What Every Canadian Business Owner Needs to Know About Group Benefits in 2025

For Canadian business owners, group benefits are no longer just a cost of doing business — they’re a critical piece of your employee value proposition. But the landscape in 2025 is more complex than ever.

From evolving plan models and rising expectations to cost management and compliance, there’s a lot to consider when building or renewing your benefits strategy. Here’s what you need to know this year,  and why a proactive approach matters more than ever.

The Shift Toward Flexibility

Gone are the days when a traditional, fully insured plan was the default. Today’s workforce expects choice and personalization, and benefits providers are responding. In 2025, an increasing number of employers are adopting flexible and hybrid models that provide employees with more autonomy while still mitigating risk.

According to the Benefits Canada 2025 report, plan designs have increasingly moved toward:

• Modular plans, where employees select from preset plan options that best suit their needs.
  
• Health Spending Accounts (HSAs) and Wellness Spending Accounts (WSAs) give employees tax-effective flexibility.
  
• Administrative Services Only (ASO) models, where employers self-fund some or all claims, are often used by mid-sized and larger businesses seeking cost control and transparency.
  

Each model comes with trade-offs around cost predictability, risk, and employee experience, which makes the role of a knowledgeable advisor more critical than ever.

Trends Driving Change in 2025

1. Mental health and wellness support
   Mental health services have become foundational. Coverage for therapy, virtual care, and digital wellness platforms is now an expectation, not a bonus. Many providers are bundling these services into core plans or offering them through add-ons and WSAs.
2. Demand for personalization
   From different life stages to diverse family structures, employees seek benefits that align with their realities. Offering options through flex plans or spending accounts helps increase perceived value, even without raising costs.
3. Cost containment and plan sustainability
   With healthcare inflation and the introduction of new treatments driving up claims, employers are seeking to manage spending while preserving value. Strategies include co-pay adjustments, drug plan caps, and selective bundling of high-usage services.

Compliance Reminders for Employers

In 2025, staying compliant means more than just knowing what’s taxable. Business owners must stay up to date on:

• Taxable vs. non-taxable benefit categories (especially for HSAs, and employer-paid premiums)
• LTD premium structure — if the employer pays, the benefit is taxable when paid out
• Leave entitlements — provincial rules often dictate how benefits are maintained during leaves of absence
• Discrimination risk — different benefits by class or role must be applied carefully to avoid legal exposure.

With the added complexity of multi-provincial workforces and remote teams, plan administration now requires both strategic design and compliance rigor.

The Strategic Role of Advisors

Benefits plans shouldn’t just roll over from year to year. In 2025, the best advisors are playing an active, strategic role — not just sourcing quotes.

At Pelorus Advisory Group, we help business owners:

• Evaluate the right plan model for your risk tolerance and budget
• Benchmark your offering against industry norms
• Stay compliant with tax and employment law
• Build a communication strategy to boost employee understanding and appreciation
• Prepare for renewal season with data, not guesswork

Why it Matters

In today’s tight labour market, your group benefits offering is one of the most visible signals of how you support your people. A well-designed plan shows that you’re not just checking a box — you’re investing in your team.

Let’s make sure your plan is working as hard as you are.
Contact us to review your current benefits strategy and explore options for 2025.