What is the difference between short-term and long-term disability in Canada?

Short-term disability covers the first weeks of a disability, usually up to around 17 to 26 weeks, with a short waiting period of days. Long-term disability starts after roughly 90–120 days and can continue for years, often to age 65. STD is typically an employer benefit or replaced by EI sickness benefits; LTD is provided through a group plan or bought individually.

Does EI count as short-term disability?

In practice, yes for many people. EI sickness benefits pay 55% of average insurable earnings up to the annual cap for up to 26 weeks, and many employers without a formal STD plan rely on EI to bridge the gap until group LTD begins. Self-employed people can only access it if they opted into EI special benefits and paid premiums.

Can I have both short-term and long-term disability insurance?

Yes, and that is how most well-designed group plans work. STD or EI covers the first few months, and LTD takes over once its waiting period ends. If you buy an individual LTD policy, you choose an elimination period that lines up with whatever short-term coverage you already have.

What happens after 24 months on long-term disability?

Most group LTD plans change the definition of disability at 24 months from own-occupation (unable to do your job) to any-occupation (unable to do any job you are reasonably suited for). The insurer reassesses your claim against the stricter test, and benefits end for people who could do some other work.

Short-Term vs. Long-Term Disability Insurance in Canada

Short-term disability (STD) replaces income for the first weeks of an illness or injury. Long-term disability (LTD) picks up after roughly 90–120 days and can keep paying for years. They aren’t competing products; they’re two halves of one timeline, and the important question is whether you have both halves covered.

Most Canadians with a good employer plan have some version of each. Many people without one have EI sickness benefits standing in for STD and nothing at all for LTD. The self-employed often have neither.

This guide explains how each works, how they hand off, where the gaps appear, and what to check in a group plan. If you’re building coverage from scratch, our guide to disability insurance and to how much disability insurance you need are good companions.

Short-term disability: the first weeks

STD is designed for disabilities that resolve in a few months: surgery and recovery, a serious fracture, a severe infection, a short mental-health leave.

Typical features of employer STD plans:

Waiting period of a few days (often none for an injury, up to a week for illness)
Benefit of roughly 55–100% of salary, depending on the plan and your length of service
Duration of around 17 to 26 weeks, sometimes shorter
Definition is your own job: you can’t do the work you were doing
Often self-insured by the employer and administered as salary continuance or paid sick leave rather than an insurance policy

Not every employer offers STD. Many small and mid-sized businesses skip it and rely on EI.

EI sickness benefits as a stand-in

If you don’t have employer STD, EI sickness benefits are the default. They pay 55% of average insurable earnings, up to the annual cap, for up to 26 weeks. There’s a one-week waiting period, and you need enough insurable hours to qualify.

Two things to know. First, 55% of earnings up to a cap means higher earners see a much smaller share of their income replaced. Second, it’s a federal program with paperwork and processing time, so keep some savings for the first few weeks.

Self-employed Canadians can only claim EI sickness benefits if they’ve opted into EI special benefits and paid premiums for the required period before claiming. Most haven’t.

Long-term disability: months to years

LTD is for the disabilities that do real financial damage: cancer treatment lasting a year, a serious cardiac event, a chronic condition, a mental-health illness that keeps you out for years, a spinal injury.

Typical features:

Elimination (waiting) period of 90–120 days for group plans; individual policies offer 30, 60, 90 or 120 days
Benefit of around 60–70% of income (group plans often use a formula such as a higher percentage on the first tranche of salary and a lower percentage above it, with a monthly cap)
Benefit period of 2 years, 5 years, or to age 65
Definition is usually own-occupation for the first 24 months, then any-occupation, in group plans; individual policies vary and better ones offer own-occupation or regular-occupation throughout
Offsets for other income, most commonly CPP Disability

For the definition question in depth, see own-occupation vs. any-occupation disability insurance.

