Misleading AARP Policies Hitting Americans Where it Hurts

Washington, DCThe head of AARP insurance maintains that his firm issues quality products to consumers, and assures that AARP health insurance remains a sound investment for consumers, together with its tag-team partner, United Health Group insurance. However, State Senator Charles Grassley sees it another way, and is on the warpath to better protect Americans from what he sees as misleading the consumer.

"Based on Senator Grassley's letter we have launched a comprehensive review of the issues he raised," AARP CEO Bill Novelli said in his response to Grassley's allegations. "I have personally assured Senator Grassley that we are moving quickly to respond to his questions."

That response included a suspension of the marketing of fixed benefit indemnity products under the AARP and UnitedHealthcare umbrella, and a review of the products, and the marketing thereof, by an independent party.

The American Association of Retired Persons (AARP) is in reality a huge, nonprofit outfit that publishes a magazine and advocates for the growing number of seniors 50+. As part of its service to its members, AARP has partnered with UnitedHealthcare in the issuance, and marketing of medical insurance products geared towards seniors looking to protect themselves from the high costs of medical care, including unanticipated procedures and the sometimes astronomical costs associated with them.

Together, they are one of the largest providers of health care coverage to seniors.

The problem—and the allegation made by the senior Republican on the Senate Finance Committee, is that certain policies pay fixed cash benefits only, and do not represent the kind of comprehensive heath coverage that seniors have been led to believe they are buying.

"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.

Show me the money…

His inquiry, Grassley said, was prompted by the experience of a cancer patient who mistakenly believed her insurance coverage was comprehensive, when in fact it was an AARP limited benefit policy. Patient Lisa Kelly was allegedly required to cough up tens of thousands of dollars in payments up front before the M.D. Anderson Cancer Center in Houston would consent to treat her.

Many of the insurance products in question have a limit of $5,000—and while a host of procedures are listed, they are relatively inexpensive in comparison to much more expensive procedures, such as major surgery. Most consumers have no idea whatsoever, unless they were privy to a cost analysis for their care, just how expensive a lengthy stay in hospital, and both invasive and non-invasive surgery, can be. Seniors have an even deeper disconnect with the potential costs for such care, give that they were raised in a much more frugal, and technically primitive time as compared with today.

Thus, many seniors have an AARP UnitedHealthcare policy, thinking that they are covered for everything, when in fact they have a policy that pays a maximum of $5,000. These seniors face the potential of either serious financial duress, or the inability to have a life-saving procedure performed, because they suddenly are unable to pay for it.

"Individuals shopping in the health insurance marketplace shouldn't be taken advantage of," Grassley asserts. "A big time advocate for health security should not target under- and un-insured Americans with misleading marketing. Consumers deserve better. It's not better than nothing to encourage people to buy something described as 'health security' when there's no basic protection against high medical costs."

Senator Grassley concluded, after a review of Kelly's health policy, that the marketing materials inherent with the policy were misleading and would cause an average person to believe, erroneously, that real insurance had been purchased, when it fact it was not.

The AARP insurance is available in 29 States: Alabama, Alaska, Arizona, Arkansas, Colorado, Delaware, Georgia, Hawaii, Illinois, Indiana, Iowa, Maryland, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Hampshire, New Mexico, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, West Virginia and Wyoming.

While AARP health insurance is still available, as is United Health Group insurance, the company is no longer actively marketing the products until such time as it gets its marketing house in order. Of course, that doesn't help the thousands of current policyholders who may remain misinformed. There is no information as to whether, or not AARP and / or UnitedHealthcare have made any effort to contact them. Then again, perhaps the policyholder's lawyer will make the first call.