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UNITED STATES _______________________________________________________________________________________________

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2000

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____ to ____

Commission file number 1-5975

HUMANA INC.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)

61-0647538
(I.R.S. Employer
Identification Number)

500 West Main Street
Louisville, Kentucky 40202
(Address of principal executive offices, including zip code)

(502) 580-1000
(Registrants' telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes X No

Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date.

Class of Common Stock

$0.16 2/3 par value

Outstanding at
October 31, 2000

169,137,624 shares

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Form 10-Q
Humana Inc.
September 30, 2000

	INDEX Part I: Financial Information	Page
Item 1. Item 2. Item 3. Item 1. Item 6. Signatures	Financial Statements Condensed Consolidated Statements of Income for the quarters and nine months ended September 30, 2000 and 1999 Condensed Consolidated Balance Sheets at September 30, 2000 and December 31, 1999 Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2000 and 1999 Notes to Condensed Consolidated Financial Statements Management's Discussion and Analysis of Financial Condition and Results of Operations Quantitative and Qualitative Disclosures about Market Risk Part II: Other Information Legal Proceedings Exhibits and Reports on Form 8-K	3 4 5 6 11 24 25 26 27

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Condensed Consolidated Statements of Income
Humana Inc.
For the quarters and nine months ended September 30, 2000 and 1999
Unaudited
(In millions, except per share results)

		Quarters Ended				Nine Months Ended
		2000		1999		2000		1999
Revenues: Premiums	$	2,588	$	2,527	$	7,865	$	7,416
Interest and other income		28		30		89		123
Total revenues		2,616		2,557		7,954		7,539
Operating expenses: Medical		2,179		2,148		6,664		6,378
Selling, general and administrative Depreciation and amortization		363 38		338 30		1,079 109		992 91
Total operating expenses		2,580		2,516		7,852		7,461
Income from operations		36		41		102		78
Interest expense		7		7		22		25
Income before income taxes		29		34		80		53
Provision for income taxes		6		12		17		19
Net income	$	23	$	22	$	63	$	34
Basic earnings per common share	$	0.14	$	0.13	$	0.38	$	0.20
Diluted earnings per common share	$	0.14	$	0.13	$	0.38	$	0.20

See accompanying notes to condensed consolidated financial statements.

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Condensed Consolidated Balance Sheets
Humana Inc.
Unaudited at September 30, 2000
(In millions, except share amounts)

		Sept. 30, 2000		Dec. 31, 1999
ASSETS Current assets:
Cash and cash equivalents	$	364	$	978
Marketable securities		1,463		1,507
Premiums receivable, less allowance for doubtful accounts
of $65 at September 30, 2000 and $61 at December 31, 1999		207		225
Other		304		354
Total current assets		2,338		3,064

Long-term marketable securities Property and equipment, net Cost in excess of net assets acquired Other		153 429 820 176		253 418 806 359
Total assets	$	3,916	$	4,900

LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Medical and other expenses payable Trade accounts payable and accrued expenses Book overdraft Unearned premium revenues Commercial paper	$	1,216 408 129 90 610	$	1,432 482 215 349 686
Total current liabilities		2,453		3,164

Long-term medical and other expenses payable Professional liability and other obligations		142		324 144
Total liabilities		2,595		3,632

Commitments and contingencies

Stockholders' equity:
Preferred stock; $1 par; authorized 10,000,000 shares, none issued
Common stock; $0.16 2/3 par, authorized 300,000,000 shares
issued 169,141,623 shares at September 30, 2000
and 167,514,710 shares at December 31, 1999		28		28
Capital in excess of par value Deferred compensation - restricted stock Retained earnings Accumulated other comprehensive loss Treasury stock, at cost, 1,558,348 shares Total stockholders' equity Total liabilities and stockholders' equity	$	922 (33) 434 (17) (13) 1,321 3,916	$	899 (2) 371 (28) 1,268 4,900

See accompanying notes to condensed consolidated financial statements.

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Condensed Consolidated Statements of Cash Flows
Humana Inc.
For the nine months ended September 30, 2000 and 1999
Unaudited
(In millions)

		2000		1999

Net cash used in operating activities	$	(239)	$	(241)

Cash flows from investing activities:
Acquisitions, net of cash and cash equivalents acquired		(12)		(14)
Divestitures, net of cash and cash equivalents disposed		32
Purchases of marketable securities		(732)		(681)
Proceeds from maturities of marketable securities		365		290
Proceeds from sales of marketable securities		260		441
Purchases of property and equipment		(99)		(65)
Proceeds from sales of property and equipment		14		27
Other		(12)		(10)
Net cash used in investing activities		(184)		(12)

Cash flows from financing activities: Repayment of line of credit Net commercial paper repayments Change in book overdraft Common stock repurchases Other		(76) (86) (26) (3)		(93) (63) (18) (4)
Net cash used in financing activities		(191)		(178)

Decrease in cash and cash equivalents Cash and cash equivalents at beginning of period		(614) 978		(431) 913
Cash and cash equivalents at end of period	$	364	$	482

Supplemental cash flow information: Interest payments Income tax refunds, net	$ $	23 35	$ $	25 57

Details of businesses acquired in purchase transactions: Fair value of net assets acquired Less: liabilities assumed	$	105 (93)	$	20 (6)
Cash paid for acquired businesses, net of cash acquired	$	12	$	14

See accompanying notes to condensed consolidated financial statements.

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Notes to Condensed Consolidated Financial Statements
Humana Inc.
Unaudited

Basis of Presentation

The accompanying condensed consolidated financial statements are presented in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the disclosures normally required by generally accepted accounting principles or those normally made in an Annual Report on Form 10-K. For further information, the reader of this Form 10-Q should refer to the Form 10-K of Humana Inc. (the "Company" or "Humana") for the year ended December 31, 1999 filed with the Securities and Exchange Commission on March 30, 2000.

The preparation of the Company's condensed consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Although these estimates are based on knowledge of current events and anticipated future events, actual results may ultimately differ from those estimates.

The financial information has been prepared in accordance with the Company's customary accounting practices and has not been audited. In the opinion of management, the information presented reflects all adjustments necessary for a fair statement of interim results. All such adjustments are of a normal and recurring nature.

Effective January 1, 2000, the Company adopted a 20 year amortization period, from the date of acquisition, for goodwill previously amortized over 40 years. The change in the amortization period of goodwill will increase amortization expense $25 million annually, while the Company's fourth quarter 1999 long-lived asset impairment expense will decrease depreciation and amortization $13 million annually.

First Quarter 1999 Additional Medical Expense and Tangible Asset Gain

During the first quarter of 1999, the Company recorded $90 million of additional medical expense for premium deficiency, reserve strengthening and provider costs. As a result of management's assessment of the profitability of its contracts for providing health care services to its members in certain markets, the Company recorded a provision for probable future losses (premium deficiency) of $50 million. Ineffective provider risk-sharing contracts and the impact of the March 31, 1999 HCA - The Healthcare Company, formerly Columbia/HCA Healthcare Corporation ("HCA") hospital agreement in Florida on current and projected future medical costs contributed to the premium deficiency. The beneficial effect from losses charged to the premium deficiency liability was $14 million and $32 million for the quarter and nine months ended September 30, 1999, respectively. Remaining liabilities related to premium deficiency provisions recorded in 1998 and 1999 were exhausted as of December 31, 1999 and, therefore, there was no beneficial effect from losses charged to these liabilities in the quarter or nine months ended September 30, 2000. Because the majority of the Company's customers' contracts renew annually, the Company does not anticipate the need for a premium deficiency charged to earnings in 2000, absent unanticipated adverse events or changes in circumstances.

Prior period adverse claims development primarily in the Company's PPO and Medicare products initially identified during an analysis of February and March 1999 medical claims resulted in a $35 million reserve strengthening. The Company releases or strengthens medical claims reserves when favorable or adverse development in prior periods exceed actuarial margins existing in the reserves. In addition, the Company paid HCA $5 million to settle certain contractual issues associated with the March 31, 1999 hospital agreement in Florida.

Also during the first quarter of 1999, the Company recorded a $12 million gain on the sale of a tangible asset which has been included in interest and other income in the accompanying Condensed Consolidated Statements of Income.

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Notes to Condensed Consolidated Financial Statements, continued
Humana Inc.
Unaudited

Recent Transactions

Divestitures

Effective July 1, 2000, the Company completed transactions to reinsure its Medicare supplement business and sell its North Florida Medicaid business. On April 10, 2000 and March 31, 2000, the Company completed the sale of its workers' compensation administrative services and run-off businesses, respectively. The Company recorded an estimated $118 million loss in 1999 related to these four transactions. There was no change in the estimated loss during 2000. Cash proceeds were $101 million ($32 million net of divested subsidiary's cash) for the nine months ended September 30, 2000. Revenue and pretax results associated with these four businesses for the quarters and nine months ended September 30, 2000 and 1999 were as follows (in millions):

		Quarters Ended				Nine Months Ended
		2000		1999		2000		1999
Revenues	$	__	$	55	$	103	$	165
Pretax results	$	__	$	(4)	$	(8)	$	(10)

Acquisitions

On August 17, 2000, the Company acquired Jacobson Management Group, Inc., a hospital in-patient management services firm for approximately $5 million in cash.

On June 9, 2000, the Company acquired American Physicians Life Insurance Company, an operating shell entity for the Company's e-business for approximately $7 million in cash.

On May 10, 2000, the Company acquired Wisconsin National Life Insurance Company, an operating shell entity for the Company's dental business for approximately $12 million in cash.

On January 31, 2000, the Company acquired Memorial Sisters of Charity Health Network ("MSCHN"), a Houston based health plan for approximately $50 million in cash.

On June 1, 1999, the Company reached an agreement with FPA Medical Management, Inc. ("FPA"), FPA's lenders and a federal bankruptcy court under which the Company acquired the operations of 50 medical centers from FPA for approximately $14 million in cash. The Company has subsequently transferred operating responsibility for all acquired FPA medical centers under long-term provider agreements.

