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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a)

of the Securities Exchange Act of 1934

(Amendment No.    )

Filed by the Registrant  x

Filed by a Party other than the Registrant  ¨

Check the appropriate box:

Humana Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

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March 17, 2006

Dear Fellow Stockholders:

We would like to invite you to attend the Annual Meeting of Stockholders of Humana Inc. to be held on Thursday, April 27, 2006, at 10:00 a.m., EDT at the Company’s headquarters, 500 West Main Street, 25th Floor Auditorium, Louisville, Kentucky and to be webcast via the Internet at the Investor Relations section of the Company’s web site at www.humana.com. The attached Proxy Statement contains information about our Company and the three proposals to be voted upon by stockholders at the meeting. Please give this information your careful attention.

Enclosed are:

We hope you can attend the meeting. However, if you are unable to join us, we urge you to exercise your right as a stockholder and vote. The vote of every stockholder is important.

Stockholders that have access to the Internet have the opportunity to receive this Proxy Statement electronically. If you have not already done so for this year, we encourage you to elect this method of receiving the Proxy Statement next year. Not only will you have access to the document as soon as it is available, but you will be helping the Company reduce expenses.

This Proxy Statement is being mailed or transmitted on or about March 17, 2006 to the Company’s stockholders of record as of March 6, 2006.

Sincerely,

David A. Jones, Jr. Chairman of the Board and Significant Stockholder		Michael B. McCallister Director, President, Chief Executive Officer and Significant Stockholder

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Humana Inc.

March 17, 2006

Notice of Annual Meeting of Stockholders

Thursday, April 27, 2006

10:00 a.m., EDT

Humana Building

25^th Floor Auditorium

500 West Main Street

Louisville, Kentucky 40202

AGENDA

Stockholders of record at the close of business on March 6, 2006 will be entitled to vote.

Your vote is important so that as many shares as possible will be represented. Please vote by one of the following methods:

(see instructions on proxy card).

By Order of the Board of Directors,

Joan O. Lenahan

Vice President & Corporate Secretary

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FREQUENTLY ASKED QUESTIONS

The Board of Directors is not aware of any other matters to be presented for action at the Annual Meeting. However, if other matters are presented for a vote, the proxies will be voted for these matters in accordance with the judgment of the persons acting under the proxies.

All Shares of Company common stock that are represented at the Annual Meeting by properly executed proxies received before or at the Annual Meeting and not revoked will be voted at the Annual Meeting in accordance with the instructions indicated in the proxies. If no instructions are indicated, the executed proxies will be voted FOR approval of the election of the Board of Directors, FOR the ratification of the appointment of PricewaterhouseCoopers LLP as Humana’s independent registered public accounting firm for 2006 and FOR the approval of the Amended and Restated 2003 Stock Incentive Plan.

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If you hold Shares through an account with a bank or broker, your Shares may be voted even if you do not provide voting instructions on your instruction form. Banks and brokers have the authority under the regulations of the New York Stock Exchange (the “NYSE”) to vote shares for which their customers do not provide voting instructions on certain “routine” matters. The election of directors and the ratification of the appointment of the Company’s independent registered public accounting firm are considered routine matters for which banks and brokers may vote without specific instructions from their customers. Brokers cannot vote on the proposal to approve the Amended and Restated 2003 Stock Incentive Plan without instructions from you.

In order to vote on the Internet, you need the control number on your proxy card. Each stockholder has a unique control number so we can ensure all voting instructions are genuine and prevent duplicate voting. The Internet voting system is available 24 hours a day, seven days a week, until 11:59 p.m. EDT on Wednesday, April 26, 2006.

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Once you are logged on the Internet voting system, you can record and confirm (or change) your voting instructions. If you use the Internet voting system, you do not need to return your proxy card.

In order to vote by telephone, you need the control number on your proxy card. Each stockholder has a unique control number so we can ensure all voting instructions are genuine and prevent duplicate voting.

Once you are logged on the telephone voting system, a series of prompts will tell you how to record and confirm (or change) your voting instructions. If you use the telephone voting system, you do not need to return your proxy card.

If you are returning your proxy card to Automatic Data Processing, Investor Communication Services (“ADP”), they must receive it before 10:00 a.m. EDT on Wednesday, April 26, 2006, the day before the Annual Meeting.

If we receive your signed proxy card, but you do not give voting instructions, our representatives will vote your shares FOR approval of the election of all members of the Board of Directors, FOR the ratification of the appointment of PricewaterhouseCoopers LLP as Humana’s independent registered public accounting firm for 2006 and FOR the approval of the Amended and Restated 2003 Stock Incentive Plan. If any other matters arise during the Annual Meeting that require a vote, the representatives will exercise their discretion.

In all cases, a vote at the Annual Meeting will revoke any prior votes.

You may exercise these voting rights in almost the same way that stockholders may vote their Shares, but you have an earlier deadline, and you provide your voting instructions to ADP. ADP will aggregate the votes of all participants and provide voting information to the Trustee. If your voting instructions are received by 11:59 p.m. EDT on Monday, April 24, 2006, the Trustee will submit a proxy that reflects your instructions. If you do not give voting instructions (or give them late), the Trustee will vote your interest in the Humana Common Stock Fund in the same proportion as the Shares subject to the HRSP actually voted.

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You provide your instructions to ADP by using the Internet, telephone or mail methods described above. You cannot vote in person at the Annual Meeting.

Your voting instructions will be kept confidential under the terms of the HRSP.

Your method of doing so will depend upon how you originally voted:

By Internet — simply log in and resubmit your vote — ADP will only count the last instructions;

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By Telephone — simply sign in and resubmit your vote — ADP will only count the last instructions;

By Mail — you must give written notice of revocation to the Automatic Data Processing, Investor Communication Services, 51 Mercedes Way, Edgewood, NY 11717 or by fax at

1-515-254-7733, submit another properly signed proxy with a more recent date, or vote in person at the meeting. For written and fax notices, you must include the control number that is printed on the upper portion of the proxy card.

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The Company has also engaged ADP to assist in the distribution of proxy materials and the accumulation of votes through the Internet, telephone and coordination of mail votes for approximately $30,000 plus expenses.

The Company will reimburse stockbrokers, other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy and solicitation material to our stockholders.

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CORPORATE GOVERNANCE

Humana Inc. (also referred to as Humana or the Company) is committed to having sound corporate governance principles and operates within a comprehensive plan of corporate governance for the purpose of defining responsibilities, setting high standards of professional and personal conduct, and assuring compliance with such responsibilities and standards. Sound corporate governance is essential to running the Company’s business effectively and to maintaining the Company’s reputation of integrity in the marketplace. The Company’s Corporate Governance Guidelines (“Guidelines”) are adopted by the Board of Directors and are intended to comply with the requirements of Section 303A.09 of the New York Stock Exchange (“NYSE”) Listed Company Manual. The Guidelines may be viewed on our web site at www.humana.com. From the www.humana.com web page, click on “Investor Relations,” then click on “Corporate Governance” and then click “Corporate Governance Guidelines” on the right side of the page. A copy may also be obtained upon request from the Company’s Corporate Secretary.

Independent Directors

Committee Composition

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C     = Chair

M    = Member

(1)  John R. Hall is retiring effective April 27, 2006.

Each Board committee operates pursuant to a charter, which may be viewed on our website at www.humana.com. From the www.humana.com web page, click on “Investor Relations,” then click on “Corporate Governance” and on the right hand side of that page you will see a link to the charter of each committee. The Company will provide a printed copy of the charter of any committee without charge to any stockholder who makes a written request to the Corporate Secretary, Humana Inc., 500 W. Main St., Louisville, KY 40202.

Audit Committee

Pursuant to its charter, this committee:

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Additionally:

Organization & Compensation Committee

Pursuant to its charter, this committee:

Additionally:

Executive Committee

Pursuant to its charter, this committee:

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Investment Committee

Pursuant to its charter, this committee:

Science & Technology Committee

Pursuant to its charter, this committee:

Nominating & Corporate Governance Committee

Pursuant to its charter, this committee:

Consideration of Director Nominees

Stockholder Nominees

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Corporate Secretary

Humana Inc.

500 West Main Street, 27^th Floor

Louisville, Kentucky 40202

Director Qualifications

Identifying and Evaluating Nominees for Directors

Director Attendance

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Executive Sessions of Non-Management Directors

Code of Ethics and Code of Business Conduct

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Communication with Directors

Organization & Compensation Committee Interlocks and Insider Participation

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PROPOSAL ONE: ELECTION OF DIRECTORS

The Board of Directors of the Company, in accordance with the provisions of the Company’s Articles of Incorporation and Bylaws, has determined that the number of directors to be elected at the Annual Meeting of the Company shall be eight (8). The directors are elected to hold office until the Annual Meeting of Stockholders in 2007 and until a successor is elected and qualified.

