I got a reply from my insurance regarding net vs gross, and it is murky


I recently posted to this forum two extended posts regarding my newly received CPP benefit.
( I have been on LTD from work for a long time, and upon being approved by CPP, I was concerned about the repayment of the lump sum to the insurance company and about the calculation of the CPP offset from the LTD benefit going forward. )

After reading the replies to my 2 posts, and trying to inform self based on logic and the feedback from the posts, I sent my insurance case manager an email stating my beliefs and asking for information

The reply I got was murky. I definitely got the impression that I was not taken too seriously. I believe that this reply does not lead me to achieve any resolution and I would value any feedback from the forum.

Before I proceed to present the relevant paragraphs, I should say that my intent is to achieve resolution, but without engaging in debates about the contract with my case manager, since I value my POM. In particular, I should mention that I work (worked) for a large company, and that my intent is to copy / cc my HR department and my case manage’s superior on
my next email.

First I will quote part of my email and then present the relevant part of the reply. Then I will try to comment and ask questions.

I value the replies since I wish to have a sanity check and a feedback that otherwise would be hard to have.

I emailed:

I received the attached letter from Service Canada regarding the “total monthly amount” and “retroactive amount”.
(Please note that the total monthly amount is the gross value, since I have not opted for income tax deduction from the payment.)
I will now present my expectations regarding the LTD benefit offset calculation and lump sum calculation. In particular first I will calculate the value of the gross offset (1), then I will present my expectation regarding the offset going forward (2), then I will present my expectation regarding the lump sum calculation (3).

(2) Calculation of the offset going forward.

The contract is silent whether the offset will be gross or net, and there is an obligation to clearly explain in the contract any situation that would potentially reduce the amount one contracted for. In addition to there being no mention in the contract of a gross deduction from the monthly benefit, there is an implication that the amount will not be gross. This implication,
this expectation, is achieved through a specific choice of words, and a specific omission of words.

In particular, I quote: “After disability benefits are payable for 24 months, the monthly benefit payable is the GROSS Disability Benefit reduced by Other Income Benefits, the calculation for Optimum Ability and 50% of Disability Earnings.” (the upper-casing is mine, for emphasis)

Since there is no explicit gross “Other Income Benefits” deduction mentioned in the contract, and since there is an implication that the amount reduced will not be the gross (due to the inclusion of gross in “GROSS Disability Benefits”), my expectation is that the calculation should be made in the following manner:
Monthly Benefit Payable = GROSS Disability Benefit reduced by (NON GROSS) NET Other Income Benefits (where Other Income Benefits is the November 2016 amount.)

(3) Expectations regarding the lump sum calculation

There are 17 months covered by the CPP retroactive payment, and, since according to the contract, no annual increases will be considered after the initial CPP-D benefit, it follows that the gross lump sum amount is 12 140 (17 x 714.14). Since there is no mention in the contract of the insurer being allowed to claim a gross lump sum, my expectation is that the lump sum to
be repaid is the NET of 12 140. (This logic is consistent with the “Calculation of the offset going forward” at step (2) above, where the offset to be deducted on an ongoing basis is the net one.)

Concluding, I desire that all three of the above expectations be forwarded, in the exact manner I conveyed them, to the appropriate decision makers / individuals performing the lump sum / monthly benefit calculations.

In case they are considering calculating the CPP-D offsets and lump sum amounts as gross deduction, I desire that I be pointed to where in the contract it is so specified.

In response my case manager said:

I see below that you are referencing the, Optimum Ability Calculation. Optimum Ability has nothing to do with your CPP-D offset/overpayment. This is a calculation that is used when a person is working part-time and we are calculating a partial disability benefit.
Also, your monthly LTD benefit is calculated as such: Gross disability benefit reduced by Gross other income benefits. This is how offsets/overpayments are always calculated here. I believe this may be a moot point in your case as your gross/net for your CPP-D are exactly the same since you are not having taxes withheld. We do not offset the NET on any other income benefits as we would have no way to track the NET amount that you are receiving from month to month or year to


I will try to be charitable wrt the first paragraph, since I can assume that she just was not paying attention to my FULL QUOTATION. But if that is the case, that she was just not paying attention, then she does not know the contract, having not recognized the quotation.

My issues are with the second paragraph. Where do I start? The person is paraphrasing my quote from the contract, stripping it bare, and adding GROSS in front of Other income. Then says they always do it like that. That’s not an answer to my questions, but a statement.