Comparison table

Feature	Short-term disability	Long-term disability
Purpose	Bridge the first weeks of a disability	Replace income for lasting disabilities
Typical waiting period	0–7 days	90–120 days (group); 30–120 days (individual)
Typical duration	Up to about 17–26 weeks	2 years, 5 years, or to age 65
Typical benefit	55–100% of salary	60–70% of income, often capped
Usually provided by	Employer (or EI sickness benefits)	Group plan or individual policy
Definition of disability	Own job	Own-occ for 24 months, then any-occ (group); varies (individual)
Taxable?	Yes if employer-paid; EI is taxable	Yes if employer pays any premium; tax-free if you pay 100%
Available to self-employed?	Only via EI opt-in	Yes, through an individual policy

How STD and LTD hand off

In a well-designed group plan the timeline looks like this:

Day 1–7: STD waiting period (or the EI one-week wait)
Weeks 1–17 (or 26): STD or EI sickness benefits pay
Day 90–120: LTD elimination period ends; LTD claim should already be filed
Month 4 onward: LTD pays, own-occupation definition
Month 25 onward: definition switches to any-occupation; claim reassessed

The key is that the LTD waiting period is set to match the STD duration, so there’s no gap. A 17-week STD plan (119 days) lines up with a 120-day LTD wait. A 26-week EI benefit more than covers a 90-day LTD wait.

Two practical warnings:

File the LTD claim early. Insurers need medical evidence and time to adjudicate. If you wait until STD runs out to start the LTD paperwork, you can end up with weeks of no income while the claim is assessed.
STD and LTD may be with different insurers, or STD may be self-funded by the employer. Don’t assume one claim rolls into the other automatically.

Where the gaps are

No STD and no EI. Self-employed people who haven’t opted into EI have nothing for the first months. Savings or a line of credit must cover the elimination period of their individual LTD policy. This is why a 90-day wait is realistic only if you actually have three months of expenses set aside.

No LTD at all. This is the bigger risk. Plenty of employees have sick leave or STD but no LTD, and most self-employed people have neither. EI sickness benefits end at 26 weeks. After that, the only public backstops are CPP Disability, which is hard to qualify for and modest, and Ontario’s ODSP, which is needs-tested. We cover both in CPP Disability vs. private disability insurance.

LTD that’s too small or too short. A group LTD benefit capped at a modest monthly figure, or a 2-year benefit period, can leave a large gap for a serious illness. An individual top-up policy fixes both.

LTD that ends at month 24. The definition change catches many claimants by surprise. If your skills would let an insurer place you in some other job, your benefit can end even though you can’t return to your own career.

For the self-employed, our guide to disability insurance for the self-employed in Ontario walks through building the whole timeline from scratch.

What to check in your group plan

Pull up the benefits booklet, find the disability sections, and confirm these points.

1. Is the LTD benefit taxable?

If your employer pays any portion of the LTD premium, the benefit is generally taxable to you. Many employers deliberately have employees pay 100% of the LTD premium through payroll so the benefit is tax-free. Ask which structure applies. A “66.7% of salary” taxable benefit can net out at 50% or less.

2. When does the definition change?

Look for language like “own occupation for 24 months” and “any occupation thereafter.” Some plans use a shorter own-occupation period. A few use any-occupation from day one. Know which you have.

3. What’s the monthly maximum?

Group LTD is capped. If the cap is well below 60–70% of your income, a top-up is worth pricing.

4. What offsets apply?

CPP Disability is almost always deducted. Some plans also offset other group benefits, workers’ compensation, or income from a spouse’s plan. Read the “integration” or “offsets” clause.

5. How long does STD run, and does it match the LTD wait?

Confirm the STD duration (or your EI entitlement) reaches the LTD elimination period. If there’s a gap of a few weeks, you’ll need savings to bridge it.

6. Is the coverage portable?

Group coverage ends when you leave. Some plans offer a conversion option to an individual policy within a short window after leaving; many don’t. If you’re planning a job change or a move to self-employment, this matters.

Individual LTD: filling what the group plan doesn’t

An individual disability insurance policy lets you:

Set an elimination period that lines up with your STD or EI coverage
Choose a to-age-65 benefit period
Get a stronger definition of disability that doesn’t change at month 24
Receive benefits tax-free (you pay the premium)
Keep the coverage when you change jobs or go out on your own

Comprehensive individual coverage typically costs roughly 1–3% of insured income as an indicative range; see how much does disability insurance cost in Canada for what moves the number.

Some people also add critical illness insurance, which pays a lump sum on diagnosis regardless of whether you can work. It’s a different tool for a different job; our critical illness vs. disability insurance guide explains the split.

How Hayes can help

We’re an independent, family-run brokerage in Ottawa regulated by FSRA, and reviewing group benefits booklets is something we do for clients every week. Send us yours and we’ll tell you plainly where the gaps are, whether a top-up makes sense, and what it would cost from 30+ Canadian insurers.

Our advice is free; insurers pay us. Get a free disability insurance quote or contact us to talk with a licensed Ontario advisor.