If any nominee becomes unable to serve for any reason (which is not anticipated), the Shares of common stock represented by the enclosed proxy may be voted for the substituted nominee as may be designated by the Board of Directors.

The following table shows certain information concerning the nominees at March 6, 2006.

David A. Jones, Jr. was initially elected to the Board in May 1993 and was elected Chairman of the Board of the Company in April 2005. He is Chairman and Managing Director of Chrysalis Ventures, LLC, in Louisville, Kentucky.

Frank A. D’Amelio was initially elected to the Board in September 2003. He is Chief Operating Officer of Lucent Technologies Inc., having held that position since January 2006. During January and February 2006, Mr. D’Amelio also was the Chief Financial Officer of Lucent. From May 2001 until January 2006, he was Executive Vice President, Administration and Chief Financial Officer. Prior to May 2001, Mr. D’Amelio was Group President of Lucent’s Switching Solutions Group from 1998.

W. Roy Dunbar was initially elected to the Board in April 2005. He is President of Global Technology and Operations for MasterCard Inc., having held that position since September 2004. Prior to that, Mr. Dunbar worked at Eli Lilly and Company for 14 years, most recently as President of Intercontinental Operations from 2003 until he joined MasterCard, and Chief Information Officer from 1999 to 2003. He also serves on the Board of Directors of Electronic Data Systems Corporation.

Kurt J. Hilzinger was initially elected to the Board in July 2003. He was elected a director of AmerisourceBergen Corporation in March 2004 and has held the position of President and Chief Operating Officer of AmerisourceBergen Corporation since October 2002. Mr. Hilzinger was Executive Vice President and Chief Operating Officer of AmerisourceBergen Corporation from August 2001 to October 2002, and President and Chief Operating Officer of AmeriSource Health Corporation from December 2000 to August 2001.

Michael B. McCallister was appointed as President and Chief Executive Officer of the Company and to the Board of Directors of the Company in February 2000. Mr. McCallister joined the Company in June 1974.

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James J. O’Brien is nominated to become a member of the Board at this Annual Meeting. Since 2002, Mr. O’Brien has been the Chairman of the Board and Chief Executive Officer of Ashland Inc. Prior to being named to this position, Mr. O’Brien was President and Chief Operating Officer of Ashland, and before that, Senior Vice President and Group Operating Officer. He also served as the President of Valvoline, a division of Ashland, from 1995 to 2001. He currently serves on the Board of Directors of Ashland. Mr. O’Brien was recommended to the Humana Board by John R. Hall, Chairman of the Company’s Nominating and Corporate Governance Committee, and by a third party search firm.

W. Ann Reynolds, Ph.D. was initially elected to the Board in January 1991. Dr. Reynolds served as the President of the University of Alabama at Birmingham from 1997 to 2002. She was also the Chancellor of the City University of New York from 1990 to 1997, where she was responsible for the 21 colleges and professional schools that comprised that system. Before that, Dr. Reynolds was the Chancellor of the California State University system from 1982 to 1990, and held academic posts as clinical professor of obstetrics and gynecology at the UCLA School of Medicine. Dr. Reynolds serves as a director of Abbott Laboratories, Maytag Corporation, Invitrogen Corporation, and Owens Corning.

James O. Robbins was appointed to the Board in August 2005. Until his retirement on December 31, 2005, he was President and Chief Executive Officer of Cox Communications, Inc., one of the nation’s largest broadband communications companies. Cox Communications is a wholly-owned subsidiary of Cox Enterprises, Inc. Robbins joined Cox as Vice President of the company’s New York City operations in 1983, and was later promoted to Senior Vice President of operations in Atlanta. He was named President in 1985 and Chief Executive Officer in 1995.

The information given in this Proxy Statement concerning the nominees is based upon statements made or confirmed to the Company by or on behalf of the nominees.

Vote Required and Recommendation of Board of Directors. The eight nominees receiving the greatest number of votes duly cast for their election as directors will be elected. Abstentions will be counted for purposes of determining whether a quorum is present at the Annual Meeting, but will not be counted for purposes of calculating a plurality. Therefore, abstentions will have no impact as to the election of directors. The Company believes that pursuant to NYSE regulations, brokers will have discretionary voting power over director elections.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR ALL NOMINEES.

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DIRECTOR COMPENSATION

The following table shows compensation for directors who are not employees for 2005:

Compensation

On January 3, 2005, on which day the fair market value of Humana stock was $29.415, each director in office at that time, other than Mr. McCallister, received a stock award of 3,400 shares valued at $100,011. On April 26, 2005, the date on which Mr. Dunbar was first elected to the Board and on which date the fair market value of Humana stock was $31.955, Mr. Dunbar was awarded 7,500 restricted shares, valued at $239,663, and was also awarded 2,087 shares valued at $66,690, representing a pro-ration of the $100,000 value award, in accordance with the policies noted above. On August 25, 2005, the date on which Mr. Robbins was first elected to the Board and on which date the fair market value of Humana stock was $46.605, Mr. Robbins was awarded 7,500 restricted share units, valued at $349,538, and was also awarded 894 shares valued at $41,665, representing a pro-ration of the $100,000 value award, in accordance with the policies noted above.

We pay for or reimburse our directors’ travel, lodging and other reasonable out-of-pocket expenses in connection with attendance at board, committee and stockholder meetings, and for other reasonable expenses related to board service such as director education. In addition, the Company paid certain local taxes that averaged approximately $3,230 per outside director, and life and accidental death insurance premiums that averaged approximately $1,089 per outside director. Directors may elect to participate in the medical and dental benefit programs offered to all employees of the Company at a comparable rate as paid by employees.

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In connection with his positions as Vice Chairman of the Board and Chairman of the Board, David A. Jones, Jr. was reimbursed $60,000 for office expenses incurred during 2005, and the Company paid $20,000 for his membership to the Business Higher Education Forum.

Under the Director Compensation Program, the 7,500 restricted stock units awarded upon initial date of election and a pro-rated amount of the $100,000 annual common stock award will apply to James J. O’Brien, if elected.

Under the Humana Inc. Deferred Compensation Plan for Non-Employee Directors, non-employee directors may make an irrevocable election each year to defer compensation paid to them by the Company in the form of cash or stock for services rendered as a Board member. The director may elect to have cash fees credited to a guaranteed interest account at a rate equal to the average ten-year U.S. Treasury Note rate for the previous calendar quarter. The deferred stock will be paid out as Shares. Payments under the Plan generally commence on the date of termination of the director’s service as a member of the Board or a date specified by the director. The Company pays all costs and expenses incurred in the administration of the Plan. Six director nominees participate in this Plan.

Retirement Benefits

A director who is not an employee must retire at the annual meeting following his or her seventy-third birthday. Non-employee directors elected subsequent to 1997 do not receive any retirement benefits. Two of the current directors have retirement benefits that are grandfathered under the Company’s former Retirement Policy (the “Policy”). Under the Policy a retiring director is entitled to elect to receive either: (1) an annual retirement benefit for the life of the director in the amount of $38,000, the annual retainer fee in effect for 1997; or (2) in lieu thereof, an actuarially equivalent joint and survivor annuity payment. In addition, under the Policy, each retiring director also receives an annual matching charitable contribution benefit of $19,000 for the life of the director. For fiscal year 2005, the Company paid benefits under the Policy to four former directors. Mr. Hall will receive benefits under the Policy upon his retirement to be effective April 27, 2006.

David A. Jones’ Chairman and Retirement Benefits

Prior to his retirement as Chairman of the Board in April 2005, David A. Jones, Sr. received a prorated amount of the $225,000 annual retainer ($75,000) and the $7,200 annual Executive Committee payment fee ($2,400). He also received 3,400 Shares.

In connection with Mr. Jones Sr.’s retirement and in recognition of his role as founder of the Company, the Board of Directors approved the following retirement benefits: (1) a lump sum of two hundred thousand dollars ($200,000) at the date of his retirement; (2) at his election, the use of his current office facilities for up to eighteen months at no expense to him; and (3) standard severance benefits, and medical benefits continuation based on a group rate to them and their current dependents at their expense, to Mr. Jones’ three staff members. Each staff member of Mr. Jones is eligible for medical benefits continuation until they reach the age of 65 or until obtaining employment elsewhere which would provide similar benefits, whichever occurs first. In 2005, office facilities valued at $53,200 were provided to him. Additionally, he received approximately $56,800 per month under the Officers Target Retirement Plan due to his retirement in 1997 as an officer of the Company.

