Understanding AARP Insurance: What It Covers and How It Works

AARP offers several types of insurance products designed for people age 50 and older. These insurance options are underwritten by third-party insurance companies, but are made available through the AARP organization. It's important to understand that AARP itself is not an insurance company—rather, it partners with established insurers to offer coverage options to its members.

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The main categories of insurance available through AARP include health insurance, supplemental health insurance (also called Medigap), long-term care insurance, auto and home insurance, and life insurance. Each type serves a different purpose in protecting your finances and health. For example, health insurance helps pay for doctor visits and hospital stays, while life insurance provides money to your family after you pass away. Supplemental health insurance works alongside Medicare to cover costs that Medicare doesn't pay for, such as copayments and deductibles.

AARP insurance products vary by state, as insurance regulations differ across the country. Some coverage options available in one state may not be offered in another. Additionally, the specific terms, costs, and coverage details can differ based on your age, health history, and location. This is why it's important to review information specific to your state of residence.

One key point: AARP membership is generally required to access these insurance products. AARP membership costs around $16 per year for a standard membership. However, joining AARP to purchase insurance should be a decision you make based on whether the coverage options meet your needs and budget.

Practical Takeaway: Start by identifying which types of insurance might address your current needs—whether that's health coverage, supplemental coverage, or protection for your family. Understanding what each type covers will help you focus on the options most relevant to your situation.

Medicare Supplement (Medigap) Insurance Through AARP

Medicare Supplement insurance, commonly called Medigap, is one of the most popular insurance products offered through AARP. This coverage is designed specifically for people already enrolled in Original Medicare (Parts A and B). Medigap policies help pay for healthcare costs that Original Medicare doesn't cover, such as copayments, coinsurance, and deductibles.

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According to the Centers for Medicare and Medicaid Services (CMS), approximately 10.4 million people with Original Medicare have some form of supplemental coverage. Medigap plans are standardized by the federal government, meaning that a Plan G from one insurance company covers the same benefits as a Plan G from any other company. The main differences between insurers are price and customer service quality. AARP partners with UnitedHealthcare to offer several Medigap plan options.

The available Medigap plans are labeled with letters: A, B, D, G, K, L, M, and N. Each plan covers a different combination of costs. For instance, Plan G is one of the most comprehensive options available, covering most out-of-pocket costs except for the Part B deductible. Plan N covers many costs but may have higher copayments for doctor visits and emergency room care. Choosing between plans involves comparing what costs each one covers against the monthly premium you'd pay.

Timing matters when purchasing Medigap coverage. There is a six-month window when you first become eligible for Medicare Part B during which insurance companies cannot deny you coverage or charge you more based on health conditions (pre-existing conditions). This period is called the Medigap Open Enrollment Period. Outside this window, you may face medical underwriting, meaning the insurance company will review your health history and may deny coverage or charge higher rates.

The average monthly premium for Medigap coverage through AARP varies widely depending on your age, location, and the specific plan selected. According to data from the Kaiser Family Foundation, Medigap premiums average between $100 and $300 per month, though they can be higher in some areas and for certain plans. Some plans use age-rated pricing, meaning premiums increase as you get older.

Practical Takeaway: If you have Original Medicare or are approaching Medicare age, review the different Medigap plan options to see which combination of covered costs aligns with your healthcare spending patterns. Compare plans based on both the monthly premium and what costs each plan covers.

Long-Term Care Insurance Options and Coverage Details

Long-term care insurance through AARP helps protect your assets if you need extended care services due to illness, injury, or cognitive decline. Long-term care includes services like nursing home care, assisted living, adult day care, and in-home care assistance. According to the U.S. Department of Health and Human Services, approximately 70% of people age 65 and older will need some form of long-term care services during their lifetime.

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The cost of long-term care can be substantial. A semi-private room in a nursing home averages around $8,000 to $9,000 per month nationally, though costs vary significantly by region. In-home care services, such as having a home health aide visit several times per week, can cost $5,000 to $15,000 per month depending on the frequency and type of care needed. Without insurance, these costs could quickly deplete retirement savings and assets.

AARP long-term care insurance policies typically cover services in nursing homes, assisted living facilities, and your own home. Coverage is usually defined by a daily benefit amount—for example, a policy might cover $150 per day of care services. The policyholder selects how many days of coverage they want (called the "benefit period"), which could range from one year to lifetime coverage. Most people choose three to five years of coverage.

Long-term care insurance also includes an "elimination period" (sometimes called a waiting period). This is the number of days you must pay for care yourself before the insurance begins paying. Common elimination periods are 30, 60, or 90 days. Policies with longer elimination periods have lower premiums because the insurance company pays benefits for a shorter total time. Additionally, many policies include inflation protection, which increases your daily benefit amount over time to account for rising care costs.

One important consideration: long-term care insurance premiums can increase over time. Unlike some other types of insurance with locked-in rates, long-term care policies sold through AARP may have premium adjustments. You should review the policy documents to understand whether premiums are guaranteed to stay the same or if they may increase.

Practical Takeaway: Consider your family's history with long-term care needs and your current assets. If you have significant savings you want to protect, or if family members have required extended care, long-term care insurance might fit your planning needs. Request information about specific daily benefit amounts, benefit periods, and how premiums work over time.

Health Insurance Options for Those Not Yet on Medicare

For AARP members age 50-64 who are not yet eligible for Medicare, AARP offers information about health insurance options through the ACA Marketplace (also called the Affordable Care Act marketplace or Healthcare.gov). While AARP doesn't directly sell health insurance to pre-Medicare adults, the organization provides educational resources about how marketplace plans work and what options might be available in your area.

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The ACA Marketplace offers several plan types, each covering different percentages of healthcare costs. These are organized into "metal" categories: Bronze, Silver, Gold, and Platinum. A Bronze plan typically covers about 60% of healthcare costs, leaving you responsible for 40%. A Platinum plan covers about 90% of costs. In between, Silver plans cover about 70% and Gold plans cover about 80%. The higher the metal level, the higher the monthly premium, but the lower your out-of-pocket costs when you use healthcare services.

Many people age 50-64 qualify for premium tax credits (subsidies) that reduce the cost of monthly premiums based on income. According to the Centers for Medicare and Medicaid Services, approximately 73% of people selecting marketplace coverage receive premium assistance. Your household income compared to the federal poverty level determines whether you qualify for these credits and how much assistance you might receive.

For 2024, people age 50 and older who do not receive assistance see average monthly premiums of around $500-$800 for a Silver plan, depending on location and specific plan. With tax credits, many people pay significantly less. The open enrollment period for marketplace coverage runs from November through January each year, though certain life events (such as losing other health coverage) may allow enrollment outside this window.

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