Ontario Disability Support Program - Income Support
Directives
4.6 - Compensation Awards
Summary of Policy
This Directive pertains to:

specific compensation awards outlined in sections 28, 41, 42 and 43 of the
ODSP general regulation;

compensation awards, up to a maximum of $100,000 for pain and suffering
and for expenses incurred or to be incurred due to injury or death; for loss of
care, guidance and companionship under the Family Law Act; non-economic
loss under the Workplace Safety And Insurance Act, 1997 or the Workers’
Compensation Act; and

expanded exemptions above $100,000 if those awards are paid for expenses
actually or reasonably incurred or to be incurred as a result of injury to or
death of a member of the benefit unit; used for expenses, approved by the
Director, for disability-related items or services for a member of the benefit
unit that are not and will not be otherwise reimbursed; or used for education
or training expenses for the recipient because of the member’s disability and
the expenses are not and will not be otherwise reimbursed.
Legislative Authority
Sections 28(1)14, 14.1, 14.2, (2) and 41(13) and 42 and 43(1)4, 9, (2), (5)
Summary of Directive
The directive pertains to both the income and the asset exemptions for
compensation awards.
The directive describes the factors to be considered when applying the income
and asset exemptions to amounts received for compensation or damages under
one or more types of recovery listed in the Summary of Policy section of this
directive.
The directive provides examples of the types of awards considered
compensation or damages for pain and suffering.
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The directive describes the options available to recipients regarding the
application of the income exemption to payments from a structured settlement.
Intent of Policy
To guide decision-making when applying the income and asset exemptions to
amounts received for compensation or damages under one or more of the types
of recovery listed in the Summary of Policy section of this directive.
Application of Policy
Reporting Requirements
Benefit unit members are obligated to report any legal actions that may result in a
monetary settlement or award. If ODSP staff become aware that a benefit unit
member is involved in a legal dispute and may receive a compensation award,
the following forms must be completed:

an Expected Compensation or Settlement Referral form;

an Agreement to Reimburse; and

an Assignment, Authorization and Direction form.
The Agreement to Reimburse and the Assignment and Direction are required as
a condition of eligibility. Completed forms must be forwarded to Legal Services
Branch.
Specific Awards
The ODSP general regulation exempts payments from specific compensation
awards, such as the Helpline Reconciliation Model Agreement, The MultiProvincial/Territorial Assistance Program Agreement, the Grandview Agreement,
the Ontario Hepatitis C Assistance Plan, the Walkerton Compensation Plan, and
payments made by a local Disaster Relief Committee established pursuant to the
Ontario Disaster Relief Assistance Program. These awards are exempt as both
income and assets.
A full list of income exemptions for specific government compensation awards
can be found in sections 41, 42 and 43 of the ODSP general regulation. The full
list of asset exemptions can be found in section 28 of the general regulation.
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Other Awards
The ODSP general regulation also establishes income and asset exemptions, up
to $100,000 for the following:

awards for pain and suffering as a result of an injury to or the death of a
member of the benefit unit;

expenses actually or reasonably incurred or to be incurred as a result of injury
to or death of a member of the benefit unit;

loss of care, guidance and companionship due to an injury to or the death of a
family member under the Family Law Act;

non-economic loss under section 46 of the Workplace Safety and Insurance
Act, 1997 or section 42 of the Workers’ Compensation Act.
Please note that prejudgment interest awarded as compensation for the delay in
receiving damages on pain and suffering awards is considered part of the actual
award for pain and suffering. Therefore, the exemption can include the pain and
suffering award as well as amounts awarded for prejudgment interest. Other
kinds of prejudgment interest, such as prejudgment interest on awards for lost
wages, are still considered as income and as an asset for ODSP purposes.
For these awards, and for awards that are over $100,000, the recipient must
provide an annual report that documents all income and expense transactions
relating to that award. Providing the annual report is a condition of the exemption
and is required by section 43(5) of the ODSP general regulation. Failure to
provide the report may result in the revocation of the exemption.
The $100,000 maximum exemption is applied for each member of the benefit unit
per occurrence. In some circumstances, multiple members of the benefit unit
may each receive the $100,000 exemption.
Income and assets exempted under this policy are payments made as an award
or in settlement of a claim by a recipient, and are therefore not voluntary
payments. As a result, the $6,000 per year limitation under section 43(1)(13) of
the ODSP regulation does not apply.
Income and asset exemptions are applied to the net amount of the award
payable to the recipient. The net amount of the award is the amount payable to
the recipient after their legal fees and associated taxes, disbursements (e.g.
court filing fees, photocopying expenses, postage) and amounts owing to other
government agencies (e.g. OHIP, Ontario Works) are deducted.
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Interest earned on exempt compensation awards is considered income, subject
to other applicable exemptions.
A Ministry claim under an Assignment and Direction and Agreement to
Reimburse can only be recovered from amounts that are not exempt and that are
considered income under ODSP.
Use of Exempt Award
If a recipient uses these exempt funds to purchase an asset, that asset is not
automatically exempt simply because it was purchased with funds from the
award.
If the funds are used to purchase: a principal residence; any other approved
asset that is necessary for health and welfare; or an exempt asset such as a
primary motor vehicle that asset remains exempt as an asset and will have no
impact on the recipient’s income support.
However, if an ODSP recipient purchases a non health-related, non-exempt
asset such as a vacation or second home or a second vehicle that is not required
for a member of the benefit unit to maintain employment outside the home, that
asset is not exempt and will count toward the benefit unit’s asset limit.
Compensation Awards Exceeding $100,000
Recipients who have received awards exceeding $100,000 may continue to be
eligible for ongoing income support if an application or request is made to the
Director of ODSP Branch to expand the exemptions. This application is sent by
the local office to Legal Services Branch of the Ministry of Community and Social
Services. Legal Services Branch will forward these cases to the Director of
ODSP Branch for approval to expand the exemption.
The exemptions will not be expanded unless the Director of ODSP Branch is
satisfied the amount exceeding $100,000 is:

