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Policy 04-04 Part II - Application 3

Chapter: Benefits
Subject: Permanent Disability
Authorization: Board of Directors resolution 2003/06/20
Date: June 24, 2003

Application 3: Economic Loss Payment - Injuries on or after January 1, 1995

1. What is the purpose of an Economic Loss Payment?

The Economic Loss Payment (ELP) compensates the worker for loss of earnings if the injury results in compensable permanent work restrictions that cause  a permanent impairment of earning capacity.

2. Who is eligible for an Economic Loss Payment?

To qualify for an ELP, the worker must meet the following conditions:

  • the date of accident is on or after January 1, 1995
  • the worker has a permanent impairment of earning capacity due to permanent compensable work restrictions (see Part I, 3.0 - Permanent Impairment of Earning Capacity and Application 1, Determining Permanent Impairment of Earning Capacity).

3. How does the WCB calculate the Economic Loss Payment?

The Economic Loss Payment is 90% of the difference between:

  • the worker's pre-accident net earnings, calculated in accordance with the Act and the General Regulations, and
  • the greater of the worker's post-accident actual net earnings or estimated post-accident net earning capacity, calculated in accordance with the Act and the General Regulations.
  • Subject to periodic review, the ELP is then normally paid until age 65 (or retirement age), at which time it is adjusted to reflect the impact on retirement income.

The only exceptions are workers with 100% permanent clinical impairment and workers presumed to be 100% permanently disabled under s.43(2) of the Act.  In these cases, the WCB does not deduct any post-accident earnings, nor does it adjust the ELP at age 65.

4. How frequently is an ELP reviewed?

This policy question is effective July 1, 2003. It applies to all ELPs awarded on or after July 1, 2003, and all ELPs already awarded where, as of July 1, 2003, the amount has not been confirmed under the previous policy.

The ELP is reviewed 36 months after it is first awarded. After the 36-month review, the WCB will normally review the ELP annually until the worker reaches retirement age (see Question 9 ). If the WCB decides annual reviews are not necessary in a particular circumstance (for example, if the worker is very severely disabled and it is clear the worker's impairment of earning capacity will not change), the WCB may schedule reviews less frequently or suspend annual reviews.

In some cases, the WCB may conduct interim reviews before the 36-month review.

Before the 36-month review
The following situations are examples of when the WCB may conduct interim reviews:
  • the worker or accident employer requests an interim review
  • the worker is in an apprenticeship program
  • the worker is expected to have significant changes in earnings before the 36-month review
Worker reaches retirement age before the 36-month review
If a worker reaches retirement age (normally age 65) before the 36-month review, the WCB will not conduct the 36-month review.  Instead, benefits will be adjusted according to the retirement age adjustment formula.

5. What earnings are considered for the review?

The WCB will normally consider gross earnings from all employment sources for the full review period.  At the 36-month review, for example, the WCB will require confirmation of the worker's earnings for the last three years. 

After the 36-month review, workers must submit the required earnings information annually until the WCB notifies them that it is no longer necessary. This will ensure there are no interruptions in benefits.

6. When will the WCB adjust or terminate an ELP?

The WCB may increase or decrease an ELP if the review findings show the worker's earning capacity differs from the previous estimate.  Increases will only be considered if the worker's reduced earning capacity is due to the compensable work restrictions.

The WCB will terminate an ELP if new evidence indicates the worker's earning capacity is not impaired by compensable work restrictions.

7. If an ELP adjustment is required, when is it effective?

If the adjustment is a consequence of the 36 month or other scheduled review, increased benefits will normally be effective the date of the review anniversary.  Decreased benefits will normally be effective the date the review is completed, unless the review was delayed by the worker's conduct, in which case the adjustment will be effective the date the review is scheduled.

If new evidence indicates the ELP determination was based on incorrect information or if the review is ad hoc (for example, at the request of the worker or employer), Policy 01-08, New Evidence, will apply.

