Preserving AISH and Disability Benefits After Settling a Personal Injury Claim in Alberta and BC

By September 11, 2018Articles

Preserving AISH and Disability Benefits After Settling a Personal Injury Claim in Alberta and British Columbia.

Article written by Alena Storton, an Articling Student for Kubitz and Company, a firm of Personal Injury Lawyers in Calgary, Alberta.


If you have experienced a severe injury or chronic pain stemming from an injury, you may know that disability benefits are, oftentimes, an essential source of financial stability for individuals in this type of situation. When those injuries have been caused by someone else’s negligence, it can be anxiety-inducing to contemplate losing such a vital source of assistance solely because you would like that person to compensate you for the losses you suffered. There are, however, several methods to preserve those life-sustaining disability benefits, while also receiving settlement money that can help you get back on your feet and plan for the future.

This article first describes the income and asset calculations under the Alberta Assured Income for the Severely Handicapped Act1 and British Columbia Employment and Assistance for Persons with Disabilities Act,2 and what types of income and assets are exempt from that calculation. This article will briefly evaluate the positive and negative aspects of each of these exempt income and assets in the context of a settlement payment. Finally, the article will provide a recommendation on which option may be best.

The options and recommendation are assessed in the context of a man who suffered a severe traumatic brain injury and other debilitating injuries as a result of a motor vehicle accident – for ease of reference, this article will refer to this man as the “client”.


The client currently resides in Alberta and has been receiving benefits under the AISH Act. The client is a dependent adult as a result of his severe brain injury. The client is considering moving to British Columbia within the next few years. If he moves, the client will apply for benefits under the Disabilities Act.

Alberta Benefits

1. Eligibility for AISH Benefits

In Alberta, persons with severe disabilities may receive financial assistance through the AISH Act. Under the AISH Act, a person may receive a living allowance, personal benefit, child benefit, and health benefit, depending on whether he or she meets the criteria in the AISH Act and regulations. A person is eligible to receive AISH benefits if he or she is a Canadian citizen or permanent resident, ordinarily resides in Alberta, is at least 18 years old, and has a severe, ongoing handicap. In addition, the person’s income, or his or her income combined with a cohabitating partner, must be less than the maximum amount allowed in the AISH Act and the corresponding regulations. In addition, to be eligible for a living allowance or health benefit under AISH, the total value of the person’s assets must be $100,000 or less. The asset limit for a personal benefit or child benefit under the AISH Act is even more stringent – it requires that the total value of the person’s assets were $3,000 or less.3

Despite the income and asset provisions in the AISH Act, the director may exempt an individual from the income requirement if that person is applying for a health benefit and the Minister concludes that he or she is in circumstances of financial hardship. The Minister may also exempt a person from the $3,000 asset limit for a personal benefit if the Minister is of the opinion that the person is in circumstances of financial hardship.4

2. Cohabitating Partners

Section 1(2) of the Assured Income for the Severely Handicapped General Regulation5 defines a cohabitating partner as a person with whom the person resides, and any of the following apply: is the person’s spouse, has a relationship of interdependence (as defined in the Adult Interdependent Relationships Act),6 or has a natural or adopted child. In this case, the client does not have a cohabitating partner.

3. Calculating Income and Assets under AISH Act

a. Income

Income, for the purposes of the AISH Act, is calculated according to Schedule 1, section 1 in the AISH Regulation. The types of income in this section include: income that is reportable under the Income Tax Act of Canada of the type that is not exempted by the AISH Regulation,7 and trust income when the director deems it to be income.8

In Schedule 1, Table 1, the AISH Regulation establishes the types of income that are entirely exempt from the income calculation in the AISH Act, meaning it does not impact the amount of AISH benefits someone will receive. The exemptions that may be most relevant to this client are:

  • cash gifts;
  • certain tax refunds;
  • payments from a registered disability savings plan.

Some income is partially exempt, meaning that only part of the value is taken into account for the purpose of calculating AISH benefits. Under Schedule 1, Table 2, partially exempt income includes:

  • trust income;
  • non-pension annuity income;
  • investment income.

