Why Canadian Employee Health Is Declining, and What Plan Sponsors Can Do About It

A new survey conducted by Leger for Dialogue Health Technologies has produced a set of numbers that should give every Canadian plan sponsor pause. Among more than 1,000 employees and 200 employers surveyed, 35 per cent of employees reported that their mental health had worsened over the past year, up from 30 per cent the year before. Thirty per cent said their physical health had declined, a considerable jump from 21 per cent in 2025. Sleep quality and financial health were reported as deteriorating by 38 per cent and 35 per cent of employees respectively, both up sharply year over year.

The figure that carries the most direct operational weight, however, is this one: 74 per cent of employees reported working at reduced capacity at some point in the past year because of health or stress challenges. Roughly half described themselves as experiencing some level of burnout, and only 21 per cent said they feel energized and motivated on most days.

For an employer, that is not a wellness statistic. It is a productivity statistic, and it describes something that is already happening inside your organization rather than something that might happen later.

Why is employee health declining across Canada?

There is no single explanation, but three forces are working together in a way that makes each one harder to solve in isolation.

Access to care outside the workplace has deteriorated meaningfully. The Angus Reid Institute reported in February of this year that 18 per cent of Canadians do not have a family doctor and a further 32 per cent find it difficult to see the one they have, which together represents roughly half the adult population. That figure has climbed from 40 per cent in 2015 to 50 per cent in 2025. The Canadian Medical Association, drawing on the 2025 OurCare survey, estimates that 5.9 million adults still lack reliable access to a regular family doctor, nurse practitioner or primary care team. When the front door to the health system is difficult to open, minor issues become chronic ones, and chronic ones become disability claims.

Mental health support, specifically, has become harder to reach in a timely way. The Canadian Institute for Health Information reports that among Canadians referred to community mental health counselling in 2024 and 2025, half received care within 30 days while one in ten waited longer than 131 days for a first appointment. An employee experiencing a difficult period in September who cannot be seen until the following January is, in practical terms, managing that period alone, and their employer absorbs the consequences.

Financial pressure has become a health issue rather than simply a household one. The TELUS Health Mental Health Index released in September found that 63 per cent of Canadian workers identify cost of living as their primary financial stressor, and one in five report that money worry has directly impaired their productivity at work. The same research found that workers under 40 were roughly three and a half times more likely than those over 50 to say financial stress was damaging their performance, which means the effect is concentrated in the part of your workforce you are most likely trying to develop and retain.

The problem is not that employees lack benefits

This is the finding from the Leger and Dialogue survey that deserves the most attention from plan sponsors, because it reframes the entire question. Among employees who do have workplace health benefits, 67 per cent used them in the past year, yet only 20 per cent described themselves as very satisfied. The reasons they gave were long wait times, cost and navigation challenges.

In other words, the coverage exists, employees are reaching for it, and it is not landing the way it was designed to. The gap is not between employees with benefits and employees without them. It is between a plan on paper and a plan that functions when someone is genuinely struggling and does not know where to begin.

The TELUS research points at the same structural issue from a different angle, finding that 60 per cent of Canadian workers do not fully understand the retirement or savings plan they contribute to every month. A benefit nobody understands is, from the employee’s perspective, close to a benefit that does not exist. We have written previously about the hidden risks in group benefits plans, and misunderstanding of coverage sits at the centre of most of them.

What can plan sponsors actually do?

Treat navigation as part of the benefit, not as an administrative afterthought. If employees are citing difficulty finding and using services as a primary source of dissatisfaction, then the design question is no longer only what you cover but how quickly someone in difficulty can get to the right place. Virtual care, guided navigation support and clearly communicated intake pathways address the specific complaint employees are making, and they address it at a fraction of the cost of expanding coverage indiscriminately.

Close the understanding gap before expanding the plan. Before adding anything, it is worth establishing how much of what you already provide is actually known and used. Enrolment-period communication, life-event prompts and plain-language summaries consistently deliver more measurable improvement per dollar than new coverage layered onto a plan employees were already navigating poorly.

Design around the access gap rather than around the average employee. Where the public system is slowest, particularly mental health and specialist referral, is precisely where a well-constructed plan creates the most tangible value. Paramedical flexibility, meaningful mental health maximums and virtual access matter far more to an employee who cannot get a timely appointment than a marginal improvement to a coverage category they rarely use.

Include financial well-being in the health conversation. Given how directly financial stress is now tracking with sleep, mental health and workplace performance, group retirement education and financial wellness support belong in the same strategic discussion as extended health, rather than in a separate one.

Measure something. The survey noted that while employers broadly understand that well-being is tied to productivity, engagement and retention, many struggle to measure the impact of the benefits they provide. Utilization data, claims patterns and disability trends are already in your possession, and they will tell you where your plan is working long before an engagement survey will.

The cost of doing nothing is not neutral

Employee health is not holding steady while employers decide how to respond. Every indicator in this research moved in the wrong direction over a single year, and the effects are already appearing as reduced capacity, burnout and disengagement across three-quarters of the Canadian workforce.

Plan sponsors cannot repair the public health system, and no group benefits plan was designed to. What a well-constructed plan can do is shorten the distance between an employee recognizing a problem and getting help with it, which is exactly where the current research says the failure is occurring.

At Pelorus Advisory Group, we help Canadian employers evaluate whether their group benefits and retirement programs are reaching the people who need them and delivering what they were designed to deliver. Let’s chat.