The group insurance forecast for 2026 has a clear theme emerging: fiscal responsibility and cost containment strategies is at odds with fulsome, inclusive coverage and employee wellbeing. We did the research, and asked for some insights so we could bring you a better understanding of the employee benefits landscape for next year. All quoted perspectives are sourced directly from Colleen Baker, highlighting her leadership on this topic.
As always, you can find previous health insurance trends and predictions blog posts from the past eight years below:
Plan design and cost
Perhaps the biggest challenge plan sponsors are facing is how to provide a competitive, fulsome benefits plan that incorporates flexibility and personalization, while balancing plan sustainability and costs.
How much are employee benefits expected to increase in 2026?
The group insurance forecast for 2026 doesn’t look great. Most sources agree that benefit costs could rise between 8% – 10%.
Given this outlook it’s no surprise that 82% of employers say cost is their biggest worry in 2026.
Stop-loss trends
Stop-loss is a system where high claims are taken on by the insurer, and taken out of a group’s claims experience in order to mitigate increases at renewal. Employers pay a stop loss charge/fee, generally a percentage, to insurers for this protection.
Over the last five years, the number of drugs that are newly available and have been approved by Health Canada each year has nearly quadrupled. The price tags have also seen steep inclines. This means that more plan members are hitting the stop-loss threshold, and when they do, they are often for claims over $100,000, with some over $500,000.
Some of these newer drugs are for very rare diseases, which means that the number of claimants is very few. However, with so many treatments available, the number of claimants has inevitably risen. Additionally, diagnosis of many of these rare diseases has gotten easier due to new technology or medical breakthroughs — which is a good thing for plan members. Lastly, environmental, social, and economic pressures are causing worsening health problems around the world, from which Canadians are not immune.
What it means for advisors and consultants
“As cost pressure intensifies, HR leaders are losing some of the autonomy they once had in benefits strategy. Finance teams, procurement groups, and senior executives are becoming far more involved in every decision from plan design to vendor selection. This creates slower cycles, more scrutiny, and a higher bar for justification. For consultants it means the conversation is no longer only about what employees need but also about how every recommendation stands up to financial review and organizational governance. The challenge is to help HR leaders maintain influence by equipping them with stronger data, clearer business cases, and a narrative that connects benefits decisions to workforce performance and enterprise risk. This shift is reshaping the advisory role and raising expectations for strategic guidance.” — Colleen Baker
Group insurance forecast:
Expect to see stop loss charges continue to rise in 2026. The increase can be mitigated by adding a drug maximum. Discussions may begin surrounding possible changes to the stop loss system to get ahead of the unsustainable rise in specialty drug prices.
As plan sponsors look for solutions to rising costs, a majority expect to use benchmarking and employee surveys to inform and build sustainable strategies. The amalgamation of administration platforms for HR teams, along with the combining of provider logins and access points for employees is also a focus for cost containment.
As we dive deeper into the group insurance forecast and outlook for 2026, we will look at the different aspects of benefit plans that are driving cost increases.
“Rising plan costs remain the biggest concern [for employers] as inflation, specialty drug growth, and provider fee pressures continue to strain budgets. Employers are increasingly worried about how to sustain competitive benefits while keeping overall compensation costs manageable. Mental health and disability trends are another major focus as stress, burnout, and complex mental health claims continue to drive longer absences and higher incidence rates. Leaders are looking for solutions that go beyond counselling hours and address prevention, early intervention, and workplace culture.” — Colleen Baker
Prescription drugs cost drivers
Employers and insurers both agree that rising drug costs are putting immense pressure on employer sponsored benefit plans. There are multiple pressures causing year over year increases.
GLP1s
Diabetes continues to be at the top of the list in drug claiming trends from multiple sources – and GLP1s are leading the charge when it comes to effectiveness in treating diabetes, as well as the per claimant costs.
These drugs have also shown great efficacy in treating obesity. For perspective, more than 30% of Canadians fall under the overweight or obese category. The approval of the GLP1 drug, Wegovy, for heart disease prevention (previously used to treat obesity only), adds another prescribing reason this category of drug.
Given these reasons, it’s easy to see how claims for these drugs have spiked. They have two very important things going for them: one, they are very effective, and two, individual price tags are still much more cost-effective than specialty drugs for cancer or hereditary neurological diseases, for example.
Specialty drugs
New cancer treatments are a boon for the more than 40% of Canadians who will be diagnosed with cancer in their lifetime. The rising rates of diagnosis along with high-cost specialty drugs to treat cancer has put added strain on benefit plans. More new drugs for rare diseases keep coming to market, helping plan members live healthier, more productive lives, but also contributing to plan increases.
Anti-depressants
These drugs continue to be claimed in high quantities, making them consistently appear in top ten claiming lists for drug trend reports, despite their lower annual cost.
Chronic conditions
There are a myriad of chronic conditions, and they encompass a variety of the reasons many plan members access the benefits plan, including drug therapies. We discuss chronic conditions in further detail below, but rising rates of people living with one is contributing to rising drug trends.