The above acquisitions were accounted for under the purchase method of accounting. In connection with these acquisitions, the Company allocated the acquisition cost to net tangible and identifiable intangible assets based upon their fair value. Identifiable intangible assets primarily relate to the cost of the acquired licenses and provider contracts. Any remaining value not assigned to net tangible or identifiable intangible assets was then allocated to cost in excess of net assets acquired, or goodwill. Goodwill and identifiable intangible assets acquired, recorded in connection with the acquisitions preliminarily, was $71 million and $17 million for the nine months ended September 30, 2000 and 1999, respectively. The identifiable intangible assets are being amortized over periods ranging from five to 20 years while goodwill is being amortized over periods ranging from six to 20 years.

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Notes to Condensed Consolidated Financial Statements, continued
Humana Inc.
Unaudited

Contingencies

The Company's Medicare HMO contracts with the federal government are renewed for a one-year term each December 31, unless terminated 90 days prior thereto. Legislative proposals are being considered which may revise the Medicare program's current support of the use of managed health care for Medicare beneficiaries and future reimbursement rates thereunder. Management is unable to predict the outcome of these proposals or the impact they may have on the Company's financial position, results of operations or cash flows. The Company's Medicaid contracts are generally annual contracts with various states except for the two-year contract with the Health Insurance Administration in Puerto Rico which expires April 30, 2001. Additionally, the Company has renewed its TRICARE contract for up to two additional years, subject to annual renewal terms, beginning July 1, 2001. The loss of these contracts (other than the contract in Puerto Rico) or significant changes in these programs as a result of legislative action, including reductions in payments or increases in benefits without corresponding increases in payments, would have a material adverse effect on the revenues, profitability and business prospects of the Company. In addition, the Company continually contracts and seeks to renew contracts with providers at rates designed to ensure adequate profitability. To the extent the Company is unable to obtain such rates, its financial position, results of operations and cash flows could be adversely impacted.

During the ordinary course of its business, the Company is or may become subject to pending or threatened litigation or other legal actions. These include, but are not limited to, routine, regular and special audits by HCFA, state insurance departments, the Office of Personnel Management, the Office of Inspector General and other state and federal regulatory agencies. Management does not believe that any pending or threatened legal actions against the Company or audits by agencies will have a material adverse effect on the Company's financial position, results of operations or cash flows. However, the likelihood or outcome of current or future suits cannot be accurately predicted, and they could adversely affect the Company's financial position, results of operations or cash flows. See Legal Proceedings in Part II.

Earnings Per Common Share

Basic earnings per common share is computed on the basis of the weighted average number of unrestricted common shares outstanding. Diluted earnings per common share is computed on the basis of the weighted average number of unrestricted common shares outstanding plus the dilutive effect of outstanding employee stock options and restricted shares using the "treasury stock" method.

There were no adjustments required to be made to net income for purposes of computing basic or diluted earnings per common share. Reconciliations of the average number of unrestricted common shares outstanding used in the calculation of basic earnings per common share and diluted earnings per common share for the quarters and nine months ended September 30, 2000 and 1999 are as follows:

	Quarters Ended			Nine Months Ended
	2000	1999	2000		1999
Shares used to compute basic earnings per common share	165,379,590	167,570,888	166,957,116		167,568,726
Effect of dilutive employee stock options and restricted shares	310,665	458,959	136,637		757,674
Shares used to compute diluted earnings per common share	165,690,255	168,029,847	167,093,753		168,326,400

Number of antidilutive employee stock options and restricted shares	13,807,697	7,782,619	11,676,093		8,796,353

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Notes to Condensed Consolidated Financial Statements, continued
Humana Inc.
Unaudited

Comprehensive Income

Details supporting the computation of comprehensive income for the quarters and nine months ended September 30, 2000 and 1999 are as follows (in millions):

	Quarters Ended					Nine Months Ended
		2000		1999		2000		1999

Net income	$	23	$	22	$	63	$	34
Net unrealized investment gains (losses), net of tax		10		(8)		11		(34)
Comprehensive income	$	33	$	14	$	74	$

Debt

The Company maintains a revolving credit agreement ("Credit Agreement") which provides a line of credit of up to $1.0 billion and expires in August 2002. Principal amounts outstanding under the Credit Agreement bear interest at either a fixed rate or a floating rate, ranging from LIBOR plus 35 basis points to LIBOR plus 80 basis points, depending on the Company's credit ratings. The Credit Agreement contains customary covenants and events of default including, but not limited to, financial tests for interest coverage and leverage. The Company was in compliance with all covenants at September 30, 2000. The Company also maintains and issues short-term debt securities under a commercial paper program, which is backed by the Credit Agreement. All borrowings outstanding at September 30, 2000 were issued under the commercial paper program. The average interest rate on commercial paper borrowings was 7.1 percent and 6.7 percent for the quarter and nine months ended September 30, 2000, respectively.

Stockholders' Equity

In July 2000, the Company's Board of Directors authorized the repurchase of up to five million of its common shares. This program allows the Company to repurchase the shares from time to time in open-market purchases, in negotiated transactions, or by using forward-purchase contracts. Shares repurchased under the Board of Directors' authorization are used in connection with various equity incentive plans aimed at the retention of key employees. Through September 30, 2000, the Company paid $26 million to repurchase 3.3 million of its common shares at an average cost of $7.65 per share.

In August 2000, the Company awarded 4.8 million shares of restricted stock to key employees all of which vest in August 2003. Deferred compensation under this restricted stock award is amortized ratably over the three year vesting period. In conjunction with the restricted stock grant, 1.7 million treasury shares were reissued.

Segment Information

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Notes to Condensed Consolidated Financial Statements, continued
Humana Inc.
Unaudited

expenses between segments based upon improved activity-based cost studies. Prior period segment administrative expenses were reclassified to conform with the current period presentation. Financial information for the Company's Health Plan and Small Group segments for the quarters and nine months ended September 30, 2000 and 1999 is as follows (in millions):

			Quarters Ended					Nine Months Ended
			2000		1999				2000			1999
Premium revenues:
Health Plan	$	1,823		$		1,740	$			5,516	$		5,120
Small Group		765				787				2,349			2,296
Total premium revenues	$	2,588		$		2,527	$			7,865	$		7,416

Underwriting margin:
Health Plan	$	248		$		235	$			735	$		630
Small Group		161				144				466			408
Total underwriting margin	$	409		$		379	$			1,201	$		1,038

Income before income taxes:
Health Plan	$	11		$		32	$			55	$		47
Small Group		18				2				25	$		6
Total income before income taxes	$	29		$		34	$			80	$		53

For the nine months ended September 30, 1999, Health Plan and Small Group underwriting margin and pretax results include $66 million and $24 million, respectively, of additional medical expense recorded during the quarter ended March 31, 1999 as previously discussed in Note B.

Impact of Recently Issued Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS No. 133"). In general, SFAS No. 133 requires that all derivatives be recognized as either assets or liabilities in the balance sheet at their fair value, and sets forth the manner in which gains or losses thereon are to be recorded. The treatment of such gains or losses is dependent upon the type of exposure, if any, for which the derivative is designated as a hedge. This standard is effective for the Company's financial statements beginning January 1, 2001, with early adoption permitted. Management of the Company anticipates that the adoption of SFAS No. 133 on January 1, 2001 will not have a material impact on the Company's financial position, results of operations or cash flows.

Reclassifications

Certain reclassifications have been made to the prior year's condensed consolidated financial statements to conform with the current year presentation.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Humana Inc.

Cautionary Statements

The statements contained in this Form 10-Q include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this Form 10-Q and in future filings by the Company with the Securities and Exchange Commission, in the Company's press releases, presentations to securities analysts or investors, and in oral statements made by or with the approval of one of the Company's executive officers, the words or phrases "believes," "anticipates," "intends," "will likely result," "estimates," "projects" or similar expressions are intended to identify such forward-looking statements. Any of these forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from the results discussed in the forward-looking statements. Readers are cautioned that a number of factors, which are described herein, could adversely affect the Company's ability to obtain these results. These include the effects of either federal or state health care reform or other legislation, including the Patients' Bill of Rights Act and the Health Insurance Portability and Accountability Act, any changes in the Medicare reimbursement system, the ability of health care providers (including physician practice management companies) to comply with current contract terms, renewal of the Company's provider contracts at favorable rates and renewal of the Company's Medicare, Medicaid and TRICARE contracts with various governmental authorities. Such factors also include the effects of other general business conditions, including but not limited to, premium rate and yield changes, retrospective premium adjustments, changes in commercial and Medicare HMO membership, medical and pharmacy cost trends, the ability to negotiate favorable rates with providers, compliance with debt covenants, changes in the Company's debt rating and its ability to borrow under its commercial paper program, operating subsidiary capital requirements, the success of the Company's improvement initiatives including its e-business strategies, competition, general economic conditions and the retention of key employees. In addition, the Company and the managed care industry as a whole are experiencing increased governmental audits, investigations and litigation, and negative publicity, including alleged class action suits challenging various managed care practices and suits seeking significant punitive damages awards. Past financial performance is not necessarily a reliable indicator of future performance and investors should not use historical performance to anticipate results or future period trends.

Introduction

Humana is one of the nation's largest publicly traded health services companies that facilitates the delivery of health care services through networks of providers to its approximately 5.4 million medical members. The Company's products are marketed primarily through health maintenance organizations ("HMOs") and preferred provider organizations ("PPOs") that encourage or require the use of contracted providers. HMOs and PPOs control health care costs by various means, including pre-admission approval for hospital inpatient services, pre-authorization of outpatient surgical procedures and risk-sharing arrangements with providers. These providers may share medical cost risk or have other incentives to deliver quality medical services in a cost-effective manner. The Company also offers various specialty products to employers, including dental, group life and administrative services ("ASO") to those who self-insure their employee health plans. In total, the Company's products are licensed in 49 states, the District of Columbia and Puerto Rico, with approximately 19 percent of its membership in the state of Florida.