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STOCK OWNERSHIP INFORMATION

SECTION 16(a)

BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 (“Exchange Act”) requires the Company’s directors and executive officers, and persons who beneficially own more than ten percent of a registered class of the Company’s equity securities, to file with the SEC and the NYSE, reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company. These reports generally are due within two business days of the transaction. Executive officers, directors, and greater than ten percent stockholders are required to furnish the Company with copies of all the forms they file.

During the year ended December 31, 2005, based upon the Company’s knowledge of stock transfers, a review of copies of these reports and written representations by persons subject to Section 16(a) as furnished to the Company, all executive officers, directors, and greater than ten percent beneficial owners of the Company’s common stock complied with Section 16(a) filing requirements applicable to the Company.

The Company has a program to oversee the compliance of its executive officers and directors in their reporting obligations.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL

OWNERS OF COMPANY COMMON STOCK

Principal Stockholders of the Company

The Company knows of no person or entity who may be deemed to own beneficially more than 5% of the outstanding common stock except for:

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SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS

The following table shows stock ownership by each of the Company’s nominees for directors, each Named Executive Officer, as defined herein, and by the directors and executive officers as a group as of March 6, 2006, unless otherwise indicated.

The number of Shares of Company common stock listed:

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EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION OF THE COMPANY

The following Summary Compensation Table shows the compensation earned for the time period served as an executive officer during the past three years by: (1) the President and Chief Executive Officer; and (2) each of the four other highest compensated executive officers of the Company serving at December 31, 2005 (collectively, the “Named Executive Officers”).

Summary Compensation Table

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Footnotes to Summary Compensation Table:

The Company does not pay any dividends, but holders of restricted stock would be entitled to dividends, if paid.

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Footnotes (Cont.)

In December 2005, the Organization & Compensation Committee established the criteria under the Company’s Executive Management Incentive Compensation Plan which covers the Named Executive Officers for the current fiscal year. The criteria for fiscal year 2006 will be based upon the following: an Earnings Per Share goal, a membership goal, and other specified initiatives. For the Chief Executive Officer, the sole measurement will be attainment of an Earnings Per Share (EPS) target for 2006. For the other executive officers, the measurements will consist of 80% EPS, 10% membership goals and 10% attainment of specific strategic initiatives. The target annual incentive awards for the executive officers generally will be in the range of 55% to 150% of base salary, with a maximum potential payment of 150% of the target amount. The actual awards will reflect the performance of the Company and the individual.

Also in December 2005, the Organization & Compensation Committee established a financial planning program for eight executive officers, including the Named Executive Officers, under which each may engage a specific third party to provide financial planning services and receive reimbursement from the Company of up to fifteen thousand dollars ($15,000) annually. No amounts were paid in 2005 for this program.

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2005 STOCK OPTION GRANTS

The following table provides information on stock options granted to the Named Executive Officers during the year ended December 31, 2005.

2005 OPTION EXERCISES AND YEAR-END VALUES

The following table provides information on the value of stock options exercised during the year ended December 31, 2005 and the year-end values of unexercised options for the Named Executive Officers.

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OFFICERS’ TARGET RETIREMENT PLAN

The Company has in effect the Officers’ Target Retirement Plan (“OTRP”), which is a non-qualified, unfunded plan providing supplemental retirement benefits to each elected Company officer, including the Named Executive Officers, and other designated key employees.

The following table illustrates the estimated maximum annual benefit which would be payable at age 65 to a participant, at various average compensation levels for specified years of credited service, under the OTRP:

Estimated OTRP Maximum Annual Benefit at Age 65

For Years of Credited Service Shown (1)(2)

The maximum years of service credited under the OTRP are 30 years, unless otherwise changed by the Board of Directors. As of January 1, 2006, the years of service for each of the Named Executive Officers are as follows: Michael B. McCallister — 32; James E. Murray — 16; Jonathan T. Lord, M.D. — 6; James H. Bloem —5; and Bruce J. Goodman — 7.

HUMANA SUPPLEMENTAL EXECUTIVE RETIREMENT & SAVINGS PLAN (“HSERSP”)

The Company has a qualified combined pension plan and 401(k) plan, the Humana Retirement and Savings Plan, and the HSERSP, a non-qualified excess benefit plan. The Internal Revenue Code imposes limitations on the contributions that may be made to qualified plans. The benefits accrued under the HSERSP are those Company contributions that cannot be made to the qualified plan because of those limitations. Accruals under the HSERSP, which is unfunded, are deemed to be invested generally in the same investment vehicles selected by participants for their qualified plan funds. Benefits are distributable upon termination of

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employment, death, total disability, retirement or change in control of the Company. At December 31, 2005, the benefits accrued under the HSERSP for the Named Executive Officers are as follows: Michael B. McCallister — $1,300,302; James E. Murray — $1,110,135; Jonathan T. Lord, M.D. — $276,560; James H. Bloem — $200,299; and Bruce J. Goodman — $462,971.

SUPPLEMENTAL INDIVIDUAL INCOME PROTECTION INSURANCE PLAN

The Company has in effect a Supplemental Individual Income Protection Insurance Plan, which covers certain officers and other designated key employees, to supplement their group long term disability coverage. The Company provides this benefit, which will replace up to a specified percentage of targeted incentive compensation due to an injury or sickness that prevents the employee from performing the duties of their occupation. Each officer or key employee pays their own premiums. Mr. McCallister and Mr. Murray have elected to participate in this plan.

AGREEMENTS WITH DIRECTORS AND OFFICERS

McCallister Agreement

In September 2000, the Company entered into an agreement with Mr. McCallister (“McCallister Agreement”) pursuant to which he: 1) serves as President and Chief Executive Officer of the Company at an annual base salary in an amount not less than $650,000; 2) participates in an incentive plan providing for a target incentive compensation amount of not less than 125% of his base salary; and 3) is eligible for participation in all benefit plans and programs made available by the Company for its executive employees.

In the event of termination of employment without Good Cause (as defined in the McCallister Agreement), or with Good Cause under certain circumstances as set out in the McCallister Agreement, or pursuant to disability or death, the Company will pay to him or his estate an amount equal to any unpaid current annual base salary accrued through the date of termination and a prorated bonus calculated on the basis of 100% of base salary, plus a severance amount equal to his annual base salary plus bonus calculated at 100% of his base salary. He is also entitled to continue his coverage under the Company’s life, health and disability plans for a 12-month period upon the same terms and costs for other employees of the Company. Additionally, all of his stock options shall become fully vested and shall be exercisable for a two-year period following his termination.

In the event of termination of employment with Good Cause under certain circumstances as set out in the McCallister Agreement, Mr. McCallister would receive an amount equal to his then current base salary earned but not yet paid and shall have a period of 90 days to exercise any vested options. Mr. McCallister would forfeit any unvested options or restricted shares.

In the event of termination of employment because Mr. McCallister gives notice of termination of the McCallister Agreement, or because Mr. McCallister voluntarily terminates his employment during the Employment Period, then the Company shall pay to him an amount equal to his then current base salary. Any bonus payable shall be prorated. He shall have two years to exercise any vested options. He is also entitled to continue his coverage for a 12-month period under the Company’s life, health and disability plans upon the same terms and costs for other similarly situated employees of the Company.

In the event of termination of employment following a Change in Control of the Company, as defined in the McCallister Agreement, then Mr. McCallister shall receive: 1) his full base salary earned but not yet paid through the termination date at the greater of the rate in effect at

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the time of the Change in Control or the Termination Date (Higher Annual Base Salary), plus a prorated bonus calculated at 125% of his Higher Annual Base Salary; 2) an amount equal to two and one-half times the sum of the Higher Annual Base Salary plus the maximum target incentive compensation which could have been earned; 3) continued coverage for a two-year period, at the Company’s expense, under all life, health, dental, accidental death and dismemberment and disability insurance; and 4) a gross up amount for any payments that constitute an excess parachute payment as defined in the Internal Revenue Code of 1986, as amended.

The McCallister Agreement also contains provisions not to compete or solicit for a 12-month period following termination. The McCallister Agreement generally may be terminated by either party giving written notice at least sixty (60) days prior to December 31 of each year.

Health Benefits

All officers elected by the Board of Directors, including the Named Executive Officers, generally receive health benefits upon termination for themselves and their eligible dependents at a predetermined rate until the earlier of attainment of age 65 or obtaining other coverage.

