Michael B. McCallister - President and Chief Executive Officer James H. Bloem - Senior Vice President and Chief Financial Officer James E. Murray - Chief Operating Officer Christopher Todoroff - Senior Vice President and General Counsel Regina C. Nethery - Vice President, Investor Relations

Matthew Borsch - Goldman Sachs Charles Boorady - Citi Joshua Raskin - Barclays Capital Thomas Carroll - Stifel Nicolaus & Company, Inc. Justin Lake - UBS Investment Research Scott Fidel - Deutsche Bank Securities Kevin Fischbeck - Bank of America-Merrill Lynch Gregory Nersessian - Credit Suisse Carl McDonald - Oppenheimer & Co. Ana Gupte - Sanford C. Bernstein & Co. Peter Costa - FTN Equity Capital Markets Matthew Perry - Wells Fargo Securities Doug Simpson - Morgan Stanley

At this time I would like to welcome everyone to the Humana third quarter 2009 earnings release conference call. (Operator Instructions). Ms. Regina Nethery, Vice President of Investor Relations, you may begin your conference. Regina C. Nethery: Good morning and thank you for joining us. In a moment Mike McCallister, Humana’s President and Chief Executive Officer, and Jim Bloem, Senior Vice President and Chief Financial Officer, will briefly discuss highlights from our third quarter 2009 results as well as comment on our earnings outlook. Following these prepared remarks we will open up the lines for a question-and-answer session with industry analysts. Joining Mike and Jim for the Q&A session will be Jim Murray, our Chief Operating Officer, and Chris Todoroff, Senior Vice President and General Counsel. We encourage the investing public and media to listen in to both management’s prepared remarks and the related Q&A with analysts. This call is being recorded for replay purposes. That replay will be available on the Investor Relations page of Humana’s website, humana.com, later today. This call is also being simulcast via the Internet along with a virtual slide presentation. For those of you who have company firewall issues and cannot access the live presentation, an Adobe version of the slides has been posted to the Investor Relations section of Humana’s website. Before we begin our discussion, I need to cover a few other items. First, our cautionary statement: Certain of the matters discussed in this conference call are forward-looking and involve a number of risks and uncertainties. Actual results could differ materially. Investors are advised to read the detailed risk factors discussed in our most recent filings with the Securities and Exchange Commission. All of our SEC filings are available via the Investor Relations page of Humana’s website as well as on the SEC’s website. Additionally, investors are advised to read Humana’s third quarter 2009 earnings press release issued this morning. This press release and other historical financial news releases are also available on our Investor Relations website. Finally, any references made to earnings per share or EPS in this morning’s call refer to diluted earnings per common share. With that, I’ll turn the call over to Mike McCallister. Michael B. McCallister: Good morning everyone and thank you for joining us. This morning I will discuss our third quarters, put additional context around our earnings guidance for 2010 included in today’s news release, and comment on the national political environment. Jim Bloem will then provide more color around financial performance moving into 2010. Turning first to our third quarter results; this morning we reported third quarter ’09 earnings of $1.78 per share, in line with our prior expectations and guidance. The quarter’s results are a significant improvement over the $1.09 per share earned last year in the third quarter, even adjusting for a charge of $0.40 per share in the third quarter ’08 results associated with unusual volatility in the financial and credit markets. Our government segment continued to perform well in the third quarter, particularly in our Medicare business. Our commercial segment faced continuing challenges from the economic recession with resulting rising unemployment as well as continued impact from a highly competitive environment and the H1N1 virus. Nevertheless, the positive momentum in the government segment is offsetting the less favorable results in the commercial segment, allowing us to reaffirm our 2009 guidance of approximately $6.15 per share. Turning to 2010, it is important to note at the offset that our guidance issued this morning of $5.05 to $5.25 per share does not include any allowance for what may or may not ultimately happen with health reform, and includes only $0.00 to $0.10 in earnings per share from our Tricare business which we believe is the most conservative assumption we can make at this point. It does however reflect the anticipated impact of the number of significant factors that are more predictable: One, savings from administrative cost reductions; two, projected increases in Medicare Advantage membership; three, a lower overall Medicare operating margins; and four, stabilization of our commercial segment results. I will begin my discussion of these four points by touching briefly on our previously disclosed target of administrative cost reductions of at least $200 million in 2010. In more that doubling our revenue since 2005, we have had to quickly ramp up our infrastructure to meet the demands of this growth as it was occurring. Now we’re taking advantage of the opportunity to find efficiencies and eliminate duplication as we adjust to a changed environment. Our goal is not just to slash costs, but to strategically restructure our organization to position us to maintain a reduced level of spending beyond 2010. We continue to actively pursue the full $200 million in administrative expense reductions and are only including approximately half of that amount in our guidance this morning, as a matter of prudence since certain of the strategic changes we anticipate making are still in their early stages of development. We will update you on our continued progress with these initiatives throughout 2010. Turning to anticipated Medicare Advantage membership gains, with plan designs and premiums across the sector, now public, we are in general pleased with how our products stack up against those offered by our competitors, particularly when Medicare beneficiaries look closely at projected out-of-pocket and supplemental benefits. Consequently, we anticipate net growth of 20,000 to 60,000 members in our Medicare Advantage individual offerings in 2010. Further, as we discussed in last quarter’s earnings call, 2010 will show a substantial increase in our group Medicare membership. In addition to the 100,000 life group account win we shared with you in last quarter’s call, in the third quarter we a three major new group Medicare accounts all with January 2010 effective dates; Navistar with 29,000 retiree lives will become a self-funded group Medicare account. We also added a West Virginia Public Employees account with 34,000 members and the United Auto Workers account in Kentucky, Ohio, and Wisconsin, totaling approximately 10,000 members. Combing these individual and group successes we anticipate total Medicare Advantage membership to increase by approximately 180,000 to 240,000 members in 2010. With respect to our targeted combined Medicare Advantage margins, we’ve long been public with the fact that we strategically target approximately 5% for this business. We believe it’s the right thing to do from a long-term perspective as it allows us to decrease out-of-pocket cost and enhance benefits for our Medicare members, making the program more attractive and driving growth. Included in our 2010 expectations are moderating margins, more PDP business, lower margins on the new group Medicare business I just discussed, and the target margin we historically use in the bidding process for our individual Medicare Advantage members. However, as we discussed with you on multiple occasions and on many earnings calls, our goal is to increasingly engage our members with our clinical guidance programs, and as a result, our Medicare margins have the potential to improve during the year. We believe it prudent to exclude this potential improvement from today’s 2010 guidance points. Turning now to the change in our expectations for the commercial segments moving into next year. In spite of the difficult external environment, due primarily to the economic recession, high unemployment, and the continuation of a highly competitive environment, we’re confident that a number of factors will help stabilize commercial segment results in 2010. Let me highlight two of these. First, as I mentioned earlier, we’re keenly focused on 2010 administrative cost reductions. Second, we believe that the pricings actions we began implementing earlier this year will gain traction in 2010. Consequently, we’re projecting our commercial segment pre-tax earnings for 2010 to stabilize in the range of $125 million to $175 million. While this is admittedly a wide range, we expect to tighten it as the year progresses and we gain more visibility on the success of the steps we have taken to address the issues that have been pressuring our commercial results. As mentioned previously, the final factor which should have a significant impact on 2010 is the assumed loss of the Tricare contract in the fall of next year. While we were pleased that the GAO has upheld our Tricare protest, we are awaiting further detail as to the protest findings and next steps. In the absence of anything definitive at this point, it is still too early to tell whether there will ultimately be any change in the word of the contract. Our guidance, therefore, conservative assumes that we will only retain the contract till September 2010 and includes all wind-down costs. Our conversations with the government indicate that this is the minimum period we would keep it even under transition to another carrier. Before turning the call over to Jim Bloem, let me spend a few moments talking about the current political environment. Humana and our industry continue to work diligently for comprehension bipartisan healthcare reform this year. Our commitment to health reform done right and precise is the primacy of guaranteeing coverage for all Americans with everyone participating in the system while reining in out of control costs that are increasingly unsustainable for individuals and business. We’re committed to doing our part