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

(502) 580-1000
(Registrant's 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.

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     The preparation of our condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Although our 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 our customary accounting practices and has not been audited. In our opinion, the information presented reflects all adjustments necessary for a fair statement of interim results. All such adjustments are of a normal and recurring nature. We have reclassified certain items in the prior year's condensed consolidated financial statements to conform with the current year presentation.

     On May 31, 2001, we acquired for $45 million cash, plus transaction costs of approximately $2 million, the outstanding shares of common stock of a newly formed Anthem Health Insurance Company subsidiary responsible for administering TRICARE benefits to approximately 1.2 million eligible members. We provide ASO services for 592,000 of the total 1.2 million eligible members. We accounted for this acquisition under the purchase method of accounting and accordingly, our consolidated results of operations include the results of the acquired TRICARE business from the date of acquisition. We allocated the purchase price to net tangible and identifiable intangible assets based on their fair value. Any remaining value not assigned to net tangible and identifiable intangible assets was then allocated to goodwill. We allocated $12 million to identifiable intangible assets, representing the value assigned to an acquired contract, which is being amortized on a straight-line basis over approximately 2 years. We allocated $35 million to goodwill, amortized on a straight-line basis over 20 years. The purchase price and allocation is subject to adjustment, no later than January 2002, based upon completion of a final balance sheet as of May 31, 2001.

     As of September 30, 2001, we maintained an unsecured revolving credit agreement, which provided a line of credit of up to $1.0 billion and was set to expire in August 2002. Principal amounts outstanding under that credit agreement were $270 million at September 30, 2001, and $520 million at December 31, 2000. Under this agreement, at our option, we could borrow on either a competitive advance basis or a revolving credit basis. The revolving credit portion of the agreement would bear interest at a floating rate, ranging from LIBOR plus 35 basis points to LIBOR plus 80 basis points, depending on our capitalization and credit ratings. The competitive advance portion of the agreement would bear interest at market rates prevailing at the time of borrowing on either a fixed rate or a floating rate basis, at our option. In addition, we paid a 15 basis point annual facility fee on the entire $1.0 billion facility amount, regardless of utilization. This facility fee fluctuated between 6.5 and 20 basis points depending on our capitalization and credit ratings. We also paid a 12.5 basis point annual usage fee when borrowings exceed one-third of the facility amount. Our effective interest rate on borrowings outstanding under this credit agreement at September 30, 2001 was 3.94%. Our credit agreement contained customary covenants and events of default. We were in compliance with all covenants at September 30, 2001. The carrying value of our borrowings under this credit agreement approximated fair value as the interest rate on our borrowings varied with market rates.

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     On October 11, 2001, we replaced our existing credit agreement with two new unsecured revolving credit agreements consisting of a $265 million 4-year revolving credit agreement and a $265 million 364-day revolving credit agreement with a one-year term out option. In addition, the 364-day revolving credit agreement supports a new conduit commercial paper financing program of up to $265 million. Under this program, a third party issues commercial paper and loans the proceeds of those issuances to us so that the interest and principal payments on the loans match those on the underlying commercial paper.

     Under these new agreements, at our option, we can borrow on either a competitive advance basis or a revolving credit basis. The revolving credit portion of both the 4-year and 364-day agreements bear interest at either a fixed rate or floating rate based on LIBOR plus a spread. The spread, which varies depending on our credit ratings, ranges from 80 to 125 basis points for our 4-year agreement and 85 to 137.5 basis points for our 364-day agreement. We also pay an annual facility fee regardless of utilization. This facility fee, currently 25 basis points, may fluctuate between 15 and 50 basis points, depending upon our credit ratings. The competitive advance portion of any borrowings under either the 4-year or 364-day revolving credit agreements will bear interest at market rates prevailing at the time of borrowing on either a fixed rate or a floating rate basis, at our option.

     Our new credit agreements contain customary restrictive and financial covenants as well as customary events of defaults, including financial covenants regarding minimum consolidated net worth, maximum leverage, and minimum interest coverage amounts substantially similar to those that existed under the agreement in place at September 30, 2001.

