Group Income Protection plan and CBESA

I wondered if someone can direct me to the reference or info source that explains the relationship between group income protection awards from an employer and contribution based ESA claim.

I have a client who has come to the end of their SSP and will be getting 70% of their wages for 2 years. I helped him with a claim for CBESA and the DWP have refused him on the basis that he gets a ‘pension’. This is not a pension as far as I am aware and he didn’t pay into a plan so it isn’t a permanent health insurance policy either. 

I am happy to tell the DWP that they are wrong! but wanted to check first that these sickness polices from work are fully disregarded for CBESA.

Is it correct that if they didn’t pay into the scheme and it is part of their contract of employment then it is disregarded.The employer is being paid by a third party and then pays their employee rather than the employee being paid directly by the insurance company?

Also the letter I have seen from his employer takes off £5500 for ESA payment from his insurance!

Any ideas/advice would be much appreciated.

Thanks
Pippa

Hi Pippa - from the little I know about GIP payments it depends how it’s set up. If the client is still employed by the company and pays tax and NI on the payments then I think it counts as a salary. If however, he’s been medically retired then I think it would be a pension and he shouldn’t be paying NI on it. How the employer funds it is, I think, irrelevant. It’s what they are paying your claimant.

Thanks Daphne, in this case the client is still employed so I will definitely go for the MR on the ESA decision to treat it as a pension.

I wanted to give an update as the DWP are still refusing to pay out full Contributory ESA to my client as they believe that a group income protection scheme (GIPS) paid like a salary, is the same as a permanent health insurance policy and therefore taken into account if over £85 per week and the client hasn’t paid over 50% of premiums. he hasn’t paid any as it is a GIPS scheme.

I have told them that this is not the same and they now want another payslip and without that refuse to refer the case to a further dispute team higher than the first dispute team! My client is now in a hospice and I fear this wont be concluded until after his death. CPAG seems very clear about this and I am at a bit of a loss as to what to keep quoting back to the DWP when they are quoting the same regulations back to me but interpreting them differently.

They have told me that because the letter from the employer states that they will pay 60% of the pensionable salary they assume it is a type of pension and comes under the PPF periodic payment rule.

I feel this is all wrong but need to take a next step that doesn’t involve the grieving family.

ESA regs 2008 define permanent health insurance Permanent health insurance….

72.—(1) For the purposes of sections 2(1)(c) and 3 of the Act (deductions from contributory allowance) pension payment is to include a permanent health insurance payment.

(2) In this regulation “permanent health insurance payment” means any periodical payment arranged by an employer under an insurance policy providing benefits in connection with physical or mental illness or disability, in relation to a former employee on the termination of that person’s employment.

The Employment and Support Allowance Regulations 2013 states that
Permanent health insurance
64.  For the purposes of sections 2(1)(c) and 3(3) of the Act (deductions from an employment and support allowance) “pension payment” is to include a permanent health insurance payment.

Why doesn’t the 2013 define it and is the 2008 still relevant?

The 2008 regs are for “old-style” ESA, the 2013 ones are for “new style” ESA. Which one is applicable depends on where your client is in the UC roll-out. However, I don’t think it much matters in this case, in reg 2 of the 2013 regs we find the same definition:

“permanent health insurance payment” means any periodical payment arranged by an employer under an insurance policy providing benefits in connection with physical or mental illness or disability, in relation to a former employee on the termination of that person’s employment;

http://www.legislation.gov.uk/uksi/2013/379/regulation/2/made

If he’s really a current employee, then I can’t see how it’s a “permanent health insurance payment”. In which case I’d have thought GIP should count like contractual sick pay, which is neither earned income nor a pension.

If you have anything resembling a Mandatory Reconsideration Notice you may want to try lodging an appeal instead of pushing further disputes, but of course that will at the least require a client/appointee go-ahead.

Also the letter I have seen from his employer takes off £5500 for ESA payment from his insurance!

Looking round the ‘net, various GIP providers are changing their policies in reaction to removal of the work component of ESA from new claims next month. GIP is clearly expected to be paid alongside c-ESA, and they are planning to take account of the ESA cut, e.g. see http://www.health-matters.co.uk/news/esa-and-wrac-changes-for-april-2017-and-group-income-protection

Thank you, Jon that was a great help.

I have just had a call from ESA who have thankfully backed down and actually apologised!

They said they now understood that when someone is still in work and getting a GIPs payment then it is fully disregarded. Months of hassle, but a good outcome.