paid for expenses actually or reasonably incurred or to be incurred as a result
of injury to or death of a member of the benefit unit;

used for expenses, approved by the Director, for disability-related items or
services for a member of the benefit unit that are not and will not be otherwise
reimbursed; or
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
used for education or training expenses for the recipient because of the
member’s disability and the expenses are not and will not be otherwise
reimbursed.
The Director’s decision to expand the exemption for amounts exceeding
$100,000 that are paid specifically for past and future care costs is based on:

objective evidence (i.e. a future care cost report) of past and/or future carerelated expenses incurred and/or to be incurred; and,

a determination that the costs are not otherwise reimbursed.
Exempt awards over $100,000 must be used for the purposes for which the
exemption was granted. If the exempted amount over $100,000 is not used for
the approved purpose, the benefit unit’s asset limit may be affected and ODSP
eligibility should be reviewed.
For example, if the amount over $100,000 was exempted to allow the recipient to
fund future medical costs, and that recipient uses those funds to purchase a
second vehicle that is not required for a member of the benefit unit to maintain
employment, the funds used to purchase the vehicle should be considered
income in the month they were received. The vehicle would be considered an
asset as per Directive 4.1 – Definition and Treatment of Assets.
Structured Settlements
Amounts awarded for compensation or damages are often used to purchase
structured settlements which provide an injured person with an income stream.
Structured settlements can only be purchased by the casualty insurer from a
federally-registered Canadian life insurer. The life insurer guarantees to provide
periodic payments for a specified period (in most cases, over the lifetime of the
beneficiary).
Structured settlements are not considered assets.
Pro-Rating of Structured Settlement Payments
With respect to the treatment of structured settlement payments, the recipient
has the option of applying the exemptions either up front or pro-rating the
exemption over the number of months until the beneficiary (recipient, spouse or
dependant) turns 65 years of age.
Please note that the amount payable to a recipient from a structured settlement
that will be exempted is equal to the exempt amount of capital invested into it.
For example, if $150,000 was the exempt capital amount invested into the
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structured settlement, then the recipient is only entitled to receive $150,000 in
payments from the structure before the income exemption is exhausted.
The prorated exemption calculation is based on the assumption that the recipient
will no longer be eligible for income support when he/she reaches 65 years of
age due to Old Age Security (OAS) income.
If, at the time the compensation award is received, it is determined that the
recipient will not be eligible to receive OAS when he/she reaches 65 years of
age, ODSP staff should attempt to determine when the recipient will be eligible
for OAS and pro-rate the exemption over the number of months from the month
the award is received to the month the recipient will be eligible to receive OAS.
Example:
The recipient receives $150,000 for future care costs and the Director exempts
the entire amount as income and an asset. The decision to expand the $100,000
exemption is based on projected costs set out in a report outlining the recipient’s
anticipated future care needs.





The $150,000 award is placed in a structured settlement that provides a
monthly payment of $900 to the recipient. At that rate, the exemption will
be exhausted in 166.67 months.
Current date is October 15, 2011; the date of the first payment is
December 1, 2011.
166 months from December 1, 2011 is October 1, 2025.
The recipient's date of birth is June 1, 1965; the recipient will be 65 years
of age on June 1, 2030.
The number of months from December 2011 to June 2030 is 224
(rounded up).

Exemption Up Front
From December 2011 to
October 2025, 100% of the
$900 monthly payment is
exempt.
Exemption Pro-Rated
 Amount of exemption is
pro-rated over the number
of months from December
2011 to June 2030.
[$900 x 166 months =
$149,400]

For the month of October
2025, $600 of the $900
monthly payment is exempt;
the remaining $300 is
[$150,000 / 224 months =
$669.64]

From December 2011 to
June 2030, the monthly
income deduction is
$230.36.
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charged as income.
[$149,400 + $600 =
$150,000]

[$900 - $669.64 =
$230.36]
Commencing November
2025, 100% of the $900
monthly payment is charged
as income.
Cases where structured settlements are being considered or where payments
are received from a structured settlement must be referred to the Legal Services
Branch of the Ministry of Community and Social Services. Legal Services
Branch will forward appropriate cases to the Director of ODSP Branch for review
and direction regarding treatment of the payments.
Hyperlinks associated with this Directive
Related Directives:
4.1 Definition and Treatment of Assets
4.4 Transfer of Assets for Inadequate Consideration
4.7 Funds Held in Trust
5.1 Definition and Treatment of Income
11.1 Recovery of Overpayments
Bulletins:
003-2002
004-2001
003-2001
2004-09
2007-01
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