to make coverage more affordable for those in need. Our industry is actively presenting solid, data-driven studies that are garnering attention across a number of rounds in Washington. We don’t anticipate those efforts will subside in 2010 no matter what the version of healthcare reform is or is not and after this year. Just as we strive for continual improvement in our day-to-day operational activities, we also strive for continued improvement in how our country addresses the challenges associated with our current healthcare system. To sum up, 2009 is playing our well though it does include some challenges. Nevertheless, as we head towards a new year we’re confident in our ability to achieve the EPS guidance range for 2010 we shared with you this morning. We recognize the importance of assessing the long-term impact of operational decisions and the need to ensure a lean cost structure, solid day-to-day execution, and an ongoing commitment to consumerism and innovation so that we provide value to all Humana stakeholders. With that, I’ll turn the call over to Jim Bloem. James H. Bloem: Thanks Mike and good morning everyone. I am pleased to report earnings per share of $1.78 for the quarter even though some of the components our earnings were a little different than we originally expected. This morning I’ll primarily focus my remarks on our business segments beginning with the commercial segment. Before we start though I’d like to note that we expect 2009 consolidated revenues to be in line with our previous guidance with growth of approximately 6% more anticipated for 2010. Turning first then to the commercial segment; our 2009 commercial pre-tax income is expected to be approximately $8 million lower at the mid point than our previous guidance, primarily due to several of the same issues which also have been cited by our competitors and which are pervasive in the current economy. We continue to experience a difficult commercial operating environment with unemployment, competition, and the H1N1 virus currently cumulatively weighing heavily on our commercial results. During the first and second quarter calls we discussed the following factors which adversely affected our commercial results. First, a decline in medical membership, primarily the result of some of the younger and healthier workers of groups we insure dropping or losing coverage as a result of fewer hours worked or broad-based layoffs. Second, as a result of fewer younger members, there has been a deterioration in the remaining risk pool. Third, medical spending increases during the run-up towards layoffs or driven by fear of layoffs. And finally, aggressive provider billing practices such as with the emergency room coding situation. During the last 90 days we did not experience any improvement in any of these factors. Additionally, we would note the following four observations: First, the impact of the H1N1 virus on our 2009 commercial results is expected to be greater than previously estimated due to an acceleration of its estimated peak season from early 2010 into the fourth quarter of this year. Second, due to the economy, we continue to see pressure on membership growth in all of our small business product lines. Third, also in today’s economic climate we’re seeing members actively fugally prior to meeting their plan deductibles, but then more aggressively as they seek to maximize their benefits once their deductibles are met. And finally, we also are noting a modest increase in COBRA membership. Together, all of these items necessitated the revision of our 2010 pre-tax income guidance. I wouldn’t single out any one of these as being the primary driver, but rather the cumulative effect of all of these factors have caused lower commercial results which we’re sharing with you today. The good news is that we have already begun to address or take into account each of these factors, and as a result, we’re anticipating stabilization in our commercial segment pre-tax income for 2010. In a few minutes when I discuss 2010, I will elaborate on why we have confidence in this expected result. Turning next to the government segment, we’re pleased to report that all of our government lines of business continue to perform well. We have experienced success in both medical and administrative class to various clinical, operational, and administrative expense reduction initiatives. As you might expect, most of the improvement in our government segment is in our Medicare business. Both our Medicare Advantage and stand-alone prescription drug plans are tracking better than both our plan and our previous guidance. Importantly, our Medicare Advantage membership also is higher than we previously expected. Finally, we also had a modest improvement in our Tricare results for the third quarter. All in then, these government segment improvements were enough to offset our lower commercial performance resulting in our 2009 consolidated earnings per share guidance of approximately $6.15. Turning now to administrative costs, as Mike said in his remarks, we continue to actively pursue our previously announced target of $200 million in selling, general, and administrative cost reductions. As we said last quarter, these reductions will occur through numerous initiatives which are now underway and generally consist of the following types of actions; continued process redesign and outsourcing, increased efficiencies associated with technology investments, procurement savings and outside services reduction, and a series of other initiatives designed to ensure we keep our cost structure lean while carefully guarding our commitment to win record of quality member and provider service. Some of these actions are fairly straightforward to implement while others are more complex in terms of their implementations requirements and timing. For this reason the 2010 guidance that we share with you today conservatively includes the anticipated realization of only $100 million administrative cost reduction. We’re confident that our actions will yield at least $100 million of savings during 2010 with our full year run rate administrative cost reflecting the entire $200 million as we move into 2011. We look forward to sharing our progress on both actual savings and the run rate improvement as we move to 2010. Moving finally now to 2010; this slide analyzes the difference between our expected 2009 earnings per share of approximately $6.15 and the mid point of our 2010 earnings per share guidance range of $5.05 to $5.25, that mid point being $5.15. Let us look more closely at each of the principle reconciling items shown. First, with respect to Tricare; we now anticipate keeping the contract for the first nine months of 2010. We also have completed our analyses with respect to possible write-downs and charges associated with the potential loss of that business. Consequently, we expect 2010 net earnings per share contribution from Tricare to be between approximately breakeven and $0.10 per share on an all-in basis. We’re pleased that the GAO upheld our protest and we will further evaluate our 2010 earnings per share guidance as the implications of the GAO decision become clear. Second, with respect to Green Ribbon, you may recall from our fourth quarter 2008 call that we had forecast a second half 2009 recognition of revenues associated with the now concluded CMS demonstration project for which we previously had recognized all related expense. Third, with respect to the Medicare margin reset that Mike described, there are three points to consider in evaluating the $115 million pre-tax shown on the slide for 2010. Number one, as most of you are aware, we made significant pricing and plan design changes for our 2009 standalone prescription drug plans in order to correct our unfortunate 2008 results. As a result we shed a substantial number of PDP members on January 1, 2009; these actions are playing out more favorably than we expected. Accordingly, for 2010 we expect to return to a more traditional PDP growth and profitability mode with more competitive levels of pricing. Number two, even as our Medicare Advantage operations are exceeding expectations for 2009, our 2010 guidance reset these margins to the approximate bid margins levels. This is both prudent and consistent and it’s how we always prepare our annual plans and give initial guidance at this time of the year. And three, our 2009 Medicare Advantage results are attributable to many things which we have mentioned regularly through the past year, and employ every year to improve our results. These efforts generate better health outcomes while lowering overall healthcare costs, and they include our clinical care co-ordination model, our wellness incentives, our disciplined and effective work in network contracting and fraud detection, and our continued implementation of selling, general, and administration efficiencies. We expect that these efforts will continue to improve health outcomes and lower cost in 2010 as well. Finally, with respect to our 2010 commercial pre-tax income guidance range, we are being cautious given all the uncertainties that we’ve outlined today including the current economic climate, and particularly the unemployment outlook. The magnitude and timing of the H1N1 virus and the current competitive environment. However, we’re confident that we will stabilize our commercial pre-tax earnings next year as indicated by our guidance range of $125 million to $175 million. This $30 million improvement at the midpoint is a result of pricing actions, both implemented earlier this year and currently still being implemented as well as SG&A reductions and improved investment income. So, to conclude, we’re pleased with our third quarter performance and the resulting 2009 earnings per share guidance of approximately $6.15 which remains consistent with our previous guidance. Also as outlined above, we believe our 2010 earnings per share guidance range of $5.05 to $5.25 actually reflects our organizational experience, confidence, and discipline applied to the current operating environment. We’re well positioned to help our members and the nation face the healthcare challenges of 2010 and beyond as well as to continue to provide our owners with solid operating returns. With that we will open the phone lines. We request that each caller ask only two questions in fairness to those waiting in the queue. Operator, will you please introduce the first caller?

