HR leaders: Your workforce is aging, fast.
More employees are working past 65, and many aren’t doing it by choice. In 2022, nearly 1 in 5 Canadians aged 65 to 74 was still on the job. Almost half said it was out of financial need.
Since mandatory retirement was phased out, employees can stay on as long as they want. And they are. Labour force participation for seniors has more than doubled in the last 25 years, from 6% in 1997 to 15% in 2023.
Longer life expectancy and inadequate savings are keeping people in the workforce.
For HR, that means it’s time to treat older workers not as outliers…but as a core part of your team.
Disability insurance hasn’t kept up. Most group LTD plans in Canada still cut off benefits at age 65. A holdover from when everyone retired by then. That’s no longer the case.
Today, more employees are working into their late 60s, but many lose income protection right when they’re most likely to need it. About 40% of Canadians over 65 live with a disability. Nearly double the rate for working-age adults.
If an older employee gets sick or injured after 65, there’s often no LTD coverage. That’s a major gap. And for employers, it means risk.
Legal, financial, and reputational.
The Current Challenges
Age cutoffs are becoming a liability.
Most LTD plans still end at 65. But when employees keep working past that, cutting off their coverage just because of age doesn’t hold up anymore. Unions and employees are pushing back, and some have already filed legal challenges. Human rights law is shifting…age-based limits are under scrutiny. If your benefits plan still treats 65 as the end point, you’re carrying legal and reputational risk.
Older workers have no safety net.
If a 66-year-old employee gets seriously ill or injured, they’re often left with nothing. No LTD, no real support from public programs, and possibly not enough pension to retire. And they’re working because they have to. This is a gap that exposes workers to hardship and employers to avoidable fallout.
Disability risk increases with age.
Older workers are more likely to have chronic conditions or mobility issues. Nearly 2 in 5 Canadians over 65 report a disability…compared to 1 in 4 working-age adults. They also take longer to recover. That means more claims and longer leaves. The current system, with a hard cutoff at 65, doesn’t reflect these realities. It leaves people mid-claim or mid-recovery with no support.
Cost fears are holding things back.
Yes, insuring older workers can cost more. That’s the main reason most plans haven’t changed. About 84% of employers still don’t offer LTD past 65. Unions may need to negotiate benefit changes. Insurers are cautious. Everyone’s worried about cost-sharing and plan design. But avoiding the issue just kicks the risk down the road.
The Cost of Doing Nothing
Older workers face the biggest risk.
If someone over 65 gets sick or injured, they often have no LTD coverage. No income replacement. No real safety net. Many of these employees are working because they have to, not because they want to. Without employer benefits, their income could drop to basic public pensions, which usually aren’t enough. That can force them into early, unplanned retirement with real financial strain.
Employers stand to lose experienced talent.
If older employees know their benefits end at 65, some will leave early to avoid risk. Others may stay, get sick, and then have no protection. Either way, employers lose valuable knowledge and skills. And when coverage isn’t there, companies may feel pressure to offer one-off support or face legal claims. Human rights complaints over age-based cutoffs are already happening. These can carry reputational damage and legal cost.
Morale and inclusion take a hit.
A workplace that doesn’t account for older employees’ needs can start to feel age-unfriendly. That affects morale, culture, and retention across the board, not just for seniors.
Insurers are at risk too.
Sticking to outdated coverage models could mean losing clients who want more flexibility. If the industry doesn’t adapt, courts or governments might force change. That’s a bigger risk. It’s smarter to update plans now — on your terms.
There’s a bigger economic impact.
When older workers are pushed out due to lack of coverage, it adds pressure to public systems. It also worsens labour shortages. Keeping seniors in the workforce, with the right support, benefits everyone.
Ignoring the problem means more financial stress for workers, more risk for employers, and missed opportunities for insurers.
What Needs to Change
Modernizing disability insurance for an aging workforce isn’t optional. It’s overdue. Plans built around a fixed age-65 cutoff no longer fit today’s workforce.