The Company is organized into two business units: the Health Plan segment and the Small Group segment. The Health Plan segment includes the Company's large group commercial (100 employees and over), Medicare, Medicaid, ASO, and military or TRICARE business. The Small Group segment includes small group commercial (under 100 employees) and specialty benefit lines, including dental, life and short-term disability. Results of each segment are measured based upon results of operations before income taxes. The Company allocates administrative expenses, interest income and interest expense, but no assets, to the segments. Members in the same geographic area that are served by the two segments generally utilize the same medical provider networks, enabling the Company to obtain more favorable contract terms with providers. As a result, the profitability of each segment is somewhat interdependent. In addition, premium revenue pricing to large group commercial employers has historically been more competitive than that to small group commercial employers, resulting in less favorable underwriting margins for the large group commercial line of business. Costs to distribute and administer products to small group commercial employers are higher compared to large group commercial employers resulting in small group's higher administrative expense ratio.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, continued
Humana Inc.

Recent Transactions
Divestitures

		Quarters Ended				Nine Months Ended
		2000		1999			2000		1999
Revenues	$	__	$	55	$		103	$	165
Pretax results	$	__	$	(4)	$		(8)	$	(10)

Acquisitions

On August 17, 2000, the Company acquired Jacobson Management Group, Inc., a hospital in-patient management services firm for approximately $5 million in cash.

On June 9, 2000, the Company acquired American Physicians Life Insurance Company, an operating shell entity for the Company's e-business for approximately $7 million in cash.

On May 10, 2000, the Company acquired Wisconsin National Life Insurance Company, an operating shell entity for the Company's dental business for approximately $12 million in cash.

On January 31, 2000, the Company acquired Memorial Sisters of Charity Health Network ("MSCHN"), a Houston based health plan for approximately $50 million in cash.

First Quarter 1999 Additional Medical Expense and Tangible Asset Gain

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, continued
Humana Inc.

million for the quarter and nine months ended September 30, 1999, respectively. Remaining liabilities related to premium deficiency provisions recorded in 1998 and 1999 were exhausted as of December 31, 1999 and, therefore, there was no beneficial effect from losses charged to these liabilities in the first nine months of 2000. Because the majority of the Company's customers' contracts renew annually, the Company does not anticipate the need for a premium deficiency charged to earnings in 2000, absent unanticipated adverse events or changes in circumstances.

Comparison of Results of Operations

In order to enhance comparability as well as to provide a baseline against which historical and prospective periods can be measured, the following discussion comparing results for the nine months ended September 30, 2000 (the "2000 period") and 1999 (the "1999 period"), excludes the previously described medical expenses and tangible asset gain recorded in the 1999 period, but does include the beneficial effect related to premium deficiency in operating results for the period shown. There are no excluded items associated with the 2000 period, or for the quarters ended September 30, 2000 (the "2000 quarter") and September 30, 1999 (the "1999 quarter"). Results reported in the Condensed Consolidated Statements of Income ("Reported Results") reconcile to the results contained in the following discussion ("Adjusted Results") for the 1999 period as follows (in millions, except per share data):

		Nine Months Ended September 30, 1999
		Reported Results	Excluded Items (a)			Adjusted Results
Condensed Consolidated Statement of Income
caption items that are adjusted:
Interest and other income	$	123		$	(12)		$	111
Total revenues		7,539			(12)			7,527
Operating expenses:
Medical		6,378			(90)			6,288
Total operating expenses		7,461			(90)			7,371
Income before income taxes		53			78			131
Net income	$	34		$	49		$	83
Basic earnings per common share	$	0.20		$	0.30		$	0.50
Diluted earnings per common share	$	0.20		$	0.30		$	0.50

	Nine Months Ended September 30, 1999
	Reported Ratios	Ratio Effect of Excluded Items (a)	Adjusted Ratios
Medical expense ratios: Health Plan	87.7%	(1.3)%	86.4%
Small Group	82.2%	(1.0)%	81.2%
Totals	86.0%	(1.2)%	84.8%

(a)	The item excluded from interest and other income is the $12 million gain on sale of a tangible asset. The items excluded from 1999 medical expenses are the $50 million premium deficiency, $35 million reserve strengthening and $5 million of provider costs.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, continued
Humana Inc.

Quarters Ended September 30, 2000 and 1999

During the 2000 quarter, the Company continued its progress to eliminate non-core businesses and position core businesses for growth. Non-core businesses, which currently represent 6.7 percent of total medical membership, are those operations or products that are both unprofitable and for which the Company sees no long-term opportunity. Core businesses include those businesses that have critical mass, growth potential, a history of steady performance and are either profitable or have the potential to be profitable in the near term. Steps taken to reduce the Company's non-core businesses include announcing the exit of 45 Medicare counties effective January 1, 2001 and the exit of 17 small group commercial markets, affecting approximately 80,000 and 25,000 remaining members as of September 30, 2000, respectively. The Company has also completed transactions to reinsure its Medicare supplement business and sell its North Florida Medicaid business affecting 39,000 and 96,000 non-core members, respectively. Consolidated and segment results discussion follows.

The Company's premium revenues increased 2.4 percent to $2.6 billion for the 2000 quarter, compared to $2.5 billion for the 1999 quarter primarily driven by increases in premium yields partially offset by a decline in membership. Commercial and Medicare HMO premium yields averaged 13.5 and 5.5 percent, respectively, in the 2000 quarter versus 6.7 and 4.0 percent, respectively, in the 1999 quarter. Due to the impact these premium increases had on commercial member retention, total medical membership declined 574,400 members or 9.5 percent from the 1999 quarter.

The Company's medical expense ratio for the 2000 quarter was 84.2 percent, compared to 85.0 percent for the 1999 quarter. Improving commercial claims experience from lower pharmacy cost trends and the reduction of higher cost, non-core membership was partially offset by higher Medicare utilization in the 45 Medicare counties the Company will be exiting January 1, 2001. Commercial pharmacy cost trends improved to 6.7 percent compared to 20.4 percent from the conversion of members to a three-tier pharmacy benefit plan. During the 1999 quarter, the Company recorded an $8 million adjustment related to favorable development in the Company's workers' compensation liabilities.

The administrative expense ratio for the 2000 quarter was 15.5 percent, compared to 14.6 percent in the 1999 quarter. Contributing to this increase were planned investments in infrastructure and technology initiatives, a lower ratio of members to employees and an increase in amortization expense from the change to a 20 year life for goodwill previously amortized over 40 years.

Investment income totaled $26 million and $29 million for the 2000 and 1999 quarters, respectively. This decrease resulted from a lower average invested balance. Interest expense was unchanged comparing the 2000 and 1999 quarters as lower average borrowings were offset by higher interest rates.

The provision for income taxes in the 2000 quarter is provided for at the anticipated effective tax rate of 21 percent for the year. This lower effective tax rate, in comparison to the 1999 quarter of approximately 35 percent, is the result of recognizing the benefit of anticipated capital gains for which the Company has available capital loss carryforwards created from the sale of the workers' compensation business.

Pretax income totaled $29 million for the 2000 quarter, compared to $34 million for the 1999 quarter. Net income was $23 million, or $0.14 per diluted share in the 2000 quarter, compared to $22 million, or $0.13 per diluted share in the 1999 quarter. Excluding favorable workers' compensation and premium deficiency reserve adjustments, earnings would have been $0.05 per diluted share in the 1999 quarter.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, continued
Humana Inc.

Business Segment Information for the Quarters Ended September 30, 2000 and 1999

Certain financial data for the Company's two segments for the 2000 quarter and 1999 quarter is as follows (in millions):

	Quarters Ended September 30,
			2000	1999
Premium revenues: Health Plan Small Group		$	1,823 765		$	1,740 787
		$	2,588		$	2,527
Income before income taxes: Health Plan Small Group		$	11 18		$	32 2
		$	29		$	34
Medical expense ratios: Health Plan Small Group			86.4% 79.0%			86.5% 81.7%
			84.2%			85.0%
Administrative expense ratios: Health Plan Small Group			13.8% 19.6%			12.5% 19.1%
			15.5%			14.6%

Health Plan

The Health Plan segment's premium revenues increased 4.8 percent to $1.8 billion for the 2000 quarter primarily due to increases in premium yields. Large group commercial premiums increased 1.4 percent to $589 million during the 2000 quarter from $581 million in the 1999 quarter. This increase was due to higher premium yields ranging from 10 to 11 percent during the 2000 quarter compared to a range of five to six percent for the 1999 quarter, reflecting the Company's improved pricing. Large group commercial membership fell 10.2 percent to 1,278,500 from the 1999 quarter as attrition from pricing actions and the termination of the State of Texas account was partially offset by acquired membership from the MSCHN acquisition. Medicare HMO premiums increased 12.2 percent to $828 million in the 2000 quarter compared to $738 million in the 1999 quarter due to higher premium yields, the MSCHN acquisition and increased membership. Premium yield increased to 5.5 percent in the 2000 quarter compared to 4.0 percent in the 1999 quarter due to the implementation of additional member premiums for many of the Company's Medicare members and improvement in the mix of members in markets with higher HCFA reimbursement rates. Medicare membership increased 23,800 members, or 4.9 percent, despite the exit of 30 Medicare counties on January 1, 2000. This increase was the result of strong sales initiatives in certain markets coupled with the acquired membership from the MSCHN acquisition. Medicaid premiums decreased $2 million or 1.3 percent from the 1999 quarter as the effect from the sale of its North Florida Medicaid business during the second quarter of 2000 was offset by the acquired MSCHN membership. The recent reinsurance of the Medicare supplement membership reduced Health Plan premiums $15 million during the 2000 quarter.

