..:: Ontario AIDS Network ::..

Whether you have health problems or not, it is always a good idea to create a 'master plan' of how you will live when you are no longer able to work. When you are living with HIV, not only do you need money for basic living expenses but you must also consider how your medication and treatment costs will be covered. It would be useful to think of areas in your current budget that can be eliminated or reduced should you have to leave work. What is the minimum amount of money you could live on? How will you financially survive if you have to leave work? The sooner you start your master plan, the better it is to build up resources. Your plan can include the support of family and friends and community organizations but will rely mainly on the financial resources or programs available to you. These resources or programs can be broken down into 4 categories:

Your master plan may include programs from all of the categories or a combination of the programs accessed at different times.

There are many ways to invest your personal money, at different rates of return for different periods of time. Some are locked in for a specific period, while others can be cashed in at any time. It is most important to review all the terms and conditions of each of your assets to determine what freedoms or restrictions you have. Generally speaking the higher the return, the higher the investment risk. The Stock Market is an aggressive, sophisticated form of investment with high risk and sometimes-high returns. You would be advised to talk with an Investment Planner or Stockbroker if this is an avenue you wished to explore. We will touch on a few of the more common ways to invest. It would still be in your best interest to talk with a Financial Planner or your Bank Manager. They will look at what assets you have, what you are hoping to achieve financially and then explain how to do it at the level of risk you are comfortable with.

Registered Savings Plan: RSP's are the most familiar tax shelters and provide many different investment options (Mutual Funds, Equity, Balance Funds to name only a few). There are high risk (high interest) and low risk (low interest) investment options to choose from locally or internationally. When you cash in an RSP, a minimum of 10% will be withheld for tax purposes. The remainder will be considered income and you will pay income tax on that amount. There is usually no fee or penalty for cashing it in.

Guaranteed Investment Certificate: GIC's are term deposits with a guaranteed rate of interest for the extent of the term, negotiated when you make the term deposit. The minimum term for $5,000 or more is 30 days, whereas less than $5,000 is 1 year. You can have a redeemable or non-redeemable certificate. The redeemable certificate has a lower rate of interest but you can cash it in at any time and receive the pro-rated interest amount for the time it has been deposited. The non-redeemable certificate has a higher interest rate (usually 25 points higher) but cannot be cashed in until the term is due. Once the term is due you can cash in the certificate or 'roll it over', to a new term deposit with a new interest rate (negotiated at the current market rate). The interest received is considered income and is taxable. There is no penalty or fee for cashing in a redeemable GIC.

Ontario & Canada Savings Bonds: Canada Savings Bonds can be purchased year round, while Ontario Savings Bonds are available only twice a year. They both have set interest rates, which are usually a little higher than GIC's. The average term is about 12 years. They can be cashed in at any time and you would receive the pro-rated interest amount. The interest received is considered income and is taxable. There is no penalty or fee for cashing in a savings bond.

Life Insurance Policies: Life insurance is usually purchased with the idea of providing for your loved ones after you have passed on. If you have a policy there may be options available to you to convert it to cash when you are diagnosed as terminally ill or have a shortened life expectancy.

Approach your insurance company and ask if your policy has a cash surrender value. This means that the company would give you a small percentage of the value of the policy and then cancel it.
Another approach is to ask your insurance company if they would provide a living benefit. This means they would lend you a portion of the final value of the policy.
As well, you may want to approach a viatical company and negotiate a viatical settlement. This means selling your policy to them at a percentage of the final value. You get your money now, when you need it and they become your beneficiary and get the full value of the policy once you pass on.

There may be some penalties associated with any of these options. Your beneficiary would lose the full value of the policy. However, you would have some money to help out if you were no longer able to work. Any money you received is considered income and is taxable. To learn more about these options, see our section on 'Utilizing Personal Assets'.

Reverse Mortgage: If you own a home you may be able to negotiate what is called a reverse mortgage. This means the bank may give you a cash advance, of a portion of the value of your home. To receive this, you would negotiate a pre-arranged agreement for the sale of your home once you pass on. The penalty here again, is that you would not receive the full value of your home. This is a complicated process, so be sure to consult with a financial planner, real estate agent and a lawyer. You could explore the option of taking a second mortgage instead or you could sell your home outright and find an affordable place to live. Any money you receive is considered income and is taxable.

