Benefit Units Are The Worst

One of the worst financial decisions one can make is being part of a benefit unit on Ontario’s Disability Support Program (ODSP,) whether by marriage or birth.


Sure, emotionally, it can be great. Romantic, even. Pledging a life together, committed through good times and bad, for  better or worse, richer or for poorer.


It’s that last part that’s key though. Most individuals with disabilities live in poverty. It’s easy to understand why since it’s not only expensive being poor, but also expensive to have a disability.


Ignoring medical expenses (not all medications and equipment are covered by ODSP), there are extra costs for transportation (modified vehicles, transit, taxes, etc), less options for bulk buying (storage limitations and higher costs with limited budgets,) less options for housing and more costly modifications for accessibility or finding cheaper places that are accessible) and any dietary requirements can cause grocery bills to soar.


The Price of Being Disabled


So starting out, someone on ODSP has higher basic expenses than the average person.


The humanitarian subsidy itself is a low amount. If one takes a minimum wage job at $14 an hour and works 40 hours a week, that’s about $560 a week. Multiply by 4 weeks and it’s about $2240 a month. Now, of course, there’s taxes to pay too. The estimated amount to take off a paycheque for this annual income would be 15%. Now that paycheque has a Net pay of about $1904.


ODSP for a single individual to cover basic needs ($672) and shelter ($497) is a maximum $1169. That’s like having a 40 hour work week all 4 weeks of the month, and getting paid about $8.40 an hour (and still paying 15% tax.)


Now this calculation is just to show that ODSP is certainly not a lot of money and definitely not the same as having a minimum wage job.


(We’ll ignore how hard it is to get a 40/hr full time job as many places shift to part time positions and lowering expected full time hours to 30-40hours a week, which is why it’s not surprising so many people end up needing two jobs. This, of course, is harder for people with disabilities due to issues with discrimination and accessibility.)


For this discussion however, we’ll stick with a full 40/hr work week.


How Shalt Thou Join A Benefit Unit? Let Me Count The Ways


The following isn’t about the individual on ODSP. This is about that benefit unit.


Our provincial government in Ontario says any married couple or family where one member is receiving the humanitarian subsidy is a benefit unit. Pretty simple:


  • Two people are dating. One is able-bodied. The other has a disability. Not a benefit unit.
  • Two people live together for 3 months and the government decides it’s a relationship. One person is able-bodied. The other has a disability. They are a benefit unit.
  • Two people get married. One person is able-bodied. The other has a disability. Benefit unit.
  • A whole family. One person has a disability. Everyone else does not. Benefit unit.


So What Are The Pros Of A Benefit Unit?


The perks are that some dental and health cost are covered for the whole benefit unit. Certain dietary needs, extra costs for living, medical aids etc may also be covered on a case-by-case basis.


There are still limitations, equivalent to those for a single person with disabilities. Also, technically, any insurance is supposed to go through the main insurer first and then the secondary. So the ODSP recipient goes through ODSP before anything is covered by any benefits from someone else in the benefit unit. However, the non-recipient member of the unit will have to go through their benefits before anything is covered by ODSP. This gives the government a bit of a discount on costs.


That’s the pro side of benefit units. Now here’s the con side. And it’s a long one.


Getting Into The Cons


(It should be noted that for calculations on the government website a dependent in a benefit unit is 17 years or older, but later switches to those 18 years or older. There’s no clarifications about why or how it affects things in the one year transition period. For this, it’s easier to stick with the 17 years or older until a thorough review of ODSP can be done to determine when it switches, why, how, etc. since that is the age used to calculate for basic needs and shelter.)


All financial restrictions for the actual ODSP recipient can apply to all members of the benefit unit who are a spouse or 17 years or older. Tax-free Savings Accounts and RRSPs have a limit of $40,000 for singles or $50,000 for couples. (I’m looking into clarifying what the limit is for a family and how that all works.) A few years ago, the limits were much lower (closer to $7000) and weren’t exactly recommended. These may have been recommended if you were able-bodied and trying to be financially responsible, but they were not for a benefit unit. These are sources of income and assets, which are factored into how much ODSP a recipient gets. So they could reduce the amount of help the ODSP recipient gets or even get them rejected from the program all together.


Cancelling these accounts comes with a penalty so it could cost possibly hundreds of dollars to be a benefit unit.

Richer or poorer, remember? Good.

Luckily, that changed but the previous limit probably hurt a lot of people in the process and it’s important to remember.

Saving For The Future


Its legacy is a lot of benefit units that simply weren’t encouraged to save in traditional ways, but are still on ODSP today. Moving past the old financial sacrifice there, one can take comfort in the federal Registered Disability Savings Plan (RDSP) though, right?