An individual may earn up to $200 per month in trust income without impacting an AISH living allowance. After $200, 75% of the trust income is subtracted from the monthly living allowance.

b. Assets

Schedule 2 in the AISH Regulation establishes the way in which assets are determined for AISH benefits. The value of each asset is considered its market value, minus any debt that has been secured against that asset at a reasonable interest rate.9 Schedule 2, section 2(2)(a)-(j) states that the following assets are exempt:

  1. one principal residence [which means one home or the home quarter section of a farm in which the AISH beneficiary ordinarily resides];
  2. one vehicle and one vehicle adapted to accommodate the handicap of the applicant or client or his or her cohabiting partner or dependent child;
  3. a locked-in retirement account; (c.1) a registered disability savings plan under section 146.4 of the Income Tax Act (Canada);
  4. clothing and reasonable household items;
  5. a prepaid funeral;
  6. repealed SA 2018 c 12 s 2;
  7. an asset held by a trustee in a bankruptcy proceeding;
  8. a non-commutable annuity purchased on or before February 1, 2002;
  9. a payment received from the Government of Canada or Alberta exempted by the Minister for the purpose of this clause and any asset to the extent it was purchased with that payment;
  10. an asset exempted by a director if it is disposed of within the time specified by the director.

On June 11, 2018, amendments to the AISH Act came into force to allow for more flexibility in relation to money obtained by individuals who receive or wish to qualify for AISH benefits. Section 3.1 of the AISH Act creates the following exclusions to the calculation of assets for AISH benefits:

  • the value of assets held in trust for the benefit of the person receiving AISH benefits;
  • money received if that money is
    • not considered income under the AISH Regulation
    • within 365 days of being received, invested in an asset that the AISH Regulation establishes for this purpose.
  • For investing money received, the AISH Regulation designates the following assets as exempt:

    • a trust in which the person is a beneficiary;
    • assets described in section 2(2)(a) to (e) [included above].10

    British Columbia Benefits

    1. Eligibility for Disability Assistance Benefits

    In British Columbia, individuals who have received the “Person with Disabilities” (PWD) designation may receive financial support through the Employment and Assistance for Persons with Disabilities Act.11 Under section 2 of the Disabilities Act, the minister may designate someone as a PWD if the person is at least 18 years of age and (in the opinion of a medical or nurse practitioner) has a mental or physical impairment that is likely to last for at least 2 years. In addition, that mental or physical impairment must (in the opinion of a prescribed professional) significantly restrict the person’s ability to perform activities of daily living, either on a continuous basis or periodically for extended amounts of time. An impaired ability to perform everyday living activities may be indicated by the person using an assistive device, receiving significant help from another person, or receiving the assistance of a service animal. There may also be some employment-related obligations under the Disabilities Act, when required by the minister, but those almost certainly will not apply here because the client is incapable of retaining employment.

    2. Calculating Income and Assets under Disabilities Act

    a. Income

    According to section 9 of the Employment and Assistance for Persons with Disabilities Regulation,12 income is determined in accordance with Schedule B. To be eligible for disability assistance, a person’s income cannot equal or exceed the amount of disability assistance that he or she would be entitled to under Schedule A,13 as the amount of disability assistance provided in a calendar month may not exceed the amount determined under Schedule A less the net income determined under Schedule B.14

    Section 1 of Schedule B provides certain exempted sources of income, meaning it will not impact the amount of disability assistance a person may receive. The exemptions that are relevant to this client in the settlement context are: money withdrawn from a registered disabilities savings plan and gifts.15

    In some circumstances, a person may receive money that was not considered earned for the purposes of the Disabilities Act and Regulation, such money is referred to as “unearned income”. Unearned income includes annuities, gifts of annuities, and trusts.16 Schedule B specifies that when calculating net income, “all unearned income must be included, except the deductions permitted under section 6 and any income exempted under sections 7 and 8.”17

    The unearned income exemptions in section 7 include a payment made from a trust or from a structured settlement annuity payment to an individual with the PWD designation if the payment is exclusively used for “(i) disability-related costs, (ii) the acquisition of a… place of residence, (iii) a registered education savings plan, or (iv) a registered disability savings plan”.18 A person with a disability, who has a temporary exemption of assets under section 12(1) of the Disabilities Regulation (discussed below), may also expend money from a registered disability savings plan or trust if the money is solely used for disability-related costs.19 Similarly, if a person with a disability uses a structured settlement annuity payment for disability-related costs to promote independence, that payment is exempt from the calculation of net income.20 To be considered a structured settlement, the settlement must be related to damages caused by a personal injury or death, and the settlement agreement must require the defendant to make periodic payments for a set amount of time or purchase a single premium annuity contract.21 The exemptions in section 8 relate to the Minister’s discretion to exempt unearned income that is used for certain educational costs.

