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How Canadian Employee Health Benefits Continue to Evolve: What You Need to Know

To all Canadian startups and United States based startups with satellite offices in Canada (now, or in the future), this background information is important to note.

Canada is recognized as having one of the best public healthcare systems in the world. The Canadian Government covers basic physician and hospital expenses for all Canadians and provides financial assistance to Canadians who are unable to work because of disability or illness.

In addition, the majority of Canadians are also protected through extended healthcare, which reimburses a variety of expenses, such as prescription drugs, dental, hospital and medical expenses not covered by provincial government plans (CLHIA, 2016). In 2015, these extended healthcare programs covered 24 million Canadians; 90% of which were provided under group plans purchased by employers, unions or professional associations (CLHIA, 2016).

Employee health benefits are an important part of Canadian culture, and this is unlikely to change in the near future. However, what is changing is the way in which Canadians use their employee health benefits, the type of coverage they expect, and how this impacts employers and their ability to compete for talent.

The Changing Face of the Canadian Workforce

The demographics of the Canadian workforce are changing. According to a 2015 study by Sanofi, employers estimate that 42% of their workforce falls into the Baby Boomer generation. While 22% of Baby Boomers expect to retire in the next 5 years, 19% intend to work beyond the traditional retirement age of 65. This aging workforce presents numerous challenges for employers when it comes to health benefits.

A 2016 Sanofi study found that 59% of employees say they’ve been diagnosed with at least one chronic disease, such as diabetes, arthritis or depression. This climbs to 79% among employees aged 55 to 64. “Despite the increased incidence of chronic diseases once people reach their 50s and 60s, 44% of [employers] say they’re not concerned about boomers’ impact on health benefits, while 18% have not considered the issue at all” (Sanofi, 2015).

At the same time, Millennials – those born between 1980 and 2000 – will comprise 50% of the global workforce by 2020 (Posadzki, 2016). Despite their growing influence, only 37% of young workers who have access to workplace health benefits feel their plan fully meets their needs. These needs include access to mental health services, financial health support, and a desire for greater flexibility in their benefits plan (Paterson, 2017).

Moving Beyond Healthcare to “Personal Wellness”

Dissatisfaction with health benefits coverage is a trend that’s growing across the entire Canadian workforce. The number of people who feel their health benefits meets their needs “extremely well” or “very well” has dropped from 73% in 1999 to just 52% in 2016 (Sanofi, 2016).

This may be, in part, due to the changing definition of “healthcare.” Healthcare has evolved from a term used to describe physical health to now encompass a state of balance in body, mind, and spirit – aka overall “wellness” (Sanofi, 2015). Young workers have largely driven this shift. In a survey conducted by Sun Life Canada, the majority of Millennials (76%) and Generation Z (78%) acknowledged mental health as central to their overall health. These generations are looking for different things than their parents had in terms of benefits plans. They place a much greater priority on mental health services, such as counseling and support groups, than their predecessors did.

But while young workers are driving this push, most people stand to benefit from a greater focus on mental wellness from their employers. According to Sanofi, 41% of employees report feeling overwhelmed on most days due to work and/or their personal lives. That climbs to 58% among those who describe their health as poor or very poor (Sanofi, 2015). “Mental health is now recognized as being one of the key factors in absenteeism and lost productivity, as well as drug claims and long-term disability,” explains Lisa Callaghan, Assistant Vice-President of Products for Manulife’s Group Benefits Division (Posadzki, 2016). As a result, 32% of employers have implemented programs specifically to support the psychological health of their employees, and 23% plan to do so (Sanofi, 2016).

Of course, achieving overall wellness is different for everybody. For that reason, a growing number of employers are offering more flexible benefits plans, health spending accounts, and greater coverage for alternative medicines and services. From acupuncture to osteopathy and health coaching, employers are getting creative. Shopify, a technology company founded in Ottawa in 2004, offers its 1700+ employees gym memberships for $10 a month, and facilitates wellness programs, such as yoga classes and running clubs. Increased coverage to support mental health, as well as flexible hours and vacation policies, are other ways Shopify encourages employee wellness (Hamilton, 2016).