The Health Plan segment's medical expense ratio for the 2000 quarter was 86.4 percent, decreasing 10 basis points from 86.5 percent in the 1999 quarter. Improving large group pharmacy cost trends and the reduction of higher cost, non-core membership was partially offset by higher Medicare utilization in the 45 Medicare counties the Company will be exiting January 1, 2001. Large group commercial pharmacy cost trends improved to 6.0 percent compared to 19.6 percent from the conversion of members to a three-tier pharmacy benefit plan. During the 2000 quarter, the Company completed transactions to reinsure its Medicare supplement business, sell its North Florida Medicaid business and terminate the State of Texas account. These transactions eliminated approximately 182,000 higher cost members. During the 1999 quarter, the Company recorded an $8 million adjustment related to favorable development in the Company's workers' compensation liabilities.

-15-

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, continued
Humana Inc.

The administrative expense ratio for the 2000 quarter increased to 13.8 percent compared to 12.5 percent for the 1999 quarter. This increase was the result of continued planned investments in infrastructure and technology initiatives, a lower ratio of members to employees and an increase in amortization expense from the change to a 20 year life for goodwill previously amortized over 40 years.

Pretax income totaled $11 million for the 2000 quarter, compared to $32 million for the 1999 quarter. Excluding favorable workers' compensation and premium deficiency reserve adjustments, pretax income would have been $14 million for the 1999 quarter.

Small Group

The Small Group segment's premium revenues decreased 2.8 percent to $765 million for the 2000 quarter from $787 million for the 1999 quarter. This decrease was due to a reduction in membership offset by higher premium yields ranging from 16 to 17 percent in the 2000 quarter compared to seven to eight percent in the 1999 quarter. During the 2000 quarter, the Company delivered accelerated rate increases in Colorado and Texas where higher than expected medical cost trends had been experienced. Attrition from rate increases and the announced exit of 17 small group commercial markets resulted in a reduction in small group commercial membership of 345,700 members or 20.3 percent from the 1999 quarter.

The Small Group segment's medical expense ratio for the 2000 quarter was 79.0 percent, decreasing from 81.7 percent for the 1999 quarter. This decrease was the result of lower small group commercial cost trends which were in the nine to 10 percent range in the 2000 quarter compared to the 10 to 11 percent range for the 1999 quarter. This improvement is primarily attributable to declining pharmacy cost trends from 22.4 percent to 6.1 percent, corrective pricing related to the higher cost open access product and membership reduction in the Company's 17 small group commercial exit markets.

The Small Group segment's administrative expense ratio increased to 19.6 percent compared to 19.1 percent for the 1999 quarter. This increase was the result of continued planned investments in infrastructure and technology initiatives, a lower ratio of members to employees and an increase in amortization expense from the change to a 20 year life for goodwill previously amortized over 40 years.

Pretax income totaled $18 million for the 2000 quarter compared to $2 million for the 1999 quarter. Excluding favorable premium deficiency reserve adjustments, pretax loss would have been $2 million for the 1999 quarter. This earnings increase is attributable to the Company's pricing actions and the continued improvement in pharmacy cost trends offset by increased administrative expenses.

Nine Months Ended September 30, 2000 and 1999

The Company's premium revenues increased 6.1 percent to $7.9 billion for the 2000 period compared to $7.4 billion for the 1999 period. Higher premium revenues in all lines of business resulted from increased premium yields as a result of pricing actions implemented by the Company during the 2000 period, partially offset by membership reduction as a result of these price increases.

The Company's medical expense ratio for the 2000 period was 84.7 percent compared to an adjusted medical expense ratio of 84.8 percent for the 1999 period. Improving commercial claims experience from lower pharmacy cost trends and the reduction of higher cost, non-core membership was partially offset by higher Medicare utilization in the 45 Medicare counties the Company will be exiting. Commercial pharmacy cost trends improved to 6.6 percent compared to 20.0 percent from the conversion of members to a three-tier pharmacy benefit plan. During the 1999 period, the Company recorded a $23 million adjustment related to favorable development in the Company's workers' compensation liabilities and a $6 million adjustment to premium deficiency reserves from the decision to maintain a presence in Puerto Rico with a favorable two year contract extension.

The administrative expense ratio was 15.1 percent and 14.6 percent for the 2000 and 1999 periods, respectively. Contributing to this increase were planned investments in infrastructure and technology initiatives, a lower ratio of members to employees and an increase in amortization expense from the change to a 20 year life for goodwill previously amortized over 40 years.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, continued
Humana Inc.

Investment income totaled $82 million in the 2000 period, compared to $103 million in the 1999 period. This decrease is primarily attributable to investment gains realized in the 1999 period and a lower average invested balance. Interest expense declined $3 million during the 2000 period as a result of lower average borrowings.

The provision for income taxes in the 2000 period is provided for at the anticipated effective tax rate of 21 percent for the year. This lower effective tax rate, in comparison to the 1999 period of approximately 35 percent, is the result of recognizing the benefit of anticipated capital gains for which the Company has available capital loss carryforwards created from the sale of the workers' compensation business.

Pretax income totaled $80 million for the 2000 period, compared to adjusted pretax income of $131 million for the 1999 period. Net income was $63 million, or $0.38 per diluted share, in the 2000 period compared to adjusted net income of $83 million, or $0.50 per diluted share, in the 1999 period. Excluding the beneficial effects of previously established premium deficiency and severance charges, favorable workers' compensation liability development and non-recurring investment gains, earnings per diluted share would have been $0.22 in the 1999 period.

Business Segment Information for the Nine Months Ended September 30, 2000 and 1999

Certain financial data for the Company's two segments for the 2000 period and 1999 period is as follows (in millions):

		Nine Months Ended
	2000			1999(a)
Premium revenues: Health Plan Small Group	$	5,516 2,349	$		5,120 2,296
	$	7,865	$		7,416
Adjusted income before income taxes: Health Plan Small Group	$	55 25	$		106 25
	$	80	$		131
Adjusted medical expense ratios: Health Plan Small Group		86.7% 80.2%			86.4% 81.2%
		84.7%			84.8%
Administrative expense ratios: Health Plan Small Group		13.2% 19.6%			12.7% 19.0%
		15.1%			14.6%

(a)	Excludes $90 million ($66 million Health Plan and $24 million Small Group) of medical expense related to premium deficiency, reserve strengthening and provider costs and $12 million ($7 million Health Plan and $5 million Small Group) gain on the sale of a tangible asset.

-17-

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, continued
Humana Inc.

Health Plan

The Health Plan segment's premium revenues increased 7.7 percent to $5.5 billion for the 2000 period from $5.1 billion for the 1999 period primarily due to increases in premium yields. Large group commercial premiums increased 1.8 percent to $1.8 billion during the 2000 period. This increase was due to higher premium yields, reflecting the Company's improved pricing. Large group commercial membership fell as attrition from pricing actions was partially offset by acquired membership from the MSCHN acquisition. Medicare HMO premiums increased 13.0 percent to $2.5 billion in the 2000 period from $2.2 billion in the 1999 period due to higher premium yields, the MSCHN acquisition and increased membership. Medicare premium yields increased due to improvement in the mix of members in markets with higher HCFA reimbursement rates and the implementation of additional member premiums for many of the Company's Medicare members. Medicare membership increased despite the exit of 30 Medicare counties on January 1, 2000. This membership increase was the result of strong sales initiatives in certain markets coupled with the acquired membership from the MSCHN acquisition. Medicaid premiums increased $64 million or 14.1 percent from the 1999 period primarily from the MSCHN acquisition and TRICARE premiums increased $33 million or 5.2 percent from the 1999 period resulting from an annual rate increase and other favorable contractual adjustments.

The Health Plan segment's medical expense ratio for the 2000 period was 86.7 percent, increasing 30 basis points from an adjusted 86.4 percent in the 1999 period. Higher than expected Medicare utilization in the 45 Medicare counties the Company will be exiting January 1, 2001 was partially offset by improving large group commercial pharmacy cost trends and the reduction of higher cost, non-core membership. Large group commercial pharmacy cost trends improved to 6.8 percent compared to 18.5 percent from the conversion of members to a three-tier pharmacy benefit plan. During the 1999 period, the Company recorded a $23 million adjustment related to favorable development in the Company's workers' compensation liabilities and a $6 million adjustment to premium deficiency reserves from the decision to maintain a presence in Puerto Rico with a favorable two year contract extension.

The administrative expense ratio for the 2000 period increased to 13.2 percent compared to 12.7 percent for the 1999 period. Contributing to this increase were planned investments in infrastructure and technology, a lower ratio of members to employees and an increase in amortization expense from the change to a 20 year life for goodwill previously amortized over 40 years.

Pretax income totaled $55 million for the 2000 period compared to adjusted pretax income of $106 million for the 1999 period. Excluding the beneficial effects of previously established premium deficiency and severance charges, favorable workers' compensation liability development and non-recurring investment gains, pretax income would have been $39 million in the 1999 period. Improving large group commercial pharmacy cost trends and the reduction of high cost, non-core membership was offset by higher utilization in the 45 Medicare exit counties and increased administrative costs.

Small Group

The Small Group segment's premium revenues increased 2.3 percent to $2.3 billion for the 2000 period. This increase was due to higher premium yields reflecting the Company's improved pricing, partially offset by reduced membership in the small group commercial product. Small group commercial membership declined 345,700 members or 20.3 percent from the 1999 period due to attrition in reaction to these price increases.

The Small Group segment's medical expense ratio for the 2000 period was 80.2 percent, decreasing from an adjusted medical expense ratio of 81.2 percent for the 1999 period. This improvement is primarily attributable to declining pharmacy cost trends from 24.5 percent to 6.3 percent, corrective pricing related to the higher cost open access product and membership reduction in the Company's 17 small group commercial exit markets. The improvement in the pharmacy cost trend resulted from the progressive implementation of the three-tier pharmacy benefit.

