AARP Medigap Plans in California
The dominant Medicare supplement carrier in the State
We
would be remiss without discussing AARP California Medigap plans when discussing
the Medicare supplement market in our State. AARP is a non-profit Associations
most associated with retired and seniors but they also tend to be one of the
largest marketers of insurance including California Medigap plans. Let's take a
look at AARP more closely and discuss the pro's and con's of this strong player
on the market.
What is AARP?
First, AARP stands for the American Associations of Retired Persons. It is a
non-governmental association formed in 1958. There are two separate entities
within AARP, The AARP Foundation and AARP services which administers California
Medigap plans. AARP is the largest marketer of California Medicare supplements
and has shaped the to's and fro's of the marketplace since their entrance into
the market. AARP does not actually underwrite the insurance plans themselves
which means that they are not the carrier. They partner with large national
carriers as a marketing partner. Their current partner and contract for
California Medigap is United Health Care, a large and stable nationwide provider
of health insurance products across the various segments of the marketplace
(including Senior). The prior carrier was Aetna with which the contracted but
United has replace them as of their current standing. So how does AARP
California medigap plans stack up against competitors?
AARP and Medigap Coverage
On the surface, Medigap plans are pretty straight forward (relatively
speaking for health insurance) since the basic benefits are standardized by the
Federal government. In light of this, you would think that the carriers would
all have pretty similar pricing since they're all constrained by the same
benefit configurations and risk profiles since a vast number of California
seniors get Medigap coverage on a guaranteed issue basis when leaving group
coverage over the age 65 or turning age 65 with Part A and Part B. AARP was the
first company to really shake up the pricing market when they came out with an
initial discounted rate for certain new enrollees which decreased over a few
years. This allowed them to quickly eat up a large share of the market place
since there were situations where they a 65 year old would find their rates to
be 30% less than the other main carriers. This discount would decrease with each
passing year but at the time of making a decision (turning 65), the price for
identical coverage was much lower and that sealed the deal especially since many
people know AARP and have deal with them for other matters. Now, there's no free
ride in the universe and the discounted rate must somehow be accounted for later
on in the life of the policy since the inherent medical risks are all the same.
So where does the pricing stand now?
AARP's Rates versus other California Medigap Providers
The market has somewhat equalized which may partly be AARP's prices going up
over time (to accommodate the discounted rate up front to gain market share) or
due to the other California Medigap carriers lowering their rates to be more
competitive but similarly moving costs to later years. That's the tricky part
about any discount up front for similar medical risks. This discount must be
re-captured later in the older age bands or after the discounts goes away. At
that point, a person may not be able to change plans due to health and that can
be a concern.
The discounted AARP California Medigap rate could be looked at in both
lights...both as a boon for new enrollees or a price to be paid later in a
person's life but either way, AARP is a strong and stable provider of California
Medicare supplement plans and will continue to be going forward regardless of
their contracted carrier partner.
Have questions regarding AARP medigap coverage? Call us at 800-320-6269 or email to
help@californiamedigap.com