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In November, 2008, one of the members of the Senate Finance Committee began an investigation into health insurance plans offered by AARP in what looked like misleading marketing. Evidence has been found that there was deceptive marketing and AARP has now hired an investigator to look into it.

The policies were branded by AARP and sold by UnitedHealth Group, and they are:

  • Essential Plus
  • Hospital Indemnity Plan; and
  • AARP Medical Advantage.

Traditional vs. Fixed-Rate Insurance

An important question for everyone who buys health insurance is: What might they have to pay if they need an expensive medical procedure?

  • Traditional insurance policies cover a percentage of each medical claim. That means the insurance company pays more when the medical procedure costs more.
  • Fixed-Rate insurance policies offer a fixed amount of coverage regardless of what any medical procedures cost.

These AARP policies are fixed-rate policies. There is no problem with this if the marketing is honest.

Misleading Marketing

An example of misleading marketing would be featuring a fairly low-cost procedure and stating that AARP would pay $5,000 to cover it. Unless the public is also informed that the policy is fixed-rate, this marketing creates the impression that it is offering generous coverage for all procedures. $5,000 for a relatively low-cost procedure implies that a high-cost procedure would be equally well covered.

But in fact a policy holder who had to have heart surgery, for example, would receive only $5,000 in coverage and be liable for the entire rest of the bill.

AARP’s Medical Advantage plans are advertised as “a real lifesaver for early retirees, part-time workers or people who just need to supplement their current health insurance.” Unless you read the fine print you would think you were very well-covered by this type of plan when you added it to your Medicare or other policies.

The Senate investigation is ongoing. One senator has said: “[AARP is] a big-time advocate of health security [and] should not target under- and uninsured Americans with misleading marketing.”

If you think you have been misled, deceived, or poorly served by your insurance company, there is help available. Please contact our insurance bad-faith attorneys today. We can help you with paperwork and speaking with insurance company representatives, and can fight to win compensation for you for this painful and unwelcome type of legal problem.

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