Change in Control Benefits

The Company has entered into agreements with all other officers, including Mr. Murray, Dr. Lord, Mr. Bloem, Mr. Goodman, as well as certain key management employees, which for a two-year period following a Change in Control of the Company, as defined in the agreements provide certain benefits upon termination. Such termination may be involuntary or may be due to a resignation as a result of a change in responsibilities or compensation. Under these agreements, these individuals would be entitled to receive severance pay which generally is determined by multiplying the sum of each individual’s annual base salary, and the maximum incentive compensation payable to him or her, by a multiple ranging from one to one and one-half. Mr. Murray, Dr. Lord, Mr. Bloem, and Mr. Goodman would each receive a payment in the amount of one and one-half times the sum of their base salary and maximum bonus, in the event of a Change in Control. In addition, in the event of a Change In Control generally all Company options and restricted stock immediately vest, and health, life and disability insurance coverage is available.

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CERTAIN TRANSACTIONS WITH MANAGEMENT AND OTHERS

In 1994, the Company entered into an agreement with JAPC, Inc. (“JAPC”), which is owned by David A. Jones, father of David A. Jones, Jr. Under the terms of the Agreement as amended, the Company provides hangar space, pilot services and maintenance for an airplane owned by JAPC. The rate paid for these services is at least as favorable to the Company as market rates. The Company is fully reimbursed for the cost of the services. Either party upon 30 days’ written notice generally may terminate the agreement. For the year ended December 31, 2005, the Company was reimbursed approximately $390,462 by JAPC.

Effective January 1998, the Company entered into an Aircraft Interchange Agreement with JAPC. Under the terms of the Agreement as amended in February 2003 and amended a second time in April 2005, the Company leases its aircraft to JAPC and JAPC leases its aircraft to the Company. The lessee exchanges with the lessor hours of time on the lessee’s aircraft based on a ratio reflecting the difference in operating costs among the various aircraft. The Company and JAPC each bill the other for any flights that occurred in the preceding month. Any difference in number of hours is carried over to succeeding months and is offset against flight hours on aircraft of the other party. Either party upon 60 days’ written notice may terminate the agreement. For the year ended December 31, 2005, JAPC owes the Company approximately 8.58 hours which will be offset against 2006 usage.

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AUDIT COMMITTEE REPORT

The Audit Committee of the Company currently is comprised of five directors. All members are independent and financially literate as defined in the New York Stock Exchange listing standards. The Board of Directors has determined that Messrs. D’Amelio, Hall, Hilzinger and Robbins, and Dr. Reynolds, each meet the definition of “financial expert.” The Board of Directors has adopted a written charter for the Committee.

The Audit Committee reviews Humana’s financial reporting processes on behalf of the Board of Directors. In fulfilling its responsibilities, the Audit Committee has reviewed and discussed the audited financial statements contained in the Annual Report on Form 10-K for the year ended December 31, 2005 with Humana’s management and its independent registered public accounting firm, PricewaterhouseCoopers LLP (“PwC”). Management is responsible for the financial statements and the reporting process, including its assessment of the Company’s internal control over financial reporting. PwC is responsible for expressing an opinion on the conformity of those audited financial statements with accounting principles generally accepted in the United States of America. Management has represented to PwC and the Audit Committee that the Company’s consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America. The Audit Committee discussed with PwC the matters required to be discussed by Statement on Auditing Standards No. 61, Communication with Audit Committees, as amended. In addition, the Audit Committee has discussed with PwC, the auditors’ independence from Humana and its management including the matters in the written disclosures required by Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees.

During 2005, the Audit Committee met independently with the Director of Internal Audit, key members of management, and PwC regarding the Company’s business and current and planned audit activities. The Audit Committee, in consultation with management, Internal Audit, and PwC reviewed quarterly financial statements and earnings releases of the Company. The Audit Committee reviewed the annual financial statements of the Company. Audit Committee members individually reviewed monthly operating and financial information of the Company as well as internal audits of controls over operations, financial processes, and compliance with laws and regulations.

The Audit Committee reviewed and evaluated the relevant requirements of the Sarbanes-Oxley Act of 2002, the rules of the U.S. Securities and Exchange Commission and the listing standards of the New York Stock Exchange regarding audit committee procedures and responsibilities, including a review of the internal controls and procedures of the Company.

The Audit Committee reviewed and approved the services provided by PwC to Humana consisting of the following:

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The Audit Committee discussed with Humana’s internal auditors and with PwC the overall scope and plans for their respective audits. At each meeting, the Audit Committee is provided the opportunity to meet with the internal auditors and with PwC with and without management present.

The Audit Committee has established policies and procedures for pre-approving all audit, review and attest services that are required under the securities laws and all other permissible tax and non-audit services necessary to assure the auditor’s continued independence. The Audit Committee annually will pre-approve the following permissible non-audit services:

The Audit Committee separately will consider any proposed retention of the independent registered public accounting firm for permissible non-audit services other than those listed above.

In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors, and the Board has approved, that the audited financial statements be included in the Humana Annual Report on Form 10-K for the year ended December 31, 2005.

All members of the Audit Committee of Humana submit the foregoing report:

AUDIT COMMITTEE

Frank A. D’Amelio, Chairman

John R. Hall

Kurt J. Hilzinger

W. Ann Reynolds, Ph.D.

James O. Robbins

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PROPOSAL TWO: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors, in accordance with the recommendation of its Audit Committee, has appointed PricewaterhouseCoopers LLP (“PwC”) as the independent registered public accounting firm to audit the consolidated financial statements of the Company for the year ending December 31, 2006. In making this appointment, the Board considered the performance and independence of PwC, including whether any non-audit services performed by PwC are compatible with maintaining independence. The Audit Committee and Board of Directors believe that PwC has invaluable long-term knowledge of Humana. While preserving that knowledge, partners and employees of PwC engaged in audits of Humana are periodically changed, giving Humana access to new expertise, experience and perspectives. This year, we are asking our stockholders to ratify the appointment of PwC as our independent registered public accounting firm. Although ratification is not required by our Charter, Bylaws, Delaware law or otherwise, the Board is submitting the appointment of PwC to our stockholders for ratification because we value our stockholders’ views on our independent registered public accounting firm. If our stockholders fail to ratify the appointment, it will be considered as a non-binding recommendation to the Board and the Audit Committee to consider the appointment of a different firm for fiscal year 2007. Even if the appointment is ratified, the Board and the Audit Committee may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and our stockholders. Representatives of PwC will be present at the Annual Meeting and will be afforded the opportunity to make a statement if they desire to do so and to respond to appropriate questions.

Vote Required and Recommendation of Board of Directors. The affirmative vote of a majority of the shares present in person or represented by proxy and entitled to vote on the proposal is required for the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm. An abstention is treated as being present and entitled to vote on the matter and, therefore, has the effect of a vote against this proposal. The Company believes that pursuant to current NYSE regulations, brokers will have discretionary voting power over the ratification of the appointment of the Company’s independent registered public accounting firm. However, any broker non-votes will not be counted in the tabulation of the votes cast on this proposal but will be counted for purposes of establishing a quorum.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.

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ORGANIZATION & COMPENSATION COMMITTEE REPORT

Executive Officer Compensation Policy

The Organization & Compensation Committee (the “Committee”) administers the Company’s executive officer compensation program, the key components of which are base salary, incentive compensation and equity compensation (stock option and restricted stock awards). Each member of the Committee is an independent, non-employee director who has never been an employee of the Company.

The Company’s compensation program is intended to create competitive advantage through the stimulation of superior performance of human capital. Performance management at the Company focuses on building competencies required for the business, and on pursuing the highest level of contribution from each Humana associate. In general, the Company’s compensation program is intended to:

The executive officer compensation program rewards executive officers for short and long-term performance. In addition to base salary, executive officers are compensated on a performance-oriented basis through the use of incentive compensation linking both annual and longer-term results. The annual incentive bonus permits team and individual performance to be recognized and is based, in part, on an evaluation of the contribution made by the officer to Company performance. Equity compensation awards are included in the compensation program to reward executive officers for longer-term strategic actions that increase Company value and thus stockholder value. This use of equity compensation directly relates a significant portion of each executive officer’s long-term remuneration to the Company’s stock price, and thus aligns the executive’s compensation with the interests of the Company’s other stockholders. The granting of stock options, as well as the more limited use of restricted stock, is used to: (1) recognize promotions of executives into positions of significant responsibilities; (2) recognize significant accomplishments of executives, particularly as the accomplishments impact growth, profits and/or competitive positioning; and (3) as an additional incentive to attract and retain high level executive talent.

