Cheaper isn't always better as mental illness accounts for more lost workdays than any other chronic condition in Canada: report
The bill for doing nothing around workplace mental health is getting harder to ignore.
A new industry report says mental illness now accounts for more lost workdays than any other chronic condition in Canada, costs the economy an estimated $51 billion per year, and drives disability leaves that cost employers twice as much as those related to physical illness.
For employers, the question is no longer whether mental health support belongs in a benefits plan, but whether the plan they have is able to deliver effective results.
Rising costs of group benefits is a design issue
While group benefits plans have expanded their mental health coverage in recent years, the new report from insurer Beneva reveals that antidepressants remain far more commonly used than psychotherapy among plan members of all ages, not because medication is more effective, but because it is more accessible and less expensive out-of-pocket.
Connecting the Dots: 2026 Health Trends and Insights details that psychotherapy involves significant costs, and when benefit plans cap coverage too tightly or exclude certain providers, medication becomes the default, even when other forms of care would produce better long-term outcomes.
Rebecca Gewurtz, associate professor of rehabilitation science at McMaster University, whose research focuses on work disability policy and employment among people living with mental illness, says the issue comes down to how benefits are structured.
"Creating benefit systems or benefit packages for employees that provide the coverage people need in a flexible way will really allow a lot of workers — the majority of workers — to take better care of their mental health," she says.
"If people are able to get the support they need, they'll be able to stay at work and stay productive in the workplace. So, there really is a return on investment."
The return-on-investment case is straightforward
According to Gewurtz, the business argument for investing in mental health benefits is not complicated, even though it’s been underappreciated until recently.
Now, the stats can speak for themselves when pitching the bottom-line case; the CSA Public Policy Centre estimates that if current trends continue the annual cost of poor mental health could climb to $600 billion by 2050, nearly 20 per cent of projected GDP.
The Beneva data reinforces this, showing that mental health leaves cost employers twice as much as those related to physical disability — reflecting not just wage replacement costs but the disruption of losing a productive team member, the cost of backfilling roles, and the downstream effects on colleagues.
As Gewurtz explains, even short absences add up quickly.
“Short-term leave can be very disruptive to work teams," she says.
"If you have a cohesive work team and one person has to go off — let's say it's for a month or two months or three months — that's still short-term disability, but it's extraordinarily expensive to the employer, and it's disruptive to the workflow. Keeping people at work and well should be the goal, and the way to do that is to make these supports available."
She draws a parallel to workplace fitness programs, which employers adopted not out of altruism but because of measurable productivity gains.
Beyond the spend: flexible benefits matter more than cost
More money in a mental health benefit line does not automatically translate into better outcomes; Gewurtz says the design of coverage is as important as the dollar amount.
A common employee complaint is too-rigid spending accounts that don’t allow them to access the care they really need, for long enough. The Beneva report cites research showing that 15 to 20 therapy sessions are typically required to achieve positive outcomes for employees with depression.
"Sometimes it's about creating more flexibility in the plan — allowing people to see the providers of their choice in a way that allows them to see them consistently, rather than such a small amount that they can only really afford a few appointments with somebody," she says.
"Opening that up a little bit more is really helpful."
Dependent coverage is another dimension that is often overlooked. When employees' family members — particularly children and adolescents — can access mental health supports through a group plan, it reduces the productivity drag that falls on working parents.
"When my kids are not well, it's hard for me to work, and my productivity goes down," Gewurtz says.
"A lot of kids in the teenage and middle-school years are having lots of mental health problems, and the schools aren't equipped to deal with it. So a lot of it does fall back on parents."
Beyond benefits: culture and flexibility
Benefits design is one part of the equation. The other is the workplace itself. Gewurtz is emphatic that a generous plan sitting inside a toxic or inflexible environment will not produce the outcomes employers are paying for.
Flexibility, she says, does not require sweeping structural changes. It requires willingness to look for workable solutions in a specific context.
"If there was one thing I could say to employers across Canada, it would be to think about ways to make their workplace a healthy place for people to come to every day — a healthy place for people to engage," Gewurtz says.
"Paying attention to the way people interact with each other and how people treat each other is probably a really good focus for employers — and creating flexibility."
Leadership buy-in and messaging also matters, she says, explaining that when employers visibly commit to mental health, they can change the culture around using benefits; however, they will increasingly need to treat mental health coverage not as a supplementary offering but as a foundation.
"If we invest in the mental health of our workforce, we'll get more stable, independent workers,” she says.
“Because it's when people don't take care of their mental health that they're going to need time off work, and that's when they're going to leave."