Long-term Disability Waiver Clause: Many times when we make large purchases or apply for credit cards we also pay premiums for wage loss protection. This means if you were no longer able to work, the insurance would cover the payments, allowing you to keep the asset whether it is a home, an appliance, an automobile, or others. This protection would also cover the outstanding balance of your credit cards. It would be wise to review any of your policies to see if this protection is part of the package and become familiar with the conditions that apply.

Other Assets: Throughout our lives we may acquire items such as art, antiques, jewellery or other collectibles that increase in value over time. You may want to prepare an inventory of items that, during difficult times, you could convert to cash. Always seek out an expert to ensure you are getting the best price for the item.

Short-term Disability: Some employers, but not all, offer STD benefits. These benefits can vary from one organization to another since they have been negotiated directly between your employer and an insurance company. If your employer has such a benefit it would be administered through the Human Resource Department, ask them for more details. Most STD benefits cover up to 26 weeks away from work and cover from 50% to 100% of your pay. The benefit you receive is considered income and is taxable. Your asset level does not affect this program.

Long-term Disability: Some employers, but not all, offer LTD benefits. These benefits can vary from one organization to another since they have been negotiated directly between your employer and an insurance company. If your employer has such a benefit it would be administered through the Human Resource Department, ask them for more details. Most LTD benefits start after 26 to 52 weeks from leaving work and cover from 50% to 90% of your pay. Some LTD benefits may include medication, dental and optical coverage also (some have to pay a monthly premium to maintain these benefits). If you paid a tax on LTD when working, your benefit is tax-free. If you didn't pay a tax, your benefit will be taxable. Other sources of income such as CPP disability will be deducted from your benefit dollar for dollar. Your asset level does not affect this program.

Employment Insurance Benefits: EI is a Federal Program that is administered through Human Resources Development Canada. For most people, EI deductions are automatically taken from each pay cheque, therefore you have contributed to the program. If an individual is self-employed they have the choice of contributing to EI or not. Regular EI Benefits are for people who have lost their job through no fault of their own, cannot find work, and have made contributions. You will receive 55% of your regular earnings (to a maximum) but must be ready, willing and able to work. If you quit your job or were fired you will not be eligible, unless you can prove extenuating circumstances. If you have to leave work because of health reasons you can apply for Sickness Benefits. You will receive 55% of your regular earnings (to a maximum) up to 15 weeks. You will start to receive benefits approximately 4 weeks after you apply. The benefit you receive is considered income and is taxable. Your asset level does not affect this program.

For more information on Employment Insurance Benefits, see our EI Benefits section

Canada Pension Plan: CPP and CPP Disability Income Programs are Federal Programs administered through Human Resources Development Canada. For most people CPP deductions are automatically deducted by your employer, therefore you have contributed to the program. If an individual is self-employed they have a choice of contributing to CPP or not. If you have contributed to CPP and/or the Quebec Pension Plan, your contributions under both plans will be combined to determine your entitlement. CPP is normally a retirement pension that you are eligible for once you reach the age of 65. However, if you are between the ages of 18 and 65; have worked and made enough contributions to the program (4 out of the last 6 years) and have a physical or mental impairment that is both severe and prolonged you may be eligible for CPP disability benefits. Your entitlement is determined by how long and how much you have contributed to the program. The maximum amount for 2002 was $956. This is taxable income. If you want to know what your entitlement may be, you can call 1-800-277-9914 (English) or 1-800-277-9915 (French) and ask for a Statement of Contributions. Once you have applied it can take 4 to 6 months before you start to receive benefits, however they will pay retroactive to the 5th month after you left work because of your health. The benefit you receive is considered income and is taxable. Your asset level does not affect this program.

