Free Guide to Understanding AARP Insurance Options

What AARP Insurance Covers and Doesn't Cover

AARP offers several types of insurance products through partner companies. Understanding what each type covers is the first step in learning about your options. AARP does not directly underwrite or sell insurance—instead, the organization endorses products from established insurance companies that have met AARP's standards.

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Medicare Supplement insurance, also called Medigap, works alongside Original Medicare (Parts A and B). Original Medicare covers about 80% of your healthcare costs after you meet your deductible. Medigap policies help pay some of the remaining costs, including copayments, coinsurance, and deductibles. For example, if you need hip replacement surgery, Original Medicare might cover the procedure, but you could owe $1,600 in out-of-pocket costs. A Medigap policy would help cover those additional expenses.

AARP Medicare Advantage plans are different from Medigap. These are comprehensive plans offered by private insurers that include hospital, doctor, and prescription drug coverage all in one plan. Many Medicare Advantage plans also include dental, vision, and hearing coverage at little or no extra cost. However, Medicare Advantage plans typically have network restrictions, meaning you must use doctors and hospitals within the plan's network except in emergencies.

AARP also offers long-term care insurance information. This type of coverage helps pay for extended care needs, such as nursing home stays, assisted living, or home care services. Long-term care insurance does not cover medical treatment like doctor visits or hospital stays—it covers the custodial care and support services people need when they can no longer perform daily activities independently.

It's important to note what insurance does not cover. Medicare and supplemental plans do not pay for routine dental work, vision exams, or hearing aids, though some Medicare Advantage plans include these benefits. Neither Original Medicare nor Medigap covers cosmetic procedures. Long-term care insurance does not cover acute medical care or rehabilitation therapy related to an illness or injury.

Practical takeaway: Make a list of your current healthcare needs and expenses, then check which type of AARP insurance addresses those specific needs. This will help you focus on the right product category for your situation.

How Medicare Works as the Foundation

Medicare is a federal health insurance program for people age 65 and older, regardless of income. It serves approximately 67 million people as of 2024. Understanding how Medicare works is essential because AARP insurance products work alongside Medicare rather than replacing it. You cannot purchase AARP Medigap or Medicare Advantage plans without being enrolled in Medicare.

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Original Medicare has two main parts. Part A covers hospital insurance, including inpatient hospital stays, skilled nursing facility care, hospice, and home health services. Part B covers medical insurance, including doctor visits, outpatient services, medical equipment, and preventive care. When you use Part A services, you pay a deductible (currently $1,676 per benefit period) and then coinsurance. For Part B, you pay a monthly premium (averaging $175 per month in 2024, though this varies by income), a $240 annual deductible, and then 20% coinsurance for most services.

Medicare Part D covers prescription drugs through private insurance plans. These plans vary in cost and coverage, and you choose which plan to join during enrollment periods. If you don't enroll in Part D when first becoming eligible and later decide to join, you may pay a penalty that increases your premium permanently.

Many people turn 65 and automatically receive Parts A and B. However, if you're still working and have employer coverage, you may delay enrolling in Part B without penalties. The Initial Enrollment Period (IEP) is the seven-month window centered on your 65th birthday. Missing this window can result in permanent premium penalties unless you have qualifying circumstances.

Original Medicare is accepted by virtually all doctors and hospitals nationwide because it's a federally managed program. However, it leaves you responsible for significant out-of-pocket costs. This is where supplemental insurance comes in. AARP Medigap policies are designed to fill these gaps by covering some or all of the copayments, coinsurance, and deductibles that Original Medicare does not cover.

Practical takeaway: Review your Medicare enrollment documents to confirm you're enrolled in Parts A and B, and verify that you're enrolled in a Part D plan. This information will determine which AARP insurance options make sense for you.

Medigap Plans Explained: Standards and Costs

Medigap policies are standardized by the federal government. There are currently 10 standard Medigap plans, labeled A through N (Plan C and F were closed to new enrollees in 2020). Each plan letter offers the same benefits regardless of which insurance company sells it, though premiums vary by company and location. This standardization means you can compare plans based on price rather than worrying that one company's Plan G differs from another's.

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Plan G covers a significant portion of out-of-pocket costs. It covers the Part B deductible (after you pay it once), coinsurance, and copayments. Plan N is similar but requires you to pay copayments for doctor visits ($20) and emergency room visits ($50), though it covers the Part B deductible. Plan A is the most basic option and covers coinsurance and copayments but not deductibles. Plan A has the lowest premium but leaves you responsible for Medicare deductibles.

The relationship between premiums and coverage is straightforward: plans covering more benefits have higher monthly premiums. Plan G might cost $150-$200 monthly in many areas, while Plan A might cost $80-$120. Over a year, that's a difference of $840-$960. However, Plan G means fewer out-of-pocket costs when you use healthcare services. If you visit doctors frequently or anticipate significant healthcare needs, Plan G's higher premium may result in lower total costs.

Insurance companies use three pricing methods for Medigap: attained age (your premium increases as you age), issue age (your premium is based on your age when you enroll and doesn't increase with age), and community rating (everyone in your state pays the same price regardless of age). Attained age is typically the least expensive initially but becomes expensive over time. Issue age is more stable. Community rating is predictable but often higher at the start.

Enrollment timing matters for Medigap. You have the best protection if you enroll within six months of turning 65 and enrolling in Part B. During this period, insurance companies cannot deny you coverage or charge more based on pre-existing conditions—this is called "guaranteed issue." If you miss this window, insurance companies can deny coverage or charge higher premiums for health reasons.

Practical takeaway: Compare Plan A, Plan G, and Plan N by calculating your expected costs. Multiply the monthly premium by 12, then add your expected out-of-pocket costs (deductibles and copayments) based on your anticipated healthcare use. The plan with the lowest total is usually your best option.

Medicare Advantage Plans: Network Coverage and Trade-offs

Medicare Advantage, also called Part C, is an alternative way to receive your Medicare benefits. Rather than using Original Medicare and purchasing a supplement, you enroll in a private insurance company's plan. The private insurer receives a capitated payment from Medicare for each enrollee and assumes the financial risk of covering your care. As of 2024, approximately 30 million beneficiaries (about 45% of Medicare recipients) are enrolled in Medicare Advantage plans.

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Medicare Advantage plans must cover everything that Original Medicare covers, but they often provide additional benefits. Many plans include dental coverage (cleanings, fillings, extractions), vision coverage (eye exams, glasses, contacts), and hearing coverage (exams and hearing aids). Some plans cover fitness benefits like gym memberships or wellness programs. Prescription drug coverage is included in all Medicare Advantage plans, unlike Original Medicare where you must purchase a separate Part D plan.

The trade-off for these additional benefits is network restriction. Most Medicare Advantage plans are Health Maintenance Organizations (HMOs) or Preferred Provider Organizations (PPOs). HMO plans require you to use doctors and hospitals within the plan's network, except in emergencies. If you see an out-of-network provider, you typically pay the full cost yourself. PPO plans allow out-of-network care but charge higher copayments or coinsurance.

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