Does AARP Supplement Insurance Include Undisclosed Fees?

A recent investigation is looking into whether or not AARP supplement insurance, known as Medigap, charges hidden and possibly illegal fees.

Last year, a class action lawsuit claimed that AARP was involved in what appeared to be a kickback scheme when the organization accepted a nearly 5 percent commission on the sale of Medigap insurance plans issued by United Healthcare – essentially acting in the capacity of an unlicensed insurance agent.

What is Medigap Insurance?

Officially known as Medicare supplement insurance, Medigap policies such as AARP supplement insurance provide coverage for out-of-pocket health care costs, like deductibles and copays, that are not covered by the federal Medicare program. United Health offers such plans, which are marketed through AARP. Those who purchase the coverage through AARP report being charged an additional, undisclosed 4.95 percent fee.

What Was the Fee For?

According to AARP, the extra fee is a royalty paid by insurance providers to AARP, which the organization maintains is “for the use of its intellectual property” and “the general purposes of AARP. ” Plaintiffs claim the fee is actually a commission from the insurance companies, which AARP pays for the right to sell the products through the organization. Because AARP is not licensed as an insurance agent, it is legally prohibited from collecting such fees.

Why Do They Do It?

According to the complaint, AARP has never disclosed the amount of this fee to consumers. Plaintiffs say that by calling the fee a “royalty” rather than a “commission,” AARP is able to bypass insurance regulations and avoid paying taxes on the income it receives from the sales of these policies.

A large number of consumers who have purchased AARP supplement insurance say that had they known the so-called “royalty” was actually a sales commission, they would have purchased their Medigap policies elsewhere.

Are There Alternatives to AARP Supplement Insurance?

A number of insurers offer Medicare supplement insurance. If you are eligible for Medicare, you don’t have to purchase Medigap coverage through AARP. If you are concerned about additional, undisclosed fees, you can purchase a plan directly, rather than going through AARP.

Keep in mind that regardless of where you purchase your Medigap coverage, it does not cover things such as long-term care, vision and dental (including hearing aids and eyeglasses) or the services of a private nurse.

Also, do not confuse Medicare supplemental insurance with cover such as Medicare Advantage or Medicare Prescription Drug Plans.

What If You Already Have an AARP Supplement Insurance Policy?

If you have already purchased Medigap insurance through AARP and believe you were assessed an extra fee without your knowledge, you may be entitled to recovery by taking legal action. A lawyer who is experienced in Medicare issues may be able to help determine whether or not you have grounds for a lawsuit or are eligible to join an existing class action.

Join an AARP Medigap Class Action Lawsuit Investigation

If you purchased Medigap insurance through AARP, you may be eligible to join this AARP Medigap insurance overcharge class action lawsuit investigation.

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