It’s basically an RRSP for people with disabilities that everyone can pay into, but one has to qualify and that’s a bit tricky. The federal government matches all deposits (to a certain annual limit) and when the account holder reaches 65, they can access it. If they don’t reach 65 (and the average life expectancy for someone with a disability is 70,) the RDSP amount (minus whatever the government contributed) is given to whomever the government decides, unless specified by a will. Luckily, will kits are free so hopefully  there will be no cost to ensure a spouse or child inherits money that they rightfully should if the ODSP recipient felt so.


Because the very long-term savings plan is under one account name, there are questions about how divorces would work that out. Did the spouse contribute? How much should be rightfully shared? How does that affect government contributions? (Those aren’t answers to be found here, unfortunately.)


The Expanding Role Of A Benefit Unit


Current money is just as problematic.


The benefit unit combines income to determine the monthly subsidy. Whether that’s a couple or a family of 5 (all over the age of 17,)  all income is combined. No exceptions, aside from that asset thing mentioned earlier.


Going back to that $1904 monthly income from that able-bodied person, this is how ODSP would figure things out for a married couple with no kids where the recipient does not have a job.


For this situation, ODSP does accept there are increased costs so $781 for shelter and $969 for basic needs, which equals a maximum total of $1750 in available subsidy money.


The combined income of this benefit unit is $1904 a month. ODSP lets them keep $200 of that, leaving $1704 from which 50% ($852) is deducted from the available subsidy. In a sense, the benefit unit subsidizes the subsidy.


What this all means is that, though ODSP was willing to give the recipient $1750 for being married, it will actually only give the recipient $898 (with an added $100 for someone having a job) because someone in the benefit unit had an income.


It’s a “what’s mine is yours” idea. In this case, there isn’t an option. The spouse will be doing this. The idea applies to any kids in the family over 17. Or as the government describes them “dependents.” Not old enough to vote, but they can support the family and help save the government money.


The rates of shelter and basic needs do go up with dependents (increases ranging between $143-$369, depending on age.) Of course, more dependents over 17 also means more combined income which would bring that subsidy down if they’re working even casual jobs.


Everybody Has A Price


Really, a benefit unit pays more into ODSP than those not on ODSP.


It’s important to remember that ODSP recipient and benefit unit members still pay taxes. The ODSP amount may not be taxable, but it still goes toward paying for things that are taxed. Paycheques for the non-recipients of the units are still fully taxed.


ODSP saves money when members of a benefit unit get income, even assistance through Canada’s Emergency Response Benefit (CERB) for those with jobs impacted by Covid-19.


However, it is harder for the benefit units to get ahead since 50% (minus $200 to start) is deducted from the subsidy.


Take that hard worker at minimum wage again. $1904 a month. They get a raise. Most minimum wage jobs give very small raises, but let’s pretend it’s a full 2% so an extra 28 cents an hour. Keep in mind that union contracts might have 2% over two years so this is an amazing raise for this worker. Clearly they are remarkable.


So $14.28 for 40 hours = $571.20 for 4 weeks = $2,284.80 – 15% for taxes = $1942.08. That’s about $42 extra every month.


Then, let’s factor in the ODSP.


$1942.08 – 200 = $1742.08 – 50% = 871.04, $1750-$871.04 = $878.96.


Before it was $1904 + $898 (from ODSP) = $2,802 a month for this couple. Now, with this generous raise, it’s $1942.08 + $878.96 (from ODSP) = $2, 821.04 a month for this couple. They will end up with only $19 more, rather than that $42.


Some would look at this and conclude that a solution is to get a better job. The spouse simply needs to try for far more than minimum wage. But the deduction problem still exists. ODSP is still saving money by forcing the members of a benefit unit to cover 50% (minus $200 from the start) of the subsidy.


If the job is good enough, the recipient is no longer getting ODSP and all costs are now covered completely by the spouse and/or unit members. All those dental and health costs too.


How A Benefit Unit Breaks Down


Let’s not forget the family unit.


Here’s another scenario. There’s a full time working spouse on minimum wage, a 17-year-old kid (still too young to drink or buy a lotto ticket) but hey, they’ve got a full time minimum wage job too, and the recipient still hasn’t found a job yet.


So spouse $1904 and kid $1904 and ODSP recipient $0. Combined income is $3808. ODSP factor: $3808 – 200 = $3608 – 50% = $1809.  Since there are more dependents over 17, the subsidy would be $1,815. And because the amount deducted ($1809) is from the maximum subsidy amount ($1,815,) the ODSP recipient will get about 6 bucks plus $200 because 2 people have jobs. The family of 3 will live off $4014 a month, coming close to losing ODSP and having to cover all the expenses that come with being able-bodied and disabled.


