Qualifying for an RDSP with type 1 diabetes
By Alicia Van Hyfte 30 October 2018 3 min read
Did you know that if you live with type 1 diabetes, you may qualify for a Disability Tax Credit (DTC) and a Registered Disability Savings Plan (RDSP). As a fellow type 1 patient of almost ten years and counting, I didn’t know I could benefit from these things until recently learning this information.
Why isn’t this common knowledge for people living with type 1 diabetes?
There are a few common reasons why people like me, who live with type 1 diabetes, are not aware that they may qualify for an RDSP or a DTC.
You just didn’t think you could qualify. Type 1 diabetes isn’t a physically obvious medical condition, except for the pokes on your fingers or somewhat noticeable insulin pump. Most of us with the condition wouldn’t necessarily consider ourselves disabled. Type 1 diabetes is a condition that requires tedious management in our everyday lives, but the physical limitations are often minimal compared to other medical conditions.
You have never heard of an RDSP or DTC until you stumbled across this article. Or maybe you had a vague idea of what they were, but no idea they were a benefit you could take advantage of.
You didn’t know that to get an RDSP, you need to qualify for the DTC first. Opening an RDSP is a process that requires one step at a time. The first step is to learn more.
What is a Registered Disability Savings Plan (RDSP)?
An RDSP is a long-term registered savings plan to assist people living with significant physical restrictions or prolonged medical conditions save for their future financial security. In addition to your own contributions to the plan, the federal government will also deposit the Canada disability savings grant and the Canada disability savings bond into your RDSP. This means the government may match your contributions to the plan by up to 300 per cent, depending on your adjusted family net income. These grants and bonds paid into the plan—as well as the RDSP earnings—grow on a tax-deferred basis until withdrawals are made from the plan.
General eligibility requirements for RDSPs
To be eligible as a beneficiary of an RDSP when the plan is opened you must:
- Be eligible for the Disability Tax Credit
- Have a valid Social Insurance Number (SIN)
- Be under the age of 60
- Be a resident of Canada
If you are a parent of a child living with type 1 diabetes, you may hold the RDSP for your child until they are 18 years old. The CRA will require your child to reapply for the DTC when they turn 18.
What is a Disability Tax Credit (DTC)?
To qualify for an RDSP you must also be eligible for the DTC. The DTC is a non-refundable tax credit that may reduce tax that persons with disabilities and prolonged medical conditions must pay.
Under the eligibility guidelines of the CRA, individuals living with type 1 diabetes may qualify for a DTC by claiming the medical condition as “life sustaining therapy.” To do so, you must have a doctor sign off on a T2201 that confirms that you spend an average of 14 hours per week managing your diabetes or assisting your child with their diabetes management.
What may be included in the 14 hours:
- Checking blood sugar levels
- Preparing and administering the insulin
- Changing infusion sets for insulin pumps
- Testing for ketones
- Recording blood sugars in a log book
If your child requires assistance to manage their diabetes, your time spent carrying out and supervising these activities can be counted in the 14 hours per week requirement. These activities include:
- Having to wake your child at night to test their blood sugar
- Checking your child to decide if more blood sugar testing is needed (during or after physical activity)
- Other supervisory activities that can reasonably be considered necessary to adjust the dosage of insulin
What may not be included in the 14 hours:
- The time an insulin pump takes to deliver the medication
- Meal preparation and carbohydrate counting
- Attending medical appointments
- Buying insulin and other diabetes-related medical supplies
- Treating and recovering from hyperglycemia or hypoglycemia
Where do I start?
Applying for an RDSP may seem overwhelming at the start line, but don’t worry, there are plenty of helpful resources. The ATB RDSP Reference Guide can provide you with a full explanation of all things RDSP and DTC related. Diabetes Canada is also a helpful resource.
When you’re ready to get your RDSP set up, a financial advisor can walk you through the process and answer any questions you may have.