In Ontario, cashing out a monthly Loss of Earnings (LOE) benefit into a single lump sum is strictly controlled. Under WSIB Policy 18-03-05, a “commutation” is automatically paid as a lump sum if your permanent LOE payment at the 72-month review is 10% or less of your full LOE rate, unless you choose to opt out. Commutation of LOE benefits above 10% is strictly prohibited.
When you suffer a permanent impairment from a workplace injury, the Workplace Safety and Insurance Board (WSIB) typically pays your Loss of Earnings (LOE) benefits on a bi-weekly or monthly schedule until you turn 65. For workers in Ontario, this provides a steady, reliable safety net. However, as of 2026, some workers find themselves receiving a permanent but incredibly tiny LOE payment—perhaps $50 or $100 a month.
Receiving a trickle of money every month can be administratively annoying. Fortunately, for workers receiving tiny permanent payments, Ontario law provides an automatic solution. Under WSIB Policy 18-03-05, if your permanent Loss of Earnings (LOE) benefit is extremely small, the board will automatically “cash out” the remainder of your benefit into one lump sum, unless you actively opt out. However, if your benefit is larger, a “commutation” is strictly prohibited under the Workplace Safety and Insurance Act (WSIA). If you want to understand how your permanent rate is calculated or whether you should opt out of a lump sum, we recommend speaking with an experienced WSIB paralegal or lawyer from our directory. 🔍
Step-by-Step Process for Requesting a Commutation
Navigating how the WSIB handles the release of your future earnings requires understanding strict policy rules. Here is how the commutation process unfolds in Ontario. 📍
Step 1: Reach Maximum Medical Recovery (MMR)
You cannot commute a temporary benefit. You must first reach Maximum Medical Recovery (MMR), meaning your condition has stabilized and is not expected to significantly improve or deteriorate.
Once at MMR, the WSIB will establish your permanent impairment. Traditionally, under section 44 of the WSIA, your LOE benefit becomes “locked in” and protected from further review at the 72-month post-injury mark. However, please note that the Ontario government introduced Bill 105 (the Protecting Ontario’s Workers and Economic Resilience Act, 2026), which is currently before the Legislative Assembly as of June 2026. If passed, Bill 105 proposes to completely eliminate this 72-month statutory lock-in for new claims and cases that have not yet reached the 72-month mark, allowing the WSIB to review and adjust LOE benefits at any time.
Step 2: Confirm You Meet the 10% Threshold
The WSIB will only consider commuting an LOE benefit if the monthly amount is extremely small. 📈
Specifically, your ongoing LOE benefit must be equal to or less than 10% of your fully compensated LOE rate. If your workplace injury caused a massive drop in income and you receive $2,000 a month, the WSIB will not commute it. If your permanent loss is tiny and you only receive $75 a month, you meet the threshold to apply.
Step 3: Automatic Commutation vs. Opting Out
Unlike pre-1990 injury pensions where a commutation is discretionary and requires proving financial benefit, commutation for post-1997 Loss of Earnings (LOE) benefits is entirely automatic. Under WSIB Policy 18-03-05, if your permanent LOE benefit at your final 72-month review is 10% or less of your full LOE benefit rate, the WSIB will automatically pay it as a lump sum.
You do not need to submit a persuasive letter detailing your credit card debts or investment plans. Instead, the only action required is if you do not want a lump sum. If you prefer a steady, ongoing bi-weekly benefit, you must actively submit a written request to opt out and elect periodic payments. Be aware that once you elect bi-weekly payments, that decision is legally irrevocable.
Step 4: Actuarial Calculation of the Payout
Because LOE commutation is non-discretionary, your Case Manager does not perform any assessment of your personal or financial circumstances, nor do they evaluate your future risk of relying on provincial social assistance programs like ODSP. ⚠️
If you do not choose to opt out in favour of bi-weekly cheques, the WSIB will calculate the present-day value of your future payments up to age 65. The board utilizes a strict actuarial discount rate to account for the time-value of money, and once this automated calculation is complete, they will issue your final lump-sum payment directly to you.
How Much Does it Cost in Ontario?
The commutation process does not involve any government administrative fees, but securing legal advice before cashing out is highly recommended. 💵
- WSIB Process: The automatic calculation and commutation of your small LOE benefit by the WSIB is completely free.
- Paralegal Consultation: Hiring an Ontario WSIB paralegal to advise on the long-term impact of accepting the automatic commutation, verify the accuracy of the board’s calculations, or prepare your written opt-out election typically costs a flat fee of $300 to $600 CAD.
- The “Discount Rate”: This is the hidden cost. When the WSIB pays you a lump sum for money you were supposed to get over 20 years, they reduce the total amount to account for inflation and investment potential. You will receive less total money overall than if you waited for the monthly cheques.
| Type of WSIB Benefit | Can it be Commuted (Cashed Out)? | Typical Criteria |
|---|---|---|
| Small Permanent LOE (Under 10%) | Yes, Automatic. | Paid automatically as a lump sum unless the worker opts out. |
| Large Permanent LOE (Over 10%) | Never. | WSIB policy strictly forbids cashing out major income replacement over 10%. |
| Non-Economic Loss (NEL) Award | Yes, Usually Automatic. | By default, small NEL awards are paid as a lump sum for pain/suffering. |
How Long Does the Process Take?
The timeline for an automatic LOE commutation is standardized under WSIB Policy 18-03-05. ⌛
Once the WSIB determines your permanent LOE benefit is 10% or less, they will send you an official notification letter outlining your commuted lump-sum amount. After this letter is mailed, the WSIB is required to make 4 further regular bi-weekly payments (a period of approximately 8 weeks). This built-in buffer gives you time to consider your options and submit your written opt-out election if you prefer periodic payments. If you do not opt out by the deadline specified in the letter, the WSIB automatically processes the actuarial calculation and issues your lump-sum payout shortly thereafter.
Frequently Asked Questions (FAQ)
What is the difference between commuting LOE and a NEL award?
Loss of Earnings (LOE) replaces your lost wages and is fiercely guarded by the WSIB to ensure you have ongoing income. A Non-Economic Loss (NEL) award is a separate payment for permanent physical or psychological impairment (pain and suffering). NEL awards are routinely and easily paid out as lump sums, unlike LOE.
If I cash out my LOE, can I still get WSIB healthcare benefits?
Yes. Commuting your LOE benefit only stops your monthly income cheques. Your WSIB claim remains open for medical purposes. If you need a new knee brace or further physiotherapy for the workplace injury five years later, the WSIB will still cover those health care costs.
Will taking a lump sum affect my ODSP benefits?
Yes, significantly. A large lump sum payout from the WSIB is generally considered income or an asset by the Ontario Disability Support Program (ODSP). If it pushes your assets over the ODSP limit, your provincial benefits could be suspended. Always consult an ODSP caseworker before requesting a commutation.
What happens if my injury suddenly gets much worse after I cash out?
Under Policy 18-03-05, if your work-related condition significantly deteriorates later and results in a Non-Economic Loss (NEL) redetermination and increased NEL benefit, your LOE is recalculated. If you receive further LOE benefits or services within 24 months of that redetermination, you are legally entitled to another commutation option for the newly increased LOE amount, as long as it remains 10% or less of your full LOE rate.
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