There’s no single fix. But there are clear moves every stakeholder can make now.
Extend LTD Coverage Beyond 65
A hard stop at 65 doesn’t make sense anymore. Employers and insurers should build in flexible options:
- Guarantee LTD coverage for at least 2 years if a worker becomes disabled after age 63.
- Offer optional extensions to 68, 70, or later.
- Let employees opt in and share costs.
- Scale the benefit if needed — some coverage is better than none.
Not every company needs the same design. But everyone should be moving away from a one-size-fits-all rule.
Align with Human Rights and Equity
Blanket age cutoffs are hard to justify. Legal risks are growing. Plans need to meet basic fairness:
- Drop arbitrary limits tied only to age.
- Use actual risk or cost data to shape any age-based changes.
- Make sure policies don’t create second-class status for older workers.
Governments can help by giving legal clarity and encouraging age-inclusive designs.
Share Costs Transparently
Older worker coverage costs more. That’s real. But it’s manageable — if shared:
- Set realistic premiums for post-65 coverage.
- Let employees pay more after a certain age.
- Be transparent about trade-offs. If you extend LTD, something else may need to adjust.
- In union environments, put it on the table early. Avoid surprise negotiations later.
As more data comes in, insurers can fine-tune pricing. But plans need to start adjusting now.
Plan Ahead (Don’t Wait for a Crisis)
This shift is coming whether you plan for it or not. It’s better to act before problems hit:
- Employers: Review your workforce by age. Run the numbers.
- Insurers: Push your clients to talk about it now, not after a claim is denied.
- Brokers and consultants: Raise the issue in renewal meetings. Bring options, not just warnings.
And educate everyone, older and younger employees alike. This isn’t just about seniors. It’s about building a fair, sustainable system for the whole workforce.
Build Strong Return-to-Work Programs
Extending coverage is only part of the fix. Help people return to work when they can:
- Offer modified duties or phased returns.
- Invest in ergonomic setups and workplace adjustments.
- Include rehab and case management in LTD plans.
- Focus on ability, not just limitations.
Older workers don’t always want to stop. But without the right support, they may have no choice.
Who Needs to Act…and How
Employers
- Review your demographics.
- Decide if post-65 coverage is needed — and for how long.
- Work with your provider to update your plan.
- Talk to your union or employee reps early.
- Invest in prevention and accommodation.
Insurers & Consultants
- Create flexible LTD products that go past 65.
- Set premiums that reflect actual risk.
- Work closely with clients on plan design. No templates.
- Use data to improve pricing and avoid over- or under-coverage.
- Lead conversations about demographic risk, not just react to it.
- Embed return-to-work support into senior disability claims.
Policymakers
- Clarify what’s legal — and what’s not — in benefit design.
- Remove barriers to offering coverage beyond 65.
- Extend LTD in the public sector as a model.
- Explore tax credits or incentives for employers who adapt.
- Push for better integration between public and private supports.
- Commission updated research and set national guidance.
The old model doesn’t work anymore. More people are working past 65. And more are at risk without protection.
We need smarter plans, better tools, and shared responsibility.
Some employers and insurers are already adapting. Others are waiting. But the trend is clear…and the cost of waiting is rising.
This is the time to act.
How We Help Employers Thrive With an Aging Workforce
At RIDM, we help employers and insurers manage disability claims in a workforce that’s staying on the job longer.
More employees are working past 65, and most benefit plans haven’t caught up. We provide independent medical assessments, return-to-work planning, and workplace accommodation support grounded in medical evidence, not assumptions.
Our CARF-accredited team has been doing this since 1986, helping reduce risk, shorten claim durations, and support fair, consistent decisions.
If you’re dealing with more complex claims or planning to extend coverage beyond 65, we’re ready to help.
FAQs About How Employers Thrive With an Aging Workforce
Q. How do disability premiums change if coverage stays in force after age 65?
A. Premiums rise because claim risk is higher. Plans may charge an age-band rate or spread the extra cost across all staff. Some firms also shorten the post-65 benefit period to keep costs down.