However, it is the last two lines of that last paragraph that kind of provide an answer, but based on some kind of twisted, murky logic, and I believe it is with these two lines that I need help:
"I believe this may be a moot point in your case as your gross/net for your CPP-D are exactly the same since you are not having taxes withheld. We do not offset the NET on any other income benefits as we would have no way to track the NET amount that you are receiving from month to month or year to year. "

I will now just list a series of three question and considerations FOCUSED ON THOSE LAST TWO LINES, and I would like your help for any constructive criticism that I can present against their logic.

Points 1 and 2 regard the first line, ie the one that starts with “moot point”.
Point 3 regards the second line, the one that says “no way of tracking”

->Wrt first line, the one that starts with the “moot point” at first I thought the reply was just born out of ignorance of Canadian taxes, (the respondent being American). However, I have been having an insight. I may be wrong, but maybe I am onto something.

This insight is based on a comment a lawyer I saw made. She was not really helpful, but she said that one cannot just argue CONTRA PROFERENTEM based on a single instance, but need look at the usage of the words in context.

In other words, I may point how there is no gross in front of Other Income Benefits ( as i did already in the quote I made in my email,) however, one need look at the WHOLE CONTRACT, and see the usage of the Other Income Benefits in CONTEXT.

During my meeting with the lawyer I showed her the definition of Other Income Benefits:
Other Income Benefits include:

  1. ANY amounts received (or assumed to be received*) by you under:
  • the Canada and Quebec Pension Plans;


She said, that by seeing how the Other Oncome benefits is defined, (ie as “any amount”), a judge may well decide that it means GROSS.

This brings me to the insight I had: CAN IT BE THAT I ONLY NEED HAVE MY TAXES WITHELD AT SOURCE BY CPP? In other words, can it be that at that point, once I only receive the net from CPP, I FIT THE DEFINITION OF ANY AMOUNT RECEIVED, and my insurance company will have to offset only the net amount?

->In regard to the above clue, should I ask CPP to apply the deduction? Will they apply the full amount of tax withdrawal?
(When I talked to them a while back, they asked me if they should estimate the amount of tax to withdraw, but at that that point I had not made up my mind whether to apply the tax withdrawal)
If I get the deduction applied, will I get back whatever is covered by non refundable credits?

->My thinking wrt the last line is as below:
The point of not being able to calculate the taxes is not really relevant. It would be the tax bracket of the appropriate year, applied to the initial CPP amount at pension start. In other words, in BC it would be 15% federal and 5.06% provincial for 2017, and one can always apply the previous years bracket, then reconcile the differences next year, (once I show them my
That would be part of their jobs, just as calculating the overpayments.

In essence, I seek advice regarding my next step, but what I really value and need is closure, especially if I can achieve it without getting into debates with people experienced at debates. That is why, I still intend one more reply, however, I will cc my HR, and the case managers superior.

So, I am looking for feedback for a constructive way of framing, where I first dispel the above two lines of faulty logic from the case manager, and then I ask once more for a fully fledged explanation on how, according to the contract they should be deducting gross.

In other words, I value more: closure and POM than $ achieved through fighting and stress.

My thanks, Alex

The insurance company has said they will offset the gross amount of CPP-D.

If you disagree then get a lawyer.

Calculate the amount that you expect to be taxed and then see if it is really worth getting a lawyer. I suspect that it may be more worthwhile to take it to small claims for the amount and then if successful you have the answer for any other future deductions.
You balance out what the potential costs are if you lose. I know in Manitoba it is -50 to 100 to file the claim and costs if one was to lose is 100.00 to the other side. We can also claim up to 2000 for general damage. To appeal is only 50.00. This is in small claims court.

That is how I would proceed. I am not sure if you are married but in our case my spouse getting the CPP-D and retro cost us as a couple a loss of aprox 7400.00 in tax return. I am no longer able to claim him and had to give him all my deductions so that he would only have to pay 374.00.

This is an issue in his lawsuit–but more so as the Insurer misrepresented that he had to apply for CPP-D when he did not. The insurer interfered with him getting the complete master policy.

Good luck!

You could offer to send them a bill after you file!
I know my spouses policy says he receives 66.6% of his income up to a maximum gross non taxable amount of 1980 , which is much less than 66.6% of his income. So we also believe that the first 1980 has to be calculated without tax deductions. Not sure if you have similar wording.