within provincial jurisdiction. One possible solution to this impasse could be the development of federal-provincial agreements that establish guidelines for how the CDB should interact with private insurance policies.

Instead, the federal government’s approach to solving the clawback issue has been to lean on cooperative federalism, which means the responsibility falls on the provinces to ensure no clawbacks occur. However, this approach presents its own set of challenges. Negotiating with 13 provinces and territories individually is a complex and time-consuming process, including interactions between the CDB and their numerous government benefit programs as well as building prohibitions on clawbacks into provincial and territorial insurance legislation. Relying on provincial cooperation in this way could lead to significant delays in the implementation of the CDB – a particular concern for people with disabilities who are in immediate need of additional financial support. It is no secret that many individuals and families affected by disabilities are already facing financial hardships, and any extended wait for the promised federal benefit could exacerbate their difficulties.

Furthermore, the possibility of inconsistent implementation across provinces could lead to inequalities in how quickly and effectively the benefit is delivered. This situation raises significant concerns about potential violations of the Canadian Charter of Rights and Freedoms, i.e., for example, if individuals with disabilities receive different levels of support or face varying degrees of clawbacks depending on their province of residence, it raises possible infringements over their equality rights under section 15. To date, only the provincial governments of Manitoba, Newfoundland and Labrador and Nunavut have confirmed that they will not claw back social assistance supports in response to the CDB. Other provinces, such as British Columbia have left the door open.

A more streamlined and expedited process is needed to ensure that the CDB can reach those who need it most without undue delay and in a manner that respects the constitutional guarantee of equality. The federal government may need to consider more proactive measures to ensure consistent implementation across all provinces and territories to avoid potential Charter challenges and to uphold the rights of all Canadians with disabilities, regardless of their place of residence.