Mental health claims cost employers up to $250,000 per head

A report published by the CSA Public Policy Centre in May 2026 found mental health is costing the Canadian economy $180 billion and the bill is only expected to climb higher.  

Meanwhile, half a million workers are absent in any given week, disability claims tied to psychological conditions have surged 132 per cent since 2020 and employers are struggling to connect their benefits spending to measurable business outcomes.

These numbers underscored one of the main panels at HRFest, a human resources conference held in downtown Toronto on Nov. 10 and 11, where three senior leaders laid out where the money leaks, what works, and what doesn’t.

“What’s happening in mental health is quite shocking from a numbers perspective,” said Tammy Sergie, Toronto-based chief HR and privacy officer at EHN Canada. “We have a drastic rise of mental health-related claims with all major insurers and with workers’ compensation boards. In fact, it went up 132 per cent since 2020,” Sergie added, noting that on any given week, 500 thousand Canadians are absent from the workplace.

“We're in a very pivotal moment as Canadians. When we're rebuilding and investing into our economy, our cost of living is going up. The cost of doing business is going up. We can't be missing 500,000 Canadians from the workplace in addition to the baby boomers retiring,” said Sergie.

Employees want mental health support

Dr. Jason Abrams, vice-president of medical affairs at Medcan in Canada, sees the same pressure in clinical data. Medcan has collected 26,000 completed screening questionnaires through its annual health assessments since 2020. According to Medcan, 75 per cent of respondents have self-selected that they want to speak to a mental health professional when they go in for their screening assessment.

Among more than 11,000 visits with mental health professionals, 20 per cent of employees reported excessive worry, another 20 per cent struggled to cope with stress, and 30 per cent flagged sleep difficulties, he said.

“As we know in our industry, a vast majority of them have difficulty with sleep because it's interrelated to mental health issues that they're dealing with, whether it's anxiety or depression or stress. This is very consistent with what Tammy was indicating, is that the numbers are huge,” said Abrams.

Mental health claims last longer, cost more

Yet, the metric that should concern plan sponsors and CFOs the most is claim duration, Sergie said. She emphasized how physical claims solve faster than mental health claims. According to Sergie, 65 per cent close within three months compared to just 11 per cent for mental health.

At the 12-month mark, half of physical claims are closed, while only four per cent of mental health claimants have returned to work.

“Using an example of an individual that’s earning $65,000 a year, going on a leave of absence and being away, that costs an organization anywhere from $105,000 to $250,000 per head,” she said.

“When the ticket price is $250,000 per head, that's a lot of money that's leaking from your revenue, from your ability to reinvest into employee experience type programs, and that's a very material number. That's going to get your CFO listening very intently but certainly monitoring how those claims transition and the period it takes to get people back to work is a very important indicator to keep an eye on,” Sergie added.

Leading indicators HR should track

But for Michelle Brooks, Toronto-based chief people officer and head of operations at Security Compass, the warning signs show up long before a disability claim is filed. She pointed to the common signs that plan sponsors should look for, noting exhaustion comes first, then mounting tension - like more employee relations cases, more interpersonal friction and managers burning out.

“In the workplace, what we’re seeing is it’s not taking much for people to tip over, and that causes a swirl of well-being issues throughout the line,” she said, urging HR leaders to watch for the moment employees go quiet.

“When people really care and they’re in a good spot, they’re making suggestions, they’re having difficult conversations, they’re giving feedback. But when that stops, and people really start to have that glazed over like look, that to me is when you need to get your Spidey-sense up,” she said.

From there, Brooks said the priorities should be to dig into engagement data, sentiment, and retention numbers to find out what is driving the silence.

Workplace flexibility and leadership over programming

Additionally, Brooks said the numbers that matter at the executive level are revenue per employee, employee lifetime value, and retention - the cost of which she pegged at two to three times an employee’s salary.

“It’s really focusing on, for the investment you make in having an employee in the workplace and how long they stay, what is the average value that an employee has across your business?” she said, noting the damage isn’t limited to those who leave as employees who stay but disengage from work represent the same drain on productivity.

What matters, in her view, are flexibility and leadership development, particularly as giving employees control over when and how they work – but within the bounds of business needs - touches engagement, retention, and well-being at the same time.

The second lever is the manager relationship. When employees feel psychologically safe and supported by their direct leader, “are fast tracks to well-being,” she said.

Prevention vs. reactive spending

Abrams agreed, arguing that interpersonal skills matter as much as technical competence. Managers who listen for signs of discouragement or workload strain can intervene before an employee reaches a clinical threshold. He also draws a line between proactive culture and reactive clinical spending.

“It takes a little bit of thought leadership in a sense to be able to convince organizations to focus on being proactive rather than reactive when it comes to employee health,” he said, noting that by the time a clinical intervention is required, the employer is already absorbing claims costs and lost productivity.

On benefit plan design, Sergie acknowledged how employers are spreading finite benefit budgets across a wide spectrum of offerings, from pet insurance, daycare subsidies, maternity top-ups, and time-off programs, hoping the breadth will cover enough needs to keep people productive and retained.

While some of those investments pay off for specific segments of the workforce, she underscored the real question is whether the dollars are landing where demand is highest. To that end, she urged employers to audit what they already have, particularly around EAP utilization and paramedical allocation. For example, if massage and chiropractic dollars are going unused while employees cannot access enough therapy sessions, the fix is redistribution, not new spending, she said.

“Look at your benefit plan utilization. We all want to have a very long benefit plan with all kinds of offerings but if there’s only 2 people using a service, those are wasted dollars, right? Take those dollars, put them somewhere else where that matters,” said Sergie. “You’re still spending the same amount of money on your benefits, but you’re redeploying the dollars in the space where utilization is higher.”