Can HR prove the ROI of rising Canadian benefits spend?

Canadian employers are spending more on group benefits than ever before — and have less certainty than ever about what that spend is returning. Canadian medical plan costs are projected to climb 8.3 per cent in 2026, up from 7.4 per cent the year before, according to Aon's 2026 Global Medical Trend Rates Report. At the same time, two in five Canadian organizations report that the current business environment is increasing pressure on their benefits spending, while one in four say it is straining the resources available for benefits management and administration, according to the 2026 Global Benefits Forecast Survey by Normandin Beaudry. Chief financial officers are asking harder questions at the boardroom table, and human resources (HR) leaders who can’t answer them risk losing budget — and credibility as a strategic function. 

The question is no longer how to design better benefits. It is: how do we know if any of it is working? 

Beyond utilization: what a mature ROI framework looks like 

Many organizations track benefits utilization — who is using what, and how often. That isn’t nearly enough, says Paula Allen, Global Leader, Research and Client Insights at TELUS Health in Toronto. 

"The metric has to be value and how relevant is this to my employee population,” says Allen. “When I fund something, am I funding something that is quality? How do I actually know that it’s quality?" 

Allen identifies three components that a genuinely mature benefits return on investment (ROI) framework must address: use, appropriate use, and outcomes within the program itself. That second element — appropriate use — is where many employers are currently losing ground, she says. 

She points to the expansion of paramedical mental health benefits as a case study in what happens when coverage opens without a quality-management mechanism. Several years ago, many Canadian employers raised their mental health coverage from caps of around $500 per year to $5,000, or even unlimited. The intent was sound, but the results have been uneven, according to Allen. 

"We ended up in a situation where the floodgates opened and there was no mechanism for quality control," Allen says. "We've had situations where counsellors have set plans with individuals that are much more intensive than that individual actually needs, so it's almost impossible to get an ROI." 

She argues that employers who route employees toward the employee assistance program (EAP) before escalating to higher-cost pathways are far more likely to demonstrate a measurable return. EAPs offer cost-effective, holistic support with built-in pre- and post-outcome measurement — a feature most benefits components lack, according to Allen. 

"EAPs are a little ahead of the curve in actually collecting those pre- and post-metrics," Allen says. "It's pretty much the most inexpensive component of any benefit plan, so it makes sense in any kind of strategy to optimize things that you already have in place, that give you metrics and are cost effective, before you go to your next level." 

The mental health measurement gap 

Mental health benefits are where the ROI challenge is sharpest — and where the stakes are highest. Mental Health Research Canada has estimated that burnout is costing Canadian employers between $5,500 and $28,000 per affected employee annually. The mental health costs borne by Canadian employers now total $110 billion each year, according to a 2026 report by the CSA Group, making workforce mental health one of the country's most significant economic liabilities. 

But Allen cautions that reducing mental health disability costs requires looking upstream at what’s generating stress in the workplace — not simply improving access to counselling. 

"If you see your people under a lot of stress and burnout, your only answer can’t just be 'go fix yourself,'" she says. "You have to look at what’s creating that in your environment and reduce that as well as part of your cost reduction." 

Canada is among the world's leaders in identifying psychosocial risk as a workplace issue. Allen notes that several countries have now legislated requirements for organizations to assess and mitigate those risks — driven not by humanitarian concern alone, but by economic necessity. 

"The same way we had occupational health legislation — that was great because employers need to assess and mitigate that risk, and it benefited countries and it also benefited employers,” she says. “The same is happening, but not as quickly in Canada as we would like, for psychological risk." 

In TELUS Health's Mental Health Index for the first quarter of 2026, 27 per cent of respondents said their physical health needs were not being met by their employer, and close to 25 per cent said the same for mental health. Those aren’t abstract metrics. They translate directly into talent acquisition and retention costs, and into the competitive value of the total rewards package, says Allen. 

Speaking the language of the boardroom 

Even when the data exists, communicating benefits value upward remains a persistent challenge. There’s often a gap between the HR function producing benefits analysis and that analysis landing with a chief financial officer in a form they can act on, says Allen. 

Allen's recommendation is to frame the conversation in the language of risk management — a framework that resonates across the C-suite. "The most common and observable, expensive risk is disability," she says. "If you can draw a line between your patterns of disability and where you're investing the most, and you have measures to say that people are using benefits appropriately and surveys showing employees are getting the value they need — that's one thing. I'm just framing it in terms of risk management." 

Benchmarking adds weight to the argument, says Allen, noting that younger employees are acutely sensitive to employers who fall below market on benefits and the cost of losing them is quantifiable. "How long does it take to recruit? How many lost candidates do you have?” she says. “When you're doing feedback and when you hire people, find the things that made a difference for them — ask did your benefits make a difference or not? And if not, what else have they seen in the market?" 

For Daniel Drolet, Senior Partner, Group Benefits at Normandin Beaudry in Toronto — producer of the 2026 Global Benefits Survey — the ROI conversation runs into a fundamental data challenge that no amount of framing can fully resolve. "It's really hard to measure the direct ROI, saying, ‘If you covered weight loss management, you will have fewer days of absenteeism, more productivity,’ and so on,” says Drolet. “Every dollar brings you back two-and-a-half to three times, but it's really, really hard to prove with their own data." The benefits industry, he notes, now relies on insurance carriers to aggregate data at scale — and those carriers are not yet providing the tools Canadian plan sponsors need, he says. 

Quality over quantity: the shift that’s coming 

What the use, mental health, and boardroom communication challenges share is a need for better data architecture, not simply more data. Allen says the industry is moving from a utilization-based mindset toward a value-based one, and organizations that make that shift now will be far better positioned when the scrutiny intensifies with rising benefits costs. 

"I think we are going to become a lot more data focused in the benefits industry," she says. "But it'll be quality metrics as opposed to solely utilization metrics." 

For Allen, the path to a credible benefits ROI story runs through cleaner data, sharper program design, outcome-based measurement, and the discipline to cut what isn’t delivering. That makes it a governance problem that HR leaders are increasingly being asked to own at the highest levels of their organizations.