-18-

______________________________________________________________________________________

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, continued
Humana Inc.

The Small Group segment's administrative expense ratio increased to 19.6 percent compared to 19.0 percent for the 1999 period. This increase was the result of continued planned investments in infrastructure and technology, a lower ratio of members to employees and an increase in amortization expense from the change to a 20 year life for goodwill previously amortized over 40 years.

Pretax income totaled $25 million for the 2000 period compared to an adjusted amount of $25 million for the 1999 period. Excluding the beneficial effects of previously established premium deficiency and non-recurring investment gains, adjusted pretax income would have been $18 million for the 1999 period. This earnings increase is attributable to the Company's pricing actions and the continued improvement in pharmacy cost trends offset by increased administrative expenses.

Liquidity and Capital Resources

Pro forma cash flows for the nine months ended September 30, 2000 and 1999, excluding the effects of the timing of Medicare premium receipts and the previously funded workers' compensation claim payments is as follows (in millions):

		Nine Months Ended
		2000		1999
Cash used in operating activities Timing of Medicare premium receipts Workers' compensation claim payments	$	(239) 251 30	$	(241) 235 92
Pro forma cash flows provided by operating activities	$	42	$	86

2000 pro forma operating cash flow was impacted primarily by a reduction in claims inventory and run-off claim payments related to terminated membership. Partially mitigating these items was lower workers' compensation claim payments from the sale of this run-off business.

The Company used net proceeds from divestitures of $101 million ($32 million net of divested subsidiary's cash) to reduce debt and reinvest in infrastructure and information technology. The divested businesses included total assets of $625 million, primarily consisting of marketable securities and reinsurance recoverables and total liabilities of $431 million, primarily consisting of workers' compensation claim liabilities. In July 2000, the Company paid $10 million to reinsure its Medicare supplement business and $13 million to transfer claim liabilities to the reinsurer.

As of September 30, 2000, the Company has repurchased approximately 3.3 million of its common shares for a total cost of $26 million, primarily from borrowed funds.

The Company's subsidiaries operate in states that require minimum levels of equity and regulate the payment of dividends to the parent company. As a result, the Company's ability to use operating subsidiaries' cash flows is restricted to the extent of the subsidiaries' ability to obtain regulatory approval to pay dividends.

The National Association of Insurance Commissioners has recommended that states adopt a risk-based capital ("RBC") formula for companies established as HMO entities, similar to the current requirement for insurance companies. The RBC provisions may require new minimum capital and surplus levels for some of the Company's HMO subsidiaries. Many states have not yet determined when they will adopt the RBC formula or if they will allow a phase-in to the required levels of capital and surplus. If the states in which the Company conducts business adopt the proposed RBC formula, without a phase-in provision, the Company estimates it would be required to fund additional capital into certain subsidiaries of approximately $80 million. After this capital infusion, the Company would have approximately $120 million of capital and surplus above the required RBC level considering all subsidiaries on a combined basis.

-19-

______________________________________________________________________________________

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, continued
Humana Inc.

Management believes that funds from future operating cash flows and funds available under the existing Credit Agreement and commercial paper program are sufficient to meet future liquidity needs. Management also believes the aforementioned sources of funds are adequate to allow the Company to fund capital requirements.

The Company's ongoing capital expenditures relate primarily to information systems and administrative facilities necessary for activities such as claims processing, billing and collections, medical utilization review and customer service. Planned capital spending for the remainder of 2000 will approximate $30 million to $35 million primarily for the funding of the Company's technology initiatives and expansion and improvement of its administrative facilities.

Impact of Recently Issued Accounting Pronouncements

- -20-

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, continued
Humana Inc.

Quarterly Membership	2000	1999
Health Plan: Large group commercial members at: March 31 June 30 September 30 December 31 Medicare HMO members at: March 31 June 30 September 30 December 31 TRICARE members at: March 31 June 30 September 30 December 31 Administrative Services members at: March 31 June 30 September 30 December 31 Medicaid and other members at: March 31 June 30 September 30 December 31 Total Health Plan members at: March 31 June 30 September 30 December 31 Small Group: Small group commercial members at: March 31 June 30 September 30 December 31 Total medical members at: March 31 June 30 September 30 December 31 Specialty members at: March 31 June 30 September 30 December 31	1,409,000 1,369,000 1,278,500 518,000 522,100 513,100 1,060,000 1,049,100 1,063,200 657,000 655,700 647,300 697,400 713,900 584,400 4,341,400 4,309,800 4,086,500 1,568,500 1,475,500 1,361,100 5,909,900 5,785,300 5,447,600 2,980,100 2,491,500 2,394,500	1,495,500 1,478,300 1,424,400 1,420,500 480,700 484,800 489,300 488,500 1,085,700 1,064,600 1,065,500 1,058,000 617,900 636,700 641,000 648,000 704,300 707,200 695,000 661,100 4,384,100 4,371,600 4,315,200 4,276,100 1,676,200 1,695,700 1,706,800 1,663,100 6,060,300 6,067,300 6,022,000 5,939,200 2,771,900 2,837,600 2,890,100 2,961,300

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______________________________________________________________________________________

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, continued
Humana Inc.

Supplemental Consolidated Statement of Quarterly Operations (Unaudited)
(Dollars in millions, except per share results)

		2000
		First		Second		Third		Total
Revenues:
Premiums by segment:
Health Plan	$	1,806	$	1,887	$	1,823	$	5,516
Small Group		805		779		765		2,349
Total premiums		2,611		2,666		2,588		7,865
Interest and other income		31		30		28		89
Total revenues		2,642		2,696		2,616		7,954

Operating expenses:
Medical		2,220		2,265		2,179		6,664
Selling, general and administrative		353		363		363		1,079
Depreciation and amortization		34		37		38		109
Total operating expenses		2,607		2,665		2,580		7,852
Income from operations		35		31		36		102
Interest expense		8		7		7		22
Income before income taxes		27		24		29		80
Provision for income taxes		6		5		6		17
Net income	$	21	$	19	$	23	$	63
Basic earnings per common share	$	0.13	$	0.11	$	0.14	$	0.38
Diluted earnings per common share	$	0.13	$	0.11	$	0.14	$	0.38

Medical expense ratios:
Health Plan		86.9%		86.7%		86.4%		86.7%
Small Group		80.7%		80.7%		79.0%		80.2%
Totals		85.0%		85.0%		84.2%		84.7%

Administrative expense ratios:
Health Plan		12.9%		12.9%		13.8%		13.2%
Small Group		19.1%		20.0%		19.6%		19.6%
Totals		14.8%		15.0%		15.5%		15.1%

- -22-

______________________________________________________________________________________

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, continued
Humana Inc.

Supplemental Consolidated Statement of Quarterly Operations (Unaudited)
(Dollars in millions, except per share results)

		1999
		First(a)		Second		Third		Fourth(b)		Total
Revenues:
Premiums by segment:
Health Plan	$	1,682	$	1,698	$	1,740	$	1,727	$	6,847
Small Group		746		763		787		816		3,112
Total premiums		2,428		2,461		2,527		2,543		9.959
Interest and other income		49		44		30		31		154
Total revenues		2,477		2,505		2,557		2,574		10,113

Operating expenses:
Medical		2,136		2,094		2,148		2,154		8,532
Selling, general and administrative		325		329		338		376		1,368
Depreciation and amortization		31		30		30		33		124
Asset write-downs and other expenses								460		460
Total operating expenses		2,492		2,453		2,516		3,023		10,484
(Loss) income from operations		(15)		52		41		(449)		(371)
Interest expense		10		8		7		8		33
(Loss) income before income taxes		(25)		44		34		(457)		(404)
(Benefit) provision for income taxes		(9)		16		12		(41)		(22)
Net (loss) income	$	(16)	$	28	$	22	$	(416)	$	(382)
Basic (loss) earnings per common share	$	(0.10)	$	0.17	$	0.13	$	(2.48)	$	(2.28)
Diluted (loss) earnings per common share	$	(0.10)	$	0.17	$	0.13	$	(2.48)	$	(2.28)

Medical expense ratios:
Health Plan		90.0%		86.6%		86.5%		86.5%		87.4%
Small Group		83.4%		81.7%		81.7%		81.0%		81.9%
Totals		88.0%		85.1%		85.0%		84.8%		85.7%

Administrative expense ratios:
Health Plan		12.8%		12.7%		12.5%		14.1%		13.0%
Small Group		18.9%		18.9%		19.1%		20.1%		19.3%
Totals		14.7%		14.6%		14.6%		16.0%		15.0%

(a)	Includes $90 million of 1999 medical expense related to premium deficiency, reserve strengthening and provider costs and $12 million gain on sale of a tangible asset.

(b)	Includes expenses of $495 million primarily related to goodwill write-down, losses on non-core asset sales and professional liability reserve strengthening.

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Item 3. Quantitative and Qualitative Disclosure about Market Risk
Humana Inc.

Since the date of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999, no material changes have occurred in the Company's exposure to market risk associated with the Company's investments in market risk sensitive financial instruments, as set forth in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in such Form 10-K.

- -24-

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Part II: Other Information
Humana Inc.

Item 1: Legal Proceedings

Managed Care Industry Litigation

On August 17, 2000, oral argument was heard before the United States District Court for the Southern District of Florida ("Court") on the motion of Humana to dismiss the consolidated complaint filed on June 23, 2000, in the matter of In Re Humana Managed Care Litigation and captioned Price v. Humana Inc. (the "Subscriber Track" case). Two days earlier, on August 15, 2000, the plaintiffs filed their Amended Motion for Class Certification, seeking a class consisting of all members of Humana medical plans, excluding Medicare and Medicaid plans, for the period from 1990 to 1999. Humana is scheduled to file its Opposition to Plaintiffs' Motion for Class certification on November 15, 2000.