The executive officer compensation program is designed to allow the Company to be competitive in the marketplace in attracting, motivating and retaining key executive officers. The Committee considers the overall compensation package when setting any one component of compensation. The marketplace is defined as both publicly traded companies approximating the Company’s revenue and employee size, and specific companies in the health benefits industry. The Committee believes this definition of the marketplace provides a good benchmark for analyzing the competitiveness of the Company’s executive compensation program. While data from specific competitors is used in the compensation analysis, the Company uses a different comparator group – a health care index—in its Stock Performance graph.

The Committee periodically reviews the effectiveness and competitiveness of the Company’s executive compensation structure with the assistance of independent consultants. Consultants are engaged by, and report directly to, the Committee.

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Base Compensation

Base compensation for executive officers is determined by an assessment of overall Company performance, executive officer performance, changes in executive officer responsibilities and relevant industry survey findings. While many aspects of performance can be measured in financial terms, the Committee also evaluates senior management in areas of performance that are more subjective. These areas include the development and execution of strategic plans, the exercise of leadership in the development of management and other associates, innovation and improvement in the Company’s products and processes, as well as the executive’s involvement in industry groups and in the communities that the Company serves. The Company’s policy is to target executive base salaries at the market median, but ranging from the 25^th to the 75^th percentile of the marketplace as defined above, depending on level of competency and contribution of each executive. Individual salaries are generally established in alignment with this target to ensure the attraction, development and retention of superior talent, as well as in relation to individual executive performance.

Incentive Compensation

The Company’s incentive compensation plans are designed to reward officers and other designated key associates for the attainment of financial goals and other performance objectives approved annually by the Committee. Incentive compensation objectives are constructed to encourage responsible and profitable growth while taking into account non-routine factors that may be integral to the success of the Company. During 2005, the Company’s executive officers reporting directly to Mr. McCallister, including the Named Executive Officers, participated in the Humana Inc. 2003 Executive Management Incentive Compensation Plan that was approved by the Company’s stockholders. The Company’s other executive officers in 2005 participated in a plan, the metrics of which were reviewed by this Committee. For 2005, the Performance Target was based solely on the attainment of a pre-established Company earnings per share objective for Mr. McCallister and earnings per share, membership and measurable strategic objectives for the other Named Executive Officers. Maximum potential payment ranged from 150% to 175% of annual base earnings. The 2005 Performance Targets under the Plan for the Named Executive Officers were met or exceeded and the Named Executive Officers received payments ranging from 112% to 156% of annual base earnings.

See the “Summary Compensation Table” herein for the amounts paid to the Named Executive Officers.

Equity Compensation

The Company uses stock options and restricted stock awards to reward executive officers and other key associates for long-term performance and as a method to attract, motivate, and retain key employees. The use of equity-based compensation provides a vital link between the long-term results achieved for the Company’s stockholders and the rewards provided to executive officers and other associates.

All stock options are granted at the fair market value of the Company’s stock on the date of grant. The Committee, through review of stock programs and competitive practices at comparable companies, determines the aggregate amounts, terms and timing of stock option and restricted stock awards, with from time to time, the assistance of outside consultants. The number of shares covered by each award reflects the executive’s level of responsibility along with past and anticipated future contributions to the Company.

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In 2005, the Committee granted options totaling approximately 1.4% and restricted stock awards totaling approximately 0.3% of the Company’s outstanding common stock as of year-end to its associates. As reported in “2005 Stock Option Grants” all Named Executive Officers received stock options in 2005, but none received a restricted stock award.

See “Summary Compensation Table” for additional information on these equity awards.

Stock Ownership Guidelines

The Board believes that linking a significant amount of an executive’s current and potential future net worth to the Company’s success, as reflected in the stock price, gives the executive a stake similar to that of Humana’s stockholders and results in long-term management for the benefit of those stockholders.

Consistent with this philosophy, in 2005 the Board of Directors established stock ownership guidelines for the Company’s executive officers. Expressed as a multiple of base salary, minimum levels of Humana common stock ownership are:

Chief Executive Officer Compensation

In April 2005, Mr. McCallister’s salary was raised from Eight Hundred Fifty Thousand ($850,000) to Eight Hundred Sixty Thousand Five Hundred Dollars ($860,500) to reflect a change in a Company car allowance policy. A $10,500 car allowance previously offered to the Company’s executives was discontinued, but that amount was added to the base salaries of each of the Company’s executive officers, including each of the Named Executive Officers. In December 2005, the Committee approved an increase in Mr. McCallister’s base salary to Nine Hundred Thousand Dollars ($900,000) effective December 25, 2005.

As indicated above, Mr. McCallister participated in the Humana Inc. 2003 Executive Management Incentive Compensation Plan. Because his 2005 Earnings Per Share goal under this Plan was met, Mr. McCallister received One Million, Three Hundred Forty-Two Thousand, Eight Hundred Sixty-Eight Dollars ($1,342,868). The Committee believes Mr. McCallister’s base salary and bonus reflect the Company’s overall financial performance together with his achievements and the progress in furthering the Company’s operational initiatives. The Company has previously entered into an Employment Agreement with Mr. McCallister that is more fully described in this Proxy Statement under “Executive Compensation of the Company — Agreements with Directors and Officers.”

Executive Compensation Tax Deductibility

The Internal Revenue Code generally provides that compensation paid by publicly-held corporations to the Chief Executive Officer and the four other most highly paid executive officers in excess of one million dollars ($1,000,000) per year per executive will be deductible by the Company only if paid pursuant to qualifying performance-based compensation plans approved by stockholders of the Company. The Committee believes it has taken the necessary steps to qualify the Company’s performance-based compensation plans for tax deductibility. Compensation as defined by the Code includes, among other things, base salary, incentive compensation, and gains on stock options and restricted stock. It is the Committee’s policy to maximize the effectiveness of the Company’s executive compensation plans. In that regard, the

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Committee intends to maintain flexibility to take actions which it deems to be in the best interest of the Company and its stockholders. Such actions may not always qualify for tax deductibility under the Code. The Committee believes that all executive compensation paid for 2005 will be deductible for federal income tax purposes.

All members of the Organization & Compensation Committee of the Company whose names follow submit the foregoing report.

ORGANIZATION & COMPENSATION COMMITTEE

Kurt J. Hilzinger, Chairman

W. Roy Dunbar

John R. Hall

W. Ann Reynolds, Ph.D.

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The foregoing reports of the Audit Committee and the Organization & Compensation Committee shall not be deemed incorporated by reference by any general statement incorporating by reference the Proxy Statement into any filing under the Securities Act of 1933 or the Exchange Act, and shall not otherwise be deemed filed under such Acts except to the extent that the Company specifically incorporates this information by reference.

STOCK PERFORMANCE GRAPH

The following graph compares the performance of the Company’s common stock to the Standard & Poor’s Composite 500 Stock Index (“S&P 500”) and the Morgan Stanley Health Care Payer Index (“Peer Group”) for the five years ended December 31, 2005. The graph assumes an investment of $100 in each of the Company’s common stock, the S&P 500, and the Peer Group on December 31, 2000.

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EQUITY COMPENSATION PLAN INFORMATION

The Company maintains plans under which options to purchase our common stock and under which awards of restricted stock may be made to officers, directors, key employees and consultants. Options are granted at the average market price on the date of grant. Exercise provisions vary, but most options vest in whole or in part from one to three years from date of grant and expire seven to ten years after date of grant.

Information concerning stock option awards, and number of securities remaining available for future issuance under our equity compensation plans in effect as of December 31, 2005 follows:

Non-Qualified Stock Option Plan for Employees

On September 9, 1999, the Board of Directors adopted the Humana Inc. Stock Option Plan for Employees (the “1999 Plan”). The Board of Directors determined that no further awards would be made under the 1999 Plan as of December 31, 2002.

The 1999 Plan authorized the grant of non-qualified stock options to eligible employees of the Company or its Subsidiaries. Executive Officers and Directors were not eligible to participate in the 1999 Plan.

The 1999 Plan was intended to provide incentives and rewards for employees (i) to support the implementation of the Company’s business and human resource strategies and the achievement of its goals, and (ii) to align the interests of employees with those of the Company’s stockholders.

The 1999 Plan is administered by the Organization & Compensation Committee of the Company’s Board of Directors (“Committee”).

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The maximum number of Shares of common stock that could be awarded under the 1999 Plan was 1,700,000. The maximum number of shares that could be awarded to any individual was 15% of the shares of common stock authorized under the 1999 Plan.

Only non-qualified stock options could be granted under the 1999 Plan.