(Operator Instructions). Your first question comes from the line of Matthew Borsch - Goldman Sachs. Matthew Borsch - Goldman Sachs: I was wondering if you could comment a little bit more about the 2010 outlook on Medicare Advantage and what you expect to see, directionally at least, in terms of the member distribution by product; do you think private fee for service is going to continue to shrink with members transitioning to network PPO; if you can size any of that, that would be great. James E. Murray: In 2009, our network membership is about 62% of the total. We think that will go up to somewhere above 70%, maybe between 70% and 75%. We do anticipate that our private fee for service membership will shrink from where it is this year, probably around 75,000 to 100,000 less private fee for service members next year, and that those members would likely go into some of our network based options. We talked a lot in the past about the product continuum and working around Medicare supplement, private fee for service, PPO, and HMO, and we’ve done a really good job, we believe, of properly setting up those product continuums to incentivize folks to shift to the network options that would be best for them in the long run. Matthew Borsch - Goldman Sachs: A followup on a different front; on the commercial pricing, what are you seeing from competitors right now, and do you think trends have improved in a way that helps you for 2010 or maybe not? James E. Murray: We talked in the past about the situation in Texas with the not-for-profit Blue Plan there. That seems to be continuing. In other parts of the United States, there is a for-profit competitor that’s a little bit aggressive right now. I think the reports this last week would, in my mind, begin to get people to think that the aggressiveness that we’re seeing and the reactions ought to start to dissipate, and I would anticipate that from here going forward that we should begin to see some more pricing reasonableness, but we hate to do anything on hope around here. So, we’re going to plan for the most conservative and hopefully it will play itself out in the next couple of months or quarters.

