The Public Service Management Insurance Plan - Main Plan Booklet

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What is the Public Service Management Insurance Plan?

The Public Service Management Insurance Plan (PSMIP) provides Public Service employees excluded from collective bargaining with group life insurance, accidental death and dismemberment insurance, dependants' insurance, and long-term disability insurance.

Certain lines of insurance under the plan are available to all members while others are restricted to certain senior level employees. This booklet provides general information on the major benefit provisions of the PSMIP that apply to excluded employees. If you are a member of the Executive group or are otherwise entitled to the government-paid insurance benefits provided to such members, please refer to the booklet, The Public Service Management Insurance Plan - Executive booklet.

Industrial Alliance Insurance and Financial Services Inc. is the principal insurer (the Insurer). It evaluates statements of health, approves and denies claims for benefits, receives and invests premiums on behalf of the Plan, monitors the Plan's financial and underwriting experience, reports annually to the Board of Trustees on the status of the Plan's finances, brings matters of concern to the attention of the Trustees and responds to matters raised by the Trustees or the Secretary, as the need arises.

The Board of Trustees, which administers the PSMIP, is composed of senior government officials appointed by the Treasury Board. As policyholder, the Board of Trustees has a continuing responsibility to review the provisions of the Plan and recommend changes as required, to review the financial experience of the Plan periodically to ensure the Plan's solvency, and to consider problems arising from the administration and adjudication of claims. The Trustees provide members with an annual report on the Plan's administration and financial affairs.

Your compensation specialist can provide information on eligibility for membership, application procedures, beginning and cost of coverage, coverage during leaves of absence or other periods without pay, termination or cancellation of coverage, and other provisions of the Plan.

The complete terms and conditions of the Plan are set out in a contract of insurance between the Board of Trustees and the Insurer. IN ANY CASE OF CONFLICT BETWEEN THIS BOOKLET AND THE INSURANCE CONTRACT, THE TERMS OF THE CONTRACT SHALL PREVAIL.

Long-Term Disability Insurance (LTD)

What is LTD insurance?

The LTD component of the PSMIP is an important part of the income-protection arrangements for Public Service employees who are excluded from the collective bargaining process. It provides a monthly income benefit for employees who are unable to work for a lengthy period of time because of a totally disabling illness or injury. The employer shares the premium for this insurance.

Am I eligible for benefits?

While you are receiving benefits, you must be under the active care of a physician who is a registered specialist in the field of medicine related to your disabling condition. You must also be receiving medical treatment or participating in a program of rehabilitation approved by the Insurer.

You are not eligible for benefits:

• if your disability is the result of a mental or physical impairment that existed before you became insured. This exclusion is lifted if you complete a continuous period of 90 days of active employment while insured for LTD, or after you have been insured for LTD for two years, whichever comes first;
• if your disability results from, or is related to, a normal pregnancy (without severe complications), commission of a felony, self-inflicted injury, attempted suicide, or a mental or physical impairment suffered while on active duty with any armed force; or
• if your disability results from, or is related to, an act of declared or undeclared war. However, this exclusion does not apply to persons who become totally disabled in this way while outside Canada at the direction of the employer.

You should always consult with your compensation specialist regardless of how you become totally disabled.

When will my benefits start?

Your benefits begin after an 'elimination period' of 13 continuous weeks of disability or after the expiry of your paid sick leave, whichever comes later.

In most cases, the elimination period will consist of a complete absence from work for a minimum period of 13 weeks. In certain circumstances, however, periods of absence due to illness which occurred within the year immediately prior to the date total disability is considered to have begun can be used in calculating the elimination period. The first such prior period of absence must have been for a continuous period of one month. These are special circumstances which must be referred to the Insurer for a decision on an individual basis.

What happens if I retire before using all my sick leave credits?

If you retire voluntarily before exhausting your accumulated sick leave credits, your unused sick leave credits will still be counted in order to determine the date your LTD benefits begin.

How are my benefits calculated?

If you become totally disabled, your gross annual benefit will be 70 per cent of your insured annual salary at the end of your elimination period. The definition of salary is the same as that used for the Supplementary Death Benefit under the Public Service Superannuation Act. Your insured annual salary for LTD purposes is equal to your annual salary at the end of the elimination period if it is a multiple of $250, or the next multiple of $250 above that amount. A member working on a part-time basis will have his or her insured annual salary based on assigned hours of work. Payments are made monthly. Other income, whether it be income received as a result of being in receipt of benefits under the PSSA or disability income under the CPP or QPP, will be deducted as an 'offset' from your LTD benefits.

