AARP, the advocacy group for Americans 50 and over, announced November 7 that it would voluntarily suspend sales of a type of health insurance plan critics say leaves policyholders vulnerable to tens of thousands of dollars in costs and not enough coverage.
Suspension of sales of AARP-branded fixed benefit indemnity plans administered by United Healthcare will occur “as soon as possible” and last until AARP completes an independent review of the plans and their marketing efforts, the group said. The AARP plans came under scrutiny recently when Senator Charles Grassley (R-Iowa) sent a letter to AARP CEO Bill Novelli asking for answers to dozens of questions about the plans, which cover up to 1 million policyholders nationwide.
“The pitch for these products should be straight up and informative, instead of designed to leave the impression of being comprehensive when the product is, in fact, very limited and leaves consumers seriously in debt if they need intensive medical care,” Grassley said in a prepared statement on November 3. “Individuals shopping in the health insurance marketplace shouldn’t be taken advantage of. A big-time advocate for health security should not target under- and un-insured Americans with misleading marketing. Consumers deserve better.” Grassley said the sales tactics used to sell the products of AARP could mislead people into believing they have better coverage than they do.
Grassley, the ranking member of the Senate’s Committee on Finance, which is responsible for health care, also wrote letters to 29 state insurance commissioners including the Washington, DC, insurance commissioner, where the plans are offered to ask whether the agencies received complaints about the AARP policies or other limited benefit policies. DISB joined other jurisdictions in responding to the inquiry.
The sales suspension and review are in response to Grassley’s concerns, the AARP said recently.
“We have extremely high standards for the provider products that carry the AARP name,” Novelli said in a written statement on AARP’s website. “Ensuring the protection and keeping the trust of our members drives all that we do at AARP.” Based on Senator Grassley’s letter, the AARP will be taking the following steps:
1) Engaging an independent expert to review the marketing and sales of the fixed benefit indemnity products and make recommendations as warranted; and
2) AARP and UnitedHealthcare have agreed that the marketing and sales of these fixed benefit indemnity products will be voluntarily suspended as soon as possible, pending the conclusion of a review. Current members of the fixed benefit indemnity plans will continue to be served by the program.
“The marketing of this plan demands a comprehensive review, and the AARP needs to do right by the more than 1 million people who may have bought this AARP product because of the misleading marketing,” said Grassley in response to the suspension.
AARP sells the plans, backed by UnitedHealth Group, mainly among people ages 50 to 64. Such plans are dubbed “limited benefit” policies because they set specific limits on how much the plan will pay per day, year or procedure rather than paying a percentage of total costs, as more traditional coverage provides. Such policies are a small but growing segment of the market and are sold by many insurers. They appeal to people on tighter budgets as the premiums are generally lower than more traditional insurance. But the plans cap what insurers pay toward medical care, thereby increasing the amount charged by the health care provider to the policyholder.
AARP offers several types of limited benefit insurance, but Grassley’s concern initially focused on two: Essential Plus Health Insurance and Medical Advantage Plan. AARP says about 44,000 people are enrolled in those two plans, out of 1 million in all AARP limited benefit plans. AARP also sells other insurance products, including a major medical plan similar to those offered by employers, supplemental Medicare insurance and Medicare drug benefit plans. None of those were part of Grassley’s inquiry.