In the meantime, on October 23, 2000, the Judicial Panel on Multi District Litigation ordered that similar litigation against other managed care organizations should be consolidated with the Humana litigation in the Southern District of Florida. The Panel's initial consolidation order included cases brought against six other managed care companies on behalf of members (so-called "Subscriber Track" cases) and litigation brought by statewide purported classes of providers against a number of managed care organizations (not including Humana) under Georgia prompt payment statutes. In addition, the Panel's order left in the Southern District of Florida a case filed against Humana and seven other companies that was filed on behalf of a nationwide class of (the so-called "Provider Track" action). In the months to come, other managed care class action cases pending around the country against defendants other than Humana may be transferred to the Southern District of Florida as well.

In the Provider Track action, captioned Shane v. Humana et al., the plaintiffs filed an amended consolidated complaint on August 11, 2000. Humana filed a motion to dismiss the complaint on September 8, 2000, and the seven other defendants have moved to dismiss the complaint and, in some cases, to compel arbitration of the provider claims. Oral argument on most of these motions, including Humana's motion to dismiss, was heard before the Court on October 26, 2000. On October 27, 2000, the Provider Track plaintiffs filed a motion for class certification. Humana is scheduled to file opposition papers to the plaintiffs' class certification motion on November 17, 2000.

Chipps v. Humana Health Insurance Company of Florida, Inc.

In this case, in which a jury in Palm Beach County, Florida, issued an approximately $80 million verdict in a case arising from removal of an insured from a special case management program, the United States District Court for the Southern District of Florida remanded the case to state court, following removal to federal court by a liability insurance carrier, ACE Bermuda. Humana's appeal of the jury verdict continues before the Fourth District Court of Appeals in Florida.

The Company believes the above actions are without merit and intends to pursue the defense of these actions vigorously.

Securities Litigation

On November 7, 2000, the United States District Court for the Western District of Kentucky issued a Memorandum Opinion and Order dismissing the action styled In re Humana Inc. Securities Litigation. That action had involved allegations that certain misleading statements had been made with regard to the impact of negotiations over renewal of the Company's contract with a major provider in 1999.

Government Audits and Other

The Florida Attorney General initiated an investigation in July, 2000, apparently relating to some of the same matters as are involved in the purported class action lawsuits described above (See Managed Care Industry Litigation ).

Damages for claims for personal injuries and medical benefit denials are usual in the Company's business. Personal injury and medical benefit denial claims are covered by insurance from the Company's wholly owned captive insurance subsidiary and excess carriers, except to the extent that claimants seek punitive damages, which may not be covered by insurance if awarded in states in which insurance coverage for punitive damages is not permitted. Other potential liabilities may not be covered by insurance, insurers may dispute coverage, or the amount of insurance may not be enough to cover the damages awarded. In addition, insurance coverage for all or certain forms of liability may become unavailable or prohibitively expensive in the future.

Due to the nature of its business, the Company is or may become subject to pending or threatened litigation or other legal actions relating to the failure to provide or pay for health care or other benefits, poor outcomes for care delivered or arranged under the Company's programs, nonacceptance or termination of providers, failure to return withheld amounts from provider compensation, and failure to disclose network discounts and various provider payment arrangements and claims relating to contract performance. Recent court decisions and legislative activity may increase our exposure for any of these types of claims.

Management does not believe that any pending or threatened legal actions against the Company or audits by agencies will have a material adverse effect on the Company's financial position or results of operations or cash flows. However, the likelihood or outcome of current or future suits cannot be accurately predicted, and they could adversely affect the Company's financial position, results of operations or cash flows.

- -25-

______________________________________________________________________________________

Part II: Other Information, continued
Humana Inc.

Item 2: Item 3: Item 4: Item 5: Item 6:	Changes in Securities None. Defaults Upon Senior Securities None. Submission of Matters to a Vote of Security Holders None. Other Information None. Exhibits and Reports on Form 8-K

(a)		Exhibit Index Exhibit 10 Employment Agreement (filed electronically). Exhibit 27 Financial Data Schedule (filed electronically).

(b)		Other than the Form 8-K filed on July 14, 2000 and referenced in the June 30, 2000 Form 10-Q, there were no other reports filed on Form 8-K.

- -26-

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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

HUMANA INC.
(Registrant)

Date: November 14, 2000

By:        /s/James E. Murray
              James E. Murray
      Chief Operating Officer - Health
            Plan Division and
          Chief Financial Officer
       (Principal Accounting Officer)

Date: November 14, 2000

By:        /s/Arthur P. Hipwell
              Arthur P. Hipwell
          Senior Vice President and
              General Counsel

-27-


                     EMPLOYMENT AGREEMENT

    EMPLOYMENT  AGREEMENT  made as of September  13,  2000,  by  and
between  HUMANA INC. (hereinafter "Company"), a Delaware corporation
having its principal place of business in Louisville, Kentucky,  and
Michael B. McCallister (hereinafter "Employee"):

                           WITNESSETH:

   WHEREAS, Employee desires to render faithful and efficient
   service to the Company; and

   WHEREAS, the Company desires to receive the benefit of
   Employee's service; and

   WHEREAS,  both  Company  and Employee desire  to  formalize  the
conditions of Employee's employment by written agreement;

   NOW,  THEREFORE,  in  consideration of the premises  the  mutual
covenants hereinafter set forth, the parties agree as follows:

   1.Office.  The Company hereby employs Employee as President  and
      Chief  Executive Officer and Employee hereby agrees to  serve
      the Company in such capacity.

   2.    Term of Employment.  Employee's employment shall be for the
      "Employment Period" with the initial term commencing on the date
      hereof, and extending through December 31, 2000.  The initial term
      shall be automatically renewed and extended upon the expiration
      thereof for successive periods of one (1) year until such time as
      the Employment Period shall terminate pursuant to the terms of this
      Agreement, or until the Company on the one hand, or Employee on the
      other hand, shall terminate the Employment Period by giving written
      notice to the other party on or before sixty (60) days prior to the
      expiration date of the initial or any renewal term.  The renewal and
      extension of this Agreement shall also be referred to  as  the
      "Employment Period."  The effective date of Employee's termination
      of employment for whatever reason under this Agreement shall be the
      "Termination Date."

    3.      Responsibilities.    During  the   Employment   Period,
      Employee shall devote his entire business time and attention,
      except during reasonable vacation periods, to, and exert  his
      best  efforts  to  promote, the affairs of the  Company,  and
      shall  render such services to the Company as may be required
      by the Board of Directors of the Company ("Board") consistent
      with  his  employment  as Chief Executive  Officer.   Nothing
      herein  contained  shall preclude service by  Employee  on  a
      reasonable number of boards of directors or trustees of other
      entities  not  engaged in any business competitive  with  the
      business of the Company, provided that Employee shall receive
      approval  for  any  such board service in  advance  from  the
      Company's Board.

    4.     Incapacity.  If, during the Employment Period,  Employee
      should  be prevented from performing his duties or fulfilling
      his   responsibilities  by  reason  of  any   incapacity   or
      disability  for a continuous period of six (6)  months,  then
      the  Company's  Board,  in its sole and absolute  discretion,
      may,  based on the opinion of a qualified physician, consider
      such  incapacity or disability to be total and may on  ninety
      (90) days written notice to Employee terminate the Employment
      Period.   Benefits  and payments shall  be  made  under  this
      Agreement  following  incapacity in accordance  with  Section
      8(a).

   5.Death.  The  Employment  Period shall automatically  terminate
     upon  the death of Employee, and payments will be made to  the
     Employee's estate in accordance with Section 8(a).

   6.Compensation.   During the Employment Period,  Employee  shall
     (i)  receive a base salary (hereinafter "Annual Base  Salary")
     that  shall  be an annual amount of not less than Six  Hundred
     Fifty  Thousand Dollars ($650,000) payable in accordance  with
     the   payroll  practices  of  the  Company,  and  shall   (ii)
     participate  in  an  incentive plan  providing  for  a  target
     incentive  compensation amount of not less  than  one  hundred
     percent twenty-five (125%) of his Annual Base Salary.

   7.Benefit  Plans  and  Programs.  During the Employment  Period,
     Employee  shall be eligible for participation in  all  benefit
     plans  and  programs, including those for executive employees,
     made available by the Company to its respective employees.

   8.Severance Payments.

        a)    In the event that Employee's employment is terminated
        by  (i)  the  Company  while this Agreement  is  in  effect
        without Good Cause as defined in Sections 8(c)(1),  (2)  or
        (3)  hereof, (ii) by the Company for Good Cause as  defined
        in  Section  8(c)(4)  hereof,  (iii)  because  the  Company
        terminates the Employment Period pursuant to Section  2  of
        this Employment Agreement, (iv) by reason of incapacity  or
        disability in accordance with Section 4, or (v)  by  reason
        of death in accordance with Section 5:

        (1)The  Company  shall pay to Employee or  his  estate,  no
           later   than  thirty  (30)  calendar  days  after   such
           Termination Date, an amount equal to any unpaid  current
           Annual  Base  Salary  accrued  through  the  Termination
           Date,  his  bonus,  calculated at  one  hundred  percent
           (100%)  of  his  Annual  Base Salary  prorated  for  the
           current  fiscal year through the Termination Date,  plus
           one  (1)  times the sum of his then current Annual  Base
           Salary  and  bonus,  calculated at one  hundred  percent
           (100%)  of  his  Annual Base Salary. The  Company  shall
           continue  to keep in full force and effect all plans  or
           policies   of  medical,  accident  and  life   insurance
           benefits  with  respect to Employee and  his  dependents
           with  the  same level of coverage available to employees
           under  the terms of those employee benefit plans  for  a
           period  of  twelve  (12) months, upon  the  same  terms,
           costs  and  otherwise to the same extent as  such  plans
           are  in  effect  for employees of the Company  who  were
           similarly  situated  to Employee as of  the  Termination
           Date.