Your net benefit (i.e. the amount payable to you after other income has been deducted as an offset), will be subject to an annual increase related to increases in the cost of living, up to a maximum of three per cent.

Any retroactive salary increase approved after the date your LTD benefits become payable affects your insured salary and benefit level only when the effective date of the increase precedes the date your LTD benefits began. Therefore, a retroactive salary increase approved in April that took effect from February 10 would only affect your LTD benefits if they began on February 11 or later.

Example of benefit calculation

If the cost of living rose by two per cent the year following the commencement of your benefits, your net monthly LTD benefit of $967 would be increased by two per cent to $986.34 on the January 1 following the effective starting date of your benefits.

At the same time, your PSSA and CPP or QPP benefits would also be increased in relation to rises in the cost of living. You would receive the full increases under those plans and those increases would not be deducted from your LTD benefit.

On January 1 of each subsequent year, your LTD benefit would be further increased to reflect increases in the cost of living, up to a maximum of three per cent annually.

Offsets: what types of income will be deducted from my LTD benefits?

The following examples illustrate the most common types of income that would be deducted from your LTD benefits:

• benefits received under the Public Service Superannuation Act (PSSA)
• disability benefits under the Canada Pension Plan (CPP) or the Quebec Pension Plan (QPP), excluding benefits payable to, or on behalf of, your dependants as a result of your disability;
• benefits under the Government Employees Compensation Act, or similar benefits under a plan of the federal government or any other government;
• disability benefits paid or available under another group insurance plan, or under a policy issued to you as a result of your membership in a Public Service employee union or association;
• disability insurance benefits under the legislation of any government, such as income replacement benefits under a no-fault automobile insurance plan; and
• loss-of-income benefits received under a third-party damage award.

The following are examples of income that would not be deducted from your LTD benefits:

• increases related to the cost of living under the PSSA, CPP, or QPP;
• return of superannuation contributions where no pension entitlement is available;
• benefits received under a purely private and personal insurance policy, or under a policy issued as a result of membership in a professional association not restricted to the Public Service; and
• severance pay.

If you do not apply for benefits under the CPP or QPP and if, in the opinion of the Insurer, the medical evidence indicates that you would be eligible for CPP or QPP benefits, the Insurer has the right to reduce your basic monthly LTD benefit by the estimated amount of your CPP or QPP entitlement.

If you subsequently applied for CPP or QPP benefits and were declared ineligible, the reduction would cease, and the amounts previously withheld would be paid to you. You should note, however, that if the Insurer thinks you have grounds for a successful appeal, the reduction may be continued until the conclusion of the appeal process.

The treatment of benefits payable under the PSSA as 'offsets' under the LTD component of the PSMIP is illustrated on the chart attached as an Appendix to this booklet.

If you cease to be employed in the Public Service, please consult your compensation specialist prior to opting for a benefit under the PSSA. Your compensation specialist can advise you how your choice of PSSA benefit will affect your monthly LTD benefit.

What will happen to my benefits if I earn money in a rehabilitation program?

While receiving benefits, you may participate in a rehabilitation program that the Insurer has approved in writing. This could be a program of vocational training or a period of work for the purpose of rehabilitation. Depending on the circumstances, you may be able to remain in such a program for up to 24 months and still receive some benefits. Normally, the amount of your rehabilitation earnings will not be deducted from your monthly benefits unless your total income while working, together with any benefits you are receiving under the Plan, exceeds the current salary of your former position.

What if I earn money from other employment?

Please note that, if you earn money from any employment that the Insurer does not consider rehabilitative, your benefits will be reduced by the total amount of those earnings.

What if I recover but become totally disabled again?

If you were in receipt of disability benefits, recovered from your illness, and then become totally disabled again, the elimination period will be waived if you were back at work for no more than:

• 1 month, if the two periods of disability are due to unrelated causes;
• 6 months, if the two periods of disability are due to related causes; and
• 12 months, if the two periods of disability are due to the same cause.

What happens if the group policy terminates?