    b. Assets

    Section 10(2) of the Disabilities Regulation establishes that a person will not be eligible for disability assistance if his or her total value of assets exceeds prescribed limits. Importantly for this case, the limit for an individual who has been designated as a PWD is $100,000.22

    The following assets are considered exempt under section 10(1)(a) – (ccc) in the Disabilities Regulation and may be relevant to this case:

    • clothing and necessary household equipment;
    • one motor vehicle generally used for day to day transportation needs;
    • a place of residence;
    • money received or to be received from a mortgage on, or an agreement for sale of, the previous place of residence if the money is
      • applied to the amount owning on the current place of residence, or
      • used to pay rent for the current place of residence
    • certain federal and provincial tax credits (see 10(1)(f)-(g));
    • funds held in, or money withdrawn from, a registered disability savings plan.
    • In certain circumstances, assets received by a person with the PWD designation, or a person receiving special care (in a private hospital or special care facility, other than a drug or alcohol treatment facility), will be exempted for a certain amount of time. During that time, the assets will not impact the asset limits. This temporary exemption applies when the minister is satisfied that the person intends to create a registered disability savings plan or trust, and the person will contribute some or all of the asset to that registered disability savings plan or trust.23 The exemption starts on the day that the person receives the asset and ends three months after that date. This date may be extended if the minister is satisfied that the person is reasonably attempting to establish the registered disability savings plan or trust. The exemption date will end if the exemption ceases to exist, or because the person contributes all of the assets to the registered disability savings plan or trust, the person no longer intends to contribute the assets to a registered disability savings plan or trust, or the person contributes some of the assets and does not intend to contributing the remaining portion.24

      The Disabilities Regulation also provides an exemption for asset development accounts, as well as assets held in trust for a person with the PWD designation25 A beneficial interest in real or personal property held in, one or more, trusts will be exempt up to an aggregate value of $200,000, or higher if approved by the minister.26 The minister will generally authorize a higher limit for the value of a trust if he or she is satisfied that there are special circumstances that will result in the disabled person experiencing lifetime disability-related costs that exceed $200,000.27 Disability-related costs refers to the cost of providing a person with disabilities with caregiver services or other services that relate to a person’s disability, renovations to the person’s place of residence to accommodate disability-related needs, or maintenance of the place of residence.28/sup> Before setting up a trust, the British Columbia government should review and approve it in order to ensure it qualifies for the exemption.

      Methods of Preserving AISH and Disability Assistance

      Given these statutory parameters, the most effective ways to preserve AISH or Disability Assistance while receiving a settlement payment are likely to invest the money in a registered disability saving plan, a trust, a vehicle or residence, or arrange a structured settlement.

      A registered disability savings plan (RDSP) is considered an exempt asset in both Alberta and British Columbia, and payments from a RDSP are generally not considered income for the purposes of assistance. RDSPs provide versatility for relocating. Once funds have been invested in a RDSP, the money can be accessed from more than one province and it can be transferred to another RDSP. An RDSP also enables the settlement funds to grow over time through this investment. There are, however, some drawbacks to investing settlement funds in RDSPs. First, there is a lifetime contribution limit of $200,000 for a beneficiary under a RDSP. Second, a RDSP is generally a long-term investment. Payments from the RDSP begin when the beneficiary is 60 years old and withdrawing money before that time may cost more due to taxes.

      Similar to an RDSP, the payments that a beneficiary receives under a structured settlement are not considered income for the purposes of AISH, and may be exempt “unearned income” under the Disabilities Act and Regulation. Structured settlement payments are not taxable under the Income Tax Act29 of Canada.30 Consequently, these payments do not meet the definition of “income” under the AISH Act, which, in part, refers to income reportable under the Income Tax Act that is not exempted under the AISH Regulation. In British Columbia, structured settlement funds are exempt from the income calculation, so long as the money is spent on disability-related costs for the purpose of supporting independence or on disability-related costs, the acquisition of a place of residence, a registered education savings plan, or a registered disability savings plan.