What if it were a full time spouse and a part-time working 17-year-old, and still unemployed recipient? Spouse = $1904. Kid ($14/hr for 15 hrs for 4 wks) = $714. PWD = $0. Combined income is $2,618. Add in the ODSP factors ($2618-$200= $2618 – 50% = $1209. $1815 – $1209) and it’s $606 for the ODSP recipient, plus $200 for jobs.

They’re living off $3,424 a month.


Of course, that part-time 17-year-old is still dealing with the financial restrictions of being in a benefit unit. They might wish to save for college or university or a car, but they will have to ensure the family isn’t saving too much for the future because that could mean the cancellation of ODSP. There are exemptions once they have post-secondary education, but not necessarily beforehand so they do have to be careful.


This is why it’s better financially not to be born into a benefit unit. There are obvious limitations on the future. They may be better off moving out as soon as they hit 17. Sure, kids with parents not on ODSP won’t have to make these hard choices, but they are privileged in that respect. They can stay home, live with their parents longer, save up more for their future careers. There’s certain penalties for kids in a benefit unit who want that kind of better life. And at the age of 17. Not old enough to be their own guardian, but old enough to cost the family ODSP by wanting a better future and having a job. Though, admittedly, hitting that $40,000 threshold is unlikely; it’s still an added consideration and concern people not on ODSP can avoid.


All these scenarios have involved an unemployed person with disabilities. However, jobs are available and people with disabilities do work. (Though not everyone with a disability can work, it should be noted.) Yes, their income is part of the combined income so the more they get paid, the less subsidy they get.


Again, this makes it harder to get ahead.


When Working Hard Is Like Hardly Working


An important thing to note is the “more they get paid” bit as well.


With able-bodied individuals how much one works equals how much one gets paid. Work 15 hours, get paid for 15 hours.


For people with disabilities however, it isn’t always straightforward. Some places will agree to half paid work, half volunteer work. So 15hrs work, get paid for 7.5 hours and say the rest was volunteered.


The response to this is often shock and disbelief. Not enough to change things. Still it’s a hard reality to accept. Yet it’s one many people with disabilities deal with because jobs aren’t easy to get when one isn’t fully able-bodied. There are still massive issues with discrimination, accessibility and inclusion. Many jobs demand experience and for many people with disabilities a job paying 50% of the deserved wage (with taxes still deducted) is an opportunity for experience to hopefully get a job one day that pays 100%. One might think there might be a law against such hiring practices, but there isn’t. If there were, would people with disabilities still get those positions? Would businesses and organizations decide to avoid them if they don’t get a discount employee?


This is another issue, but it helps to highlight one of the biggest problems with benefit units: dependency.


Depending On Dependants And Building Up Resentments


The ODSP subsidy of the recipient is heavily tied to the spouse and/or family.


It is unlikely the person with disabilities will be the one employed with the higher paying job. It can happen, especially if a disability occurs later in life/career. A person has already established their abilities but now has to show they can do so with a disability. This compared to someone having to prove themselves with a disability.


Just imagine a movie about a dancer who loses a leg. Friends rally around them. They go into a depression, only to reemerge victorious. A feel good story of triumph as they reclaim their place on the stage. Cue the applause and Oscar. Now imagine a movie about a person with one leg trying to become an acclaimed dancer. Friends try to rally around them, but some suggest it’s just a dream and they need to be realistic. Finally someone (a helping hero) gives them a shot. You know the character, the one person who sees a spark and has the influence to make the dream suddenly come true. Finally a feel good story of triumph. Cue the applause, maybe an Oscar nomination. Definitely a win for choreography.


(Done digressing. Almost. Shout out to Ali Stroker for winning that Tony and being the first person who uses a wheelchair to do so.)


Back to ODSP, the reality is that in all most all cases the actual ODSP recipient will make far less than the others in the benefit unit. In fact, their subsidy is determined by the income of others. This kind of financial situation means that most, if not all, of the financial power is controlled by others in the relationship. If the spouse is the primary caregiver, as is often the case as well, then the power in the relationship is definitely unequal.


The recipient is, in many ways, at the mercy of the spouse or others in the benefit unit. It sounds harsh, considering loving relationships, but it’s also true. Many financial services are not easily accessible with various disabilities. Caregivers are often needed, whether it’s for transportation to a bank or helping to key in a passcode, or reading a document. In these situations, a person with disabilities will rely heavily on that caregiver to get proper access to accounts and money.


