AARP, UHC and Chuck

From yesterday's McPaper:

"Insurance is supposed to limit your exposure to the potentially high cost of a serious illness, and these plans do the opposite..."

So says Sen Chuck Grassley of the Senate Finance Committee. That august body is investigating the famed AARP's foray into the marketing of individual health plans. What many folks may not know is that, in addition to the usual MedSupps, AARP and its sales partner, UHC, have been pushing "limited benefit" or "mini-med" plans. The problem is, these plans are often marketed to folks who don't understand that they can leave some major holes.

We've written extensively on mini-meds, and have concluded that, in certain circumstances, they make a lot of sense. Folks who can't qualify for or afford a true "major med" plan can benefit from these limited benefit policies, which offer reduced coverages at a reduced cost.

You get what you pay for.

But the dark side is that unscrupulous vendors often push them as viable and attractive alternatives to major med -- or even group -- plans. Now, there's nothing in the article that explicitly states that this is the case with AARP/UHC, but I can tell our readers from personal experience that these plans do not go out of their way to inform the public of their limitations.

[ed: In fairness, brochures and other sales literature for "regular" plans could do a better job of disclosure, as well. That's why having a professional agent on your side can be such a boon]

About two years ago, I had a client come in to discuss one of these plans. She was covered by a major med with a "decent" deductible, but the renewal was bothersome. She had received some literature from AARP, and wanted my advice. I've always tried to be upfront with my clients; if another plan, that I can't duplicate, would better serve them, I'm happy to let them "jump ship," content with the knowledge that "they'll be back," and I've built up invaluable goodwill.

In that case, she brought in the AARP/UHC mini-med info. We discussed it at length, and she realized that what she had was far better for her in the case of a large claim, which was her primary concern. I was able to pursuade her that increasing the deductible on her existing plan would bring the cost more in line, and she wouldn't be giving up the coverage on the back end by doing so.

But how many "seniors" know to discuss this with their agent, or even think about it? Here comes this very inexpensive offer in the mail, it looks good, so why not make the switch?

Well, if you have no other choice, then maybe that's appropriate. But in too many instances, folks do have a choice, and in their ignorance, make the wrong one. By the way, I didn't choose the word "ignorance" as a pejorative, but to illustrate that not everyone's an insurance expert.

Present company excepted, of course.

The "chutzpah" award, however, goes to AARP VP David Sloane, who, when confronted with the fruit of his company's perhaps questionable sales practices, complained that it wasn't their fault, but that until America "reforms the system and gives everyone access to coverage," these plans provide an alternative. Of course, he neglects to point out that "the system" isn't responsible for AARP's advertising and marketing issues.