        (2)Any  of  the  restricted shares awarded to  Employee  on
           September 9, 1998 but which have not yet vested or  been
           forfeited shall become vested and non-forfeitable as  of
           the Termination Date.

        (3)To  the  extent  stock options granted to Employee  have
           not  become  fully  vested and  exercisable  as  of  the
           Termination  Date,  such  options  shall  become   fully
           vested   and   all   vested  stock  options   shall   be
           exercisable  until  the earlier of (i)   two  (2)  years
           commencing  on  the  Termination  Date,  or   (ii)   the
           original term of the option grant.

     b)In  the  event  that Employee's employment is terminated  by
        the  Company for Good Cause as defined in Sections 8(c)(1),
        (2), (3):

        (1) The  Company  shall  pay  to Employee,  no  later  than
            thirty  (30) calendar days after the Termination  Date,
            an  amount equal to his then current Annual Base Salary
            accrued  but unpaid through the Termination  Date;  and
            Employee shall have a period of ninety (90) days  after
            such   Termination  Date  in  which  to  exercise   any
            exercisable  vested  stock  options,  subject  to   the
            provisions of any applicable stock option agreement.

        (2) Any  restricted  shares  or  stock  options  previously
            granted  but  still subject to restriction or  unvested
            at the Termination Date shall be forfeited.

     c)Good Cause shall mean the Company's Board has determined in
        good faith, without being bound by the Company's
        progressive discipline policy for employees:

        (1) that  Employee has engaged in acts or omissions against
            the  Company  or  any of its subsidiaries  constituting
            dishonesty, intentional breach of fiduciary  obligation
            or intentional wrongdoing or misfeasance; or

        (2) that  Employee  has  been arrested  or  indicted  in  a
            possible   criminal   violation  involving   fraud   or
            dishonesty; or

        (3)  that Employee has intentionally and in bad faith acted in a
           manner which results in a material detriment to the assets,
           business or prospects of the Company or any of its subsidiaries;
           or

        (4)that  Employee  has  failed to perform  on  a  prolonged
           basis,   where   such  failure  is  considered   to   be
           substantial     and    where    corporate    performance
           expectations have been previously agreed upon  with  the
           Employee  on  an annual basis. Further, the  failure  to
           perform  must  be  because of things  considered  to  be
           within   the   reasonable  control  of   the   Employee,
           generally  of  an  operating or  strategic  nature,  and
           excluding  performance primarily resulting  from  things
           clearly beyond the reasonable control of Employee,  such
           as the following:

           (A)  drop in the Company's stock share price as a result of an
              overall market correction,
           (B)  severe national economic conditions, or
           (C)  adverse problems intrinsic to the Company's industry.

      d)   In the event that Employee's employment is terminated (i)
        because the Employee terminates the Employment Period pursuant to
        Section 2 of this Employment Agreement or (ii) because Employee
        voluntarily leaves the employ of the Company during the Employment
        Period:

        (1)  The Company shall pay to Employee, no later than thirty (30)
            calendar days after such Termination Date, an amount equal to any
            unpaid current Annual Base Salary accrued through the Termination
            Date, plus one (1) times his then current Annual Base Salary.
            Any bonus finally determined to be payable at the end of the
            fiscal year in which the Termination Date is included shall be
            prorated for the period up to and including the Termination Date
            and shall be promptly paid to Employee at the same time any other
            similar bonuses are paid to any other employee of the Company for
            such fiscal year.  The Company shall continue to keep in full force
            and effect all plans or policies of medical, accident and life
            insurance benefits with respect to Employee and his dependents with
            the same level of coverage available to employees under the terms
            of those employee benefit plans for a period of twelve (12) months,
            upon the same terms, costs and otherwise to the same extent as such
            plans are in effect for employees of the Company who were similarly
            situated to Employee as of the Termination Date.

        (2)  Any restricted shares or stock options previously granted but
            still subject to restriction or unvested at the Termination Date
            shall be forfeited.  Any vested but unexercisable options shall be
            exercisable until the earlier of (i)  two (2) years commencing on
            the Termination Date or, (ii)  the original term of the option
            grant.

      e)Following   the  Employment  Period,  Employee   shall   be
        eligible  for  continuation of health and dental  insurance
        coverage  pursuant  to  the  Consolidated  Omnibus   Budget
        Reconciliation  Act (COBRA) for eighteen (18)  months.  For
        the  first twelve (12) months, Employee's cost will  be  an
        amount   equal   to   the  normal  employee   contribution.
        Thereafter, the cost will be an amount equal to  the  COBRA
        cost  of  such  coverage. During the  first  eighteen  (18)
        months,  Employee may elect any of the coverages  available
        to   Humana  employees.  Thereafter,  Humana  agrees   that
        Employee  may  elect  coverage under  any  of  the  insured
        products  offered  by  Humana's  health  insurance  or  HMO
        subsidiaries  for  Employee, his  spouse  as  of  the  date
        hereof  ("Spouse"),  and any eligible dependent  until  the
        later of Employee's age sixty-five (65) or eligibility  for
        Medicare  coverage  (hereinafter "Extended  Coverage").  At
        the  earlier of Employee attaining Medicare eligibility  or
        death,  Employee's  Spouse  and any  now  current  eligible
        dependent  of  Employee and Spouse  will  be  eligible  for
        Extended   Coverage  until  the  later  of   Spouse's   age
        sixty-five  (65)  or Medicare coverage eligibility.  If  at
        any  time  during which the Extended Coverage is in  effect
        Employee   or  his  Spouse  obtains  Medicare  or   becomes
        eligible   for   other  employee  group  health   insurance
        coverage  which  does not exclude a pre-existing  condition
        of  Employee, Spouse or dependent, Humana's obligation will
        cease  as to the one who has obtained Medicare or,  in  the
        case  of  other employee group health coverage, as to  that
        person  and their eligible dependents.  Employee's  premium
        for  the  Extended Coverage and Spouse's  premium,  if  she
        retains  Extended  Coverage, will be amount  equal  to  the
        COBRA  cost of such coverage. If Humana hereafter adopts  a
        retiree  health  insurance program  and  Humana  still  has
        obligations under this provision, Employee will be  offered
        the  option of participating in that program in lieu of the
        Extended  Coverage described herein. The health and  dental
        insurance  benefits  hereunder  shall  be  administered  in
        conjunction  with  any  other similar  benefits  which  the
        Employee  has  from the Company but in  no  case  shall  be
        duplicative.

  9.Termination  After  A Change in Control.  In  the  event  of  a
     "Change in Control" of the Company (as defined as of the  date
     hereof  in  the  Company's  1996  Stock  Incentive  Plan   for
     Employees),  if, within twenty-four (24) months following  the
     closing  of  such a Change in Control (or at  any  time  prior
     thereto but in contemplation thereof):

     (i)  There is a material reduction in the Employee's title,
     authority or responsibilities, including reporting
     responsibilities;

     (ii)    The Employee's Annual Base Salary is reduced;

     (iii)The Employee's office at which he is to perform his
     duties is relocated to a location more than thirty (30) miles
     from the location at which the Employee performed his duties
     prior to the Change in Control;

     (iv)The  Company  fails to continue in effect  any  incentive,
     bonus  or  other  compensation  plan  in  which  the  Employee
     participates,  unless the Company substitutes a  substantially
     equivalent benefit;

     (v)  The  Company  fails to continue in  effect  any  employee
     benefit  plan  (including any medical,  hospitalization,  life
     insurance,  dental  or disability benefit plan  in  which  the
     Employee  participated)  or  any material  fringe  benefit  or
     perquisite  enjoyed by the Employee at the time of the  Change
     in  Control, unless the Company substitutes benefits which, in
     the aggregate, are substantially equivalent;

     (vi)   The Company breaches any material provision of this
   Employment Agreement; or

     (vii)     The Company fails to obtain a satisfactory agreement
     from  any  successor or assign of the Company  to  assume  and
     agree to perform this Employment Agreement;

     Then  the  Employee  shall  have  the  option  to  voluntarily
     terminate his employment and the Company shall:

     a)Pay  the  Employee his full base salary earned but  not  yet
       paid  through  the Termination Date at the  greater  of  the
       rate  in effect at the time of the Change in Control or  the
       Termination  Date  ("Higher Annual  Base  Salary"),  plus  a
       bonus  calculated at one hundred twenty-five percent  (125%)
       of  his  Annual Base Salary prorated for the current  fiscal
       year through the Termination Date.

     b)Pay  the  Employee a lump sum in an amount equal to two  and
       one-half  (2 1/2) times the amount equal to the sum  of  (1)
       the  Employee's  Higher  Annual Base  Salary  plus  (2)  the
       maximum  target bonus or incentive compensation which  could
       have  been  earned  by  the Employee calculated  as  if  all
       relevant  goals had been met during the then current  fiscal
       year  of  the Company pursuant to the terms of the incentive
       compensation plan in which he participates. If there  is  no
       incentive  compensation plan in effect as of the Termination
       Date,  then  for  purposes of this  Agreement  it  shall  be
       assumed  that  the  amount of incentive compensation  to  be
       paid  to  the  Employee shall be the maximum  target  amount
       under   any   incentive  compensation  plan  in   which   he
       participated  at the date of the Change in  Control  or  the
       most  recent  plan  participated  in,  whichever  would   be
       greater.

     c)Maintain  in  full force and effect for the benefit  of  the
       Employee  and  the Employee's dependents and  beneficiaries,
       at   the  Company's  expense,  all  life  insurance,  health
       insurance,   dental   insurance,   accidental   death    and
       dismemberment  insurance  and  disability  insurance   under
       plans  and  programs  in  which  the  Employee  and/or   the
       Employee's   dependents   and   beneficiaries   participated
       immediately  prior  to the Termination Date,  provided  that
       continued participation is possible under the general  terms
       and   provisions  of  such  plans  and  programs  ("Extended
       Benefits").  The Extended Benefits shall be continued  until
       the  earlier  of  (A)  the second (2nd) anniversary  of  the
       Termination  Date, (B) the effective date of the  Employee's
       coverage  under  equivalent benefits  from  a  new  employer
       (provided  that  no  such  equivalent  benefits   shall   be
       considered  effective  unless  and  until  all  pre-existing
       condition  limitations and waiting period restrictions  have
       been  waived or have otherwise lapsed), or (C) the death  of
       the  Employee. If participation in any such plan or  program
       is  barred, the Company shall arrange at its own expense  to
       provide the Employee with benefits substantially similar  to
       those which he was entitled to receive under such plans  and
       programs.  At  the  end  of  the  period  of  coverage,  the
       Employee  shall have the right to have assigned to  him,  at
       no  cost and with no apportionment of prepaid premiums,  any
       assignable  insurance policy relating specifically  to  him.
       Employee  shall  be  entitled to  continuation  coverage  as
       provided  in Section 8(d) at the conclusion of the  coverage
       provided under this Section.

