Free Guide to AARP Health Insurance Plan Options

Understanding AARP Health Insurance Plan Options

AARP offers several types of health insurance plans designed for people age 50 and older. This guide provides information about what these plans are, how they work, and what to consider when reviewing them. It's important to note that this is educational material meant to help you understand the landscape of health insurance options available—not a tool for purchasing plans or determining what coverage you personally might receive.

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The main types of AARP health insurance plans include Medicare Supplement (Medigap) plans, Medicare Advantage plans, and long-term care insurance. Each type serves a different purpose and has different rules about coverage, costs, and networks. Understanding the differences between these options is a key first step in exploring what information might be relevant to your situation.

AARP partners with insurance companies to offer these plans, but AARP itself does not provide the insurance. Instead, AARP works with carriers like UnitedHealthcare, Humana, and others. This means that while AARP markets these plans and provides information about them, the actual coverage and claims are handled by the insurance company you choose.

According to the Centers for Medicare & Medicaid Services (CMS), over 28 million people are enrolled in Medicare Advantage plans as of 2023, and millions more hold Medigap policies. This shows that supplemental coverage is a common choice among Medicare beneficiaries. The variety of options reflects different healthcare needs and financial situations across the older adult population.

Practical Takeaway: Before exploring specific plans, understand that AARP-marketed plans are offered through partner insurance companies, and different plan types serve different purposes. Reading through general information about each type helps you determine which category might be worth learning more about based on your own circumstances.

Medicare Supplement (Medigap) Plans Explained

Medigap plans are policies sold by private insurance companies that work alongside Original Medicare (Parts A and B). These plans are designed to cover some of the costs that Original Medicare does not pay for, such as copayments, coinsurance, and deductibles. AARP offers Medigap plans through partner carriers, and these plans follow standardized designs set by federal law.

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There are 10 standardized Medigap plan types, labeled A through N. Each plan letter offers the same benefits regardless of which insurance company sells it—the only differences are price and the company's customer service. Plan A offers basic coverage, while Plan G and Plan N offer more comprehensive benefits. For example, Plan G covers all of the deductible for Part B (which is $240 in 2024), whereas Plan A does not cover this deductible.

The costs of Medigap plans vary based on three rating methods: age-rated (where premiums increase as you get older), community-rated (where everyone in the area pays the same premium), or issue-age-rated (where your premium is based on your age when you enroll). According to the Medicare.gov website, the average cost of a Medigap policy ranges from about $100 to $300 per month, but this varies significantly by location, plan type, and insurance company.

One important feature of Medigap plans is that they do not restrict you to a specific network of doctors. You can see any doctor who accepts Medicare anywhere in the United States, which provides flexibility for travel or if you move. However, Medigap plans do not cover prescription drugs, dental, vision, or hearing—you would need to enroll in a separate Part D prescription drug plan and potentially purchase additional coverage for other services.

The timing of when you enroll in a Medigap plan matters. If you enroll during your open enrollment period (generally within six months of turning 65 and enrolling in Medicare Part B), insurance companies cannot deny you coverage or charge you more based on health conditions. If you wait to enroll outside this window, you may face underwriting and could be denied coverage or charged higher premiums.

Practical Takeaway: Medigap plans fill gaps in Original Medicare coverage and allow you to see any Medicare-accepting doctor. Since plan benefits are standardized by letter, comparing costs between companies becomes the main shopping task. Understanding the timing of enrollment windows helps you plan ahead to avoid potential coverage gaps or higher costs.

Medicare Advantage Plans: How They Differ

Medicare Advantage plans, also called Part C plans, are an alternative way to receive your Medicare benefits. Instead of using Original Medicare with a supplement, you enroll in a private insurance plan that contracts with Medicare to provide Part A and Part B coverage. These plans typically include prescription drug coverage (Part D) as part of the package, unlike Original Medicare.

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Medicare Advantage plans come in several varieties: Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), Private Fee-for-Service plans, and Special Needs Plans. HMO plans usually require you to use doctors and hospitals within their network and often require referrals to see specialists. PPO plans offer more flexibility to see out-of-network providers, though typically at higher costs. According to the Kaiser Family Foundation, about 28 million Medicare beneficiaries were enrolled in Medicare Advantage as of 2023, representing roughly 42% of all Medicare beneficiaries.

One significant difference between Medicare Advantage and Medigap is that Advantage plans have annual out-of-pocket maximums. In 2024, these limits range up to $8,000 for in-network care. Once you reach this limit, the plan pays for covered services. Original Medicare combined with Medigap does not have a yearly maximum, which can be an advantage for people with high medical costs, but it may come with higher monthly premiums.

Many Medicare Advantage plans offer extra benefits not covered by Original Medicare, such as fitness programs, dental coverage, vision coverage, or hearing aids. Some plans include meal programs or transportation to medical appointments. These extra benefits vary widely by plan and location, so reviewing what each specific plan offers in your area is important.

The trade-off with Medicare Advantage plans is that they typically have lower monthly premiums than Medigap coverage but may include higher copayments and coinsurance when you use services. Additionally, if you travel frequently or live in multiple states, the network restrictions of Advantage plans may be inconvenient, whereas Medigap allows you to see any Medicare provider nationwide.

Practical Takeaway: Medicare Advantage plans bundle coverage and prescription drugs with potentially lower premiums, but involve network restrictions and higher out-of-pocket costs at the point of care. They work best for people with predictable healthcare needs and those who prefer extra benefits like dental or fitness programs included in one plan.

Long-Term Care Insurance Through AARP

AARP also offers long-term care insurance (LTCI), which is distinct from health insurance. Long-term care covers costs associated with extended care in a nursing home, assisted living facility, or at home—services that health insurance typically does not cover. This type of coverage becomes increasingly relevant as people age, since the likelihood of needing long-term care services increases significantly after age 70.

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According to the U.S. Department of Health and Human Services, about 70% of people over age 65 will need some form of long-term care during their lifetime. The average cost of nursing home care is approximately $108,405 per year, and assisted living averages around $54,000 per year (2023 data). These costs can quickly exhaust retirement savings, making long-term care insurance a consideration for people concerned about protecting their assets.

AARP's long-term care insurance is underwritten by insurance partners and offers different coverage options based on daily benefit amounts, elimination periods (the number of days before coverage begins), and benefit periods (how long benefits continue). For example, a policy might cover $150 per day for three years of nursing home care, or $100 per day for five years of combined home care and facility care.

One feature of long-term care insurance is that premiums are based partly on your age and health status at the time you enroll. Premiums are typically locked in and do not increase based on age alone, though insurance companies can request rate increases for entire classes of policies if their claims experience indicates it's necessary. Waiting to enroll until you are older generally results in significantly higher premiums.

Long-term care insurance is not the same as health insurance and does not cover medical care like doctor visits or prescriptions. It is also distinct from disability insurance. Understanding what services long-term care insurance actually covers