Medical plan costs for Canadian employers are expected to increase by 7.4 per cent in 2025, up from a 5.0 per cent rise in 2024, according to Aon plc’s latest Global Medical Trend Rates Report.
The medical trend rate reflects the anticipated percentage increases in medical plan unit costs—both insured and self-insured—required to address projected price inflation, technological advancements in the medical field, plan utilization patterns, and cost shifting from social programs.
“In 2025, we anticipate a return to more typical inflationary conditions, with the Bank of Canada projecting that inflation will be well under control,” said Joey Raheb, senior vice-president and Canadian national leader for growth and client engagement for Health Solutions at Aon. “However, our concerns are now shifting towards continued economic slowdowns, which will undoubtedly influence plan sponsor decisions.”
Raheb noted that while a full-scale pullback on spending has yet to occur, employers are exercising caution and continuously reviewing their plans for efficiency in delivery and optimal medical efficacy. “Discussions are expected to continue to be dominated by GLP-1 drugs and chronic conditions, such as diabetes,” he said. “Alongside these, efficient plan design that allows employers to deliver programs that meet the needs of a diverse workforce while keeping costs sustainable will remain a focal point.”
According to the report, the top medical conditions driving medical plan costs in Canada are diabetes, autoimmune diseases (excluding diabetes), mental health issues, lung disorders and respiratory conditions, and cardiovascular diseases and weight loss.
Globally, Aon forecasts that medical plan costs will rise on average 10.0 per cent in 2025, slightly below the projected increase of 10.1 per cent for 2024, which represented the highest increase forecasted in a decade.
“Despite inflation projected to decrease in 2025, we expect health and wellbeing costs will continue to rise,” said Kathryn Davis, vice-president of global benefits at Aon. “As a result, medical plans are an important concern for companies, especially those with a global footprint. Rising costs often bring unexpected budget increases and make affordability for employers and employees more difficult.”
Davis added that as employer-sponsored medical plans become a larger part of total rewards spending, businesses are leveraging trend rate data to inform their budgets and benefits strategies. “Wellbeing initiatives are again the leading mitigation strategy as they help to control costs by encouraging utilization of preventative care and by keeping employees engaged in their wellbeing,” she said.
The report is based on a survey conducted across 112 countries and locations where Aon brokers, administers, or advises on employer-sponsored medical plans. The survey responses reflect the medical trend rate expectations of Aon professionals based on their interactions with clients and carriers represented in the firm’s medical plan business in each location.
