AARP Shell Game

[Welcome Insurance Forums readers!]

It is an old carny trick.

Three shells on a table. One pea.

Hide the pea under a shell. Move the shells around and ask the player to guess where the pea is hidden.

In that game, no one get's hurt.

AARP is a massive marketing organization and advocate for the "elderly", but I hardly consider 50 years of age to be elderly.

AARP has done a great job of promoting themselves. So much so that they have created their own brand.

One not so well known fact is this. The dues paid to AARP are not enough to cover the cost of their operation. AARP is a non-profit organization but don't let that moniker fool you into thinking all their work is charitable.

A major source of revenue for AARP comes from their partnership with insurance carriers.

In 2007, AARP made about $299 million just from its health insurance partnerships,

That's some serious cheddar.

But this relationship between marketing organization is not all rosey.

Bob August found out how confusing things can be when he tried to use his health insurance purchased through AARP.

My wife and I have had AARP insurance since 1982.

See the confusion?

They don't have AARP insurance. They have a policy that was purchased through AARP.

AARP is not a carrier, only a marketing partner.

This year, when we decided to get shingles vaccinations, we called AARP and were told the shots were covered.

We got the shots June 10 but didn't receive a bill until early September. We paid and sent in the forms to AARP, but our claim was denied.

AARP should not be giving out this kind of information since they are not the carrier, and are not in a position to adjudicate claims.

They also should not be handling claims, even as a facilitating agent. All it does is perpetuate the illusion that AARP is the carrier.

We were told to appeal to something called UnitedHealth Group and the appeal was denied. Apparently, there is a 60-day deadline for filing for reimbursement. So we got clipped for $518.

That "something" called United Healthgroup is actually a very large carrier, insuring 25 million individuals.

United pays a commission to AARP for every policy sold through their organization.

Many times members of associations or warehouse clubs like Costco or Sam's believe they are getting a special deal on products (including insurance) that is sold through these outlets. Most of the time the policies are identical to policies sold direct by carriers or through independent agents. Underwriting is the same, so you can be rated or rejected for coverage, just like in the free market.

If you want to buy your coverage through an association or warehouse club, just beware that you are actually on your own when it comes to advice and service after the sale. You pay a full service price but without any of the benefits.