Generally, in the event of a Change in Control of the Company, as defined in the 1999 Plan, all outstanding stock options become fully vested and immediately exercisable in their entirety.

For federal income tax purposes, no income is recognized by a participant upon the grant of a non-qualified stock option under the 1999 Plan. Upon the exercise of an option, however, compensation taxable as ordinary income is realized by the participant in an amount equal to the excess of the fair market value of a share of the common stock on the date of such exercise over the exercise price. The taxable income resulting from the exercise of an option granted to an employee constitutes wages subject to the withholding of income taxes. Accordingly, the Company is required to make whatever arrangements are necessary to collect the amount of tax required to be withheld. The employee’s income as reported on the Form W-2 will include the stock option exercise.

The above description does not include the shares of Restricted Stock awarded in 2000 and thereafter. For information concerning these awards, see the “Summary Compensation Table” contained in this Proxy Statement and “Footnote 11 — Employee Benefit Plans” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2005.

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PROPOSAL THREE: APPROVE THE AMENDED AND RESTATED 2003

STOCK INCENTIVE PLAN

In 2003, the Board adopted, and the stockholders subsequently approved, the 2003 Stock Incentive Plan (the “Stock Plan”). The Stock Plan provides for the award of long-term incentives to directors, executive officers and other employees who make substantial contributions to the growth of the Company. The Stock Plan enables the Company to grant stock options and stock appreciation rights and to make grants of restricted stock, performance awards, restricted stock units and other stock-based and cash-based grants and awards (collectively the “Awards”). As originally approved, 8,000,000 shares, $0.16 ²/3 per share par value of the Company’s common stock (the “Shares”) were available for issuance under the Stock Plan. As of March 6, 2006, 1,313,703 Shares remain available for issuance under the Stock Plan. The Board, upon recommendation of the Organization & Compensation Committee (“the Committee”), has approved a restatement of the Stock Plan which, among other things, increases the aggregate number of Shares authorized for issuance by 11,000,000 Shares, subject to stockholder approval so that the total Shares available for issuance under the restated Stock Plan would be 19,000,000 and made certain other revisions to the Stock Plan. The restated Stock Plan will implement the so-called “fungible share approach” – which would count Options and Stock Appreciation Rights as 1 share equivalent against the total number of Shares authorized for issuance, and full value awards such as restricted stock awards as 1.7 share equivalents against the number of Shares available for issuance.

The restated Stock Plan includes certain other revisions that are administrative in character and do not require stockholder approval under NYSE rules. One such revision is the replacement of the phrase “Phantom Stock”, and all incidental references thereto, with the phrase “Restricted Stock Units” which are the same benefits under the restated Stock Plan. There are other revisions to the restated Stock Plan which are clerical or purely administrative in nature.

The provisions of the restated Stock Plan, and all actions and transactions under and pursuant to it, are intended to comply with all applicable conditions of rules promulgated under Section 16 of the Exchange Act, or its successors, with respect to reporting persons, including the Company’s executive officers. The aggregate number of Shares that may be issued or reserved for issuance pursuant to the restated Stock Plan may consist, in whole or in part, of authorized but unissued Shares or Shares reacquired by the Company (and not reserved for any other purpose). The restated Stock Plan contains antidilution provisions, allowing for adjustments in the number of Shares in case of stock dividends and other changes in the Company’s capital structure. No grants or awards of Shares may be made under the restated Stock Plan after May 14, 2013.

The Board of Directors believes that their actions described below together with the restated Stock Plan provisions are consistent with the interests of stockholders and with sound corporate governance practices. These actions and provisions include:

No Stock Option or Repricings:    The restated Stock Plan prohibits the repricing of stock options and Stock Appreciation Rights without the approval of stockholders. This provision applies to both direct repricings—lowering the exercise price of a stock option—and indirect repricings—canceling an outstanding stock option and granting a replacement stock option with a lower exercise price or any other Award or cash payment.

Limitation on Shares Issued Other than for Stock Options and Stock Appreciation Rights:    Any Shares granted, after the date of the amendment, as Options or Stock Appreciation Rights shall be counted against the number of Shares available under the restated

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Stock Plan as one Share for every one Share granted. Any Shares granted as Awards other than Options or Stock Appreciation Rights shall be counted against the number of Shares available under the restated Stock Plan as 1.7 Shares for every 1 Share granted.

Limitation on Individual Awards:    During the term of the restated Stock Plan, no single Participant may receive Awards (other than Performance Units denominated in dollars) covering more than 20% of the Shares available for issuance under the restated Stock Plan. The maximum dollar amount of Performance Units denominated in dollars which may be paid in any calendar year to any individual is limited to three million dollars ($3,000,000) for the Chief Executive Officer and one million five hundred thousand dollars ($1,500,000) for any other Participant.

No annual “Evergreen” Provision:    The restated Stock Plan provides for a fixed number of Shares, and requires stockholder approval of any additional allocation of Shares.

No Discount Stock Options:    The restated Stock Plan prohibits the grant of a stock option with an exercise price of less than the fair market value of a Share on the date the stock option is granted.

Independent Organization & Compensation Committee:    The restated Stock Plan will be governed by a committee consisting of “outside directors” within the meaning of Section 162(m) of the Internal Revenue Code and meeting the NYSE standards for director independence.

At March 6, 2006, there were 10,018,048 options outstanding at an average exercise price of $22.77, with an average remaining contractual life of 5.92 years, and 1,313,703 Shares were available for future grants. On March 6, 2006, there were 164,376,634 Shares issued and outstanding. The average price per Share on March 6, 2006 was $50.27.

The principal provisions of the restated Stock Plan are summarized below. This summary, however, does not purport to be complete and is qualified in its entirety by reference to the provisions of the restated Stock Plan, a copy of which is attached hereto as Appendix A. Terms not defined herein shall have the same meaning as set forth in the restated Stock Plan. While the proposed amendment to the restated Stock Plan to authorize more Shares as described herein is submitted for stockholder approval, there are other amendments, administrative in character, which do not require stockholder approval.

Purpose:    The restated Stock Plan is intended to strengthen the Company by providing incentives and rewards for Participants thereby encouraging them to devote their abilities to the success of the Company, thus enhancing the value of the Company for the benefit of stockholders. It is also intended to enhance the ability of the Company to attract and retain individuals of exceptional talent upon whom, in large measure, the sustained progress, growth and profitability of the Company depend.

Administration:    The restated Stock Plan will be administered by the Committee with each member being a “non-employee director” under Rule 16b-3 of the Securities Exchange Act of 1934, as amended, and an “outside” director within the meaning of Section 162(m) of the Internal Revenue Code as amended (the “Code”). All of the members of the Committee meet the NYSE and SEC standards for director independence.

In administering the restated Stock Plan, the Committee will determine, among other things: (i) the individuals to whom grants or Awards will be made; (ii) the type and size of

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Awards; and (iii) the terms of an Award including, but not limited to, vesting schedule, grant price, restriction or performance criteria, and length of relevant performance, restriction or option periods.

The Committee may delegate to one or more directors, or one or more executive officers, the power to grant and administer awards under the restated Stock Plan to Participants who are not executive officers. The Committee may also construe, interpret and correct defects, omissions and inconsistencies in the restated Stock Plan.

Participation:    The Committee may grant Awards under the restated Stock Plan to any director, officer, employee or consultant of the Company (“Eligible Individual”). In practice, annual Awards are made to a group of approximately 500—800 management employees. Outside directors currently receive annual awards as described in this Proxy Statement under “Director Compensation.”

New Plan Benefits:    As described above, the selection of the Eligible Individuals who will receive Awards under the restated Stock Plan, if approved by stockholders, and the size and type of Awards is to be determined by the Committee in its discretion.

No amounts have been granted or awarded from the additional 11,000,000 Shares authorized under the restated Stock Plan, and no Awards in respect of such Shares are determinable at this time.

Shares of Company Stock Available for Issuance:    The restated Stock Plan authorizes the issuance of up to Nineteen Million (19,000,000) Shares.

The stock subject to the provisions of the restated Stock Plan shall be authorized but unissued Shares or treasury shares. If any Shares subject to any Award under the restated Stock Plan are forfeited or the Award otherwise terminates without the issuance of such Shares, those Shares will again be available for grant under the restated Stock Plan.

Pursuant to the restated Stock Plan, the number and kind of Shares to which Awards are subject may be appropriately adjusted in the event of certain changes in capitalization of the Company, including stock dividends and splits, reclassification, recapitalization, reorganizations, mergers, consolidations, spin-offs, split-ups, combinations or exchanges of Shares.