Your next question comes from the line of Charles Boorady - Citi. Charles Boorady - Citi: My first question on MA for 2010; what do you estimate the average increase in member-paid premiums will be next year or an average member paid premium if you have that, and what is your plan for retaining some of the low-risk lives, maybe attracted to switch to a zero premium offering of a competitor? James H. Bloem: Across the entire book of business, I think the premium is going up a little under $20 in general for Medicare Advantage members. I would remind you, Charles, on the risk piece of it, that risk mix issue is not as important in Medicare because of the risk adjustment payment methodology; so, it’s something you pay attention to; at the end of the day, I would argue reasonably accurately paid based on the risk of these folks, so that business of losing healthy based on pricing is not as big a concern as it might be in another line of business. Charles Boorady - Citi: My second question on G&A saves, if you can walk us throughout a couple of very big round numbers of $100 million and the $200 million and what made you to reduce the $200 million goal to $100 and what specifically could actually make the difference between getting to $200 million and is there a couple of big programs that you’re thinking of doing or not doing, or is it really just executing a little bit better on everything in your plan? James H. Bloem: It’s made up of a lot of things, but let me start with the number; there’s nothing magical about the $100 or the $200 million; we’re starting with the $200 million target, I can tell you that I have numbers around here that are bigger, we’re just entering into this really aggressive review of our company as a result of multiple years of growth; no one in our sector has growth like we have and it happened very fast, and at one point in 2006 and early 2007, we really had to jump through hooks to respond to the growth, and you can sit back and you can say with that kind of growth there’s no way that all those decisions were made to drive great efficiency and effectiveness and also we get smarter and smarter over time by understanding what’s going on with these customers; I’ll give you a perfect example, every quarter we understand more and more about how seniors interact with us and how various communication devices and things produce phone calls or the lack therefore; so, it’s a constant fine-tuning but we also know we have opportunities to restructure some of our operational organization; it’s a combination of a lot of things, a lot better execution driven off better understanding of what these consumers need and what we can do for them and I’ve shown you all many times for example, the smart summary statement. We get better and better at knowing what to put in that and what not to put in that to produce a different result with our customers; we know what produces phone calls, we know what does not, so, it’s a combination of productivity gains around better understanding, process improvement throughout the whole system, and some restructuring and reorganizational opportunities that are in front of us; so, it’s a mixed bag, but the number we put out there in front of us is quite achievable and the other reason we didn’t put the whole thing into 2010 is just some question about when the actual time might occur.

Your next question comes from the line of Joshua Raskin - Barclays Capital. Joshua Raskin - Barclays Capital: Just one quick followup on the SG&A; I understand that some of its timing, now that you’re being conservative and that you will be after $200 million in terms of the run rate savings, but still looking at an SG&A ratio I would have expected especially in light of all the growth to start moderating a little bit more quickly; so, is there just more variable costs than we think in the business or the top-line leverage, when do you expect to get some more leverage on the ratio? James H. Bloem: Well you’re seeing the beginning of it now; that’s the number we have in front of you. I think we will just continue to put forward; like I said, we have numbers around here that are bigger than that in terms of potential; so, I don’t fundamentally disagree with your directional question; we have a bigger opportunity and we will pursue it, but we have a lot to do around here, this is one thing we will get after; you’re going to see the early results of that this year and there will be news to come. Joshua Raskin - Barclays Capital: Just risk adjuster questions, any risk adjustment settlements paid from CMS in the last quarter that related to prior year and prior quarters? Michael B. McCallister: No.

Your next question comes from the line of Thomas Carroll - Stifel Nicolaus & Company, Inc. Thomas Carroll - Stifel Nicolaus & Company, Inc.: As I think about your comments about your longer term Medicare Advantage margins, should we interpret your comments as maybe a softening of that 5% pre-tax goal or is it just not the case at all? James E. Murray: When we talk about the 5%, its how we look at the business as we’re bidding it into the future, but it’s important to remember that we’re constantly trying to drive efficiency and effectiveness and how many times have you heard us talk about the insufficiency and the waste and the fraud and all the nonsense that goes on in Medicare, that’s not something that you can take out instantly or quickly or easily but is what we work on all the time; so, when we bid our business for the following year, we sit down and say, what do we have, what do we think it looks like, and where is the business going, we build our bids around an overall 5% target, but then we continue to work and as we get progress and as we have efficiency and effectiveness and as we gain ground on rationalizing the business, that’s upside to that 5% and you saw it happen this year, when we bid 2009, we started at 5 and it’s actually a little bit better than that through the good work it was around here. Thomas Carroll - Stifel Nicolaus & Company, Inc.: As a followup, remind us as to what percent of your declining private fee for service book is choosing another Humana product? James E. Murray: In 2009, about 90,000 folks switched from our private fee for service to one of our network based plan; we anticipate that same kind of movement in 2010 or more.

