Does the Threshold Apply to Future Out-of-Pocket Expenses? A Guide for Early Career Litigators

By: Simmi Sidhu B.A. Hons., LL.B., Mediator

At a recent mediation, a familiar question caused pause during what should have been a straightforward discussion on damages: Does the statutory threshold apply to the plaintiff’s claim for future out-of-pocket expenses?

Silence settled over the room. Counsel on both sides paused, flipping through their briefs, unable to give a definitive answer. I too could not answer it with confidence off the cuff.

When Ontario personal injury and insurance defence lawyers talk about "the threshold" under s. 267.5 of the Insurance Act, we almost always mean non-pecuniary losses (general damages, pain and suffering etc.). We automatically think of the threshold test under s. 267.5(5) proving a permanent serious impairment of an important physical, mental, or psychological function, and the statutory deductible standing between the plaintiff and their general damages. If a plaintiff can clear this threshold hurdle, general damages remain subject to an annually indexed statutory deductible (currently $47,913.01 for 2026, vanishing once the award exceeds $156,715.16). Due to the fact that general damages and statutory deductibles dominate pre-trial discussions, counsel often associate the threshold exclusively with pain and suffering. Far less discussed, and frequently misunderstood, is how s. 267.5 applies to economic claims, specifically future out-of-pocket expenses. Section 267.5(3) imposes a parallel threshold requirement on future health care costs. This often creates a statutory trap for counsel who treat a future care report as a single, indivisible head of damage.

The critical principle for junior counsel is that the Insurance Act does not impose the threshold on every future expense simply because it stems from an automobile collision. Section 267.5(3) specifically targets health care expenses. The first step in any analysis is to look past the catch-all heading of a future care report and identify the precise legal category of each expense being claimed.

The Statutory Starting Point

Section 267.5(3) of the Insurance Act provides:

Despite any other Act and subject to subsections (6) and (6.1), the owner of an automobile, the occupants of an automobile and any person present at the incident are not liable in an action in Ontario for damages for expenses that have been incurred or will be incurred for health care resulting from bodily injury arising directly or indirectly from the use or operation of the automobile unless, as a result of the use or operation of the automobile, the injured person has died or has sustained,

(a) permanent serious disfigurement; or

(b) permanent serious impairment of an important physical, mental or psychological function.

The statutory wording is deliberate: the provision does not refer to "future out-of-pocket expenses" generally. It applies strictly to expenses incurred for health care.

As illustrated in cases like Parmar v. Beach, 2017 ONSC 7810, where a plaintiff claims a future health care expense, they must establish that the statutory threshold has been met before recovering that expense from the tort defendant.

What Counts as "Health Care"?

Section 224(1) of the Insurance Act defines "health care" to include goods and services for which payment is provided under the medical, rehabilitation, and attendant care benefits of the Statutory Accident Benefits Schedule (SABS). Courts cross-reference the SABS framework to determine whether a given tort expense falls within the s. 267.5(3) threshold.

Housekeeping and Home Maintenance

In Sabourin v. Dominion of Canada General Insurance Co., [2009] O.J. No. 1425 (S.C.) and Valentine v. Rodriguez-Elizalde, 2016 ONSC 3540, the courts confirmed that housekeeping and home maintenance expenses are not "health care expenses" under s. 267.5(3). Consequently, a failure to meet the threshold does not bar a plaintiff from recovering future housekeeping or home maintenance damages.

In the post 2010 SABS era, Junior counsel often confuse statutory accident benefits eligibility with tort claim viability. Following the September 1, 2010 SABS amendments, housekeeping benefits were eliminated for non-catastrophically injured claimants under first-party coverage. However, that statutory change did not redefine the tort threshold in s. 267.5(3). Even if a non-catastrophic plaintiff cannot claim housekeeping under SABS, their tort claim for future housekeeping remains viable in court and is free of the health care threshold.

Caregiving

In Abraham v. Cann, 2003 CanLII 761 (Ont. C.A.), the Court of Appeal examined a claim for substitute caregiver services and concluded that these expenses were not "health care" within the meaning of s. 267.5(3). More recently, in the case of Ayub v Sun, 2015 ONSC 1828, during a similar threshold motion the court clarified that expenses such as future caregiving were not treated the same way. The threshold did not apply to these types of expenses. The precise statutory basis matters:

• Substitute Caregiver / Routine Domestic help does not fall within the definition of medical or rehabilitation benefits and escapes the health care threshold.

Income Loss and Other Financial Headings

It is also vital to distinguish future expense claims from pecuniary loss of income. Claims for future loss of income or loss of competitive advantage are governed separately by s. 267.5(1) of the Insurance Act, which carries its own distinct statutory criteria. They are never subject to the health care threshold under s. 267.5(3).

5-Step Checklist for Reviewing Future Care Plans

Step 1: Isolate the Specific Expense

Ignore generic headers like "Future Care Costs" or "Pecuniary Out-of-Pocket Claims." Break down every single item recommended by the occupational therapist or physiatrist.

Step 2: Cross-Reference s. 224(1)

Determine whether the expense fits within the SABS definitions of medical, rehabilitation, or attendant care.

Step 3: Apply s. 267.5(3) to Health Care Items

If the item is a health care expense, confirm that the plaintiff must prove a permanent, serious impairment of an important physical, mental, or psychological function to recover.

Step 4: Protect Non-Health-Care Pecuniary Claims

If the item is housekeeping, home maintenance, or non-health substitute care, do not concede threshold applicability. Ensure these claims remain intact even if the judge or jury finds against the plaintiff on the general damages threshold.

Step 5: Scrutinize the Functional Reality of "Care"

If a report uses broad terms like "support worker," inspect the underlying task. Is the worker administering medication/physio (health care) or performing routine domestic errands (non-health care)?

Conclusion

The crucial takeaway is simple: not every future out-of-pocket expense is subject to the automobile accident threshold.

Section 267.5(3) targets expenses incurred for health care. By resisting broad report labels and breaking down each expense into its actual statutory category, early career litigators can avoid inadvertently compromising claims that the Insurance Act does not bar.