Spending more on group benefits no longer guarantees employee loyalty. Canadian data from 2025 and 2026 show why, and what employers and brokers can do differently.
A $53-billion paradox
In 2024, health insurance plans generated $65.9 billion in premiums in Canada, 91% of it through group plans, and paid out $53.3 billion in benefits to some 27 million covered Canadians. Benefits paid rose 10.7% in a single year, according to the latest data published by the Canadian Life and Health Insurance Association.
Yet barely more than one plan member in two says they understand their plan very well. Employers have never invested so much in group benefits, and a large share of that investment remains invisible to the very people it was meant to retain.
The problem isn’t generosity. It’s how programs are designed, communicated and administered.
in health benefits paid in Canada in 2024
of plan members understand their plan very or extremely well
projected gross increase in health plan costs in 2026
Sources: CLHIA (2025 edition), Benefits Canada (2025), Aon (2026)
What has changed in Canadian employees’ expectations?
The unspoken deal between employer and employee has shifted. A salary and basic coverage are no longer enough: employees expect their employer to help them through what truly weighs on their daily lives.
According to the 2025 Benefits Canada Healthcare Survey, 39% of plan members experience high or extreme daily stress and 25% rate their financial health as poor. The TELUS Mental Health Index (August 2026) adds that 63% of workers rank the cost of living as their top financial concern, and that 28% have no emergency savings to cover their basic needs.
The pressure also comes from family. Again according to TELUS Health, 27% of workers financially support an adult child and 12% care for an aging parent. Among these caregivers, 37% report a financial impact and 32% an impact on their mental health.
Why doesn’t the one-size-fits-all program work anymore?
Most group programs were designed for a typical employee who no longer exists. The same team now includes a young professional paying off student loans, a parent juggling childcare costs and an experienced worker caring for aging parents. Their needs have little in common.
A young professional
Paying off student loans.
A parent
Juggling childcare costs.
An experienced worker
Caring for aging parents.
The result is predictable: barely more than half of plan members feel their plan meets their needs, according to the 2025 Benefits Canada Healthcare Survey. The gap also shows up in engagement. The June 2026 ADP Canada survey reports a workplace happiness score of 7.6 out of 10 among baby boomers, compared with 6.8 for Generations X, Y and Z.
A single program for everyone delivers very uneven value. Some members pay, through their contributions, for coverage they will never use, while their real needs go unanswered.
Do your employees really understand their plan?
This is a costly blind spot. In the 2023 edition of the Benefits Canada Healthcare Survey, 88% of plan sponsors believed they communicated coverage effectively. At the same time, only 51% of plan members said they understood their plan very or extremely well, down from 65% in 2018.
of plan sponsors believe they communicate coverage well (2023)
of plan members understand their plan very or extremely well (2023)
Source: Benefits Canada Healthcare Survey, 2023 edition
The 2025 edition shows little improvement: 53% understand their plan very or extremely well and 10% don’t understand their coverage at all. Employers feel it. According to a survey by MBWL International and Normandin Beaudry (June 2026), 41% of employers struggle to get their program understood and appreciated, and 36% are held back by manual administrative tasks. We explored this understanding gap in an article published in March; the 2026 data now show its impact on retention.
The two findings are linked. When administration relies on spreadsheets, emails and PDF brochures, information arrives late, fragmented and hard to find. Members don’t know what they have left to claim, or what is covered before they pay.
Can we meet these expectations without driving up costs?
Aon’s 2026 medical trends report projects a gross increase of 8.3% in health plan costs in Canada, 6.2 points above inflation. Prescription drugs remain the largest expense, with $16.6 billion in claims in 2024. Paramedical care is also growing quickly, with a 16% increase in mental health and massage therapy claims.
Not surprisingly, 65% of employers have made cost control their priority for 2026. But only 2% are considering cutting their program, and 9% plan to increase the share paid by employees.
That’s the dead end. Cutting hurts retention. Adding coverage without making it useful raises the bill without improving engagement. The only sustainable path is to better direct every existing dollar toward what matters to each employee.
What are successful organizations doing?
They don’t necessarily spend more. They spend differently, by acting on four levers.
Personalize without complicating
A fixed envelope each employee directs toward their own priorities, through a health spending account or a wellness account.
Holistic well-being as the foundation
Mental health, financial health and caregiver support, treated with the same rigour as physical health.
