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9 Group Insurance Trends and Predictions for 2023 

By: Benefits by Design | Tuesday December 6, 2022

Updated : Thursday December 1, 2022

Here we go again! Another year in the bag, and another one looming ahead. But what does the future have in store for the insurance industry? We’ve gathered information and put our sooth saying abilities to the task yet again to bring you our group insurance trends and predictions for 2023. And if you’re in for a blast from the past, check out our predictions for 2018, 2019, 2020, 2021, and 2022

1. Delayed Care Due to COVID-19 Will Cost Plan Sponsors and Plan Members 

Many people with both chronic and acute illness avoided healthcare professionals during the pandemic. And can you really blame them? No one wanted to go to a doctor’s office full of sick patients, especially those at increased risk.  

And now that we are coming out of it (albeit slowly and with the flu season in full swing) delayed diagnoses and treatment of illnesses continue. In part due to an over-burdened healthcare system still recovering from the pandemic. But also, because people delayed seeing a healthcare professional, the treatment they require is more involved, more expensive, and may take longer. For instance, we have seen less cancer claims and of course cancer hasn’t gone anywhere. In fact, “55% of insurers report an increase in later-stage diagnosis of illness due to deferred care.” 

While long wait times were previously attributed to an increase in disability and chronic illnesses, the longer wait times now have an effect on morbidity. This only exacerbates the entire situation and has created a vicious cycle. 

Plan Sponsors will likely see an increase in medical claims due to these worse illnesses and conditions. Both for medical supplies and prescription drugs. And other benefits may be called into action, such as disability and mental health benefits – all contributing to higher plan costs. 

Overall, plan members’ health has suffered, and will continue to suffer as we play catch-up with our healthcare system. Their out-of-pocket expenses for co-pays will likely increase, since medical costs continue to rise with inflation, and cost sharing may increase as a result of increased premiums. 

How Increasing Healthcare Wait Times in Canada Impact Health Outcomes

2. Mental Health and Wellbeing Initiatives Still Have a Ways to Go  

Workplace mental health continues to affect employees. In fact, according to a Deloitte Global 2022 GenZ and Millennial Survey, a third of participants said they would not feel comfortable speaking openly with their direct manager about feeling stressed or anxious. Nor talking to them about their mental health. The CLHIA Fact 2022 Edition shows that 16% of plans have no mental health offering at all.  

In 2021, Canadian Insurers paid out $580 million for mental health support. That’s up 75% from 2019. While that sounds like a lot, compare it to the $30.4 billion that was paid out for health, drugs and dental care, and you can see that employees are still struggling to access mental health benefits. 

What’s more, employee wellbeing doesn’t seem to be getting better, despite all the updates to benefits plans that employers made during the pandemic. According to a global Gympass study, almost half of employees say their wellbeing declined in 2022. Another 28% do not like their jobs at all, and a quarter feel their workplace doesn’t care about their wellbeing.  

Despite a plethora of new wellbeing initiatives and supports being added to employee benefits plans, 77% of employees feel the help they get from their employer to manage their mental health is only somewhat or not effective.    

We expect to see more mental health and wellness benefits and innovations being explored and implemented in the coming year. 

Mental Illness Awareness and Overall Mental Health of Canadians

3. Mental Health Disability Claims Will Keep Going Up 

We’ve seen a marked increase in mental health disability claims since the start of the pandemic, and next year will be no exception. Mental health and wellbeing, as shown above, continues to be a cause for concern for many employees and employers.   

Overcoming Mental Health Stigma in the Workplace & Support Employees

And while the stigma is reducing, it is still a major challenge for employers to replace experienced employees while they are on leave. Employers might be more understanding of the circumstances, but it still doesn’t change the negative impact of a mental health leave. The industry is still very reactive and not proactive. 

Given the current state of the Canadian health care industry, claimants will most likely continue to take longer to return to work. Whether they are away for illness or injury, the longer a person is unable to contribute to society in a meaningful way, the worse their mental health becomes. This may be impacted more greatly by returning to the office as employees struggle with adapting to the new (old) way of working.   

The Connection Between Disability, Mental Health, & the Future of Benefits

4. High-Cost Drugs Will Continue to Be the Main Factor in Health Plan Increases 

Unsurprisingly, high-cost drugs are still expensive, and are still the biggest driver in health plan increases. And this doesn’t appear to be changing anytime soon.  

We’re seeing less of an impact from generic pricing policies and substitutions as well, as new high-cost drugs hit the market and eat up any savings gained.  

Even though new rules were released from the Canadian Drug Review Patent Board in October 2022, most in the healthcare industry agree that it will have little direct effect on health plan costs. 

Will Biosimilar substitutions become more common? Currently there are only 3 provinces (British Columbia, Alberta and Quebec) that have biosimilar programs in place, and all three report significant savings. We predict that other provinces will look at implementing a biosimilar substitution program in the coming year(s). 

What are Biologic and Biosimilar Drugs and What is the Difference?