This isn’t to suggest people with disabilities are helpless. But the obstacles they face are greater than if they were able-bodied. The more hurdles they face, the harder it is to have access to their finances which means increased dependency.


Perception Becomes Reality


Added to the situation is the unclear distinction of their income and contribution to a relationship.


If that able-bodied person getting a raise ended up bittersweet, imagine the sting of being the actual recipient with a raise. On one hand, more money which means in the other hand is less money. It’s like working harder to deduct money. The joy of “earning a paycheque” is easily soured when the cash isn’t the great increased income if it weren’t for ODSP. It all adds up to a situation where one person in the relationship rarely has a solid, independent contribution financially. There is always a catch to them trying to get and give more.


Besides, ODSP is often labelled in such a way that social assistance is considered for moochers who don’t try to get a decent job. Taxpayers pay them to be lazy.


Many people don’t make distinctions about assistance, make broad statements about taxpayer dollars and bums. Not only is that insulting to the young widow with twins whose poor life choice was marrying someone who died of cancer at the age of 21. It’s also hurtful to the 21-year-old whose poor life choice was surviving cancer at age 3, but with a permanent disability.


The humanitarian subsidy is supposed to be the compassionate helping hand, to acknowledge life’s troubles and try to ease them for a better future for everyone. It’s now commonly treated as a financial burden to be removed as soon as possible.


The recipient has to deal with all these financial headaches. Income tied to subsidy that is deducted like a penalty, that is treated like an unearned fortune given to the unworthy. All that money still tied to a benefit unit, which means leaving that unit is even harder.


In abuse cases, one of the first questions asked of the abused is where can they go that is safe. For a person with disabilities, that escape can be even harder. Funds are often shared— certainly in the eyes of the government they are. Caregivers who may be abusive are often around, meaning less chance for privacy. A clandestine escape in the middle of the night to a hideaway where the escapee will be properly cared for and financially safe isn’t likely. (Not impossible, but much harder.) It is easy for the abused to resign themselves to this because ODSP and the government does not grant them enough independence.


Putting Pressure On Non-Recipients


On the other side of the relationship, ODSP isn’t easy on the spouse.


Remember that $42 raise turning into just over $19? It’s also hard being the main source of income and a caregiver. Many need a flexible work schedule (and nice employer) to attend doctor’s appointments, tend to illnesses, etc. Several careers require employees who can travel, work long or irregular hours, or be on call. Many of those high-paying jobs can’t easily be done by someone who is a caregiver for someone who needs more assistance. There can be medication schedules, dietary preparation, exercise or physiotherapy routines. The job generally can’t come first in these relationships.


Which means it is harder for that spouse, who is supposed to be supporting the family, to have a great job and support ODSP too. There’s a possibility for resentment, to be limited financially so much. There can be tears if one has to give up that Tax Free Savings Account or RRSP because being financially responsible was having them until marrying someone on ODSP made them liabilities.


It’s also harder for that spouse to apply for other jobs because there is no safety net. ODSP won’t save them and it’s unlikely the person with disabilities will suddenly get a job that allows a leap of faith for a new career. There’s motivation for a better job, but it’s a hard leap when someone is so dependent on the secure one.


Putting The Human Back In Humanitarian Subsidy


Benefit units are terrible.


They were probably conceived so, on the off chance someone married rich, the government wasn’t paying more than it felt it should. It’s an understandable fear. An alternative to the reduction in ODSP could simply be saying once an income reaches a certain threshold, either ODSP is reduced or cancelled.


The recipient keeps a constant subsidy amount that is clearly theirs. Whether they are married, single, have kids or not. The combined income does not become a penalty. Their contribution to the relationship is solid and steady. Recipients do not pay into their own subsidy. Others in the unit have unaffected income. Raises are clear raises. Their incomes do not pay for the subsidy either, beyond the taxes everyone pays. Increase in assets and savings. No more penalties for being financially responsible.


Is it free money? Won’t everyone want a disability?


The cost of the subsidy is basically whatever it is that forces a person to live in a world consistently not designed for them. There will still be forms to fill out. Financial audits. Checks and safe guards. The goal will be a modern helping hand, better adapted for marriages and families.


If there is a solid continued push for accessibility and inclusion and that produces a society that readily welcomes those with disabilities with decent jobs, the subsidy will be needed less and changes can be made in the future to adapt to that reality.


Final Notes


It should be mentioned that there are different amounts for “double disabled rates” as they are actually called on the ODSP website. So there is a different situation if both people in a benefit unit have disabilities.


Also, despite efforts to keep this as accurate as possible, following all the ins and outs of ODSP makes this very difficult. The math is correct, though. Used a calculator and everything.


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