Medico to Offer AARP-Branded Short-Term Care Insurance

AARP will be letting an insurer offer short-term care insurance (STCI) that includes "AARP" in the name to many of its 38 million members.

The group has let Medico Insurance Company, a unit of American Enterprise Group Inc., to be the AARP STCI provider.

Medico will provide a product designed exclusively for AARP members, AARP and American Enterprise announced last week.

Medico will try to have the product on the shelves in several states by early 2020

AARP is a Washington-based group that serves people ages 50 and older.

Medico is a Des Moines, Iowa-based issuer of life and health products aimed at older consumers. Its parent, American Enterprise, also controls American Republic Insurance Company and Great Western Insurance Company.

Medico now sells a short-term recovery care insurance product to consumers ages 18 to 79. That policy can pay for recovery care for up to 12 months.

Like the existing Medico recovery care product, the new Medico AARP STCI product will help purchasers pay for short-term use of home health care, adult daycare, hospice care, assisted living facility care and nursing home care, according to AARP and American Enterprise.

AARP and American Enterprise have not talked about what the new STCI prices or underwriting process will be like.

An agent field guide on the web shows the current individual product uses medical underwriting. Applicants can be declined if they have conditions such as a history of stroke, kidney failure, lupus, or an inability to dress themselves.

An applicant who was 5 feet 6 inches tall would have to weigh somewhere between 106 pounds and 254 pounds to qualify for coverage.

AARP, the Member Benefit Program Manager

AARP is known for representing the interests of older people in Washington and in state capitals.

The group also licenses use of the AARP brand name, and gives members access to Medicare supplement insurance products, long-term care planning products, and other products and services, through the AARP Services Inc. unit.

AARP Services helped AARP increase member benefits royalty revenue to $909 million in 2017, from $880 million in 2016, according to AARP's consolidated financial statements.

AARP's relationship with a unit of UnitedHealth Group Inc. accounted for 69% of the 2017 member benefit program royalty revenue.

AARP and Producers

The AARP-Medico deal could help all agents, brokers and insurers in the STCI market, by increasing consumer awareness of the product.

The relationship could also increase competition for the producers already working to sell STCI.

AARP has come under fire for insurance distribution arrangements in the past. Migliaccio & Rathod LLP, for example, says it has been working with other law firms to represent Medicare supplement insurance policyholder plaintiffs in Krukas v. AARP.

The plaintiffs in that case allege that AARP Services is collecting a 4.95% royalty fee in connection with the sale of UnitedHealth Medicare supplement insurance policies, and that AARP cannot legally collect that royalty, because collecting that royalty means that AARP Services is acting as an unlicensed insurance agent.

AARP argues that the royalty is a charge for UnitedHealth's use of AARP's intellectual property, such as its name and logo, not an insurance sales commission.

Correction: An earlier version of this article misstated AARP Services' relationship to the Medico short-term care insurance. AARP Services licenses use of its brand to Medico. Medico and its distribution organization handle distribution.

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