AARP Suspends Health Plan Sales

November 13, 2008
Special Feature

After drawing fire from a number of critics about some of its health insurance plans, AARP has announced that it would voluntarily suspend sales of several of its health coverage products.

After drawing fire from a number of critics about some of its health insurance plans, the senior citizen advocacy group AARP has announced that it would voluntarily suspend sales of several of its health coverage products. The move comes after Sen. Chuck Grassley (R-Iowa) asked AARP for detailed answers to several questions about its health insurance programs. According to the AARP, the sales hiatus will continue until the organization has a chance to review the plans and the marketing tactics used to sell them.

Covered by the sales ban are so-called “limited benefit” plans, which put a cap on how much the insurer will pay per day or per procedure, rather than paying all or a percentage of the cost, as most traditional health insurance plans do. This type of plan usually carries lower premiums, making them popular among those with limited resources. Critics point out, however, that the plans leave consumers with unlimited liability for healthcare bills and that those who buy this type of insurance may not fully understand the limitations.

Sen. Grassley, while noting that the sales suspension is a move in the right direction, is still concerned about those who are already covered under the plans and, because of misleading marketing claims, may not realize how little of their healthcare expenses may be covered. The AARP’s limited benefit plans cover more than a million members nationwide.