Understanding the June 1st Accident Benefit Changes

May 18, 2016

On June 1, 2016 significant car insurance changes will come into effect in Ontario. These changes mean major reductions to the Accident Benefits available to you and your family in the case of a serious accident. On this page you will find key information, including articles and videos, to help you better understand these changes and what they could mean to you and your family.

THE CHANGES EXPLAINED

Join Dale Orlando, Darcy Merkur and Ryan Murray as they discuss the Accident Benefit changes and what they mean to you.

ACCIDENT BENEFITS REDUCTIONS: HOW TO PROTECT YOUR FAMILY

By: Troy Lehman

Our accident benefits system is intended to provide the victims of motor vehicle accidents with the care and treatment they need and compensation for lost income.   The goal of the system should be to meet the needs of seriously injured people to allow them to live with dignity.

Unfortunately, following extensive lobbying by the insurance industry, Ontario’s government has repeatedly reduced available accident benefits.    The most recent and most severe reductions to the system are effective June 1, 2016.    These changes will leave the most seriously injured people in our society without the care that they need to live with dignity.

The only way to protect yourself and your family from these devastating changes is to purchase optional accident benefits.   The government and the insurance industry are trumpeting the changes as “good news for consumers” because “consumers will have more choice.”   However, most people do not realize the importance of accident benefits and will go with the cheapest premium available. They only realize the mistake that they have made when they or a loved one is seriously injured.   By that point in time it is too late.

BENEFITS FOR TREATMENT OF CATASTROPHIC INJURIES CUT IN HALF

The government has slashed benefits for people with the most serious injuries.   People suffering catastrophic injuries before June 1, 2016 are entitled to a total of $2 million for medical-rehabilitation and attendant care benefits ($1 million for each category).     For accidents happening on and after June 1, 2016, this has been cut in half.   Catastrophically injured people will only have $1 million available for both medical-rehabilitation benefits and attendant care benefits.

This change is aimed at the most seriously injured people in our society.   The catastrophic injury category is limited to people with spinal cord injuries, severe traumatic brain injuries, amputations and similarly serious injuries. Under the pre-June 1, 2016 system only 1% of the 65,000 Ontarians injured in car accidents each year qualified for the catastrophic injury category.

While $1 million may seem like a lot of money it is utterly inadequate to pay for the care costs of a catastrophically injured person.   The annual care costs for a 20 year-old quadriplegic can easily exceed $200,000.    Under the new system, the money for treatment and care for the 20 year-old quadriplegic will be gone long before he or she turns 30.

BENEFITS FOR TREATMENT OF OTHER SERIOUS INJURIES REDUCED

Just because an injury does not qualify as being labelled “catastrophic” does not mean it is not devastating.   Non-catastrophic injuries can leave people incapable of working and requiring extensive treatment and care.

As the chart below demonstrates, the government has repeatedly cut medical-rehabilitation and attendant care benefits for seriously but not catastrophically injured accident victims:

As of June 1, 2016 the combined medical-rehabilitation and attendant care benefits for seriously but non-catastrophically injured people will be limited to only $65,000.   It is also limited to only 5 years (down from the previous 10), except for children, whose benefits will expire once they reach $65,000 in spending or age 28, whichever comes first.

A non-catastrophic injury might involve multiple orthopedic injuries and a traumatic brain injury.   With this combination of injuries $65,000 is entirely inadequate to meet care needs.

NON-EARNER BENEFITS REDUCED

People who are working at the time of an accident are entitled to an income replacement benefit if their injuries prevent them from working.   Absent optional benefits, income replacement benefits are capped at $400.   This number has not risen in over 20 years despite rising costs of living.

Under the pre-June 2016 system people who were not working at the time of an accident and who suffered injuries so severe that they had “a complete inability to carry on a normal life” qualified for a non-earner benefit of $185 per week.   For students, the weekly amount increased to $320 per week at the two year mark.   So long as the person continued to be unable to carry on a normal life, the benefit remained payable. The purpose of this benefit was to provide a modest weekly amount to very seriously injured people who were not working at the time of the accident and who would likely remain unable to work.

As of June 1, 2016 the benefit is limited to $185 and limited to 2 years.   Under the previous system a 16 year old girl suffering a spinal cord injury leaving her with a complete inability to carry on a normal life would receive almost $800,000 in non-earner benefits to age 65, to help compensate for a life of unemployment.    This same girl injured after June 1, 2016 will receive less than $20,000 for this benefit.

CATASTROPHIC DEFINITION CHANGED

The government not only slashed the benefits available to catastrophically injured people but also changed the definition of catastrophic impairment to make it much more difficult to qualify for this level of benefits.

Before June 1, 2016 a person suffering from paraplegia or quadriplegia was accepted as being catastrophically impaired regardless of whether the injury was complete or incomplete.   As of June 1, 2016 many people suffering from incomplete paraplegia or quadriplegia will no longer be eligible for catastrophic level benefits.

The test for catastrophic impairment resulting from a brain injury has been changed in a way that will leave many people suffering from significant traumatic brain injuries in the non-catastrophic category.    Many people who would have qualified as having a catastrophic level brain injury under the old system will now be limited to only $65,000 for their medical, rehabilitation and attendant care costs.

The situation is even worse when it comes to people suffering from a combination of physical and psychological injuries.    After June 1, 2016 it will be far more difficult to meet the test for catastrophic impairment due to the combined impact of multiple injuries.    This is because under the new definition psychological injuries are underrated.

The changes will also make it much more difficult for people with purely psychological injuries to meet the test of being catastrophic impaired.   After June 1, 2016 even people suffering with profound impairments due to PTSD and depression may not qualify as being catastrophically impaired.

Under the pre-June 2016 system, only 1% of accident victims qualified as being catastrophically impaired.   After June 1, 2016 only a fraction of 1% of accident victims will qualify as being catastrophically impaired. The remainder will only be entitled to $65,000 for all treatment, rehabilitation and attendant care.

OPTIONAL BENEFITS

The only good news with this new system is that it remains possible to purchase optional accident benefits. For a relatively low cost it is possible to protect yourself and your family.   It is possible to purchase optional benefits that will restore the previous $2,000,000 limit for medical-rehabilitation and attendant care benefits for catastrophic injuries. It is possible to purchase optional benefits to increase coverage for non-catastrophic injuries well beyond the $65,000 that otherwise exists.    The income replacement benefit can be increased from $400 to $600, $800 or $1,000.    It is very important to talk to your broker about these optional benefits and how they can protect you and your family in the event of serious injury.

PIA LAW IN THE NEWS

Leonard Kunka discusses the Accident Benefit changes with Libby Znaimer on Zoomer radio.