     We also maintain and issue short-term debt securities under a commercial paper program. The program is backed by our new credit agreements described above. Aggregate borrowings under both the credit agreements and the commercial paper program cannot exceed $530 million. We had no commercial paper borrowings outstanding at September 30, 2001, and $80 million outstanding at December 31, 2000.

     On August 7, 2001, we issued $300 million 7 1/4% senior, unsecured notes due August 1, 2006 at 99.759%. Our net proceeds, reduced for costs of the offering, were approximately $296 million. The net proceeds from this offering were used to repay a portion of the amounts outstanding under our existing credit facility.

     In order to hedge the risk of changes in the fair value of our $300 million 7 1/4% senior notes attributable to fluctuations in interest rates, we entered into interest rate swap agreements. Interest rate swap agreements, which are considered derivatives, are contracts that exchange interest payments on a specified principal amount, or notional amount, for a specified period. Our interest rate swap agreements exchange the 7 1/4% fixed interest rate under our senior notes for a variable interest rate, which was 3.91% at September 30, 2001. The $300 million swap agreements mature on August 1, 2006, and have the same critical terms as our senior notes. Changes in the fair value of the 7 1/4% senior notes and the swap agreements due to changing interest rates are assumed to offset each other completely, resulting in no impact to earnings from hedge ineffectiveness.

     Our swap agreements are recognized in our condensed consolidated balance sheet at fair value with an equal and offsetting adjustment to the carrying value of our senior notes. At September 30, 2001, the $13 million fair value of our swap agreements is included in other long-term assets. Likewise, the carrying value of our senior notes has been increased $13 million to its fair value. The counterparties to our swap agreements are major financial institutions with which we also have other financial relationships.

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     There were no adjustments required to be made to net income for purposes of computing basic or diluted earnings per common share. The following table presents 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 three and nine months ended September 30, 2001 and 2000:

     Our Medicare+Choice contracts with the federal government are renewed for a one-year term each December 31 unless terminated 90 days prior thereto. Increased funding, which began March 1, 2001, under Medicare, Medicaid and the State Children's Health Insurance Benefits Improvement and Protection Act, or BIPA, is being used to provide additional reimbursement under our contracts with providers and lower member premiums in certain markets. 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 our financial position, results of operations, or cash flows.

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     Our Medicaid contracts with various states are generally annual contracts. One of our two Puerto Rico Medicaid contracts covering approximately 147,000 members was transitioned to another insurer on October 1, 2001. The loss of this contract, which accounted for approximately 1% of consolidated premium revenues for the nine months ended September 30, 2001, was not material to our financial position, results of operations, or cash flows. The other contract with the Health Insurance Administration in Puerto Rico covering approximately 248,000 members is scheduled to expire on June 30, 2002, unless extended.

     Effective July 1, 2001, our TRICARE contract for regions 3 and 4 was renewed for up to two additional years subject to annual renewal at the option of the Department of Defense. The TRICARE contract for regions 2 and 5 that we recently acquired from Anthem is scheduled to expire on May 1, 2003, subject to the exercise of an option by the Department of Defense to renew the final year of this contract.

     The loss of any of these government contracts 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, may have a material adverse effect on our revenues, profitability, and business prospects.

     Legal Proceedings

     Six purported class action complaints were filed in 1999 in the United States District Court for the Western District of Kentucky at Louisville by purported stockholders against us and certain of our current and former directors and officers. The complaints contained the same or substantially similar allegations, namely, that we and the individual defendants knowingly or recklessly made false or misleading statements in press releases and public filings concerning our financial condition, primarily with respect to the impact of negotiations over renewal of our contract with HCA-The Healthcare Company, formerly Columbia/HCA Healthcare Corporation, which took effect April 1, 1999. The complaints allege violations of Section 10(b) of the Securities Exchange Act of 1934, or the 1934 Act, Rule 10b-5 and Section 20(a) of the 1934 Act, and seek certification of a class of stockholders who purchased shares of our common stock starting either (in four complaints) in late October 1998 or (in two complaints) on February 9, 1999, and ending (in all complaints) on April 8, 1999. Plaintiffs moved for consolidation of the actions, now styled In re Humana Inc. Securities Litigation, and filed a consolidated complaint. On April 28, 2000, the defendants filed a motion requesting dismissal of the consolidated complaint. On November 7, 2000, the United States District Court for the Western District of Kentucky issued a memorandum opinion and order dismissing the action. On November 30, 2000, the plaintiffs filed a notice of appeal to the United States Court of Appeals for the Sixth Circuit. We believe the above allegations are without merit and intend to continue to pursue defense of the action.