Your children could be eligible for a child's benefit if they are considered dependent. The average benefit in 2002 was $184 per child. CPP provides Return to Work and Vocational Rehabilitation benefits if your health improves and you want to re-enter the workforce. CPP will pay a lump sum Survivor Benefit to the deceased person's estate. The amount is six times the monthly retirement entitlement, to a maximum of $2500. There is also Survivor Pensions payable to the legal spouse, common-law partner or same-sex partner.

For more information about Canada Pension Plan, see our section on CPP Disability.

Ontario Works: OW is a Municipal Program administered through the Ministry of Community, Family and Children's Services. This benefit is for people in immediate financial need who have no other immediate source of income and no assets. You must be over the age of 18, have legal status in Canada, be a resident of Ontario and be able to provide all vital applicant information to verify your immediate and ongoing eligibility. Your basic monthly entitlement is determined by the size of your family and your housing costs. A single person could receive $195 living allowance and up to $325 for rent (maximum $520) plus an Ontario Drug Benefits Card, which covers most prescription medications. Once you are determined eligible, the first payment is usually received within 72 hours. This can be affected by when you received and how much your last source of income was. OW benefits are not taxable. If you have any liquid assets beyond a specific maximum amount, you can be refused OW. The exception to this rule is if you are applying to the Ontario Disability Support Program at the same time. Then a single person is allowed up to $5,000 in liquid assets and still is eligible for OW.

Ontario Disability Support Program: ODSP is a Provincial Program administered through the Ministry of Community, Family and Children's Services. This benefit is for people who have a substantial physical or mental impairment that is expected to last one year or more and your health problem substantially limits your ability to work, look after yourself, or carry out daily activities at home and in the community, and you have financial need. You must be over the age of 18 but under 65, have legal status in Canada, be a resident of Ontario and be able to provide all the applicant information necessary to verify your immediate and ongoing eligibility. Your basic monthly entitlement is determined by the size of your family and your housing costs. Other family member's income will affect your entitlement. A single person could receive $516 living allowance and up to $414 for rent (maximum $930) plus an Ontario Drug Benefits Card (which covers most prescription medications) and a Dental Card (basic dental coverage). Some other benefits of the program include help with optical, transportation, and special diet costs. It can take about 6 months to be determined eligible for this benefit and receive your first payment. ODSP benefits are not taxable. If you have liquid assets over $5,000 you can be refused ODSP. Any other income you receive can be deducted from your monthly entitlement.

Now that you know the various options, you need to think about creating a map. What are your various options if you have to leave work? What exactly are you entitled to?

Here are some suggestions to building your own map, or putting together the pieces for your own personal financial puzzle:

Do I qualify for "asset-tested" programs (OW, ODSP) and how much do they pay?
Do I qualify for "contribution tested" programs (EIB, CPP) and how much do they pay? Complete a CPP 'Statement of Contributions' form to learn of your entitlement
What are all my assets (liquid assets, investments, possessions, property, life insurance policy)?
What are my liabilities (debts, mortgages, credit cards, loans, line of credit)?
Do I have employer-based programs? How much do they pay? What are the qualifying time periods? Is the income taxable? Are there return-to-work provisions in my policy?
Create a time line and "to do" list from the moment you leave work. What programs do I need to apply to and when. What will my income be for at least the next 12 months?
Do I meet the various definitions of disability? Have I talked to my physician to ensure he/she supports my decision to leave work, and has enough medical information to document my medical case?
Have as much money as possible for a rainy day. Save at least enough for one month.
Keep a journal to document both your health and practical information (date you applied for various government programs, medical tests, who and when you spoke to a particular person, and future things you need to do). It is important to keep track of your health - tests, how you feel, medications, side effects, complementary therapies, doctors seen, specialists, etc.)
Use available resources - AIDS organizations, community programs, Social Workers, MPs, MPPs, City Councillors. Remember to ask lots of questions as information is power and you need to know everything in order to make informed choices.
Consider reviewing materials on Financial Planning or meet with a Financial Planner.
Create a budget. For at least one month, document everything you spend your money on, even the littlest of things. This will help you to know exactly where you spend your money, and to help guide you if you must reduce your spending.
Consider having a Will and Powers of Attorney.