December 18, 2009 Correspondence to David G. Reichert, Wally Herger, Ginny Brown-Waite

As indicated above, we have previously submitted the Form 990s for tax year 2008 for AARP and the AARP Foundation. Attached hereto, as Exhibit C, are the publicly available AARP and the AARP Foundation 990s for tax years 2006 and 2007. The tax returns for the AARP Trust, ASI and AFI are confidential documents which federal law does not require to be disclosed.

Additionally, as mentioned above, for your general information, we are attaching the 2008 Annual Reports for AARP, the AARP Foundation, ASI and AFI (Exhibit A), and AARP's Consolidated Financial Statements for the years ending December 31, 2007 and 2008 (Exhibit D). Again, we emphasize that the public policy positions AARP takes and that we have discussed with you are developed through a process that is independent of any royalty-generating activities.

Grants

AARP does not receive grants; however, its affiliated 50l(c)(3) charitable organization, the AARP Foundation, does receive grants. Documents listing the federal grants and contracts from 2000 through October 31, 2009, are attached as Exhibit E. We have also attached, as part of Exhibit E, a brief history and explanation of the AARP Foundation.

We routinely make these disclosures pursuant to House Rule XI, Clause 2(g), which requires non-government witnesses to disclose their receipt of federal grants or contracts prior to testifying.

Other Questions

In addition to providing these Exhibits, which include information related to a number of your questions, the following points address other specific questions in your letter:

• AARP retains its subsidiary, AARP Services, Inc., to help select and negotiate license agreements with providers of AARP member benefits.
• As the group policy holder, the AARP Trust collects premiums, and remits them to the applicable insurance company, for the following products carrying the AARP name: (1) the Medicare Supplement and under-65 insurance and indemnity plans offered by United HealthCare Corporation, (2) the under-65 insurance products from Aetna Life Insurance Company, and (3) the long term care insurance products from Genworth Life Insurance Company and Metropolitan Life Insurance Company. The insurers direct the Trust to pay the royalty owed by the insurers to AARP, and certain deductions are made to pay expenses incurred by the Trust.
• Premiums or payments for other health products and offerings that carry the AARP name are paid directly to the applicable insurance company or provider, and those companies pay the royalty directly to AARP. These other products are: the Medicare Advantage and Part D Plans from United HealthCare, Medical Supply Services from United HealthCare, Dental Insurance from Delta Dental, Vision Discount Programs from EyeMed, Hearing Program from HearUSA, Prescription Discount Program from Walgreens, and Fitness programs from Gold's and ACE.
• Income earned from the investment of premiums while on deposit with the Trust is paid to AARP and used to support AARP's mission and operation. As noted in the attached AARP consolidated financial statements, for the years ended December 31, 2008 and 2007, the Trust experienced a net investment loss of$69,274,000, and net investment income of$40,422,000, respectively.
• As noted in the attached AARP Consolidated Financial Statements, The AARP Andrus Insurance Fund LLC was formed in 2007 to serve as a self-funding mechanism for the deductible portion of certain of AARP's own insurance coverage with third-party insurance underwriters (e.g., to cover the deductible for AARP's own general liability insurance). AARP has purchased additional insurance outside of the Fund to help limit its potential exposures for claims that exceed the deductibles. The Fund currently underwrites a portion of: general liability, workers' compensation, property and terrorism insurance, in conformance with laws of the District of Columbia. The President of the Fund is a current employee in the AARP Risk Management office.
• AARP does not have a financial relationship with the American Medical Association. On occasion, we do jointly sponsor and fund advertising related to shared advocacy goals with the AMA and other organizations.
• As we have noted, AARP is a 501 (c)(4) social welfare organization, and the royalty income received by AARP is used to further AARP's tax-exempt, social welfare mission and operation. In addition, the AARP Foundation and Legal Counsel for the Elderly are 50l(c)(3) charitable organizations, and AARP has also provided financial support for their tax -exempt, charitable missions. The following table shows AARP cash and in-kind contributions to the Foundation and LCE for the past eight years:
  
  AARP Foundation             LCE
  2000         $8,232,000                 $802,000
  2001         $9,491,000                 $607,000
  2002         $15,541,000                 $2,133,000
  2003         $21,126,000                 $2,011,000
  2004         $27,704,000                 $3,521,000
  2005         $32,937,000                 $3,129,000
  2006         $27,405,000                 $2,042,000
  2007         $31,693,000                 $2,828,000
  2008         $30,833,000                 $3,223,000
  

• AARP and its affiliates are not insurance agencies or carriers and do not employ or endorse insurance agents, brokers, representatives or advisors.
• AARP and its entities do not fund advertisements marketing the providers' AARP-branded insurance products. The insurance providers fund the advertising for the AARP-branded products that they offer.
• The ten most highly compensated employees for 2008 are listed in the 2008 Form 990 that we previously submitted.
• AARP develops its public policy positions through a process that is independent of any royalty-generating activities. This process involves input from AARP members and others, research and analysis by AARP staff of older persons' needs, review by a volunteer National Policy Council, and, ultimately, approval by the all-volunteer AARP Board of Directors. AARP's positions on health care reform were in no way formulated, motivated by, or based upon any assessment of the financial impact on AARP or on whether insurance carriers using the AARP name might participate in Exchanges described in proposed legislation. AARP has developed its positions independently based upon what we believe is in the best interests of our members and all people age 50+.
• The total number of employees in AARP and its affiliated entities, as of the end of the year, for the past eight years, is as follows:
  
  Year    Employees
  2000    1,921
  2001    1,760
  2002    1,850
  2003    1,929
  2004    1,998
  2005    2,152
  2006    2,248
  2007    2,340
  2008    2,398
  2009    2,157
  

Other questions contained in your letter of December 9, 2009, pertain to information that has already been provided, or, as we have explained, is non-public or confidential and proprietary to AARP and/or its member benefit providers.

Please know that AARP welcomes meaningful dialogue with you and other Members of Congress on the important issues surrounding health care reform, as well as other legislative issues of importance to older Americans. We look forward to working with you in the future.

Respectfully,
 
Thomas C. Nelson
Chief Operating Officer

Enclosures

¹ There is one small change from the list of ASIJAFI Board members in the 2008 ASI Annual Report: A. Barry Rand became AARP's CEO in April2009 and now sits as an ex officio Board member (instead of Bill Novelli, the former CEO of AARP).

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