Options and Stock Appreciation Rights:    Options to purchase Shares may be granted under the restated Stock Plan, either alone or in addition to other Awards and for no consideration or for such consideration as the Committee may determine or as may be required by applicable law. A stock option may be granted in the form of an incentive stock option or a non-qualified stock option.

The price at which a Share may be purchased under an Option will be determined by the Committee, but may not be less than the fair market value of a Share on the date the Option is granted. Fair market value means the average of the highest and lowest sale price of Humana Inc. common stock reported on the NYSE on the relevant date of determination.

The restated Stock Plan permits the Committee to establish the term of each option, but generally no option will be exercisable after ten years from the grant date of the option. Options will be exercisable at such time or times as determined by the Committee.

The amount of incentive stock options vesting in a particular year cannot exceed the maximum amount permitted under Section 422 of the Code, determined using the aggregate

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fair market value of a Share on the date of grant. Additionally, the aggregate number of Shares which can be awarded as incentive stock options is limited to fifty percent (50%) of the total Shares available for issuance under the restated Stock Plan.

In its sole discretion, the Committee may provide, at the time of grant, that the Shares to be issued upon an Option’s exercise will be in the form of Restricted Stock or other similar securities.

Stock Appreciation Rights entitle a Participant to receive upon exercise an amount equal to the number of Shares subject to the Award multiplied by the excess of the fair market value of a Share at the time of exercise over the exercise price which may not be less than the fair market value on the grant date. Stock Appreciation Rights may be paid in cash, Shares, other property or any combination thereof, in the sole discretion of the Committee. Stock Appreciation Rights may be granted to Participants either alone or in addition to other awards and may relate to a specific option. Any Stock Appreciation Rights related to an Option other than an incentive stock option may be granted at the same time the Option is granted or at any time thereafter before exercise or expiration of the option. Any Stock Appreciation Rights related to an incentive stock option must be granted at the same time the option is granted.

A Stock Appreciation Right related to an Option, or the applicable portion thereof, will terminate and no longer be exercisable upon the termination or exercise of the related Option. Any Option related to a Stock Appreciation Right that is exercised will cease to be exercisable to the extent the related Stock Appreciation Right has been exercised.

Restricted Stock:    Restricted Stock awards may, subject to the limitations of the restated Stock Plan, be issued to Participants, either alone or in addition to other Awards granted under the restated Stock Plan. Restricted shares are Shares that are subject to restrictions on transfer or other incidents of ownership. The restrictions may lapse based solely on continued employment or service with the Company for specified periods or based on the attainment of specified performance criteria.

Performance Awards:    Performance-based awards may be issued to Participants, either alone or in addition to other Awards granted under the restated Stock Plan. The performance criteria to be achieved during a performance period and the length of such performance period will be determined by the Committee. Performance-based awards may be in the form of performance units (each representing a Share or a specific dollar award) or performance shares.

With certain exceptions, the settlement of performance awards will be made only after the end of the relevant performance period. Performance Units may be settled in cash, Shares or any combination thereof, in the sole discretion of the Committee at the time of payment.

Performance Objectives:    The performance criteria established by the Committee will be based on the following objectives: (i) earnings per Share; (ii) Share price; (iii) consolidated net income; (iv) pre-tax profits; (v) earnings or net earnings; (vi) return on equity or assets; (vii) sales; (viii) cash flows from operating activities; (ix) return on invested capital; (x) membership; (xi) other Company-specific growth or profit objectives as determined by the Committee; or (xii) any combination of the foregoing.

These Performance Objectives may be established in respect to the performance of the Company, any of its subsidiaries, any of its divisions or any combinations thereof.

To preserve the intended incentives and benefits of an Award based on Performance Objectives, the Committee may determine at the time Performance Objectives are established

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that certain adjustments shall apply to the objective formula or standard with respect to the applicable Performance Objective to take into account, in whole or in part, in any manner specified by the Committee, any one or more of the following: (i) the gain, loss, income or expense resulting from changes in accounting principles that become effective during the Performance Period; (ii) the gain, loss, income or expense reported publicly by the Company with respect to the Performance Period that are extraordinary or unusual in nature or infrequent in occurrence; (iii) the gains or losses resulting from, and the direct expenses incurred in connection with the disposition of a business, or the sale of investments or non-core assets; (iv) the gain or loss from all or certain claims and/or litigation and all or certain insurance recoveries relating to claims or litigation; (v) the impact of impairment of tangible or intangible assets including goodwill; (vi) the impact of restructuring or business recharacterization activities, including but not limited to reductions in force, that are reported publicly by the Company; or (vii) the impact of investments or acquisitions made during the year, or to the extent provided by the Committee, any prior year. Each of the adjustments described in this Section may relate to the Company as a whole or any part of the Company’s business operations. The adjustments are to be determined in accordance with generally accepted accounting principles and standards, unless the Committee designates another objective method of measurement.

In addition to the foregoing, the Committee shall adjust any Performance Objectives or other features of an Award that relate to or are wholly or partially based on the number of, or the value of, any stock of the Company, to reflect any stock dividend or split, recapitalization, combination or exchange of Shares or other similar changes in such stock.

Restricted Stock Units:    The restated Stock Plan provides for the grant of common stock-equivalents referred to as Restricted Stock Units, which may be settled in cash or Shares. The Restricted Stock Units are intended to be substantially similar to Restricted Stock Awards with the exception that no Shares are issued at the time of the grant of the Award. Any Shares issuable in settlement of any Restricted Stock Units will be issued only upon the vesting of the Restricted Stock Units.

Termination, Death or Disability:    If a Participant is terminated for Cause, all rights of such Participant under any outstanding Award shall terminate.

Except as otherwise determined by the Committee, if a Participant is terminated for any reason other than for Cause, Retirement, death or Disability, any outstanding Option and Stock Appreciation Right shall be exercisable by such Participant at any time prior to the expiration date of the Option or Stock Appreciation Right or within ninety days after the date of such termination, whichever is the shorter period, but only to the extent the Option or Stock Appreciation Right was exercisable at the time of termination.

Except as otherwise determined by the Committee, upon termination of employment for any reason, other than, death or Disability, any portion of a Restricted Stock Award, Restricted Stock Unit Award, or other Performance Award still subject to restriction will be forfeited by the Participant and reacquired by the Company.

Except as otherwise determined by the Committee, upon a Participant’s Retirement, any outstanding Options or Stock Appreciation Rights shall be exercisable by such Participant at any time prior to the expiration date of the Option or Stock Appreciation Right or within two (2) years after the date of such Retirement, whichever is the shorter period, but only to the extent the Option or Stock Appreciation Right was exercisable at the date of such Retirement.

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Except as otherwise determined by the Committee, upon death or Disability, all outstanding Options and Stock Appreciation Rights of such Participant then outstanding shall become immediately exercisable in full and shall remain exercisable for two (2) years after the date of death regardless of the expiration of the Option or Stock Appreciation Right, except for Incentive Stock Options which may not be exercised later than the expiration date of the Options. Except as otherwise determined by the Committee, upon death or Disability, all restrictions or performance criteria applicable to any Shares of Restricted Stock or Performance Awards shall immediately lapse.

Change in Control:    Unless otherwise provided in an Award Agreement, in the event of a Change in Control of the Company, all outstanding Options and Stock Appreciation Rights become fully vested and immediately exercisable in their entirety, and, to the extent set forth in a Participant’s agreement, the Participant will be permitted, during the 60-day period following the Change in Control, to surrender for cancellation any Option or Stock Appreciation Rights (or portion thereof) for a cash payment in respect of each Share covered by the Option or Stock Appreciation Rights or portion thereof surrendered. The payment would generally be equal to the excess, if any, of the greater of (1) the fair market value of a Share on the date of surrender or (2) the Fair Market Value as Adjusted of a Share over the per Share exercise price under the Option.

Additionally, unless otherwise provided in an Award Agreement, in the event of a Change in Control of the Company, all other types of Awards, including Restricted Stock and Performance Awards, will become fully and immediately exercisable, and all restrictions shall lapse and all Performance Objectives will be deemed to have been met at the maximum level.

Effective Date, Term, Amendment and Termination:    If approved by stockholders, the restated Stock Plan, as amended, will become effective as of the date of such approval (April 27, 2006) and will remain in effect until the earlier of (a) the date that no additional Shares are available for issuance, (b) the date the restated Stock Plan is terminated by the Board of Directors in accordance with its terms, or (c) ten years from its original effective date (May 14, 2013). Termination will not affect grants and awards then outstanding under the restated Stock Plan.