Your next question comes from the line of Justin Lake - UBS Investment Research. Justin Lake - UBS Investment Research: First, a quick question on how you’re viewing the potential Medicare Advantage reimbursement changes and reforms, would like to get your view on this and it seems like there is either going to be a change to fee for service rates, more competitive bidding, and just want your view on those two potential changes and how you would view them from your business standpoint especially if you could talk about HMO versus PPO? Michael B. McCallister: What we have in front of us is uncertain, but I will bucket it into two buckets; one is moving things in-house to the traditional Medicare cost, we have competitive bidding in the senate, this is one of those cases where the devil will ultimately be in the details and so its hard to respond to where the same might end up but I will say and I’ve been saying that for a long time, that over time these payments rates would be adjusting and so we’ve been raising and working as hard as we can to get networks built for clinical capabilities because it’s all about managing this business, not insuring this business for us; so that has not changed and we’re moving as quickly as we can; we talked to you about the 15% solution and we think over the long-term that companies like Humana need to deliver savings to the federal government, those savings are going to ultimately result in those payments to us being no more at some point than they would be paying to the traditional provider community; so, those things have not changed and I think we continue to provide feedback and modeling capabilities to those that are trying to figure out the best way to do this. The issues are the same, rural versus urban; the adjustment to 100% rates goes one direction, competitive bidding goes another direction and it has varying impacts on communities around the country; so, I think we’re very much in the middle of a conversation around the impact across the country and there’s 11 million people in this program, and depending on how this is done, there’s the potential for a great deal of damage to the benefits and premiums; so, I think there’s news to come on that, but as a company, we have been preparing for these rates to come down. It’s really a function of timing as much as anything else because we’re doing quite well building out capabilities, and prior question was around margin; that good work we did this year is one of the reasons the margin was a little higher than we had originally anticipated for ’09, that will continue on, and the more that we do and the more success we have, the better we are able to deal with whatever changes comes; I think it’s a little too early to react to any specifics. Justin Lake - UBS Investment Research: Is there one that’s better or worse for your book of business in your view, private fee for service or competitive bidding? Michael B. McCallister: I don’t know that I would go there, Justin; there are things about both the differing impacts on our company; we’re pretty broad-based, so when I talk about rural versus urban whichever way you go, you’ll hit a piece of it a different way, so, I don’t know that I can pick my poison there?

Your next question comes from the line of Scott Fidel - Deutsche Bank Securities. Scott Fidel - Deutsche Bank Securities: First question, if you have any updated intelligence on how the negotiations are proceeding around the industry tax that would start in 2010 and then also if you’ve just received any feedback on any different formula that they might use for the Medicare business relative to the commercial business? Michael B. McCallister: Not sure I understood the second question, Scott? Scott Fidel - Deutsche Bank Securities: Are they going to use market share based approach or premium based approach, and any understanding on whether they would look at Medicare premiums any differently or whether it would just be a cross-off net premiums written for the industry tax? Michael B. McCallister: Basically, we’ve not received anymore information; I think there’s still the same difference of opinion among whoever you ask whether or not Medicare or Medicaid and the excise tax, so there hasn’t really been a lot of development there; it’s kind of hard to find a rationale for including Medicare but we’ll have to see how that plays out; I don’t think that was the initial intent, and because we’re looking at Medicare as being adjusted under a whole different channel and all of a sudden we’re going to have premiums, taxes on Medicare; I don’t believe that was the intent but I know that the conversation up there is now around whether it is going to be included or not; so, there’s one impact you can passively be certain of and that is that as we start taxing these benefits and start taxing these companies, it’s going to be pass-on to our customers, and whether we get it done in 2010 or 2011, it’s going to happen, and of course 2010 a lot of those business is already big in terms of pricing and so it could have an impact, but at the end of the day, the question from a political perspective is do you in fact want to cause health insurance premiums to rise by taxing the system. Scott Fidel - Deutsche Bank Securities: Just a followup on the medical cost trend view for 2010, looks like you’re assuming stable at 7%, 8%, that is a bit lower than what we’re seeing some of the peers issue guidance at around 9%; just interested, you guys have had a different cost trend over the last year to your peers, but can you highlight some of the variance that you think between your trend and peers and also what you’re building in for benefit buy-downs relative to 2010? Michael B. McCallister: Generally speaking we’ve always had a slightly less trend than the rest of the industry; so, we’re going to 7% to 8%, but we’ve been in this 7% range before; basically as you look at how the things are driving that secular trend, the hospital rates, there are still things in the provider billing practices that are there, and then as we’ve talked about still cost shifting going on too from regulatory authorities, a potential going forward, and then there’s been a leveling off we think for 2010, there’ll be more of a leveling off in the generic dispensing rates which for us has helped us have that lower trend that I mentioned initially. Scott Fidel - Deutsche Bank Securities: And on the buy-downs? Michael B. McCallister: Buy-downs generally speaking we don’t see a lot different than we’ve seen in prior years, 2.5%, 3%.