      A trust is also an exempt asset in Alberta and British Columbia, although in British Columbia exempt trusts are generally limited to $200,000. Trusts may be more flexible than an RDSP, as the amount invested and the payment schedule and size can be determined when the trust is established. In British Columbia, payments from a trust are not considered income, so long as it is used to pay for disability-related costs to promote independence, or disability-related costs, the acquisition of a place of residence, a registered education savings plan, or a registered disability savings plan. In Alberta, however, income from a trust can significantly limit the amount of a living allowance provided under AISH. Although the value of the trust is exempt, payments from a trust are only exempted under AISH if it is below $200 per month. Beyond that amount, 75% of the payment from a trust is considered income and will reduce the monthly living allowance accordingly.31

      Finally, a personal injury settlement payment may be used to purchase a personal residence or vehicle, both of which are exempt assets in Alberta and British Columbia. A fully accessible house and vehicle may help the person live a comfortable life, but it also ties the settlements funds into property that cannot be easily converted to pay for the necessaries of daily living.

      Recommendation for the Client

      Given the client’s circumstances, he will most likely want to invest settlement money in a way that preserves his AISH benefits to the fullest extent, while still being versatile enough to support his day-to-day needs and allow him to potentially move to British Columbia. We recommend that the client negotiate with the defendant’s insurer to place as much money as possible into a structured settlement. Any funds in excess of the amount that is structured can be put into savings (up to a maximum of $100,000), a trust, an RDSP, or a locked-in retirement account, as best suited to the client’s needs. Alternatively, part of those excess funds could be used to purchase an accessible house and vehicle as a means of providing stable and appropriate housing and transportation. The client has one year from the date he receives the settlement money to transfer the funds into one of these exempt or partially exempt assets. After that year, his AISH eligibility will be impacted by these funds. If the client moves to British Columbia, he could sell the residence or vehicle. He then has at least a three-month period to invest it into an exempt asset in British Columbia.

      Article was written by Alena Storton, an Articling Student for Kubitz and Company, a firm of Personal Injury Lawyers in Calgary, Alberta.

      This article is not intended to give legal advice, but only general information. Legal advice specific to your situation should be sought from a lawyer experienced in the field of personal injury law in Alberta or British Columbia, as the case may be.

      1 SA 2006, c A-45.1 [AISH Act].
      2 SBC 2002, c 41 [Disabilities Act].
      3 AISH Act, supra note 1, s 3(1)-(3).
      4 Ibid, s 3(4).
      5 Alta Reg 91/2007 [AISH Regulation].
      6 SA 2002, c A-4.5.
      7 Supra note 5, Schedule 1, s 1(1)(a).
      8 Ibid, Schedule 1, s (1)(d).
      9 Ibid, Schedule 2, s 1(1)-(2).
      10 Ibid, s 3.
      11 Supra note 2.
      12 BC Reg 81/2016 [Disabilities Regulation].
      13 Ibid, s 9(2).
      14 Ibid, s 24.
      15 Ibid, Schedule B, s 1(xxxiv), (xlix).
      16 Ibid, s 1(1).
      17 Ibid, Schedule B, s 1(d).
      18 Ibid, Schedule B, s 7(1)(d)-(d.1).
      19 Ibid, Schedule B, s 7(1)(d.2).
      20 Ibid, Schedule B, s 7(1)(d.3)(ii).
      21 Ibid, Schedule B, s 7(2).
      22 Ibid, s 10(2)(a).
      23 Ibid, s 12.1.
      24 Ibid.
      25 Ibid, s 10(1)(y).
      26 Ibid, s 12(2).
      27 Ibid, s 12(3).
      28 Please note, these aspects of “disability-related costs” are the most likely to be relevant to this case. For a full definition, please see Disabilities Regulation section 12(1).
      29 RSC 1985, c 1 (5th Supp).
      30 Canada Revenue Agency, Interpretation Bulletin, IT-365R2, “Damages, Settlements and Similar Receipts” (8 May 1987), s 5.
      31 Government of Alberta, Your guide to AISH: the Assured Income for the Severely Handicapped Program (2018), online: Government of Alberta at 15.