     In late 1997, three purported class action complaints were filed in the United States District Court for the Southern District of Florida by former stockholders of Physician Corporation of America, or PCA, and certain of its former directors and officers. We acquired PCA by a merger that became effective on September 8, 1997. The three actions were consolidated into a single action entitled In re Physician Corporation of America Securities Litigation. The consolidated complaint alleges that PCA and the individual defendants knowingly or recklessly made false and misleading statements in press releases and public filings with respect to the financial and regulatory difficulties of PCA's workers' compensation business. On May 5, 1999, plaintiffs moved for certification of the purported class, and on August 25, 2000, the defendants moved for summary judgment. On January 31, 2001, defendants were granted leave to file a third-party complaint for declaratory judgment on insurance coverage, seeking a determination that the defense costs and liability, if any, resulting from the class action defense are covered by an insurance policy issued by one insurer and, in the alternative, declaring that there is coverage under policies issued by two other insurers. Defendants have moved for summary judgment on the third-party complaint, and the third party defendants have moved to dismiss or stay the third-party complaint.

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     In the subscriber track cases, the plaintiffs seek a recovery under RICO for all persons who are or were subscribers at any time during the four-year period prior to the filing of the complaints. Plaintiffs also seek to represent a subclass of policyholders who purchased insurance through their employers' health benefit plans governed by ERISA, and who are or were subscribers at any time during the six-year period prior to the filing of the complaints. The complaint alleges, among other things, that we intentionally concealed from members certain information concerning the way in which we conduct business, including the methods by which we pay providers. The plaintiffs do not allege that any of the purported practices resulted in denial of any claim for a particular benefit, but instead, claim that we provided the purported class with health insurance benefits of lesser value than promised. The complaint also alleges an industry-wide conspiracy to engage in the various alleged improper practices. We filed a motion to dismiss the complaint on July 14, 2000. On August 15, 2000, the plaintiffs filed their amended motion for class certification, seeking a class consisting of all members of our medical plans, excluding Medicare and Medicaid plans, for the period from 1990 to 1999. We filed our opposition to the motion for class certification on November 15, 2000. A hearing on the class certification issue was conducted on July 24, 2001. No ruling has been issued.

     On June 12, 2001, the federal district court rendered its decision with respect to the motions to dismiss. The court dismissed the ERISA claims against us and the other defendants on the grounds that the plaintiffs had failed to exhaust administrative remedies, but permitted the plaintiffs to file amended complaints no later than June 29, 2001. The court declined to dismiss all of the RICO fraud claims against Humana. In the subscriber track cases against other companies, the court dismissed all RICO fraud claims against the other defendants for lack of specificity in their allegations but permitted the plaintiffs to refile all dismissed RICO claims. The plaintiffs filed amended complaints against all except one of the other defendants realleging RICO and ERISA claims on June 29, 2001. Following the district court's June 12, 2001 ruling, we and other defendants requested that the court amend its ruling to allow us to ask the United States Court of Appeals for the Eleventh Circuit to review the court's refusal to follow the decision by the Third Circuit in Maio v. Aetna that would have resulted in dismissal of the RICO claims. The district court denied this request, but noted that the defendants could renew it following its ruling on motions to dismiss the amended complaints. The motions to dismiss were filed on August 13, 2001.

