Higher education is experiencing a period of profound disruption and change. Economic pressures – including threats to research funding, an expansion of the endowment tax, and cuts to state support for public universities – are putting many institutions under significant financial strain. Colleges and universities across the spectrum have been bracing themselves. Many remain in contingency planning mode, while others have already begun implementing budget cuts – with employee benefits often a target. For many institutions, retiree medical benefits remain an important component of the overall benefits package – and a prime area for strategic review.
Individual market – an untapped opportunity?
While some schools have already achieved cost savings by transitioning to the individual market (often referred to as “retiree exchange”), the individual marketplace is a platform where retirees receive expert guidance and decision support to shop for and enroll in personalized health insurance plans that best fit their needs, many still provide coverage through traditional employer sponsored plans. Given the significant advantages of the individual market – potential cost savings for both the school and retirees, reduced cost volatility, broader plan choice, streamlined administration – why has higher ed been slow to move? And, given the current financial environment, will that now change?
According to a 2025 WTW pulse survey 47% of colleges and universities are reassessing their long-term retiree medical strategy. So, the answer to the second question is likely yes: change is on the horizon. But the answer to the first question – why has higher ed been slow to move – is more complex and stems from the cultural and structural elements that make higher education unique. And examining these elements can shed light on how best to manage the workforce and institutional headwinds that may accompany such a move.
Barriers to change
The challenges of implementing large-scale benefit changes in an academic setting generally fall into three broad categories: governance, culture, and communication.
- Governance Decision-making in higher education typically involves different committees and requires input from multiple stakeholders. Faculty bring distinct expertise that must be respected and often seek additional in-depth analyses that can delay timelines. Institutions with medical centers or large unionized workforces face additional complexity.
- Culture is a frequently underestimated barrier. Higher education values debate and critical engagement, which, while healthy, can lead to vocal dissent that can quickly cascade across campus. Consensus may not be achievable—yet it is often expected. Emotional ties to the institution can also fuel resistance to solutions seen as “outsourced.”
- Communications. Communicating benefit changes in a higher education setting is uniquely challenging. Faculty and staff expect detailed, evidence-based messaging aligned with institutional values. In-person communications – both one-on-on and group meetings – are assumed and must meet the needs of diverse stakeholders. And external experts or vendors may be met with skepticism.
Keys to successful implementation
So how best to address these challenges? Drawing on WTW’s experience working with 28 higher education institutions, representing more than 75% of the schools already on a retiree exchange, here are 5 factors that colleges and universities should consider when transitioning to the individual market:
