As of July 1, 2004, there were approximately 36.2 million people 65 and older in the United States. As the oldest baby boomers become senior citizens in 2011, the population 65 and older is projected to grow faster than the total population in every state. In fact, 26 states are projected to double their 65 and older population between 2000 and 2030.
Not surprisingly, the number of senior citizen associations has similarly escalated. These associations provide their members with a wide variety of benefits, such as travel discounts, financial and legal assistance, and entertainment options.
Many of the associates also offer affordable health insurance, and that can create an attractive market for health insurers.
However, there are a number of issues any health insurer should consider before entering into a partnership with a senior citizen association, or any association for that matter. For example, choosing the right association to partner with is of paramount concern, as a number of state insurance departments have uncovered sham organizations. The products offered to older insureds should also be considered. Finally, the structure of the partnership, such as whether it should be reinsured and whether claims should be handled internally or through a third party administrator, must be analyzed.
The first step in establishing a senior citizen association partnership is to select a bona fide association with a proven track record of quality service to its members. Unfortunately, a number of bogus associations have recently surfaced, and that has led to department scrutiny.
For example, since at least 2006, several state insurance departments have been investigating unscrupulous associations purportedly claiming to offer inexpensive health plans to their members through a number of legitimate insurers.
Generally, the solicitors request an application or administrative fee and then charge members additional monthly fees for coverage. Although these scam artists often prey upon the general public, they sometimes focus on health insurance carriers as well. For example, there has been at least one instance in which such an operation used an insurer’s logo and forms to make its solicitations look legitimate.