Drug cost containment strategies for 2026
Prior authorizations and step-therapy for GLP1s have proven to be effective in curbing the steep spike in claims – especially for the off-label use of diabetes medication for weight loss that was seen in 2023.
Drug formularies can also be a way to shelter plans from high-cost drugs, and many now offer assistance for plan members facing critical illnesses to help them find coverage for specialty drugs through government plans, private support, and pharmaceutical companies.
Generic drug substitution within drug formularies is also a great way to ensure plan members are using generic drugs when available, as the price for these are less expensive than their brand-name counterparts.
Notably, Novo Nordisk’s patent for semaglutide (aka GLP1s, the active ingredient in Ozempic and Wegovy) will expire in 2026 due to their failure to pay a small maintenance fee. This will open the door to generics, which will significantly lower the cost of these drugs. Expect to see multiple options come to market over the next few years.
Drug maximums ensure that each plan member can only claim up to the maximum amount. While this protects the plan, it offers less coverage for employees managing a chronic condition or critical illness.
Preventative care can certainly curb costs in the long run, but it can be hard to pursue for several reasons. For plan sponsors, the immediate ROI just isn’t there, and some may not have the ability to invest in preventative care. For plan members, existing health issues, and lack of knowledge and motivation can be huge roadblocks to improving their current health, or at least maintaining good health for their future selves.
Chronic conditions
The 2025 Benefits Canada Healthcare Survey (BCHS) found that three in five employees were living with at least one chronic condition, a number that has continued to rise over the years. We’ll look at why.
Aging workforce
It’s no secret that the Canadian workforce is disproportionately older. While older employees’ experience and mentorship are invaluable, chronic conditions tend to afflict more of them. Chronic pain, inflammatory diseases, hypertension, obesity, and diabetes generally affect the older population more.
High-cost of maintenance treatment
All of these chronic conditions come with treatment price tags. Whether it’s diabetes supplies and medication, arthritis drugs, weight management regimes, or pain medication, keeping a semblance of normalcy can be expensive. Thankfully, many Canadians have access to help from their employee benefits.
Group insurance forecast:
The rise in chronic conditions does not look to be slowing down in 2026. Look to see more plan sponsors implementing drug formularies and maximums.
Preventative care will also gain ground as more employers focusing on ergonomics, psychological safety, and physical health and safety.
Mental health
Canadians are experiencing high levels of stress, anxiety, and burnout, and have been since the pandemic. This could be partly attributed to the fact we are more aware of our mental health than ever before, but mental health across all generations is suffering, despite employers offering more support for counselling and self-guided services.
The younger population especially have continued to see increased mental health issues, possibly due to unrealistic expectations from too much social media exposure. However, the pressures of financial security, social isolation, and global politics appear to have deeper effects on them as well.
Employee burnout is also contributing to rising mental health issues. Employers should be aware of the risks to their business if left unaddressed.
Mental health services
The other shoe has dropped, and employers are seeing that mental health isn’t something they can ignore without consequences. We’ve seen a continued rise in employers implementing Employee Assistance Programs (EAPs), as well as increasing the mental health allowance, whether through a Health Care Spending Account (HCSA), or paramedical services.
Disability
We reported earlier this year on disability trends and mental health in our Trends in Disability infographic. Currently, mental health claims make up 35% or more of total claims, while the costs of these claims amount to 70% of total costs. Not only are mental health claims more costly, but they also last longer. Plus, mental health issues are often compounded, either being caused from another chronic condition, or eventually contributing to new ones.
Group insurance forecast:
In 2026, expect to see a continued push towards preventative and ongoing mental health support. As the stigma surrounding mental health continues to erode, so too will claiming patterns for mental health continue to rise in 2026.
Women’s health
The past year saw a major push forward in terms of women’s health discussions. The gap in research and care was brought to light as women are demanding better equality in health care, and are being heard.
Eye opening statistics
The facts speak for themselves when it comes to the disparity between women’s and men’s health care. Men’s health is just as important, which is why these conversations are so necessary. Here are just a few of those statistics:
- Women experience 75% of adverse drug reactions.
- Women make up 70% of patients with ‘medically unexplained symptons’, which are often eventually chalked up to psychological issues.
- Women spend 25% more time in poor health in their later years than men, despite spending 18% more on health care.
- 70% of people with chronic pain are women.
- Women are 7x more likely to be discharged from the hospital while having a heart attack.
The gender bias and stigma
When it comes to medical research, the numbers don’t add up. In fact, less than 1% of global healthcare funding goes to women’s health. In Canada, it’s just 4% to 7%. Given this difference, it’s no wonder women’s health issues are misunderstood.
Additionally, women suffer in silence when it comes to our regular, natural bodily functions. From periods and menopause (both peri- and post-), to pregnancy, infertility, miscarriages, and more, these subjects are mostly taboo.
In fact, 97% of women admitted to staying silent when it comes to their menopause symptoms. Why? Unsupportive workplace culture and fear of being judged were the main culprits.