Your next question comes from the line of Kevin Fischbeck - Bank of America-Merrill Lynch. Kevin Fischbeck - Bank of America-Merrill Lynch: You talked a lot about how you feel like the guidance is somewhat conservative but you haven’t talked a lot about the cash component of this, can you remind us how much cash at the parent level and what would kind of get you to put that cash to use; the press release talked about how the financial environmental slowed down the share repurchase this year, is that still the issue, a little clarity about what will cause you to put that cash to use, is it share repurchase or is it acquisitions? James E. Murray: First of all, the cash at the parent at the end of the third quarter was $693 million, that’s up from about $665 million, but generally speaking, the change this year beginning the year at 250, we paid debt of 250, we took dividends of 775 and we put 100 back into the subsidiaries; so, again, that’s going to be the patter for the rest of the year; as we look at as to the uses of cash basically, we are looking at what healthcare reform, we’re uncertain as to what that will mean for us from a cash position; the cash at parent is one of the highest numbers we’ve had in the last 10 years; but as we look at things, we continue to look at acquisitions, we look at a lot of different things, obviously we never comment on overlooking at it, but they are out there; but I think right now, cash conservation is the fairly good conservative strategy given the fact that we are in an uncertain environment as we’ve mentioned on the commercial side and in the economy in general, but also, really with respect to healthcare reform. Michael B. McCallister: I would follow that up by saying I think all the companies in this industry are going to confront a complete review of the world as we know here in a few months as this thing gets clear and so there’s going to be a significant strategic implications to companies and will all be effective somewhat different depending on where we are and the kind of businesses we’re in, but I think at this point in time, the smart thing is to hold to keep your powder dry and assess where we are, and we may need to actually go a direction to respond to all that when it is all set and done, so, I think right now it’s a time to be cautious and conservative. Kevin Fischbeck - Bank of America-Merrill Lynch: One quick question on TriCare, based upon the guidance before around margins, TriCare contributed about $0.35 to $0.40 to earnings annually and you’re talking about the cost here about $0.43 in 2010 and reconciliation in my chart is about $0.24 implying about $0.19 hit in Q4 from losing the contract, is that $0.10 from actual operations and $0.09 in wind-down cost, what is in that Q4 implied hit? James H. Bloem: It’s actually what we’ve been saying all along; if you look at the TriCare revenues, there are $3.5 billion would put about a little over 3% margin on there and you’ll come up with 115 that’s on the fly; what we’ve said is looking at the contribution though if we are not successful in retaining the contract, then we have certain wind-down costs, the impairment of goodwill and other things which we’ve estimated to be between $50 and $75 million; so for the coming year 2010, we’re saying that we keep the contract through 930 and then we also take into account those costs that’s why we get a net EPS contribution of between $0.00 and $0.10 a share, and looking at from the way you are looking at it and you would say that we have 50 to 100 because we had for three quarters of a year 50 to75 of those charges given those zero to $25 million of pre-tax.

Your next question comes from the line of Justin Lake - UBS Investment Research. Justin Lake - UBS Investment Research: My followup was on the margin side for the 5% Medicare Advantage or Medicare margins, just thinking about clearly you’re doing a lot better this year than you thought when you reported last quarter both from a margin perspective and it would appear better than what you’ve planned, so when will that run rate carry over to next year and therefore if you bid the 5% maybe you would actually be trending towards the 5.5%, 6% run rate for next year? James E. Murray: Lots of factors go into the Medicare margin that we talked about; the group business has a lower margin than the overall individual that we bid separately; the PDP as Jim indicated is moderating down from where it had been, and we just think it’s prudent as a company that if we bid the 5%, and remember that we do that in April which is before some of what we see happening; we just think it’s prudent to go back to that original bid amount and then let the result of our good work play out as it is seen in our financial statements.

Your next question comes from the line of Gregory Nersessian - Credit Suisse. Gregory Nersessian - Credit Suisse: First question on overall reaction by our Medicare Advantage customers, maybe not just yours but industry wide to the benefit cuts and the premium hikes, is the level of discontent amongst seniors, in line with your expectations, is it worse, is it less severe than you thought it might be; any color there in terms of how they’re responding to those changes? James H. Bloem: It’s developing and it’s early; one of the things we learned about seniors is that as this whole process rolls out, there’s a growing thing that occurs here, and so people don’t jump in and start studying this the first minute the data is available, but they will as they start really thinking about their choices that they have to make and it happens reasonably quickly because this only lasts for a few weeks, but I think we’re going to see a pretty significant reaction; there’s no question, if we have any doubts in Washington, what happens when we cut payments, we’re going to see it right here; we have our payments going down this year because of some assumptions that CMS made around next year’s cost trends; we don’t agree with those things, but they definitely affected our rates and so we appropriately responded by changing benefits and premiums; we raised our premiums on average a little less than $20 and there’s been some benefit changes as a result; so, here’s the direct cause and effect evidence of what happens when we take actions relative to this program and so, I think that as the noise starts building, they will make their voice heard in Washington and I think it’s going to be a stage-setter relative to an ongoing conversation about what happens with this program; the timing is going to be interesting because we’re going to be in the middle of debating the future of Medicare Advantage right when this occurs; so, in many ways from educational perspective, it couldn’t be at a better time. Gregory Nersessian - Credit Suisse: This was very helpful; and then just a couple of clarifying points; what was the green ribbon contribution this year, and then secondly, you’ve got DNA moving higher next year, Jim, but the CapEx has been coming down; wondering what’s in there to get your DNA higher? James H. Bloem: The green ribbon contribution is $20 million, again this was a demonstration project that we worked on for several years and have expensed everything; we had it in our guidance and we mentioned it a year ago; we respect the DNA depreciation and amortization; generally speaking, the amortization is on a quick table and the CapEx has come down but we basically have a few years lag; the average use for life of most of our equipment and most of the software and technology things we do is between 5 and 7 years; there’s been a fairly steady capital expenditures at that level; so, that’s why it still continues to go up and then we’ll receive back down as we come down to the 175 to 200 for next year that we’ve signified in the guidance.

