The Coverage Gap Nobody Is Pricing: What to Expect in Group Benefits Through the Rest of 2026

Halfway through the year, the question we hear most from plan sponsors has not changed: how do we hold the line on cost without hollowing out the plan? 

What has changed is the answer. Read across this year’s industry research and a clear pattern emerges. The pressure is not coming from benefits that are too generous. It is coming from benefits that have quietly become too small to finish the job, while the costs they were meant to prevent land somewhere more expensive. 

Here is what the data suggests plan sponsors should prepare for between now and year end.

1. Affordability is the dominant pressure, and most sponsors are already acting: HUB International’s 2026 Canadian Employee Benefits and Retirement Outlook found 82% of Canadian employers name benefits-related expenses as their biggest worry, and three-quarters are planning changes to their benefits programs. HUB also reports prescription drug costs in private plans rose 14.1% between 2022 and 2023. With change already on the agenda for most plans, the useful question becomes what those decisions are built on.  
2. The coverage gap: paramedical maximums have not kept pace with 2026 fees: This is the finding we think deserves the most attention this year, and it comes from Benefits Canada’s July 2026 feature on paramedical benefits. The 2025 Benefits Canada Healthcare Survey found paramedical services were the benefit plan members would be most upset to see reduced or removed, the top response at 25%. Yet only 47% of plan sponsors offered paramedical coverage, 52% of those with coverage applied annual per-practitioner maximums, and 44% applied a combined annual maximum across all practitioners. Now put those maximums next to what care actually costs. Benefits Canada reports standard plans across Canadian insurers usually range from $300 to $500 per practitioner per year, with enhanced plans at $1,000 to $1,500. A $500 annual maximum buys roughly two hours with a psychologist. That is not a treatment plan. It is an intake appointment and a follow-up. The experts quoted in the piece describe exactly what follows. Ayla Azad, chief executive officer of the Canadian Chiropractic Association, notes chiropractic coverage has sat at roughly $500 for 30 years while costs have risen. When members exhaust it partway through care, she describes what she calls “profession hopping”: moving to a different practitioner type to access a fresh maximum, restarting the conversation and losing continuity. Paul Donovan of the Natural Health Practitioners of Canada describes members with coverage for three appointments when the care plan calls for five or six. Azad also notes back pain is one of the leading causes of disability in Canada, and points to the rising burden of musculoskeletal conditions. The argument, in one line: when a maximum is set below the cost of completing care, the plan pays for treatment that does not finish, and the unfinished condition has a reasonable chance of arriving later as a disability claim.
3. Mental health is now a disability line item, and paramedical coverage for it is going the wrong way: Sun Life findings reported in May 2025 show mental health is the most common diagnosis for long-term disability claims in Canada, representing almost 40% of claims in 2024, up from the high 30% range the year before. By gender the figure is 35% for men and 45% for women. Depression claims are steady while anxiety and adjustment disorders rise: adjustment disorder claim volumes have doubled since 2019, and together adjustment disorder and anxiety claims now make up over 40% of long-term disability mental disorder claims, compared with 25% in 2019. “A diagnosis isn’t what determines the claim, it’s about how that condition impacts someone’s ability to do their job.”Marie-Chantal Côté, Senior Vice President, Sun Life Health. Set that against the paramedical data and the tension is hard to miss. The 2025 Benefits Canada Healthcare Survey found 25% of plan sponsors covered mental-health providers within paramedical benefits under a combined maximum for all paramedical services, down from 33% in 2024. Mara Notarfonzo, vice-president of total rewards at CAA Club Group, makes the case for increasing paramedical coverage or carving mental health out as a separate bucket, in her words, “before it becomes a disability claim.”Sun Life also flags that Employee Assistance Programs remain underused despite sitting in nearly every benefits plan, and points to manager support, leadership talking openly about mental health, virtual primary care and mental health coaches as available levers.
4. Climate has become a benefits variable, and most sponsors have no plan for it: Sun Life research reported in August 2026 found nearly 60% of employees said climate change or severe weather has affected their physical health, and more than half said it has affected their mental health. Those impacts show up at work as absenteeism, presenteeism and reduced productivity. Employees with chronic conditions were about twice as likely to report physical and mental-health impacts related to climate and severe weather. Erin Crump, vice-president of market development at Sun Life Health, describes climate as “an amplifier of existing workforce health issues” rather than a source of entirely new ones. The gap: 61% of employers said climate-related health impacts pose a risk to their organization, but just 25% have a strategy to address the short or long-term impacts on employee health. That is a concerning gap between recognition and readiness. Crump’s practical point is that most of the support needed during a wildfire or evacuation already sits in the plan: mental-health counselling and coaching, employee assistance programs, virtual care, online pharmacy services and chronic disease management. Virtual care keeps people connected to a provider when air quality or travel makes an in-person visit impractical. Online pharmacy keeps prescriptions flowing when someone is displaced. Beyond respiratory issues, she flags effects on mental health, sleep and the ability to manage existing chronic conditions.Her expectation for what comes next is worth quoting on its own terms: less focus on introducing entirely new benefits, more on making existing services accessible and connected, because one climate event can hit mental health, chronic conditions, medication adherence, sleep and access to care at the same time.
5. Voluntary benefits are where sponsors can broaden the offer without adding claims cost: If three-quarters of employers are planning program changes under cost pressure, the obvious question is how to add perceived value without adding spend. Voluntary, employee-paid benefits at preferred rates are one answer, and pet insurance is the clearest current example. A North American Pet Health Insurance Association report covered in August 2026 found just 3.72% of Canadian pets have health insurance, 5.64% of dogs and 1.91% of cats. Across North America, 7.6 million pets are covered, with a 3.9% year-over-year jump in Canada. Canadian gross written premiums rose 13.1% last year. Average annual premiums for Canadian dogs run roughly $1,176 for accident and illness coverage Pet ownership has only increased since the start of the pandemic, and several companies are starting to adopt pet insurance as part of their benefit offerings to help maintain and attract top talent. The connection to plan performance is a wellbeing one. A sick pet creates stress that follows employees into the workday, through vet trips, midday medication and simple worry, and that unexpected vet bills hit financial wellbeing.  “Helping them love their dogs and cats longer is our singular focus and guides everything we do”, said Paul Guyardo, CEO of Fetch Pet Insurance.
6. The talent backdrop has not eased: G-P frames 2026 as the AI era of human work, with five shifts covering employee engagement and internal skills gaps, guiding teams through AI adoption, looking beyond shrinking local talent pools, and simplifying global workforce management, compliance and localized benefits. G-P’s own World at Work survey found 84% of executives had difficulty finding skilled talent in their existing markets, and ManpowerGroup’s 2025 Talent Shortage Survey reported 74% of global employers struggling to find talent. In a market where hiring is hard, the retention argument for a plan that actually finishes a course of treatment gets stronger, not weaker. 

