Higher education and the retiree health plan individual market

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:

1. 01

   Do the math upfront: compare plans and transition options

   Review the plans available in the individual market (based on zip codes where your retirees reside) and compare the total costs (including premiums, co-pays, and out-of-pocket expenses) under your current plans to the total costs in available in individual market plans. Confirm where retirees will be better off financially and determine how the institution and retirees should share in the savings.

   Early adopters often moved all retirees to the individual market at once, but most retiree exchanges now permit retained or gradual phase-in, including transitions for future retirees only. Institutions considering a transition – especially those concerned about retiree disruption – should assess the full range of available options and downstream considerations.

2. 02

   Engage leadership early

   Failure to engage senior leadership early can cause delays or derail approval. Educating senior leaders and providing regular updates is essential. A clear rationale, tied to the university’s mission and values is also critical. When presenting options to senior leadership, HR and benefit leaders should be transparent about trade-offs and avoid overpromising. Change is always difficult, and not everyone will be happy – even when it’s in their best interest.

3. 03

   Leverage existing support structures

   Many colleges and universities benefit from internal expertise, specialized capabilities and extensive support resources for employees and retirees. A transition to the individual market should leverage these support structures – for example, integrating retiree health plan exchange communications with retirement counseling teams or engaging a faculty member with healthcare expertise to help secure leadership buy-in.

4. 04

   Communicate with transparency

   Roll-out communications should clearly explain the rationale for change and the impact it will have on the institution and its stakeholders. Skepticism is natural and credibility can be quickly lost if faculty or staff sense an unspoken motive. Written communications should leverage technology, including nudges and personalized messages. Finally, both live meetings and written communications should be tailored to different workforce segments to address varying needs and benefit eligibility.

5. 05

   Use trusted messengers

   In a values driven culture, trusted messengers carry significant weight. For example, engaging a retiree ambassador or a faculty member with relevant expertise can help address concerns and resistance among retirees, faculty and staff. Benefits and HR staff are, of course, essential but other internal messengers can play an important complementary role.

During this period of intense economic pressure and financial uncertainty, delivering retiree healthcare benefits through the individual market presents a significant opportunity for institutions to reduce costs and improve retiree satisfaction. However, it’s imperative to allocate sufficient resources to a communication and change management strategy that anticipates and addresses retiree and stakeholder concerns – and, most importantly, aligns with the institution's culture and values.

Contacts

---

Meghan Scott

Senior Director, Retirement

email Email

---

Margaret Rutter

Managing Director, Employee Experience

email Email

---