If the group policy were to terminate for any reason after your disability began, the Insurer will continue to pay any benefits for which you may be eligible, as long as you remain totally disabled during a continuous period.

Are my LTD benefits subject to income tax?

If you qualify for benefits under the Plan, the amount you receive will be subject to income tax. After the end of each year, the Insurer will send you a form indicating the total amount of benefits paid to you. The Insurer does not automatically deduct taxes at source, except in the case of provincial taxes payable by Quebec residents. However, if you wish, the Insurer will deduct taxes at source based on information you provide.

The monthly premiums you pay while you are employed are not tax deductible from earnings. If you become eligible for benefits, however, the total amount of the premiums you have paid from the time you became a member of the Plan may be deducted for tax purposes from the amount of your disability income from the Plan. If the total amount of premiums you have paid exceeds the benefits you receive during the first taxation year in which your benefits begin, you can carry over the excess amount to the following year. You should consult your District Taxation Office for details if you become totally disabled. Your compensation specialist can help you determine the amount of premiums you have paid.

How do I submit a claim for LTD benefits?

If you become totally disabled and you think your disability will last long enough for you to qualify for benefits, you should notify your compensation specialist as soon as possible. Your compensation specialist will provide you with a claim form and a form for your doctor to complete.

You and your doctor must complete these statements as clearly and completely as possible. Industrial Alliance adjudicates benefit claims using the medical evidence provided on the claimant's condition. The medical information provided must be complete, and the findings must be substantiated to the fullest extent possible by test results and clinical findings. If the information is not sufficient to establish that you are totally disabled, the insurer may arrange for you to be assessed by an independent medical specialist.

Accordingly, you should ask your doctor to provide a full, well-documented report that clearly details the medical evidence supporting his or her diagnosis and prognosis. If more than one doctor is involved in the assessment or treatment of your disabling condition, you should ask them all to supply the Insurer with detailed medical reports. The onus is on you to provide the Insurer with sufficient medical proof of total disability. Please note that any omissions or unclear statements could result in a delay in settling your claim.

It is your responsibility to ensure that your doctor completes the medical report and that the report reaches Industrial Alliance without delay. All of this should be done two months prior to the end of the elimination period.

The Insurer has the right to request additional medical information from your doctor, or to arrange for your examination by independent medical specialists as often as may be reasonably required. Independent medical consultation allows the Insurer to assess or monitor a disability to ensure that benefits are not paid to persons who are not eligible or who have recovered to the point where they no longer qualify.

What Other Insurance is Available to Me?

The PSMIP provides Public Service employees who are excluded from the collective bargaining process, or their families, with benefits in the event of accident or death. The Plan offers four types of optional insurance, which you may carry entirely at your own expense.

In order to be covered for optional insurance, you must complete an application form. You can apply for coverage under:

• basic life insurance - a lump-sum benefit roughly equal to your annual salary, payable to your beneficiary in the event of your death from any cause;
• supplementary life insurance - an additional layer of insurance identical to that provided by basic life insurance;
• accidental death and dismemberment (AD&D) insurance - a lump-sum benefit payable to your beneficiary if you are killed in an accident (on or off the job), or to you directly, if you are maimed in an accident; and
• dependants' insurance - a lump-sum benefit to you in the event of the death or dismemberment of one or more of your dependants.

Applications for basic life and dependants' insurance made more than two months after you or your dependants become eligible to join the plan, must be accompanied by evidence of insurability satisfactory to the Insurer. For example, a member, who enters into a relationship that satisfies the definition of spouse, and who does not apply for dependants' insurance within two months of having satisfied the requirements of the definition will have to provide evidence of the spouse's insurability in a form satisfactory to the Insurer when submitting an application.

Please note that applications for supplementary life insurance made at any time must be accompanied by evidence of insurability satisfactory to the Insurer.

Life insurance benefits payable under the Plan are in addition to any Supplementary Death Benefit payable under the Public Service Superannuation Act (PSSA).

Basic Life Insurance

How is basic life insurance calculated?

Your basic life insurance is based on your salary adjusted to the nearest $1,000 (for example, all salaries in the range of $47,500.01 to $48,500 would be regarded as $48,000). This amount (i.e. $48,000) represents an adjusted salary. The definition of salary is the same as that used for the Supplementary Death Benefit under the PSSA. If you are a part-time employee, your annual salary for the purposes of insurance is determined by reducing the full-time salary for your occupational group and level, in proportion to the relationship of your assigned hours of work to normal full-time hours in that group. That amount is then rounded to the nearest $1,000.