A program that’s clear in seconds
Coverage, balances and claims available on mobile, right when employees need them.
Steer with data
Reallocate the budget based on actual usage, then validate with a pilot project before rolling out.
Personalize without complicating
A health spending account and a wellness account let each employee direct a fixed envelope toward their own priorities.
- Health spending account: an annual amount for eligible medical and dental expenses, generally non-taxable federally.
- Wellness account: an amount for lifestyle expenses such as physical activity, training or transportation. It is a taxable benefit.
The employer keeps control of the budget, and employees get what matters to them. Tax treatment varies by province, notably in Quebec, and must be validated for each program.
Make holistic well-being the foundation of the program
Mental health and financial health go hand in hand. TELUS Health reports that 20% of workers say financial stress affects their productivity, and that 63% want support from their employer for savings and retirement. Easy access to therapy, financial planning tools and caregiver support directly addresses these needs.
Make the program clear in seconds
Members should be able to check their coverage, balance and claims on their phone, without searching. The demand is there: 70% of plan members say they are comfortable receiving personalized health information from their insurer. Communication is no longer an annual campaign, but information available the moment employees need it. See also: portals and digital journeys.
Steer with data
Before adding coverage, you need to know what is being used, by whom and where engagement is fading. A usage data audit, combined with a short anonymous survey, makes it possible to reallocate the budget rather than increase it. A pilot project in a single team then reduces the risk before a full rollout.
What role for the broker?
This shift is redefining the broker’s role. For a long time, their value rested on placing insurance and negotiating renewals. Those skills remain essential, but they are no longer enough.
Employers need an advisor who designs a complete program: insurance, flexible accounts, mental and financial health support, and data to measure results. A broker who can bring these elements together, without multiplying suppliers or invoices for the client, becomes a strategic partner rather than an intermediary.
It’s also a response to cost pressure. According to Aon, nearly three quarters of employers expect tough negotiations with their insurers and suppliers. The broker who arrives with usage data and a reallocation plan has a head start. See also: Brokers and partners.
How Segic approaches this challenge
At Segic, we start from a simple observation: a program’s value depends as much on its administration and the member experience as on what it covers.
The Segic Platform brings together group benefits administration, TPA and TPP Services, and a Benefits Marketplace with Canadian providers. Brokers and their partners can build a personalized program, including a wellness account, without adding to the employer’s workload. Members find their coverage and balances in one place, and the client remains the broker’s client.
In conclusion: retention depends on clarity
Canadian employers don’t have a generosity problem. They have a relevance and clarity problem. A one-size-fits-all program that is poorly understood and heavy to administer is expensive and doesn’t build loyalty.
The organizations that win the war for talent won’t be the ones that offer the most. They’ll be the ones that offer what matters to each person, and make it effortless to use.
Make your program easier to understand
Talk to your broker, or see how the Segic Platform makes your program more personalized and easier to manage.
Frequently asked questions
- Are Canadian employees satisfied with their benefits?
Partly. According to ADP Canada (June 2026), 60% of employees are satisfied with their benefits, but barely more than half of plan members feel their plan meets their needs (Benefits Canada, 2025). - What is the difference between a health spending account and a wellness account?
A health spending account reimburses eligible medical expenses and is generally non-taxable federally. A wellness account covers lifestyle expenses, such as physical activity or training, and is a taxable benefit. - Why are group benefits costs rising in Canada?
Prescription drugs remain the largest expense, and paramedical care, particularly mental health, is growing rapidly. Aon projects a gross increase of 8.3% in 2026. - How can employers improve employee retention through benefits without increasing the budget?
By personalizing the program, making it easy to understand and use, and reallocating the budget based on actual usage data rather than adding coverage. - What is the broker’s role in modernizing a group benefits program?
The broker designs the complete program: insurance, flexible accounts, well-being support and results measurement. They become the employer’s strategic partner.
Sources
- CLHIA — Benefits paid in 2024 (2025 edition)
- Medavie Blue Cross — 2025 Benefits Canada Healthcare Survey
- Benefits Canada — 2023 survey on plan understanding
- TELUS Health — Mental Health Index, August 2026
- Benefits Canada — ADP Canada survey, June 2026
- Benefits Canada — MBWL International and Normandin Beaudry survey, June 2026
- Benefits and Pensions Monitor — Aon medical trends 2026