 

What this adds up to: design and access, not addition 

The most consistent theme across all seven sources is that the highest-return moves for the rest of 2026 are not new benefits. They are changes to how existing coverage is structured, connected and explained. 

 

Five moves worth putting on the agenda 

1. Test your maximums against 2026 fees. Take your per-practitioner limit, divide it by the current average fee, and ask whether the result is a course of treatment or an introduction. If it is fewer than three or four sessions, the coverage is unlikely to finish the job. 
2. Consider shared maximums instead of practitioner-by-practitioner limits. Paula Grossman of Medavie Blue Cross makes the case for combining related services such as physiotherapy, chiropractic and osteopathy under a higher shared maximum, so members continue with the most appropriate provider rather than switching to access coverage. Donovan raises condition-based categories and flexible dollar allotments as further options, and Azad points to growing interest in health-care spending accounts for when paramedical coverage runs out. 
3. Carve out mental health or raise it. With mental health at almost 40% of long-term disability claims and sponsor coverage for mental-health providers under paramedical down from 33% to 25%, this is the clearest mismatch in the data. Azad notes the mental health space already responded by bundling and raising maximums and suggests applying the same thinking to musculoskeletal care. 
4. Use the plan you already have. EAPs are underused. Virtual care and online pharmacy already cover the climate-disruption scenarios most sponsors have no strategy for. Communication is the cheapest lever on this list. 
5. Manage drug spend with design, not cuts. GreenShield found managed formularies delivered an 8.2% lower cost per claim than open formularies in 2023, across conditions including diabetes, anxiety and depression, ADHD, hypertension and acid-related gastrointestinal conditions. HUB’s resiliency pillar makes the same argument at the strategy level: multi-year planning over annual firefighting. 

None of this is a single fix. The pattern across the 2026 research is that plans fail at the point where coverage runs out, not at the point where it starts. Sponsors who look at where their own members hit the ceiling, and then fix the ceiling rather than the entitlement, will be in better shape at renewal than those who trim the benefit their people value most. 

If you would like to run this comparison against your own plan maximums and utilization data, our team can help. 

 

Sources 

Benefits Canada 

Is it time to evolve paramedical benefits to overcome barriers and meet employees’ needs? July 31, 2026.  

benefitscanada.com/archives_/benefits-canada-archive/is-it-time-to-evolve-paramedical-benefits-to-overcome-barriers-and-meet-employees-needs/ 

How employers can support workers’ health amid growing wildfire risks. August 14, 2026.  

benefitscanada.com/benefits/health-benefits/how-employers-can-support-workers-health-amid-growing-wildfire-risks/ 

Canadian employees slowly adopting pet benefits: report. August 19, 2026.  

benefitscanada.com/uncategorized/canadian-employees-slowly-adopting-pet-benefits-report/ 

Benefits and Pensions Monitor 

Mental health is now a long-term disability issue, Sun Life warns. May 12, 2025. 

benefitsandpensionsmonitor.com/benefits/mental-health/mental-health-is-now-a-long-term-disability-issue-sun-life-warns/391959 

Pet Insurance 

Fetch Pet Insurance Voted #1 Best Pet Insurance in the 2026. June 24, 2026. 

https://www.globenewswire.com/news-release/2026/06/24/3316778/0/en/Fetch-Pet-Insurance-[%E2%80%A6]-Insurance-in-the-2026-Newsweek-Readers-Choice-Awards.html 

GreenShield 

2024 Drug Trends Report, based on 2023 claims data. 

greenshield.ca/en-ca/drug-trends-report 

G-P (Globalization Partners) 

Global Workforce Trends 2026. 

globalization-partners.com/blog/2026-global-workforce-trends/ 

HUB International 

2026 Canadian Employee Benefits and Retirement Outlook. 

hubinternational.com/en-CA/insights/outlook/2026/employee-benefits-and-retirement/