Your next question comes from the line of Carl McDonald - Oppenheimer & Co. Carl McDonald - Oppenheimer & Co.: Do you think that the benefit design changes that you made in 2010, at least from a high level, it looks like you did offset most of the negative spread from the pricing and the affected cost trend next year, and looking at the Medicare margin guidance for next year would suggest that wasn’t the case, so am I misreading the benefit design changes or again going back to that 5% expectation for next year really just a place holder because that’s what the initial bid expectation was? James H. Bloem: When we did the work around our bids in April and again filed them in June, the data that was available to us suggested that the 5% was a reasonable target; we do a pretty thoughtful job of summarizing through a bid model all of the margins that are created by the premium and benefit design changes that we make and that model told us at that time that the margins for that business would be around 5%, and so again, we wanted it to run itself out as we do some of the work that Mike talked about earlier in terms of clinical programs and contracting and some of the work that we do on the Medicare risk adjustment so that we get paid for the risk that we assume, we’ll let that flow into our earnings and we’ll report that at that time. Carl McDonald - Oppenheimer & Co.: Second question on the TriCare write-down, is that going to be a fourth quarter event after you find out whether you’ve retained the contract or not or is the timing of the recognition there not related to that? Michael B. McCallister: Carl, no, it’s not a fourth quarter event; we don’t really anticipate it this year and that’s why we put it in the next year. Carl McDonald - Oppenheimer & Co.: Sorry, fourth quarter of 2010? Michael B. McCallister: It could be there but we don’t know yet because we don’t know all the details and the implications of the GAO decision. The way that the calculation works with respect to the impairment of goodwill for example, you take a look at the net present value of the remaining cash flows in the light of the contract and compare that with the carrying value of goodwill on your books, and when that falls out of balance, that is the carrying value is more than what the supporting cash flow are, that’s the period in which we’ll recognize it. So, as we get more clarity as to how long we’ll keep the contract and what the terms of the contract will be, we’ll be able to better gauge and will be able to better evaluate what quarter of 2010 that occurs in.

Your next question comes from the line of Ana Gupte - Sanford C. Bernstein & Co. Ana Gupte - Sanford C. Bernstein & Co.: Another followup question on the preservation of 5% margin long term, and I was wondering what lessons have you learned from your 2010 experience with regard to premium shifting and buy-downs and in terms of the demand elasticity, do you see that there is more capacity to shift premiums to seniors as you continue to see cuts in 2012 all the way through 2014, and then in terms of buy-downs, have you reached your asymptotic limit on the buy-downs or can you do more and continue to gain share if you will? Michael B. McCallister: Firstly, it’s going to vary by location around the country because in some places there is more headroom than others depending on how long we’ve been there, the scale of our business, how much penetration we have relative to our clinical work, and those sort of things. So the answer is yes, in many places there is continued to room to adjust benefits down. In terms of the balance between benefits and premiums though, that’s done with a fair amount of research that’s been focused on trying to find out what the right balance is, is there an inflection point where premium becomes more important than benefit changes or vice versa, and we’ve put a lot of energy into understanding how seniors respond to those two changing dynamics and we try to hit a sweet spot. The challenge is always we never now exactly what our competition is going to do or whether they’re working off the same set of understandings as we are. So we’re always subject to the competitive market place, but we try to hit a smart sweet spot between premiums and benefit cuts. And I think at the end of the day, Humana is not going to win or lose based on that. That’s important to get that right. It comes back to if we’re not managing costs down, none of it is going to matter because you do run out of room at some point. We keep coming back to this 15% solution subject. You’re going to hear that from us until you’re sick of it because that is the absolute key to having us and the individual Medicare folks having a future with this private sector alternative. We have to get better, we have to get more efficient. The good news is that there are incredible opportunities in a lot of ways in this system, and we’re seeing good traction, and so we’ll just keep it up. Ana Gupte - Sanford C. Bernstein & Co.: The second question is more near term on commercial membership. Can you break down how that works between individual and small group, and on individual, do you see that when the stimulus subsidy of COBRA rolls off, potentially the individual membership you could have some upside, in other words, to your forecast? James E. Murray: The individual membership is around 350,000. Small group membership under 50 which is what’s being discussed through healthcare reform is around 590, and about 900,000 other fully insured total of about 1.8 to 1.9 million. Can you repeat your message around the individual? Ana Gupte - Sanford C. Bernstein & Co.: Typically, you do pretty well in individual. Assuming the COBRA subsidy rolls off which I’m assuming is pressuring individual market growth, would you see any upside to your 2010 forecast, or is that already taken into account with a fairly optimistic viewpoint and then the small group is really pressuring your membership downward? James E. Murray: To your point the individual membership is growing nicely. We like our model, and we believe that the broker community that works closely with us likes our model relative to the competition. I would anticipate depending upon what happens with COBRA that what we’re going to trying to focus on more than that particular issue is making sure that we catch some of our small group members that are choosing to drop coverage, and we’re working really closely to coordinate the efforts of our small group salesforce and our individual salesforce to make sure that more and more folks are made aware of our individual offerings so that we can catch more of that as opposed to them just falling into the marketplace. So that’s really where our good focus is right now. To be brutally honest, we haven’t been as good at that as we should’ve been this year, but we’re going to get a lot better at it going forward.

