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. 

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. 

"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.