Increases to social assistance income exemptions will decrease benefits for some people

Minister of Children, Community and Social Services, Lisa MacLeod, released details of the Ontario government’s 100-day review of planned changes to social assistance in the province on November 22nd.

A key feature of her announcement was a new formula regarding the retention of social assistance benefits for people with jobs. It had been widely reported by the government and in the media that the plan included increases to the amount of money a person can keep from their social assistance when they work.

That will not always be the case according to John Stapleton, Innovation Fellow with the Metcalf Foundation.

Under the government’s proposed new system, a single person who is working and receiving benefits from the Ontario Disability Support Program will be allowed to earn up to $6,000 per year before having his or her income support benefits reduced.

This is a significant increase to the exemption limit that currently exists for ODSP, which only allows for earnings of $200 a month or $2400 annually. For Ontario Works recipients, the exemption limit will be increased from $200 a month to $300. In both cases, each dollar received beyond these limits will result in a 75 cent reduction or claw-back in benefits. At present, earning beyond the established limits, in both cases, result in just a 50 cent reduction for each dollar earned.

The increase to allowable earnings will result in people retaining more of their benefits as long as their earned income from employment remains below a certain level.

According to calculations done by Stapleton, the increase of the claw-back from 50 to 75 percent means that once a person on ODSP earns more than $13,200 in wages in a year, they will actually be worse off under the proposed new system than under the current one. For people on OW, the impact occurs even sooner; a person will be worse off once their annual employment income hits just $6000.

The changes will also negatively affect the point at which a person is no longer eligible for social assistance income supports because of income earned through employment.

At present, a person on ODSP can earn $30,456 before income benefits are reduced to zero. Under the proposed new system, income benefits will end once employment income reaches $24,704. Currently under OW, benefits end when income earnings reach $19,922, and the new end point will be $15,328.

These changes are displayed in graphs produced by Hannah Aldridgefrom the Maytree Foundation (click here to view them). The charts also show the significantly higher cutoff point that would have existed had the changes proposed by the previous Liberal government in the 2018 Provincial Budget been enacted.