     In the provider track case, the plaintiffs assert that we and other defendants improperly (i) paid providers' claims and (ii) "downcoded" their claims by paying lesser amounts than they submitted. The complaint alleges, among other things, multiple violations under RICO as well as various breaches of contract and violations of regulations governing the timeliness of claim payments. We moved to dismiss the provider track complaint on September 8, 2000, and the other defendants filed similar motions thereafter. On March 2, 2001, the court dismissed certain of the plaintiffs' claims, including the RICO claim, pursuant to the defendants' several motions to dismiss. However, the court allowed the plaintiffs to attempt to correct the deficiencies in their complaint with an amended pleading with respect to all of the allegations except the claim under the federal Medicare regulations, which was dismissed with prejudice. The court also left undisturbed the plaintiffs' claims for breach of contract. On March 26, 2001, the plaintiffs filed their amended complaint which, among other things, added four state or county medical associations as additional plaintiffs. Two of those, the Denton County Medical Society and the Texas Medical Association, purport to bring their actions against us, as well as against several other defendant companies. The Medical Association of Georgia and the California Medical Association purport to bring their actions against various other defendant companies. The associations seek injunctive relief only. The Florida Medicaid Association has also announced its intent to join the action. On October 27, 2000, the provider track plaintiffs filed a motion for class certification. We filed our opposition to that motion on November 17, 2000. Oral argument on the motion for class certification was conducted May 7, 2001. No ruling has been issued.

     Some defendants have filed appeals to the United States Court of Appeals for the Eleventh Circuit from a ruling by the district court that refused to enforce several arbitration clauses in the provider agreements with the defendants. On June 25, 2001, the Eleventh Circuit stayed all proceedings in the district court pending these appeals. Oral argument before the Eleventh Circuit is scheduled for January 2002. Other defendants, including us, have filed similar motions to enforce arbitration agreements which have not yet been ruled on by the district court.

     We intend to continue to defend these actions vigorously.

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     On January 4, 2000, a jury in Palm Beach County, Florida, rendered an approximately $80 million verdict against us in a case arising from removal of an insured from a special case management program. The award included approximately $78.5 million of punitive damages, $1 million of damages for emotional distress and $29,000 of damages for contractual benefits. On September 19, 2001, the Court of Appeals overturned the verdict, citing numerous errors by the trial court, and remanded for a new trial. The plaintiff filed a Motion for Rehearing EnBanc with the Court of Appeals on October 3, 2001.

     In July 2000, the Office of the Florida Attorney General initiated an investigation, apparently relating to some of the same matters that are involved in the purported class action lawsuits described above. While the Attorney General has filed no action against us, he has indicated that he may do so in the future. On September 21, 2001, the Texas Attorney General initiated a similar investigation.

     On May 31, 2000, we entered into a five-year Corporate Integrity Agreement, or CIA, with the Office of Inspector General, or OIG, of the Department of Health and Human Services. Under the CIA, we are obligated to, among other things, provide training, conduct periodic audits and make periodic reports to the OIG.

     In addition, our business practices are subject to review by various state insurance and health care regulatory authorities and federal regulatory authorities. Recently, there has been increased scrutiny by these regulators of the managed health care companies' business practices, including claims payment practices and utilization management. We have been and continue to be subject to such reviews. Some of these could require changes in some of our practices and could also result in fines or other sanctions.

     We also are involved in other lawsuits that arise in the ordinary course of our business operations, including claims of medical malpractice, bad faith, failure to properly pay claims, nonacceptance or termination of providers, failure to disclose network discounts and various provider arrangements, challenges to subrogation practices, and claims relating to performance of contractual obligations to providers and others. Recent court decisions and pending state and federal legislative activity may increase our exposure for any of these types of claims.

     Personal injury claims and claims for extracontractual damages arising from medical benefit denials are covered by insurance from our wholly owned captive insurance subsidiary and excess carriers, except to the extent that claimants seek punitive damages, which may not be covered by insurance in certain states in which insurance coverage for punitive damages is not permitted. In connection with the case of Chipps v. Humana Health Insurance Company of Florida, Inc., our insurance carriers have preliminarily indicated they believe no coverage may be available for a punitive damages award. 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.

