Check your policy — some group benefits change, or vanish, when you turn 65

Stephen Booth continues to be surprised by what life throws at him.

The 66-year-old who lives in Barrie, Ont., didn't expect to be working in retail past 65. He certainly didn't think he'd be losing some of his employee disability benefits as he battled paralysis-inducing cataplexy, either.

"That was just one more thing on top of everything else," he said.

"During that time, depression hit me pretty bad."

If Booth still had long-term disability coverage, it would have helped support him. But he was surprised to learn that, upon turning 65, he'd lost some of the benefits he'd previously had through his employer's group insurance plan.

So he still had to work — if only for the paycheque — and apply for other government support to make ends meet.

Sheila Burns of the Canadian Life and Health Insurance Association says it's common for people at any age to not fully understand the coverage in their group benefit plans. (Marc Robichaud/CBC)

The reduction of long-term disability insurance at that age isn't unique. In fact it's pretty standard in most group plans. Life insurance itself also typically decreases or expires. The industry says this is to keep group plans financially viable and accessible, as the cost to insure workers past 65 can be steep.

While group benefits differ from workplace to workplace across the country, a majority of them cut or reduce employee disability insurance once employees reach their 65th birthday, even if they're still working.

It's because, in the past, this was the age many people would have left the workforce and other pension plans or government support would kick in, says Sheila Burns, the director of health and public policy at the Canadian Life and Health Insurance Association.

However seniors are increasingly staying in the workforce past 65. About 900,000 people were working past that age, according to Statistics Canada's 2023 labour report. Some delay retirement by choice or necessity, but discovering the loss of benefits is becoming a more common reason.

On the surface it might seem unfair that a worker's benefits would change from one day to the next, from age 64 to 65. But Burns says it comes back to the point of insurance, which is there to protect against the risk of financial loss.

David Harvey, 70, was shocked to learn some of his group benefits changed when he turned 65. (Georgie Smyth/CBC)

"Someone who can't access their full retirement benefit would have a real risk of losing income, someone who's over age 65 and has access to their full retirement benefit has less of a risk of that loss," she said.

Central to this, of course, is money.

Unsurprisingly, the rising cost of living is a big motivator for seniors to remain in the workforce after 65.

Is it age discrimination?

David Harvey, a 70-year-old from Burnaby, B.C., says every dollar and benefit counts as older people try to fund their lives amid ever-increasing average lifespans.

Harvey officially retired at 68, but kept working because he enjoyed his teaching job at Kwantlen Polytechnic University in nearby Surrey. But says he was shocked to learn some of his group benefits diminished after his 65th birthday, so he filed a pay equity complaint against the school and the faculty's union.

His complaint, filed to the BC Human Rights Tribunal, claims the university failed "to provide equal work for equal value to faculty members who are over 65 years of age."

It claims an employee over that age stands to lose thousands of dollars worth of benefits, when they lose access to long-term disability insurance — and that that amounts to discrimination on the basis of age.

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"It feels like you are not as valuable as other people," Harvey told CBC News.

A similar case was heard in Ontario in 2018, when a teacher successfully argued the termination of benefits in his workplace was unconstitutional.

The B.C. case has not yet been heard by the tribunal and the university said in a statement to CBC News it values the "diverse range of demographic groups" represented in its staff and couldn't comment beyond that.

Harvey says he's financially prepared for retirement and his complaint is more about drawing attention to shrinking or vanishing benefits for people who don't have significant retirement savings.

People like Booth.

Booth loves his retail job, especially the interactions with customers at the self-serve checkout. But he admits working is tough with his health issues. He's legally blind and suffers from cataplexy, which can cause him to collapse and then take extended periods of time off work.

He says he feels less financially secure without the private plan but doesn't have much of a choice other than to keep working as long as he can, in spite of the reduced benefits.

We asked how long that could be.

"Till I die," he responded.

Employers and workers have options to buy new coverage plans past age 65. Some insurance providers offer bespoke plans for older employees, though Burns says it comes down to what workplaces and people can afford.

"Sometimes the the cost might not make it as attractive to the employer and the employee as they thought initially, " she said.

At the very least she says employees should take some time to read through their policies to make sure they understand when coverage changes or ends and employers should communicate all of that with their workers, well before they turn 65.