The amount of basic life insurance is one year's adjusted salary (as described above) up to age 65. On the first of the month following your 66th birthday, the basic amount becomes 90 per cent of one year's adjusted salary. It becomes 80 per cent of one year's adjusted salary one year later, and so on. However, coverage will never be less than 10 per cent of one year's adjusted salary while you remain a member of the Plan.

The amount of this insurance will be revised immediately to reflect any changes in salary due to annual increments, economic increases or promotions. In the case of a retroactive salary change, coverage will change on the first of the month following the month in which the change was authorized.

The premium rates for basic life insurance are related to your sex and age. You are responsible for paying the premiums. Your compensation specialist can advise you of the premiums for this insurance.

If you die from any cause while insured under basic life insurance or supplementary life insurance, the amount of life insurance in force at that time will be paid to your beneficiary. You may name your own beneficiary. Your beneficiary may be one or more than one person including a minor. It can also be a charitable organization or your estate. Your beneficiary would receive any life (basic and supplementary) insurance and accidental death benefits payable under the policy. If you wish to change beneficiaries at any time, you may do so (subject to any applicable provincial law) by completing the necessary card, available from your compensation specialist. If you do not name a beneficiary, or if your beneficiary predeceases you, benefits will be paid to your estate.

Supplementary Life Insurance

Is there any additional insurance available?

If you decide to take basic life insurance under the Plan, you may also elect to take supplementary life insurance, subject to the Insurer's approval. The amount of this supplementary life insurance is equal to the amount of basic life insurance, and together these would bring your total protection to twice your adjusted salary. EVIDENCE OF YOUR INSURABILITY SATISFACTORY TO THE INSURER IS NEEDED FOR SUPPLEMENTARY LIFE INSURANCE, NO MATTER WHEN YOU APPLY.

As for basic life insurance, the premium rates for supplementary life insurance are related to your sex and age. Your compensation specialist can advise you of the premiums for this insurance.

Accidental Death and Dismemberment Insurance (AD&D)

How does AD&D insurance work?

The maximum principal sum available through AD&D insurance is $250,000. It is available in units of $25,000. You may select any number of units, up to 10, unless you are a part-time employee, in which case the maximum number of units available to you depends on your assigned hours of work. Your compensation specialist can provide full details. If you sustain any of the following losses solely through external accidental means, the following benefits will be paid in addition to any life insurance or LTD benefits payable under the Plan:

Schedule of amounts of insurance

As an example, if you carried five units of this insurance and were killed in a car accident, your beneficiary would receive $125,000 (the principal sum). If, instead, you lost one foot, you would receive $62,500 (half of the principal sum). Losses must be suffered within 90 days from the date of the accident. The total amount payable for all losses sustained in any one accident is limited to the principal sum.

These benefits are not payable in the event of loss arising from suicide or self-inflicted injury. Benefits are not payable if the loss results from war or any act of war, unless the incident occurs while you are outside Canada at the direction of the employer: on posting, on assignment or in travel status. Benefits are also not payable if the loss was caused by disease, bacterial infection, taking poison, or participating in any riot or civil strife.

Dependants' Insurance

What kind of coverage is available for my dependants?

This coverage consists of life insurance and AD&D insurance for your dependants, who are defined as:

• your spouse (i.e. a person to whom you are legally married), or a person who resides and has resided with you for a period of at least one year and whom you have publicly represented as your spouse;
• all of your unmarried children over the age of 14 days but not yet 21 years old (25 in the case of full-time students enrolled in a school or university) who are not employed on a regular, full-time basis and who are dependent on you for support.

The amounts of insurance are:

• life insurance of $5,000 on the life of your spouse and $2,500 on the life of each child. (On the first of the month following your 65th birthday, all amounts are reduced to $1,250.) If one of your dependants dies from any cause while insured, the amount of life insurance in force on the life of the dependant will be paid to you; and
• AD&D insurance in a principal sum of $5,000 on the life of your spouse and $2,500 on the life of each child. Again, the principal sums are reduced to $1,250 after you reach age 65. The proportions of the principal sum payable for a loss suffered by one of your insured dependants, and all other conditions, are identical to those of the AD&D insurance available to you as described above.