The Board of Directors may terminate or amend the restated Stock Plan at any time without stockholder approval, unless such approval is mandated by the restated Stock Plan or necessary to comply with the Exchange Act, the Code or other applicable law. In any event, stockholder approval will be required to, among other things, (i) increase the maximum number of Shares issuable under the restated Stock Plan, (ii) reprice or replace Options by reducing the exercise price, or (iii) change the individuals or class of individuals eligible to participate in the restated Stock Plan.

No amendment may impair the rights of a Participant with respect to outstanding Awards without the Participant’s consent.

Federal Income Tax Consequences:    Options.    The Company believes that under present law, the following are the U.S. federal income tax consequences generally arising with respect to Stock Options. The grant of an Option will create no tax consequences for a Participant or the Company. A Participant will have no taxable income upon exercising an incentive stock option after the applicable incentive stock option holding periods have been satisfied (except that the alternative minimum tax may apply), and the Company will receive no deduction when an incentive stock option is exercised. Upon exercising an Option other than an incentive stock option, a Participant must recognize ordinary income equal to the difference

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between the fair market value of the Shares on the date of exercise and the exercise price. Subject to any deduction limitation under Section 162(m) or 280G of the Internal Revenue Code, the Company will be entitled to a deduction for the same amount. The treatment to a Participant of a disposition of Shares acquired through the exercise of an Option depends on how long the Shares were held and on whether the Shares were acquired by exercising an incentive stock option or by exercising an Option other than an incentive stock option. Generally, there will be no tax consequence to the Company in connection with a disposition of Shares acquired under an Option, except that the Company may be entitled to a deduction in the case of a disposition of Shares acquired under an incentive stock option before the applicable incentive stock option holding periods have been satisfied.

Stock Appreciation Rights.    The amount of any cash (or the fair market value of any Shares) received upon the exercise of a Stock Appreciation Right under the restated Stock Plan will be includable in a Participant’s ordinary income. Subject to any deduction limitation under Section 162(m) or 280G of the Internal Revenue Code, the Company will be entitled to a deduction equal to the amount of such ordinary income recognized by the Participant.

Restricted Stock.    A Participant generally will not recognize taxable income upon the grant of Restricted Stock, and the recognition of any income will be postponed until such Shares are no longer subject to the restrictions or the risk of forfeiture. When either the restrictions or the risk of forfeiture lapses, the Participant will recognize ordinary income equal to the fair market value of the restricted stock at the time that such restrictions lapse less any amount paid by the Participant for the restricted stock. Subject to any deduction limitation under Section 162(m) or 280G of the Internal Revenue Code, the Company will be entitled to a deduction equal to the amount included in the Participant’s gross income.

A Participant may elect to be taxed at the time of the grant of Restricted Stock (rather than being taxed at the time that the respective restrictions lapse) and, if this election is made no later than 30 days after the date of grant, the Participant will recognize ordinary income equal to the excess of the fair market value of the restricted stock at the time of grant determined without regard to any of the restrictions thereon over the amount paid, if any, by the Participant for such Shares. The Company would be entitled to a correlative deduction.

Performance Units and Shares.    Generally, a Participant will not recognize any taxable income upon the award of performance units. At the end of the applicable performance period, an amount equal to the amount of cash or the fair market value of the common stock or other property received will be recognized as ordinary income by the Participant, and, subject to the deduction limitation under Section 162(m) or 280G of the Internal Revenue Code, the Company will be entitled to a deduction at such time equal to the amount recognized by the Participant.

No taxable income will generally be recognized by a Participant upon being awarded performance Shares. Upon delivery of the common stock at the end of the applicable performance period free of all restrictions, the Participant will recognize ordinary income equal to the fair market value of the stock received. Alternatively, the Participant may elect to be taxed at the time of the grant of the Performance Shares or Restricted Stock, as described above. The Company will be entitled to a deduction equal to the amount recognized by the Participant at the time such amount is recognized by the Participant, subject to the deduction limitation under Section 162 (m) or 280G of the Internal Revenue Code.

Restricted Stock Units.    A Participant who is granted a Restricted Stock Unit is not required to recognize any taxable income at the time of grant. Upon distribution of Shares in respect of a Restricted Stock Unit, the fair market value of those Shares will be taxable to the Participant as

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ordinary income and the Company will receive a deduction equal to the income recognized by the Participant. Any subsequent disposition by the Participant of Shares acquired pursuant to Restricted Stock Units will result in capital gain or loss (based on the difference between the price received on disposition of the Shares and the market value of the Shares at the time of distribution).

Section 162(m) Limit.    The restated Stock Plan is designed to enable Humana to provide certain forms of performance-based compensation to executive officers that will meet the requirements for tax deductibility under Section 162(m) of the Internal Revenue Code. Section 162(m) of the Internal Revenue Code provides that, subject to certain exceptions, Humana may not deduct compensation paid to any one of certain executive officers in excess of $1 million for any one fiscal year. Section 162(m) excludes performance-based compensation meeting certain requirements from the $1 million limitation on tax deductibility. If the restated Stock Plan is approved by stockholders, the Company expects that all Stock Options, Stock Appreciation Rights and Performance Awards paid in accordance with the Stock Plan will be deductible as performance based compensation not subject to the $1 million limitation on deductibility.

If the restated Stock Plan is approved by the stockholders, the Company intends to register the Shares that could be awarded under the restated Stock Plan as soon as practicable after such approval.

Vote Required and Recommendation of Board of Directors. The affirmative vote of a majority of the shares present in person or represented by proxy and entitled to vote on the proposal is required for the approval of the Amended and Restated 2003 Stock Incentive Plan. On this proposal, abstentions will be included as negative votes in the tabulation of the votes cast by stockholders. Broker non-votes will not be counted in the tabulation of the votes cast on the proposal but will be counted for purposes of establishing a quorum.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDED AND RESTATED 2003 STOCK INCENTIVE PLAN TO AUTHORIZE, AMONG OTHER THINGS, ADDITIONAL SHARES.

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ADDITIONAL INFORMATION

Our Annual Report on Form 10-K for the year ended December 31, 2005, excluding certain of its exhibits, is included with the mailing of this Proxy Statement. The Company will provide a copy without charge to anyone who makes a written request to Humana Inc., Investor Relations Department, 500 West Main Street, Louisville, KY 40202. The Company’s Annual Report on Form 10-K and all other filings with the SEC may also be accessed via the Investor Relations page on the Company’s web site at www.humana.com. From the www.humana.com web page, click on “Investor Relations,” then click on “Financial Reports & Press Releases”, and then select from the various SEC filings available for display there.

By Order of the Board of Directors,

Joan O. Lenahan, Vice President &

Corporate Secretary

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APPENDIX A

HUMANA INC.

AMENDED AND RESTATED

2003 STOCK INCENTIVE PLAN

SECTION 1.1 PURPOSE. The purpose of the Humana Inc. 2003 Stock Incentive Plan (the “Plan”) is to strengthen Humana Inc., a Delaware corporation (the “Company”), by providing an incentive to its and its Subsidiaries’ employees, officers, consultants and directors and thereby encouraging them to devote their abilities to the success of the Company and its Subsidiaries, thus enhancing the value of the Company for the benefit of its stockholders. It is also intended to enhance the ability of the Company and its Subsidiaries to attract and retain individuals of exceptional talent upon whom, in large measure, the sustained progress, growth and profitability of the Company depend.

SECTION 1.2 ESTABLISHMENT AND TERM OF THE PLAN. The Company establishes the Plan effective as of May 15, 2003, the Plan having been approved by the Company’s stockholders on that date. The Plan shall remain in effect until the earliest of: (i) the date that no additional Shares are available for issuance under the Plan, (ii) the date that the Plan has been terminated in accordance with Section 13 or (iii) the day preceding the tenth anniversary of the date of its adoption. Upon the termination or expiration of the Plan as provided in this Section 1.2, no Award shall be granted pursuant to the Plan, but any Award granted prior thereto may extend beyond such termination or expiration.

SECTION 2. DEFINITIONS. As used in the Plan, the following terms shall have the meanings set forth below:

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Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any Person (the “Subject Person”) acquired Beneficial Ownership of more than the permitted amount of the then outstanding Voting Securities as a result of the acquisition of Voting Securities by the Company which, by reducing the number of Voting Securities then outstanding, increases the proportional number of Shares Beneficially Owned by the Subject Persons, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of Voting Securities by the Company, and after such share acquisition by the Company, the Subject Person becomes the Beneficial Owner of any additional Voting Securities which increases the percentage of the then outstanding Voting Securities Beneficially Owned by the Subject Person, then a Change in Control shall occur.