Q. Are disability payments taxed when they are received after 65?
A. The rule stays the same. If the employer paid the full premium, the benefit is taxable. If workers paid with after-tax dollars, the benefit is tax-free.
Q. How do CPP-Disability (CPP-D) and a long-term disability (LTD) plan interact for older workers?
A. Before 65, most insurers subtract the CPP-D amount from the LTD benefit. At 65, CPP-D stops and turns into the standard CPP pension; the offset then uses the pension amount instead.
Q. Can self-employed Canadians buy disability cover that lasts past 65?
A. Yes. A few insurers sell individual policies that pay to age 70. Underwriting is strict and premiums are higher, but it fills the gap when no group plan exists.
Q. What workplace changes can cut injury risk for staff in their late 60s?
A. Good lighting, non-slip floors, adjustable desks, and flexible shifts help. Early physiotherapy and quick case reviews keep small strains from turning into long absences.
Q. What is a partial disability benefit and why does it help older staff?
A. It pays a share of income when a worker can do lighter duties or fewer hours. That lets older staff phase back instead of choosing between full work and no work.
Q. Do any sectors already insure employees to age 70?
A. Yes. Many hospitals, some universities, and parts of the energy field extend LTD to 70. They fund the added cost through joint employer-employee premiums.
Q. Are mental-health claims common among older workers?
A. They are rising. Mood and anxiety issues do not stop at 65, and early dementia can lead to claims. Insurers say mental-health now makes up about one-quarter of LTD cases among people aged 55–70.
Q. What data do insurers still need to set fair rates for post-65 coverage?
A. They need solid figures on claim frequency and length after 65, broken down by diagnosis and job group. Current data are thin because few plans pay in that age band.
Q. How can collective agreements add post-65 LTD without large wage trade-offs?
A. One option is to give any claim that starts after 63 a two-year benefit cap, funded by a small premium rise spread across all members. Another is to let workers buy extra cover at cost through payroll.
Glossary of Key Terms
1. Long-Term Disability (LTD)
Monthly income paid by insurance if a worker can’t work for a long time due to illness or injury.
2. Short-Term Disability (STD)
Income paid for a short time—usually up to 6 months—when someone is off work due to health reasons.
3. Premium
The amount paid (by the worker, employer, or both) to keep the insurance in force.
4. Benefit Period
How long the insurance will pay someone once a claim starts.
5. Elimination Period
The wait time between the start of a disability and when payments begin.
6. Partial Disability
When someone can still work part-time or at a lower level, and gets a smaller insurance payment.
7. Total Disability
When someone can’t do the main parts of their job due to illness or injury.
8. Own Occupation
A definition of disability that means you can’t do your specific job.
9. Any Occupation
A stricter definition. You’re considered disabled only if you can’t do any job you’re suited for.
10. Age Cutoff
The age when LTD benefits stop (often 65, unless extended).
11. CPP-Disability (CPP-D)
Government disability payments from the Canada Pension Plan for people under 65.
12. CPP Retirement Pension
Monthly payments from the Canada Pension Plan that start at age 65 or earlier.
13. Offset
When the insurer reduces your LTD benefit by other income, like CPP-D.
14. Waiver of Premium
If you’re getting LTD benefits, you usually don’t have to keep paying premiums.
15. Insurable Earnings
The part of your pay used to calculate how much LTD you’ll get.
16. Non-Evidence Maximum (NEM)
The amount of coverage you can get without giving medical proof.
17. Evidence of Insurability
Health details you must give to get extra coverage above the NEM.
18. Group Plan
Insurance bought by an employer for a group of workers, usually with better rates.
19. Self-Insured Plan
When an employer pays for claims out-of-pocket instead of using an insurance company.
20. Actuarial Data
The numbers used by insurers to figure out claim rates and set premiums.