Living Benefit

What is the 'Living Benefit'?

This benefit, which came into effect in February 1994, provides members who have a terminal condition (i.e. are terminally ill) with a portion of the life insurance benefit which would otherwise be payable to their beneficiary on their death.

What is a terminal condition?

A terminal condition means an injury or illness that is expected to result in death within 24 months and from which there is no reasonable prospect of recovery as determined by the Insurer.

How is the living benefit calculated?

The amount payable is the lesser of 50 per cent of thes total amount of insurance on your life and $50,000.

How do I apply for the benefit?

You can request this benefit by writing to the Insurer at the address shown in the last section of this booklet. You will be required to provide all medical information necessary to permit the Insurer to determine whether you are suffering from a terminal condition as defined in the Plan. You and your beneficiary will be required to sign a 'Living Benefit Agreement'.

Are there any other restrictions?

A benefit is not payable if all or a portion of your life insurance is to be paid to your former spouse as part of a divorce agreement.

If I receive a living benefit, what effect will it have on the amount payable on my death?

The amount payable as a living benefit will be deducted from the amount otherwise payable under the Plan to your beneficiary. No interest will be charged.

Termination of Employment

What happens to my insurance coverage when I cease to be employed in the Public Service?

If you leave the Public Service, your life insurance will cease, subject to a 31-day extension period. During that extension period, you will be able to obtain an individual private life insurance policy, including some types of term insurance regularly issued by Industrial Alliance WITHOUT medical examination and regardless of your state of health. Such a policy may be for any amount equal to or less than the amount for which you were last insured under the group policy and will be available at Industrial Alliance's standard rates for your age, based on any special non-medical hazards (e.g. those hazards which an aircraft pilot could experience) to which you may be exposed.

If your own PSMIP basic life insurance ceases, dependants' insurance will also cease. However, the life insurance portion of your dependants' life insurance may also be converted to an individual private policy. AD&D and LTD insurances cannot be converted to private policies, and terminate on the day you leave the
Public Service.

You must make your own arrangements directly with the Insurer to convert your insurance to a private policy.

General Information

What is the 'Waiver of Premium' Benefit?

If you become totally disabled by injury or disease to the point where you qualify for LTD benefits - or where you would qualify if you belonged to the LTD portion of the Plan - your optional and LTD insurance will be continued in force without payment of further premiums from the date your salary ceases until your recovery, death or 65th birthday, whichever comes first. This benefit is subject to proof of total disability. You must provide this proof when you first make the claim, and from time to time as set forth in the policy.

Can I appeal the Insurer's decision?

If you disagree with the Insurer's decision on an insurance application or a claim for benefits, you can appeal to the Insurer. If the Insurer's decision remains unchanged, the Board of Trustees can review your case. The Board has power only to make recommendations to the Insurer and cannot overrule decisions the Insurer has made. If you want the Board of Trustees to review your case, write to:

How can I contact the Insurer?

You, or your beneficiary, can contact Industrial Alliance at:

To speed up the handling of your claim, you should quote the group policy number (G68-1400), the name of the member, the nature of the claim, and the employing department (or agency) of the member or the office held by the member. The claim forms and details of procedure will be sent to you or your beneficiary.

Who can access personal information on my file?

Personal information used to:

1. assess a late application for basic or dependants' life insurance or any application for supplementary life insurance;
2. adjudicate any claim for benefits;
3. administer premiums remitted while on leave without pay; or
4. convert life insurance;

is held on file at Industrial Alliance. Authorized employees or other persons working for or on behalf of Industrial Alliance are allowed access to the information in the file while performing their duties, as outlined above. You have the right to get access to and, if necessary, to correct the information on file. You must make any such request in writing to Industrial Alliance.

Who can I call for more information?

Your compensation specialist, or the Insurance Section of the Superannuation Directorate in Shediac, New Brunswick (1-800-561-7930) can provide you with further information on conditions of membership, application procedures, commencement, continuation, termination or cancellation of coverage and claim procedures.

Appendix

Treatment of Benefits Payable Under the Public Service Superannuation Act (PSSA) as Offsets from Long-Term Disability (LTD) Benefits

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