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 $40,000 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.