ODSP IS BETTER THAN IT WAS, BUT IT ISN’T ANY EASIER.
The Ontario Disability Support Program (ODSP) is the social safety net for Ontario adults with disabilities. With the unemployment rate for people with disabilities hovering near 50%, it isn’t surprising almost 489,000* people rely on ODSP.
As of the beginning of the month (September 2017), ODSP improved. Income benefits increased by two percent and restrictions on the meagre amount of assets you could own to qualify for ODSP were eased.
A two percent increase isn’t much, especially considering a single person with no dependents now receives $1,129 per month, keeping them well below the poverty line. It is a step in the right direction, though.
Relaxing the asset restrictions will have a much larger, positive impact…at least for those who have or will receive assets. For years, you had to have less than $5,000 in assets ($7,500 for couples), otherwise you wouldn’t qualify for ODSP. If you applied for ODSP and had more than $5,000, you would be turned away until you either spent down the excess or purchased ODSP exempt assets to bring you under the limit. For those already on ODSP if an inheritance or a gift that pushed you over the $5,000 limit, your benefits could be cut off until you either spent the money or moved it into an exempt asset.
That $5,000 limit has been increased to $40,000 ($50,000 for couples). This increase has provided much needed breathing room. A person who can no longer work but has saved $10,000 or $20,000 over time can apply for ODSP. They won’t have to put their savings in an RDSP or spend a god portion of it to qualify.
It is easy enough to understand that you can’t have more than $40,000 in assets. But ODSP isn’t so simple. There are other rules you must consider – and this is where it gets complicated. On top of rules about how much you are allowed to “own”, there are rules about how much you are allowed to “receive” over a given period of time.
This is important.
There is one rule in particular that seems to trip up people, but it is so important that you understand it. The limit a person on ODSP is allowed to receive in gifts and voluntary payments in a 12-month period for non-disability related expenses was $6,000 and, as of September 1st, is now $10,000. Confused? If you are, you aren’t alone. I promise.
For years, under the old rules, I was asked the same question by so many different people.
“How is it I am allowed no more than $5,000 in assets, but I am allowed to receive $6,000?”
At first glance, it is confusing. Think of it this way. At any given point in time, you were not allowed to have more than $5,000. If you had a camera and took a snapshot of your assets, you could see if they added up to more than $5,000 or less. It is like taking your temperature. Either you are under or over at any given point in time.
So, how could you receive $6,000 over a 12-month period without going over the $5,000 limit? Here’s how. If you had $1,000 and somebody started giving you $500 a month (which is equal to $6,000 over 12 months), your assets would increase and eventually exceed the $5,000 “snapshot” limit…unless you spent the $500 gift each month.
I have clients who have been receiving $500 a month to supplement their ODSP. They ended up receiving a total of $6,000 every 12 months, but they never exceeded the $5,000 limit. They spend most if not all the money they received each month.
Now the limit is $10,000 every 12 months. Is it an improvement? Yes. Does it make ODSP better than it was? Yes. But it doesn’t make things any easier to understand.
We had the “$5,000” rule and the “$6,000” rule. Now we have the “$40,000” and “$10,000” rules. Keeping both rules in your head at the same time can be like tapping the top of your head with one hand while you rub your belly in circles with the other. Focus on one and you might forget the other.
How many people will fail to realize they will jeopardize their ODSP if they accept a $20,000 gift and simply put it in their bank account? The $20,000 gift might not push them over the $40,000 asset limit, but it would be more than the $10,000 they are allowed to receive in a 12-month period. I suspect at least some will make this mistake.
But, what do you do if you are faced with that $20,000 gift and you realize it could jeopardize their ODSP if you do accept it? Should you refuse it? Doesn’t seem to make a lot of sense, especially when you know you can have up to $40,000.
Just as there are exceptions to ODSP asset rules, there are exceptions to the $10,000 gifts and voluntary payments rule. You might be able to accept the full $20,000 without any impact on your ODSP benefits, if you can take advantage of one or more of the exceptions.
Even if you can’t use any of the exceptions or if you didn’t know about them, accepting the $20,000 shouldn’t cost you more than one month of ODSP as long as your assets won’t exceed the $40,000 limit. Losing a month of ODSP income because you received $20,000 is better than forgoing the $20,000 in the name of protecting your eligibility at all costs.
The confusion these two rules tend to create is only the tip of the iceberg. Deciphering what you can and can’t do, requires a comprehensive understanding of many different policies that can and do change over time. ODSP’s treatment of money you receive can differ, depending on the source of the money, the reason you received it, the amount, and/or what you do with the money. ODSP’s treatment of assets that you hold can also differ, depending on the asset and its value, your personal circumstances, and what you do it.
It takes time, dedication, research, and competency to not only understand ODSP policies, but also apply them to your circumstances. It also helps to have a network of lawyers and other professionals to call upon. Most people do not have the time or capacity to really understand ODSP policies. And yet, this is the social safety net for people with disabilities who are also dealing with financial hardship.
It is a problem if you can’t understand the policies, especially the exceptions to the rules that would help you improve your financial standing, because they are overly complicated. It is a problem if your ODSP worker doesn’t understand the rules sufficiently and misinforms you. It is a problem if you need to hire a lawyer to explain the basic rules related to your situation, because even the basic rules are confusing.
ODSP is better than it was a month ago. But how much will these improvements truly benefit people on ODSP when it isn’t any easier to understand?
* Ontario Social Assistance Monthly Statistical Report, July 2017. http://www.mcss.gov.on.ca/documents/en/mcss/social/reports/ODSP_EN_2017-07.pdf