Group insurance forecast:
In 2026, women’s health care will get even more of the spotlight. There is a huge untapped market in women’s health care, with some studies suggesting a 300% ROI. With that much potential for profit, this is not a market health care providers and researchers are going to ignore.
Financial health and security
“Inflation and tariff pressures in Canada have raised the cost of medical supplies, dental materials, prescription drugs, and the services that underpin group insurance plans. These higher input costs have flowed directly into claims, which has pushed premiums upward and reduced the ability of insurers to absorb volatility. At the same time employers are facing tighter budgets, which increases the tension between maintaining competitive benefits and managing rising plan expenses. The result is a more cost sensitive environment where plan sponsors and insurers are re-examining plan design, funding models, and cost control strategies.” — Colleen Baker
Financial concerns, no matter the cause, are contributing to uncertainty about the future when it comes to more than just employee benefits.
Employers have some tough choices to make as employees demand more thoughtful, personalized benefits while they struggle with renewal increases.
Employees are worried about making rent, paying bills, and buying groceries. Retirement savings, while understood to be important, are on the back burner. In fact, almost 60% of employees think they will never be able to retire due to finances.
All of these financial pressures are affecting employees’ mental and physical health, as well as their productivity, focus, and engagement.
Group insurance forecast:
Support for financial wellbeing will be another hot topic in 2026. Employees are nervous about their financial security, which means group retirement plans will be even more popular.
At the same time, employers are grappling with sustainability and cost control issues, which will continue to inform plan design.
Advisors and consultants will be tasked with explaining the value of employee benefits using more data and industry insights than ever before in order to demonstrate their worth to client stakeholders. They will also be expected to find more unique solutions, tailored to each client’s needs.
Technology
Insurers, employers and employees have all embraced technological advancements in the benefits space. So, what does the insurance industry forecast look like for different aspects of the technology we use?
Benefits delivery and personalization
Insurers and service providers are rolling out all types of online wellness programs and lifestyle apps that are self-serve and/or customizable. Yet there appears to be a disconnect between the desire for these options and their use when available. Utilization remains low, while a recent survey found 75% of employees say they would stay at their current employer if they offered more comprehensive and personalized benefits.
Group insurance forecast:
In 2026, look to see this discord addressed as employees become more familiar with using these services, and employers streamline and simplify access to them.
Virtual care
While this is not a new topic, the insurance industry forecast for virtual care in 2026 looks to be a good one. CLHIA’s pre-budget submission to the government this year included a proposal to work with Canada to protect employer-sponsored virtual care access. As it stands now, there is some confusion whether the government will disallow this coverage in favour of making access ‘fair’.
Given the fact millions of Canadians do not have a family physician, and the remote and rural nature of the country, the CHLIA noted that employer-sponsored virtual care “can create significant health improvements for people across the country.” In other words, virtual care can bring equitable access to care to many people.
Group insurance forecast:
In 2023, more than half a million Canadians accessed virtual care through their employee benefits. Look to see those numbers keep rising in 2026, as health care system issues continue to strain the public system.
AI
That’s right, we’re also going to talk about AI, and no, this blog was not written by Chat GPT. AI remains a hot topic, but how does it fit into the insurance industry forecast?
Firstly, day to day administrative tasks can be sped up, such as checking and responding to emails (grammar, answers, omissions — your AI assistant can help catch those quickly and easily).
Secondly, AI can help analyse data and discover patterns far quicker than a human can. Using these insights, advisors, insurers, and plan sponsors can make smarter decisions for their benefits plans.
Thirdly, claims adjudication for simple submissions such as dental, drug, or paramedical services claims can easily be done by AI.
Lastly, AI can help detect fraud within benefits, from both plan members, service providers, and plan sponsors, helping to keep costs down.
Group insurance forecast:
This is just the tip of the iceberg as AI continues to learn and grow in leaps and bounds. Look to see these four uses be honed in 2026, and even more uses to emerge such as help with benefits communication and personalization.
Conclusion
The 2026 group insurance outlook highlights a challenging environment for employers, advisors, and insurers as benefit costs are projected to rise between 8% and 10%. Inflation, specialty drug growth, and provider fee pressures are straining budgets, while HR leaders face increasing scrutiny from finance and executive teams.
Key cost drivers include high-priced specialty drugs, GLP-1 medications for diabetes and obesity, and the growing prevalence of chronic conditions and mental health claims.
Employers are expected to adopt cost-containment strategies such as drug formularies, prior authorizations, and stop-loss adjustments, while also addressing employee demands for personalized benefits, mental health support, and financial security. Technology and AI will play a larger role in benefits delivery, virtual care, and fraud prevention, while women’s health and preventative care emerge as critical focus areas. Overall, 2026 will require a balance between plan sustainability, workforce wellbeing, and strategic innovation to meet rising expectations.
Borrowed from BBD Blog “2026 group insurance forecast and outlook”, December 9, 2025, https://www.bbd.ca/blog/2026-group-insurance-forecast/