5. Inflation Will Impact Claims Experience and Plan Designs 

We believe that the high inflation will have a twofold effect on benefits plans.  

Firstly, when times are tough, many people start to look at ways to save. This means there could be an increase in plan usage as employees try to get the most out of their benefits. And with possible job losses as employers make budget cuts, it could pave the way for the “use it or lose it” mentality. Higher levels of stress due to financial worries may also contribute to more mental health problems, and therefore more usage of mental health services and disability claims. All of this means claims experience for disability and health will increase. 

Secondly, plan sponsors who are feeling the pinch might begin scaling back benefits to save money. Although this sounds counterintuitive given the still tight labour market, it’s also understandable. Especially if the value of their benefits is not fully understood – both by the plan sponsor and the employees.  

We think we’re going to see large increases at renewals in 2023. And there could be lots of plan design changes or marketing of groups as well. 

6. Remote and Hybrid Work Will Continue to Prompt Updates and Innovation 

As the world continues to adapt to the new technologies and ways of doing business, we will likely continue to see new products and solutions designed for these employees.  

  • Addition of more telehealth services within benefits plans. Such as iBCT, virtual physician appointments, lifestyle apps and assessments, wellness programs, and more. 
  • Streamlining of services and functions – such as payroll, employee benefits administration and communication, and employee onboarding. 
  • Business cards, forms, employee enrollment and data transfers will most likely all be offered digitally. Even an electronically signed beneficiary designation form is acceptable these days. Carriers and brokers who do not offer electronic options may be left behind. 

Even though many offices are full of life once more, the best practices that we adopted in order to let everyone work from home should continue to shine and make our work more efficient.  

[Free Download] Reimagining Health & Wellness for a Remote Workforce

7. DEI Initiatives Will Bloom 

Employers are striving to make improvements to provide more inclusive benefits. Both to remain competitive, and also to ensure they are taking care of all employees equally.   

“1 in 2 insurers has changed or expects to change eligibility requirements and eligible expenses to make coverage more inclusive for those who identify as LGBTQ+.” – MMB Health Trends 2023 

The goal in 2023 will be to move away from performative DEI initiatives, to providing tangible benefits that include all employees. It’s simply not enough to say “we hire diverse people and we have anti-bullying policies” anymore.  

Two-thirds (68%) of employers with a well-defined DEI plan have high levels of employee engagement. And a diverse staff usually means more creativity, innovation and belonging. Plus, companies with diverse c-suites out-performed those without diversity by 25%-36% in profitability. 

Watch for lots of discussions surrounding DEI benefits, and plan design updates as employers race to be more inclusive.  

Employee Benefits to Build an Inclusive Workplace

8. Retirement and Termination Ages Could Get a Makeover 

The age at which employees are retiring has become very blurred, and it’s moving up. People are working longer, in to their 70’s and some even in to their 80’s. The reasons are many and varied: 

  • Not enough money to retire 
  • Retirement savings were lost as a result of the pandemic and inflation 
  • Retirees are bored or feel they have lost their sense of purpose 
  • There is no one qualified to replace them 
  • They own their own business and are not able to sell and retire 

Because of this trend, insurance companies will need to start looking at termination ages to match plan sponsors’ work forces. However, changing termination ages will have it’s own set of challenges. Do we set-up special employee classes for employees over 65. If yes, the rates would have to increase. Or do we keep all employees in the same pool and raise the rates slightly for all? 

Another conversation surrounding age is the reduction of insurance that occurs at age 65 for Life Insurance and AD&D. This could be seen as a form of ageism, and insurers may need to adjust to ensure equal treatment of all demographics.  

Of course, the question remains whether this will start happening sooner rather than later. We’ll check back in and see if this trend takes shape in 2023. 

Employee Benefits Philosophy for a Multigenerational Workforce

9. Change to EI Sickness Benefit Length  

The government will be changing the length of time a person is eligible to collect the Employment Insurance (EI) Sickness Benefit. Effective December 18, 2022, the benefit period will be extended from 15 to 26 weeks.  

As of this post, there are no mandatory changes being forced by the government or disability insurance carriers.

For employers who offer Short Term Disability (STD) Insurance, they may be encouraged to extend the benefit period to 26 weeks to match the EI benefit period. Although at this time there are no proposed changes to the EI reduction program for those offering STD, we can expect to see a government review of this in the coming year. 

Long Term Disability (LTD) elimination periods often closely align with the EI sickness benefit as well, with the majority of plans having a 119 day (17 weeks) elimination period. If employers update this to 182 days (26 weeks), then the disability management and early intervention programs that go along with many LTD plans will not be utilized until much later.

How Disability Management Fast-tracks Employee Health & Return to Work

Given the fact that most LTD claims stay open for longer than the extension, we’re predicting that there won’t be a marked decrease in LTD claims. 

Initial speculation is that there would be a decrease in LTD rates should employers choose to extend.  

Interested in other insurance industry trends and statistics?

6 Things You Should Know from the 2022 Benefits Canada Healthcare Survey