The Cost of Mental Health Is Rising

The Cost of Mental Health Is Rising: What Employers Need to Know

The cost of employee mental health is rising, and Canadian employers are feeling the impact in real, measurable ways. As the cost of living increases, interest rates remain high, and stress levels climb, workplaces are seeing more absences, higher disability claims, and escalating benefit claims costs tied directly to mental health conditions.

According to Sun Life Canada, long-term disability (LTD) claims related to mental health are nearly double the next leading cause of disability. While mental health accounts for approximately 30% of LTD claims, it represents almost 70% of total LTD claim costs. These numbers make one thing clear: the rising cost of mental health is no longer a future concern. It is affecting businesses today.

Why the Cost of Mental Health Is Rising in the Workplace

Many employers feel overwhelmed by these statistics. After all, most organizations are not mental health or medical specialists. As a result, mental health is often addressed only when a crisis occurs, such as an employee requiring extended time off work.

However, mental health challenges are already present in every workplace. The Canadian Mental Health Association (CMHA) reports that:

1 in 5 Canadians will struggle with a mental health challenge or be diagnosed with a mental illness by age 40
50% of Canadians will have or have had a mental illness at some point in their lives

This means employees in your organization are doing their best while managing anxiety, depression, burnout, or other mental health conditions. Ignoring this reality does not reduce costs. In fact, it increases them through lost productivity, higher claims, turnover, and a strained workplace culture.

The True Cost of Mental Health for Employers

When mental health support is lacking, employers often see:

Increased short- and long-term disability claims
Higher absenteeism and presenteeism
Rising group benefits premiums
Increased turnover, higher recruitment efforts and costs
Lower employee engagement and morale

The rising costs are, in part, because it is taking too long for employees to get help. The good news is that there are proven, cost-effective strategies employers can implement now.

Employee Assistance Plans (EAPs) Help Control the Rising Cost of Mental Health

Timely access to care is one of the most important factors in improving mental health outcomes. Employee Assistance Plans (EAPs) play a critical role in controlling the rising cost of mental health by providing fast, confidential access to professional support.

EAP counselling services:

Remove financial barriers to care
Offer faster access than the public system
Help employees address concerns before they escalate into claims or crises

In many cases, EAP services can be accessed within 72 hours, compared to weeks or months through traditional referral pathways. Beyond counselling, EAPs often include crisis response, trauma support, and wellness resources.

Importantly, EAPs do not have to be expensive. Pay-per-use options make this support accessible for small and mid-sized Canadian employers while still delivering meaningful impact.

Clear Performance Expectations Reduce Workplace Stress and Mental Health Costs

Outdated job descriptions and unclear performance expectations significantly contribute to workplace stress. When roles no longer reflect reality, employees struggle, managers become reactive, and mental health costs rise.

Employers can reduce pressure and improve outcomes by:

Updating job descriptions to reflect actual responsibilities
Aligning performance expectations with current roles
Introducing flexibility where possible to support work-life balance

Clear expectations reduce anxiety, improve engagement, and give managers a framework to support employees before issues escalate into leaves or claims.

Inclusive Workplace Cultures Lower the Long-Term Cost of Mental Health

An inclusive workplace culture is a powerful, often underestimated, way to address the rising cost of mental health.

Employers can start by:

Redefining success away from burnout and overwork
Normalizing respectful conversations about mental health
Regularly communicating available benefits and support resources

When employees feel safe accessing help, issues are addressed earlier, significantly reducing costs over time.

Addressing the Rising Cost of Mental Health Starts Now

The cost of mental health is rising, and employers will continue to bear part of that financial burden. But rising costs are not inevitable.

With the right mix of benefits, clear expectations, and supportive culture, organizations can control costs while creating healthier, more resilient workplaces.

We help employers by:

Implementing effective EAP solutions
Optimizing benefits plans to decrease burnout
Providing HR consulting that supports both performance and well-being

Taking a proactive approach to mental health is the right thing to do and a strategic decision that protects your people, your culture, and your bottom line.

< Older Post

Newer Post >