8. Will the ELP be terminated or adjusted if the worker leaves Alberta or Canada?

ELP will normally continue if the worker leaves the province or country.  ELP is based on a permanent impairment of earning capacity, and it is reasonable to assume the worker's permanent work restrictions will continue to impair earning capacity regardless of the place of residence.

Workers who leave the province or country are still subject to the same reviews as workers who live in Alberta, and an ELP may be adjusted or terminated as discussed in question 6.

ELP will not be increased if the economic conditions in the new place of residence result in reduced earnings.  The WCB will estimate earning capacity as though the worker had continued to work in suitable employment in Alberta.

9. Why is the ELP adjusted at retirement age?

At retirement, the impact on earning capacity is reduced as wages are replaced by pension/retirement income.  The ELP is adjusted to reflect the changed earning capacity by using a formula similar to that used for standard retirement pensions.

Age 65 is commonly considered to be normal retirement age, and the ELP will be adjusted when the worker reaches age 65 unless there is sufficient and satisfactory evidence to show that the worker would have continued to work past that age if the injury had not occurred.

10. What is considered sufficient and satisfactory evidence that a worker would have continued to work past age 65?

As with any adjudicative issue, the decision will be made on the balance of probabilities.  Workers are not required to provide absolute proof, however, there must be some independent evidence that the worker intended to work after age 65, and would have done so if not for the compensable injury.

Examples of satisfactory independent evidence include:

  • confirmation from the worker's accident employer, union, or other independent employment source that the worker had planned to continue after age 65 and employment was available
  • continued employment post-age 65 at the same level and earnings as pre-age 65 [for example, a 51 year old worker with compensable permanent work restrictions returns to work with reduced earning capacity and is paid an ELP.  The worker continues to work at that level (same type of work, same hours) until age 69]
  • continued employment post-age 65 at reduced earnings, when it is clear that the further reduction is due to a deterioration of the compensable work restrictions, rather than a personal choice of semi-retirement.

The WCB will also consider any other relevant factors such as the normal retirement age for workers in the same pre-accident occupation.

11. Will the WCB adjust the ELP earlier than age 65 if a worker chooses early retirement?

The WCB will not apply the retirement adjustment to ELP until the worker reaches age 65, as the injury may have been a factor in the worker's decision to retire or to not pursue other employment. However, if the worker would have been expected to have significant increases in earnings if he or she had continued in the workforce, the WCB may review and adjust the worker's ELP, based on the estimated earning capacity (see Questions 4 and 6 in this Application, and Application 1, Question 4).

12. How is the retirement adjustment calculated?

To estimate the impact of the disability on the worker's retirement income (due to the reduced opportunity to contribute to retirement plans), economic loss payments will be adjusted according to the following formula:

Average Annual Compensation* x (Number of years of compensable earnings loss [to a maximum of 35 years] x 2%)

    *Average Annual Compensation is based on economic loss payments for the five-year period ending with the month in which the worker reaches retirement age.  If the economic loss payment has been in effect for less than five years, the annual average will be calculated using the actual period the payment was in effect.

    The adjusted benefits will normally be payable on a monthly basis for the lifetime of the worker.

13. Are periods of temporary disability included in the retirement adjustment?

Periods of temporary disability are included when calculating the number of years of compensable earnings loss.  For example, a worker injured at age 50 who receives 2 years of temporary benefits followed by 13 years of ELP has a total of 15 years of compensable earnings loss.

Periods of temporary disability are not included when calculating the Average Annual Compensation.  This amount is based on ELP, and is an average of the last five-year period (or shorter period if applicable).

14. Does the retirement adjustment apply to workers who are permanently totally disabled?

Benefits will not be adjusted at retirement age if the worker has a 100% clinical impairment, or if the worker is conclusively presumed to be permanently totally disabled under s.43(2) of the Act.

15.  When is this policy application effective?

This policy application (Application 3 - Economic Loss Payment - Injuries On or After January 1, 1995) is effective July 1, 2003, except when noted otherwise in a specific policy section(s).

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