AARP Coverage Change to Cost Jobs at Prudential
Prudential Insurance Co. of America said it will cut 3,500 employees in 1997 when its $4.5-billion health-insurance contract with the American Assn. of Retired Persons expires.
The AARP said Wednesday that it is in discussions with three other companies to provide health insurance to the organization. About 5.7 million of its more than 30 million members are enrolled in the AARP’s group health insurance program.
Under the proposed contract, United HealthCare Corp. would provide Medicare supplement and hospital indemnity insurance, Metropolitan Life Insurance Co. would provide long-term-care insurance, and ITT Hartford Group would provide administrative services.
The AARP said it has won commitments from United HealthCare and ITT Hartford to employ the Prudential employees handling the AARP business.
Wayne F. Haefer, director of AARP’s Membership Group, said the AARP wanted to offer its members a menu of health-care plans from different providers, and specifically more options for members seeking home care instead of hospitals or nursing homes.
Under the proposed contract, for example, United HealthCare and MetLife will teach members how to better manage chronic illnesses on their own.
Negotiations with the three companies will continue over the next several months and will be considered for approval by AARP’s Insurance Trust and Board in November.
The announcement was a blow to Newark, N.J.-based Prudential, which has provided the AARP with health insurance since 1981 but lost the new contract in a bidding contest.