Your next question comes from the line of Peter Costa - FTN Equity Capital Markets. Peter Costa - FTN Equity Capital Markets: In terms of the gains and losses of members in Medicare Advantage, you talked about net individuals of 20,000 to 60,000 growth. What’s the absolute number of adds versus the absolute drops? Michael B. McCallister: We’re anticipating on the individual piece that the sales will be somewhere between 460 and 480, and the terms would be 420 to 440. We really have to focus on the terms. We’ve used a historical number to develop that, and we’re doing a lot of work here to message our membership to let them know what to expect to give them some alternatives for other products that make good sense for them, and we’re really taking an aggressive approach to being very transparent with the membership with the goal of making that number go down, but for purposes of this projection, we’ve used some historical numbers to develop it. Peter Costa - FTN Equity Capital Markets: Is there a geographically specifically place where that exists where those terms are? Have you looked at regions where you’ve gotten out of products and things like that? Is that where it’s stronger or how do you develop that number exactly? James E. Murray: All of our folks who are in the field rigorously review all of the competitive environment in our product design to decide where we’re going to put our direct marketing dollars. They look at what competitors are likely to do, for example, the Coventry and Wellpoint and WellCare getting out of the private-fee-for-service business. We’re looking at where our benefit designs don’t look so hot relative to the competition, and we aggregate all of that good knowledge up to these totals that I just shared with you. Peter Costa - FTN Equity Capital Markets: Can you give me some clarity on the Tricare contract as to when you’ll have some view as to whether that’s going to be rebid, or exactly what’s going to happen there? What’s the timeframe on what’s going to happen there?

We really don’t have enough detail yet to even assess that. A lot depends on how the TMA will choose to proceed once the full GAO decision is released. Peter Costa - FTN Equity Capital Markets: When do you expect the full decision to be released?

We’ll probably know a fair bit more this week, but that doesn’t mean that we’ll be in a position to really materially assess things. Again, a lot depends on how the TMA chooses to proceed once the GAO puts out all of its findings. Regina C. Nethery: The TMA, for those who are unaware, is Tricare Management Authority that’s part of the Department of Defense.

Your next question comes from the line of Matthew Perry - Wells Fargo Securities. Matthew Perry - Wells Fargo Securities: I have a question on the PDP margin. You talked about moderating PDP margin in 2010. Can you delve into that a little deeper? I see mostly your member premiums have gone up. Do you just expect cost trends to go at a faster rate, or is there something else there? James E. Murray: You’ll all recall the 2008 situation that we attempted to correct in 2009, and frankly the results came out better than we had anticipated, and so we purposely try to take our member premiums up only slightly in 2010 with the hope that the membership would become more stable and we’d actually begin regrow the PDP membership, which is something that we’re very interested in doing, and so yes, we anticipate that the trends would go up slightly more than the premiums that we’ve put in place. Matthew Perry - Wells Fargo Securities: On investment income, does your 2010 guidance anticipate a change in interest rates, and if so, by how much, and then secondly would you expect to reauthorize the share repurchase after it expires at the end of this year? Michael B. McCallister: For the first one, we expect that the investment income increase of about $30 to $35 million that we have there is all on the balances. The interest rates are going to make any real meaningful difference. With respect to the share repurchase authorization, that’s a matter for the board of directors, and I’m sure they’ll be talking about that when they get together in December.

Your next question comes from the line of Doug Simpson - Morgan Stanley. Doug Simpson - Morgan Stanley: Am I doing the math wrong here? If I take the commercial segment and improve the MLR by 150 basis points, that gives me about $0.30 versus the $0.11 delta that you show on that one mapping chart. And then if we look at Medicare and we assume 150 basis point margin pressure, that gives you a downside of $1.25 on a year over year basis versus the $0.43. It looks like to get to that $1.50 decline, you would need to put basically all $100 million of those cuts against Medicare? Am I doing that math right, and what explains that delta? James H. Bloem: I think the first thing I would say is in general we’re not in the business of commenting on people’s models, but what I heard you say was 100 basis point improvement in the commercial, and I said, again, there is that aspect of the guidance, but still with the range, a total of 100 change would be probably too big a change given all the uncertainties that we’ve set out at this time of the year. That’s why we have a wide range on our commercial pre-tax guidance. We have a $50 million range on that. Doug Simpson - Morgan Stanley: The Medicare variance was the bigger of the two. James H. Bloem: The Medicare variance basically works its way through the mix of membership. As we’ve talked about, we’ve got PDP memberships. We’ve got demonstration in PDP, and we’ve got lots of different mixes there too, so you wouldn’t be able to do that, but generally administrative cut, which is really what your question is focused on, is around a 55-45 to 60-40 split, and it would be in favor of government. Doug Simpson - Morgan Stanley: So it sounds like the delta between this math and the numbers you mapped, it’s things like member month timing and mix shift. Is that fair? James H. Bloem: That’s correct.

That concludes today’s Q&A session. I would now like to turn the call back over to Mike McCallister Michael B. McCallister: Thanks again for joining us this morning. I would conclude by saying that I think this was a good quarter in an environment of uncertainty. I think it’s good news that we’re going to finish the year where we thought we were going to although the moving parts have changed a little bit. We’re actually pretty optimistic about going into 2010. We do have our challenges with Tricare and the other issues we talked about this morning, but I think the company is a position to respond well to the environment. We’ve worked hard to get to a point with our Medicare business where we really understand what it’s doing, where it’s going, and how to grow it and how to interact with seniors. We’ll continue to be involved in the political conversation. Our members will continue to be involved because we’ll inform them about how things are changing, and then lastly, I’d like to thank all the associates who are on the call for making all this possible, and also for participating in the political process as our Humana associates have stepped up in a big way to be a part of the conversation and debate. With that, I’ll close the call this morning. Thanks for being with us.