     We do not believe that any pending or threatened legal actions against us or audits by agencies will have a material adverse effect on our financial position, results of operations, or cash flows. However, the likelihood or outcome of current or future suits, like the purported class action lawsuits described above and the appeal of the Chipps case, cannot be accurately predicted with certainty. In addition, the increased litigation which has accompanied the recent negative publicity and public perception of our industry adds to this uncertainty. Therefore, such legal actions could have a material adverse effect on our financial position, results of operations, and cash flows.

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     During the third quarter of 2001, we changed our presentation of administrative services fees and the method of allocating investment income and interest expense to our segments. Prior period segment results were reclassified to conform to our current period presentation. Additionally, we reclassified medical and selling, general and administrative expenses in 2000 to better conform prior year's results to our current segment definitions described above. None of these changes impacted consolidated results of operations. See supplemental schedules in Management's Discussion and Analysis for 2001 and 2000 quarterly financial information by segment.

     The following tables present financial information for our Commercial and Government segments for the three and nine months ended September 30, 2001 and 2000:

     Statement 141 requires that all business combinations initiated after June 30, 2001 be accounted for using the purchase method. Use of the pooling-of-interest method is no longer permitted.

     Statement 142 requires that goodwill no longer be amortized to earnings, but instead be reviewed at least annually for impairment. Impairment losses that arise from completing a transitional impairment test during 2002 are to be reported as resulting from a change in accounting principle. The amortization of existing goodwill ceases upon adoption of the Statement, which we will adopt effective January 1, 2002. Goodwill acquired after June 30, 2001 will not be subject to amortization. In the third quarter of 2001, goodwill amortization expense of $13 million decreased earnings per share by $0.08.

     In October 2001, the FASB issued Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. Statement 144 develops a single accounting model for long-lived assets to be disposed of by sale, and addresses significant implementation issues related to previous guidance. Statement 144 requires long-lived assets to be disposed of by sale be measured at the lower of their carrying amount or fair value less cost to sell, whether reported in continuing operations or in discontinued operations. Statement 144 also broadens the reporting of discontinued operations by potentially qualifying more disposal transactions for discontinued operations reporting. Generally, the provisions of Statement 144 are to be applied prospectively. Our January 1, 2002 adoption of the Statement is not expected to have a material impact on our financial position, results of operations or cash flows.

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     We are one of the largest publicly traded health benefits companies, based on our 2000 total revenues of $10.5 billion. We offer coordinated health insurance coverage and related services principally through traditional and Internet-based plans to employer groups and government-sponsored plans. As of September 30, 2001, we had approximately 6.4 million members in our medical insurance programs. In addition, we have approximately 2.3 million members in our specialty products programs. We contract directly with more than 400,000 physicians, hospitals, dentists and other providers to provide health care to our members. For the first nine months of 2001, over 70% of our premium revenues were derived from members located in Florida, Illinois, Texas, Kentucky and Ohio.

     During the first quarter of 2001, we realigned our management to better focus on the consumer. As part of this management realignment, we redefined our business into two segments, Commercial and Government. The Commercial segment includes three lines of business: fully insured medical, administrative services only, or ASO, and specialty. The Government segment includes three lines of business: Medicare+Choice, Medicaid, and TRICARE. Results of each segment are measured based upon income from operations before income taxes. We allocate administrative expenses, investment and other income, and interest expense, but not assets, to our segments. Members served by the two segments generally utilize the same medical provider networks, enabling us to obtain more favorable contract terms with providers. Our segments also share overhead costs. As a result, the profitability of each segment is interdependent.

     Throughout 2000 and to date in 2001, we continued to implement a strategy targeted at improving our financial results while simultaneously positioning ourselves for future growth. Part of our strategy involved eliminating non-core businesses and focusing on improving the infrastructure related to our core businesses. Our core businesses are those that are profitable or have the potential to be profitable, have growth potential, have sufficient membership to allow us to contract with an adequate network of medical providers at appropriate rates or have steady performance.