       The  amount  of any payment provided for in this  Section  9
       shall  be  offset  by  any lump sum cash  payments  due  the
       Employee  upon  termination under any  other  provisions  of
       this Employment Agreement.

             d)   To the extent that any amounts or payments in the
       nature  of compensation [within the meaning of Section  280G
       of  the  Internal Revenue Code of 1986, as amended, and  the
       regulations promulgated thereunder ("Section 280G")]  to  or
       for  the  benefit  of  the Employee  under  this  Employment
       Agreement or otherwise (or any part of such amount or  other
       payment)  constitutes an "excess parachute  payment"  within
       the  meaning  of  Section  280G  and  Section  4999  of  the
       Internal  Revenue  Code,  then  the  Company  shall  pay  to
       Employee  an  additional  sum such  that,  after  all  taxes
       applicable  to  the  receipt  of  such  amount   have   been
       subtracted  therefrom, the remaining amount will  equal  the
       sum  of  the  amount  of tax imposed  with  respect  to  the
       "excess  parachute payment," plus any interest and penalties
       thereon  (other  than  those  caused  solely  by  Employee's
       action  or  inaction). Therefore, the  effect  shall  be  to
       maintain  the  Employee in the same financial position  that
       he  would  have been in had no tax under Section  280G  been
       imposed.

 10.Confidential Information and Trade Secrets.

     a)Employee  recognizes  that  Employee's  position  with   the
       Company  requires  considerable  responsibility  and  trust,
       and,  in  reliance on Employee's loyalty,  the  Company  may
       entrust   Employee   with  highly  sensitive   confidential,
       restricted  and  proprietary  information  involving   Trade
       Secrets and Confidential Information.

     b)For  purposes  of this Agreement, a "Trade  Secret"  is  any
       scientific   or  technical  information,  design,   process,
       procedure, formula or improvement that is valuable  and  not
       generally    known   to   competitors   of   the    Company.
       "Confidential  Information"  is  any  data  or  information,
       other  than  Trade Secrets, that is important, competitively
       sensitive,   and   not  generally  known  by   the   public,
       including,  but  not  limited  to,  the  Company's  business
       plans,   business   prospects,  training  manuals,   product
       development  plans,  bidding and pricing procedures,  market
       strategies,   internal  performance  statistics,   financial
       data,    confidential   personnel   information   concerning
       employees  of  the  Company, supplier data,  operational  or
       administrative  plans,  policy  manuals,   and   terms   and
       conditions  of  contracts and agreements. The  terms  "Trade
       Secrets"  and "Confidential Information" shall not apply  to
       information  which  is (i) already in Employee's  possession
       (unless  such  information  was  used  in  connection   with
       formulating  the  Company's  business  plans,  obtained   by
       Employee  from  the Company or was obtained by  Employee  in
       the  course  of Employee's employment by the Company),  (ii)
       required to be disclosed by any applicable law.

     c)Except  as  required to perform Employee's duties hereunder,
       Employee  will  not  use or disclose any  Trade  Secrets  or
       Confidential  Information of the Company during  employment,
       at  any  time after termination of employment and  prior  to
       such  time as they cease to be Trade Secrets or Confidential
       Information through no act of Employee in violation of  this
       Section 11.

     d)   Upon the request of the Company and, in any event, upon the
       termination of employment hereunder, Employee will surrender to the
       Company all memoranda, notes, records, plans, manuals or other
       documents pertaining to the Company's business or Employee's
       employment (including all copies thereof).  Employee will also leave
       with  the  Company all materials involving Trade Secrets  or
       Confidential Information of the Company. All such information and
       materials, whether or not made or developed by Employee, shall be
       the sole and exclusive property of the Company, and Employee hereby
       assigns to the Company all of Employee's right, title and interest
       in and to any and all of such information and materials.

 11.Agreement Not To Compete and Agreement Not To Solicit

     a)Agreement  Not  To  Compete. Employee  hereby  covenants  and
       agrees  that for a period commencing on the date  hereof  and
       ending twelve (12) months after Employee's Termination  Date,
       Employee,  directly  or  indirectly,  personally,  or  as  an
       employee,   officer,   director,  partner,   member,   owner,
       shareholder,  investor  or principal  of,  or  consultant  or
       independent contractor with, another entity, shall not:

           (1)   Participate in any business which competes with the
           Company    including,    without    limitation,    health
           maintenance   organizations,   insurance   companies   or
           prepaid  health plan businesses in which the Company  has
           been  actively  engaged during any part of  the  two  (2)
           year   period   immediately  preceding   the   Employee's
           employment Termination Date ("Company Business"), in  any
           of  the  markets  in which the Company is then  currently
           doing business.

     b)Agreement  Not  To  Solicit. Employee  hereby  covenants  and
       agrees  that for a period commencing on the date  hereof  and
       ending twelve (12) months after Employee's Termination  Date,
       Employee,  directly  or  indirectly,  personally,  or  as  an
       employee,   officer,   director,  partner,   member,   owner,
       shareholder,  investor  or principal  of,  or  consultant  or
       independent contractor with, another entity, shall not:

       (1)Interfere  with  the relationship of the Company  and  any
           of  its  employees, agents, representatives,  consultants
           or advisors.

       (2)Divert,  or  attempt  to  cause  the  diversion  from  the
           Company,   any  Company  Business,  nor  interfere   with
           relationships  of  the  Company with  its  policyholders,
           agents,   brokers,   dealers,  distributors,   marketers,
           sources of supply or customers.

       (3)Solicit,  recruit  or otherwise induce  or  influence  any
           employee  of  the  Company to accept  employment  in  any
           business  which  competes with the Company  Business,  in
           any   of  the  markets  in  which  the  Company  is  then
           currently doing business.

 12.Specific  Enforcement.  Employee specifically  acknowledges  and
     agrees  that the restrictions set forth in Sections 10  and  11
     hereof  are  reasonable and necessary to protect the legitimate
     interest  of  the Company and that the Company would  not  have
     entered   into   this  Agreement  in  the   absence   of   such
     restrictions.   Employee further acknowledges and  agrees  that
     any  violation of the provisions of Sections 10  or  11  hereof
     will  result  in  irreparable injury to the Company,  that  the
     remedy at law for any violation or threatened violation of such
     Sections  will be inadequate and that in the event of any  such
     breach,  the  Company,  in addition to any  other  remedies  or
     damages  available to it at law or in equity, shall be entitled
     to  temporary injunctive relief before trial from any court  of
     competent  jurisdiction as a matter of course, and to permanent
     injunctive  relief  without  the necessity  of  proving  actual
     damages.

 13.Notice.   Any  notice  required  to  be  given  by  the  Company
     hereunder to Employee shall be in proper form and signed by  an
     officer  or  Director of the Board of the Company.   Until  one
     party  shall  advise  the  other in writing  to  the  contrary,
     notices shall be deemed delivered:

     a)To  the Company if delivered to the Chairman of the Board of
       the  Company,  or  if mailed, certified or  registered  mail
       postage  prepaid,  to  Humana Inc., 500  West  Main  Street,
       Louisville,  Kentucky  40202;  Attention:  Chairman  of  the
       Board, with a copy to the Company's General Counsel.

     b)To  Employee if delivered to Michael B. McCallister,  or  if
       mailed  to  him  by  certified or registered  mail,  postage
       prepaid,  to Michael B. McCallister, 2101 Club Vista  Place,
       Louisville, Kentucky  40245.

 14.Benefit. This Agreement shall bind and inure to the benefit  of
     the   Company  and  the  Employee,  their  respective   heirs,
     successors and assigns.

 15.Severability.  If a judicial determination is made that any  of
     the  provisions  of this Employment Agreement  constitutes  an
     unreasonable  or  otherwise unenforceable restriction  against
     Employee,  such provision shall be rendered void only  to  the
     extent  that such judicial determination finds such  provision
     to  be  unreasonable  or  otherwise  unenforceable.  Moreover,
     notwithstanding   the  fact  that  any  provisions   of   this
     Employment  Agreement are determined not  to  be  specifically
     enforceable,  the Company shall nevertheless  be  entitled  to
     recover  monetary damages as a result of the  breach  of  such
     provision by Employee.

 16.Other.   This  Employment Agreement shall not  be  construed  as
     replacing  or  superceding  any other  agreements  between  the
     parties,  all of which will be deemed to be in full  force  and
     effect unless specifically stated otherwise.

    IN   WITNESS   WHEREOF,  the  undersigned  have  executed   this
Agreement as of the day and year first above written.


ATTEST:                          HUMANA INC.



BY:   /s/ Joan O. Lenahan        BY: /s/ David A. Jones
          Joan O. Lenahan
          Corporate Secretary         David A. Jones
                                      Chairman of the Board
                                        of Directors


WITNESS:                         "EMPLOYEE"


/s/Arthur P. Hipwell             /s/ Michael B. McCallister
   Arthur P. Hipell                  Michael B. McCallister
                                     President and Chief
                                       Executive Office