     During 2000 and to date in 2001, we completed transactions to divest our workers' compensation business and portions of our Medicaid businesses in north Florida, Milwaukee, Wisconsin, and Austin, Houston and San Antonio, Texas. We reinsured with third parties substantially all of our Medicare supplement business. We also exited numerous non-core counties in our Medicare+Choice business and discontinued aspects of our product line focusing on small group commercial businesses in 17 states.

     Premium revenues are recognized as income in the period members are entitled to receive services. Premiums received prior to such period are recorded as unearned premium revenues.

     Administrative services fees are earned as services are performed and consist of fees for administrative services provided to members of self-funded employers, which may include claims processing, access to provider networks and clinical programs, and customer service inquiries. Under administrative services only, or ASO, contracts, self-funded employers and, for TRICARE ASO, the Department of Defense, retain the full risk of financing benefits.

     Medical costs include claim payments, capitation payments, allocations of certain centralized expenses and various other costs incurred to provide health insurance coverage to members, as well as estimates of future payments to hospitals and others for medical care provided prior to the balance sheet date. Capitation payments represent monthly prepaid fees disbursed to participating primary care physicians and other providers who are responsible for providing medical care to members. We estimate the costs of our future medical claims and other expense payments using actuarial methods and assumptions based upon payment patterns, medical inflation, historical developments and other relevant factors, and create medical claims reserves for future payments. We continually review estimates of future payments relating to medical claims costs for services incurred in the current and prior periods and make necessary adjustments to our reserves.

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     We reassess the profitability of our contracts for providing health insurance coverage to our members when current market operating results or forecasts indicate probable future losses. We record a premium deficiency in current operations to the extent that the sum of expected medical costs, claim adjustment expenses and maintenance costs exceeds related future premiums. Anticipated investment income is not considered for purposes of computing the premium deficiency. Because the majority of our member contracts renew annually, we do not anticipate premium deficiencies, except when unanticipated adverse events or changes in circumstances indicate otherwise.

     We believe our medical and other expenses payable are adequate to cover future claims payments required. However, such estimates are based on knowledge of current events and anticipated future events, and, therefore, the actual liability could differ from amounts provided.

     The tragic events of September 11, 2001, and their aftermath, including the threats of further terrorism, did not have a material financial impact on our operations through September 30, 2001. An initial analysis for the fourth quarter of 2001, indicates an increase in physician office visits and antibiotic and mental health drug prescriptions, which is not expected to have a material adverse effect on our results of operations. It is uncertain whether or not the costs associated with higher physician and prescription drug utilization will have a material impact on the remainder of the fourth quarter of 2001, or on subsequent periods. We will continue to monitor the potential impact of these events on our business.

On May 31, 2001, we acquired for $45 million cash, plus transaction costs of approximately $2 million, the outstanding shares of common stock of a newly formed Anthem Health Insurance Company subsidiary responsible for administering TRICARE benefits to approximately 1.2 million eligible members. We provide ASO services for 592,000 of the total 1.2 million eligible members.

     Upon becoming Medicare eligible, which is normally at age 65, TRICARE beneficiaries generally stop receiving benefits under the TRICARE program and begin receiving benefits under a Medicare program. However, recent legislation allows TRICARE beneficiaries to receive pharmacy benefits after age 65. Effective April 1, 2001, we provided pharmacy benefits in an administrative capacity under this new program to approximately 555,000 members for our two TRICARE contracts. Effective October 1, 2001, the benefits under this administrative services program for the over age 65 TRICARE population were expanded to include medical benefits comparable to the benefits for the under age 65 beneficiaries.

     The following discussion deals primarily with our results of operations for the three months ended September 30, 2001, or the 2001 quarter, and the three months ended September 30, 2000, or the 2000 quarter, as well as the nine months ended September 30, 2001, or the 2001 period, and the nine months ended September 30, 2000, or the 2000 period.

The following table presents certain consolidated financial data as well as data for our two segments for the three and nine months ended September 30, 2001 and 2000:

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     The following table presents our medical membership at September 30, 2001 and 2000: