10-K

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

FORM 10-K

/x/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

Commission file number: 1-10864

UNITEDHEALTH GROUP INCORPORATED*
(Exact name of registrant as specified in its charter)

MINNESOTA (State or other jurisdiction of incorporation or organization)	41-1321939 (I.R.S. Employer Identification No.)
UNITEDHEALTH GROUP CENTER 9900 BREN ROAD EAST MINNETONKA, MINNESOTA (Address of principal executive offices)	55343 (Zip Code)

Registrant's telephone number, including area code: (952) 936-1300

Securities registered pursuant to Section 12(b) of the Act:

COMMON STOCK, $.01 PAR VALUE
(Title of each class) NEW YORK STOCK EXCHANGE, INC.
(Name of each exchange on which registered)

Securities registered pursuant to Section 12(g) of the Act: NONE

    Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES /x/  NO / /

    Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. / /

    The aggregate market value of voting stock held by non-affiliates of the registrant as of February 29, 2000, was approximately $8,348,152,221 (based on the last reported sale price of $51.125 per share on February 29, 2000, on the New York Stock Exchange).**

    As of February 29, 2000, 163,289,041 shares of the registrant's Common Stock, $.01 par value per share, were issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

    Annual Report to Shareholders of Registrant for the fiscal year ended December 31, 1999. Certain information therein is incorporated by reference into Part II hereof.

    Proxy Statement for the Annual Meeting of Shareholders of Registrant to be held on May 10, 2000. Certain information therein is incorporated by reference into Part III hereof.

 *Formerly known as United HealthCare Corporation

**Only shares of common stock held beneficially by directors and executive officers of the Company and persons or entities holding more than 10% of the common stock filing Schedules 13G received by the Company have been excluded in determining this number.

PART I

ITEM 1. BUSINESS

INTRODUCTION

    UnitedHealth Group Incorporated is a national leader in forming and operating markets for the exchange of health and well-being services. In our five primary businesses, we provide a broad spectrum of resources to help people improve their health and well-being through all stages of life.

    Our Health Care Services segment consists of our UnitedHealthcare and Ovations businesses. UnitedHealthcare coordinates network-based health and well-being services on behalf of local employers and consumers nationwide in six broad regional markets. Ovations is a business dedicated to advancing the health and well-being goals of Americans in the second half of life, age 50 and older.

    Our Uniprise business is devoted to serving the needs of large organizations. Its services include network-based health and well-being services, business-to-business transactional infrastructure services and consumer connectivity, and technology support services.

    Our Specialized Care Services business is an expanding portfolio of health and well-being companies, each serving a specialized market need with a unique blend of benefits, provider networks, services and resources. These specialty businesses offer products that address consumers' needs for mental health and chemical dependency services, employee assistance, organ transplants, vision and dental services, health related information and other health and well-being services.

    Our Ingenix business is a leader in the field of health care data and information, analysis and application. Ingenix serves multiple health care market segments on a business-to-business basis, including pharmaceutical companies, health insurers and other payers, care providers, large employers and governments.

    While separate, our businesses remain interrelated as part of our health and well-being enterprise. Our businesses share customers, and in some instances, use common information systems and have access to shared administrative services.

    UnitedHealth Group Incorporated, formerly known as United HealthCare Corporation, is a Minnesota corporation, incorporated in January 1977. The terms "we," "our" or the "Company" refer to UnitedHealth Group Incorporated and its subsidiaries. Our executive offices are located at UnitedHealth Group Center, 9900 Bren Road East, Minnetonka, Minnesota 55343; telephone (952) 936-1300.

HEALTH CARE SERVICES

    Our Health Care Services segment consists of the UnitedHealthcare and Ovations businesses.

    UnitedHealthcare.  UnitedHealthcare coordinates network-based health and well-being services on behalf of local employers and consumers nationwide in six broad regional U.S. markets. UnitedHealthcare provides commercial, Medicare and Medicaid products. The commercial product is marketed to middle and small market businesses serving employers and other groups with less than 5,000 individuals. As of December 31, 1999, this business served approximately 6.9 million individuals. UnitedHealthcare also serves approximately 437,000 Medicare and 479,000 Medicaid eligible individuals. In some cases, UnitedHealthcare assumes the risk of both medical and administrative costs for its members in return for premium revenue. It accomplishes this through subsidiaries that are usually licensed as health maintenance organizations ("HMOs"), preferred provider organizations ("PPOs") or insurers, depending upon state regulations. It also provides administrative and other management services to health plans and self-funded customers for which UnitedHealthcare receives a fee, as it does not assume the risk of health care costs.

    UnitedHealthcare arranges access to care through more than 340,000 network physicians and 3,200 network hospitals across the United States. The consolidated purchasing power represented by the individuals we serve makes it possible for us to contract for cost-effective access to broad, convenient networks of care providers.

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    UnitedHealthcare believes that its history of innovation distinguishes its product offerings from the competition. We design consumer-oriented health benefits and services that value individual choice and control in accessing health care. With our comprehensive Care Coordination philosophy, one of our goals is to make it easier for people to get the care they need, when they need it. We have programs that provide health education; admission counseling before hospital stays; care advocacy to help avoid delays in patients' stays in the hospital; assistance with a safe transition from the hospital; support for individuals at risk of needing intensive treatment; continuous coordination for people with chronic conditions; and pharmacy management, which promotes safe use of medications. We want consumers to be engaged and active participants in managing their own health and well-being. For example, UnitedHealthcare's multi-layered pharmacy benefit program provides access to a wide range of generic and brand-name drugs. Individuals who choose to use generic drugs pay less, while those who prefer to use brand-name drugs pay more. In addition, UnitedHealthcare was the first company to offer open access, which allows individuals to schedule appointments directly with specialists without a referral from a primary care physician. Further, an enriched Web site puts in-depth information at consumers' fingertips: a directory of network physicians and hospitals, reports on thousands of health topics, and soon, a health profile tailored to individual interests. In totality, UnitedHealthcare's efforts to help improve quality of care are key in helping keep health care costs affordable.

    Ovations.  Ovations is a business dedicated to advancing the health and well-being goals of Americans in the second half of life, age 50 and older. Ovations is one of the few companies fully dedicated to this market segment. As a part of this business, in January, 1998, Ovations began a 10-year partnership with the American Association of Retired Persons ("AARP"), providing Medicare Supplement and Hospital Indemnity insurance to more than 3.7 million AARP members. Recently, Ovations introduced AARP Eye Health Services to offer affordable eye exams, complimentary glaucoma screenings and discounts on eyewear. Ovations' Medicare Supplement Pharmacy Service addresses one of the most significant cost problems facing older Americans—prescription drug costs. This service saved AARP members nearly $60 million in 1999. Ovations also developed a valuable offering with lower cost Medicare supplement coverage that provides a hospital network and 24-hour access to health care information from nurses. Finally, Ovations Knowledge Group provides useful information for making health and lifestyle decisions. The Ovations Press is developing books designed to improve understanding of complex issues, such as financial planning; caring for your heart; Alzheimer's disease; and wills, trusts and estate planning.

    Ovations' EverCare® unit provides a broad spectrum of health care services to the frail elderly. EverCare has innovative programs to detect and treat common conditions—such as pneumonia and other infections, congestive heart failure, hip fractures and medication side effects—which are among the top reasons for hospital admissions among elderly individuals. These services are provided to residents living in long-term care settings, primarily through nurse practitioners. EverCare is available in ten markets in eight states, and we anticipate adding additional markets and testing new service offerings.

UNIPRISE

    Uniprise is a business devoted to serving the needs of large organizations. We offer consumers access to the full spectrum of health and well-being products and services, available anywhere in the marketplace, through one efficient and unified source. Our core competencies are in health care, large volume transaction management, large-scale benefit design and administration for large organizations, and innovative technology solutions designed to transform complex administrative processes into efficient, high quality computer processes. We design and market leading-edge health and well-being services for large organizations, enabling these organizations to offer custom health benefit programs to their employees. Uniprise is the business through which large employers can access not only our services, but also all of UnitedHealth Group's network-based medical, insurance and specialty services, with a large variety of funding arrangements. As of December 31, 1999, we managed 240 client relationships, representing approximately 6 million individuals, including more than one-fourth of the Fortune 500 companies.

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    Uniprise also offers human resources and benefit administration outsourcing services to large organizations. We provide large organizations with the services formerly provided by the organization's in-house human resources departments, including but not limited to call center services, enrollment services, and defined benefit and contribution plan support services. Uniprise also provides claim and customer services and technological solutions for six non-UnitedHealthcare health plans. We presently provide such services for more than 1.5 million individuals. We expect growth in both of these segments of our business.

SPECIALIZED CARE SERVICES

    Specialized Care Services is a portfolio of specialized health and well-being companies, each serving a specific market need with a unique blend of benefits, provider networks, services and resources. We are uniquely positioned to provide comprehensive offerings that are focused on highly specialized health care needs. These offerings are sold to and through other UnitedHealth Group businesses as well as to unrelated entities, including HMOs, PPOs, insurers, reinsurers, third-party administrators, labor unions, employers and state and federal governmental customers. We are generally compensated on an administrative service fee basis although for certain managed behavioral health, dental and stop loss products we assume risk for health care expenses.

    Through United Behavioral Health ("UBH") and its affiliated companies, we provide behavioral health care management services, employee assistance programs and psychiatric disability management services. UBH's care management staff and extensive network of contracted mental health professionals represent the core of its product offerings. UBH's services and products reach almost 15 million individuals.

    Optum® provides health information assistance, support and related services all designed to improve the health and well-being of the approximately 16 million individuals it serves. Through multiple access points, including the Internet, telephone, audio tapes, print and in-person consultations, we help consumers address daily living concerns, make informed health care decisions and become more effective health care consumers.

    With the June 1999 acquisition of Dental Benefit Providers ("DBP"), we have expanded our product portfolio to include management services for dental care benefits. Through an extensive network of contracted dental providers, DBP and its affiliates manage dental benefit offerings for over 90 customers covering more than 2 million individuals in 33 states and the District of Columbia. This business is sold on both an insured and an administrative fee basis. DBP's products are distributed primarily through HMOs and insurers to commercial, Medicare and Medicaid populations. DBP has begun to offer its products and services to and through UnitedHealth Group affiliates and has expanded its offering of both network based and indemnity dental care plan designs.

    United Resource Networks is the gateway to leading critical care and chronic care programs at more than 50 of the most widely recognized medical centers in the United States. United Resource Networks negotiates fixed, competitive rates for high-cost, low-frequency health care services. Access to United Resource Networks' programs and services is available to over 1,400 payers representing 43 million individuals.

    Acquired in December 1999, National Benefit Resources ("NBR") is a managing general underwriter that originates and administers medical stop loss insurance provided to employers who offer self-funded employee benefit plans. NBR markets stop loss coverage primarily through 300 third party administrators located in 44 states. We expect to distribute the products and services of Specialized Care Services businesses to NBR's customer base.

    Coordinated Vision Care ("CVC") represents Specialized Care Services' platform for entry into the vision care market. Founded in August 1998, CVC has developed a business model that will enhance the value of existing vision benefits through coordinating the delivery of vision care services and ophthalmic materials. CVC's immediate focus is to manage vision benefits for UnitedHealthcare members, but plans

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to market its services to other UnitedHealth Group businesses and unaffiliated managed health care organizations in the future. UnitedHealth Group holds a controlling interest in CVC.

    Unimerica Life and Accident is a single convenient source for life and accident benefits that align with other health and specialty coverage and benefits.

INGENIX

    Our Ingenix business is a leader in the field of health care data and information, analysis and application. Ingenix serves multiple health care market segments on a business-to-business basis, including pharmaceutical companies, health insurers and other payers, care providers, large employers and governments. Early in 2000, Ingenix was realigned into two primary operating divisions: Ingenix Health Information and Ingenix International.

    Ingenix Health Information offers three broad types of services: consulting, publishing and software data and services. Our consulting services focus on actuarial and financial matters, product development, provider contracting and medical policy and management. We publish print and electronic media products that provide information regarding coding, reimbursement, billing, compliance and other general health care issues. We also provide a wide variety of software and database services including databases for benchmarking and creation of fee schedules, software to analyze and report cost and utilization of services, data management services, HEDIS reporting, fraud and abuse prevention and detection services, claims editing software and reimbursement systems audits.

    Ingenix International provides drug development and marketing-related services for pharmaceutical and medical device manufacturers globally. Services include finding and training investigators and recruiting patients, developing research protocols, providing regulatory assistance, data collection and management, biostatistics, outcomes, economics and safety research, medical education programs, medical writings and general project management.

EXPANSION AND DIVESTITURE OF OPERATIONS

    We continually evaluate expansion and divestiture opportunities and, in the normal course of business, often consider whether to sell or stop offering certain of our businesses, products or services. Expansion opportunities may include acquiring businesses that are complementary to our existing operations. During 1999, we completed several acquisitions and also sold or terminated certain lines of business and ceased offering some products, all as part of our ongoing emphasis on our strategic focus. Further, we devote significant attention to developing new products and services in the health and well-being sector as we have broadly defined it.

    If we were to make any particular acquisition, it may affect our ability to integrate and manage our overall business effectively. Integration activities relating to acquisitions may increase costs, affect membership, affect revenue and earnings growth and adversely affect our financial results.

GOVERNMENT REGULATION

    Most of our health and well-being services are regulated at both federal and state levels. Government regulation of health care coverage products and services is a changing area of law that varies from jurisdiction to jurisdiction. Regulatory agencies generally have discretion to issue regulations and interpret and enforce laws and rules. Changes in applicable laws and regulations are continually being considered, and the interpretation of existing laws and rules also may change periodically. These revisions could affect our operations and financial results. Enactment of federal and state managed care laws and regulations can also affect our businesses. Examples of such laws and regulations include: medical malpractice liability laws for health plans; restrictions on the use and disclosure of medical and claims data; mandated benefits limits on contractual terms with providers, including termination provisions; implementation of a mandatory

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third party review process for certain coverage denials; and other laws and limits on utilization management. Further, as our businesses continue to implement their e-commerce initiatives, uncertainty surrounding the regulatory authority and requirements in this area will make compliance an important focus.

    Federal programs.  UnitedHealthcare's health plans that have Medicare+Choice contracts are regulated by the Health Care Financing Administration ("HCFA"). HCFA has the right to audit such health plans in order to determine each plan's compliance with HCFA's contracts and regulations and the quality of care being given to members. Effective January 1999, the Medicare+Choice regulations were an entirely new set of rules and regulations instituted by HCFA for its contractors. These new rules and the law enforcement environment generally with respect to health care issues make compliance in this product line a continuing challenge. Some of UnitedHealthcare's health plans also have Medicaid contracts that are subject to federal and state regulation regarding services to be provided to Medicaid enrollees, payment for those services, and other aspects of the Medicaid program. Further, some of UnitedHealthcare's health plans have contracts to participate in the federal employees health benefits program ("FEHBP"). These contracts are subject to extensive regulation, including complex rules regarding premiums charged. FEHBP is authorized to audit the rates charged retroactively and seek premium refunds or institute other sanctions against health plans that participate in the program, depending on the outcome of such audits. We believe we are in compliance in all material respects with these regulations.

    HIPAA.  The Health Insurance Portability and Accountability Act of 1996 ("HIPAA") may represent the most significant federal reform of employee benefits law since the enactment of the Employee Retirement Income Security Act ("ERISA") in 1974. HIPAA's federal standards apply to both the group and individual health insurance markets, including self-funded employee benefit plans. HIPAA's administrative simplification provisions, establishing new standards for electronic transactions, as well as for the privacy and the security of electronically transmitted data, and standardizing national provider and employer identifiers, have yet to be formalized in regulation. HIPAA's coverage related provisions have been implemented through regulation and include guarantees of the availability and renewability of health insurance for certain employees and individuals; limits on termination options and on the use of preexisting condition exclusions; prohibitions against discriminating on the basis of health status; and requirements which make it easier to continue coverage in cases where an employee is terminated or changes employers.

    We believe that we are in material compliance with the requirements of HIPAA; the law is far-reaching and complex, however, and proper interpretation and practice under the law continue to evolve. Consequently, our efforts to measure, monitor and adjust our business practices to comply with HIPAA are ongoing. The federal agencies involved in the enforcement of HIPAA's provisions have been slow to provide guidance. Further, significant enforcement responsibilities for HIPAA's provisions have been given to the states, and it is unclear how HIPAA's administrative simplification rules, particularly those regarding data privacy, will interact with existing or emerging state law. Moreover, different approaches to HIPAA's provisions and varying enforcement philosophies in the different states may adversely affect our ability to standardize our products and services across state lines and will require additional compliance resources to track and coordinate. Ultimately, under HIPAA and related state laws, careful pricing, system integration, and cost control through provider contracting and coordinating care may become more important, and we believe our experience in these areas will allow us to compete effectively.

    ERISA.  ERISA regulates how goods and services are provided to or through certain types of employer sponsored health benefit plans. ERISA is a complex set of laws and regulations that is subject to periodic interpretation by the United States Department of Labor ("DOL") as well as the federal courts. ERISA places controls on how our business units may do business with employers whose plans are covered by ERISA, particularly employers that maintain self-funded plans. For example, the DOL has proposed a complex set of claim regulations which, if adopted in their current form, will require significant changes to operations and may increase administrative costs. Moreover, there recently have been federal and state legislative attempts to limit ERISA's preemptive effect on state laws. If adopted, such limitations could

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increase our liability exposure in our business operations and could permit greater state regulation of other aspects of those operations.

    Fraud and Abuse.  Investigating and prosecuting health care fraud and abuse is a top priority for the nation's law enforcement entities. The funding of such law enforcement efforts has increased dramatically in the past few years and is expected to continue. The focus of these efforts has been directed at participants in federal government health care programs such as Medicare, Medicaid and the FEHBP. We participate in these programs. The regulations and contractual requirements applicable to participants in these programs are complex and changing. We have re-emphasized our regulatory compliance efforts for these programs, but ongoing vigorous law enforcement and the highly technical regulatory scheme mean that compliance efforts in this arena will continue to require significant resources.

    Audits and Investigations.  We are regularly subject to governmental audits, investigations and enforcement actions. Any such government actions can result in assessment of damages, civil or criminal fines or penalties, or other sanctions, including loss of licensure or exclusion from participation in government programs. Currently, routine audits are being conducted by various state insurance departments. In addition, a state department of insurance or other state or federal authority (including HCFA and the Office of the Inspector General) may from time to time begin a special audit of one of our health plans, our behavioral health company or one of our other operations regarding issues such as utilization management; financial, eligibility or other data reporting; prompt claims payment; or coverage of medically necessary care, including emergency room care. One or more such special audits are typically pending at any one time. We do not believe the results of any of the current audits, individually or in the aggregate, will have a material adverse effect on our financial position or results of operations.

    State regulation.  All of the states in which our subsidiaries offer insurance and HMO products regulate the activities of those products and operations. Most states require periodic financial reports and impose minimum capital or reserve requirements. Some of our health plan and insurance subsidiaries must maintain specified capital levels to support their operations. In addition, some state regulatory agencies require our health plans and insurance subsidiaries to maintain restricted cash reserves represented by interest-bearing instruments, which are held by trustees or state regulatory agencies to ensure that each subsidiary maintains adequate financial reserves. Many of UnitedHealthcare's health plans and each of our insurance subsidiaries are regulated under state insurance holding company regulations. Insurance holding company laws and regulations generally require registration with the state department of insurance and the filing of certain reports that describe capital structure, ownership, financial condition, certain inter-company transactions and general business operations. Various notice, reporting and pre-approval requirements generally apply to transactions between companies within an insurance holding company system, depending on the size and nature of the transactions. Some state insurance holding company laws and regulations require prior regulatory approval or, in certain circumstances, prior notice of acquisitions and certain material inter-company transfers of assets, as well as certain transactions between the regulated companies and their parent holding companies or affiliates. Certain of our subsidiaries are licensed as third-party administrators ("TPAs"). TPA regulations differ greatly from state to state, but generally contain certain required administrative procedures, periodic reporting obligations and minimum financial requirements. Some of our subsidiaries or products may be subject to PPO or managed care organization ("MCO") regulations in a particular state. PPO and MCO regulations generally contain network, contracting, financial and reporting requirements, which vary from state to state. Many states also have enacted laws and/or adopted regulations governing utilization review activities, and these laws may apply to some of our operations. Generally, these laws and regulations set specific standards for delivery of services, confidentiality, staffing and policies and procedures of private review entities, including the credentials required of personnel. To date, these various laws and regulations have not materially affected our financial position or results of operations.

    International regulation.  Our Ingenix and UnitedHealthcare segments both have limited international operations. As of December 31, 1999, Ingenix had operations in 15 countries principally related to

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its pharmaceutical services business, and UnitedHealthcare's international division operated health companies and consulting services in four markets around the world. These international operations are subject to different legal and regulatory requirements in local jurisdictions, including various tax, tariff and trade regulations as well as employment, intellectual property and investment rules and laws.

MARKETING

    Our marketing strategy is defined and coordinated by each segment's dedicated marketing staff. Within these segments, primary marketing responsibility generally resides with a marketing leader and a direct sales force. In addition, several of the segments also rely upon independent insurance agents and brokers to sell some of their products. Marketing efforts also include public relations efforts and advertising programs that may use television, radio, newspapers, magazines, billboards, direct mail and telemarketing.

COMPETITION

    As a diversified health and well being services company with a scope that extends far beyond the traditional boundaries of managed health care companies, we operate in highly competitive markets. We compete not only with managed health care companies, insurance companies, employer groups which have elected to self-insure and health care providers which have formed networks to directly contract with employers, but also with virtually all participants in the health care system as well as various information and consulting companies. New entrants into the markets in which we compete as well as consolidation within these markets also contribute to this competitive environment. We believe that the principal competitive factors affecting us and our products and services include price, consumer satisfaction, the level and quality of products and service, network capabilities, market share, the offering of innovative products, product distribution systems, efficient administration operations, financial strength and marketplace reputation.

    We currently believe that our competitive strengths include the focus resulting from our operational realignment. Each UnitedHealth Group business represents a strategic platform from which we can grow vertically, within specific markets. These businesses are anchored in a common pursuit of improved health and well being, exploiting three core competencies: network management, knowledge and information and service infrastructure. Other strengths include the breadth and quality of our products, our geographic scope and diversity, our Care Coordination program, our disciplined underwriting and pricing practices and staff, our significant market position in certain geographic areas, the strength of our distribution network, our financial strength, our generally large provider networks that provide more member choice, our point-of-service products, our experience and our generally favorable marketplace reputation. However, in some markets we may be at a disadvantage for a number of reasons, including competitors with more resources, longer operating histories, larger market shares, broader networks, narrower networks (which may allow greater cost control and lower prices) or more established names and reputations. These competitive factors could adversely affect our business and operating results.

EMPLOYEES

    As of December 31, 1999, the Company employed approximately 29,000 individuals. The Company believes its employee relations are good.

YEAR 2000 INFRASTRUCTURE MODIFICATION ACTIVITIES

    Our Year 2000 system remediation efforts were successful, and, during 2000, we have not experienced any business disruptions or system failures.

CAUTIONARY STATEMENTS

    The statements contained in this Form 10-K and the Management's Discussion and Analysis of Financial Condition and Results of Operation and other sections of our Annual Report to Shareholders

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incorporated by reference in this document, include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "PSLRA"). When used in this Form 10-K and in future filings by the Company with the Securities and Exchange Commission, in our press releases, presentations to securities analysts or investors, and in oral statements made by or with the approval of one of our executive officers, the words or phrases "believes," "anticipates," "intends," "will likely result," "estimates," "projects" or similar expressions are intended to identify such forward-looking statements. Any of these forward-looking statements involve risks and uncertainties that may cause our actual results to differ materially from the results discussed in the forward-looking statements.

    The following discussion contains certain cautionary statements regarding our business that investors and others should consider. This discussion is intended to take advantage of the "safe harbor" provisions of the PSLRA. In making these cautionary statements, we are not undertaking to address or update each factor in future filings or communications regarding our business or results, and are not undertaking to address how any of these factors may have caused results to differ from discussions or information contained in previous filings or communications. In addition, any of the matters discussed below may have affected our past, as well as current, forward-looking statements about future results. Our actual results in the future may differ materially from those expressed in prior communications.

    Health Care Costs.  We use a large portion of our revenue to pay the costs of health care services or supplies delivered to our members. Total health care costs we incur are affected by the number of individual services rendered and the cost of each service. Much of our premium revenue is priced before services are delivered and the related costs are incurred, usually on a prospective annual basis. Although we base the premiums we charge on our estimate of future health care costs over the fixed premium period, competition, regulations and other factors may and often do cause actual health care costs to exceed what was estimated and reflected in premiums. These factors may include increased use of services, increased cost of individual services, catastrophes, epidemics, the introduction of new or costly treatments, medical cost inflation, new mandated benefits or other regulatory changes and insured population characteristics. In addition, the earnings we report for any particular quarter include estimates of covered services incurred by our enrollees during that period for claims that have not been received or processed. Because these are estimates, our earnings may be adjusted later to reflect the actual costs. Relatively insignificant changes in the medical care ratio, because of the narrow margins of our health plan business, can create significant changes in our earnings. In addition, our operating results may be affected by the seasonal changes in the level of health care use during the calendar year. Although there are no assurances, per member medical costs generally have been higher in the first half than in the second half of each year.

    Industry Factors.  The managed care industry receives significant negative publicity and has been the subject of large jury awards. This publicity has been accompanied by increased litigation, legislative activity, regulation and governmental review of industry practices. These factors may adversely affect our ability to market our products or services, may require us to change our products and services, and may increase the regulatory burdens under which we operate, further increasing our costs of doing business and adversely affecting our profitability.

    Competition.  In many of our geographic or product markets, we compete with a number of other entities, some of which may have certain characteristics or capabilities that give them a competitive advantage. We believe the barriers to entry in these markets are not substantial, so the addition of new competitors can occur relatively easily, and consumers enjoy significant flexibility in moving to new managed care providers. Certain of our customers may decide to perform functions or services we provide for themselves, which would decrease our revenues. Certain of our contracted providers may decide to market products and services to our customers in competition with us. In addition, significant merger and acquisition activity has occurred in the industry in which we operate as well as in industries that act as suppliers to us, such as the hospital, physician, pharmaceutical, medical device and health information systems industries. To the extent that there is strong competition or that competition intensifies in any market, our ability to retain or increase customers or providers, or maintain or increase our revenue

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growth, pricing flexibility, control over medical cost trends and marketing expenses may be adversely affected.

    AARP Contract.  Under our long-term contract with AARP, we provide Medicare supplemental, hospital indemnity health insurance and other products to AARP members. As a result of the agreement, the number of members we serve, products we offer and services we provide has grown significantly. As of December 31, 1999, our portion of AARP's insurance program represents approximately $3.5 billion in annual net premium revenue from approximately 3.7 million AARP members. The success of the AARP arrangement will depend, in part, on our ability to service these new members, develop additional products and services, price the products and services competitively, and respond effectively to federal and state regulatory changes. Additionally, events that adversely affect AARP or one of its other business partners for its member insurance program could have an adverse effect on the success of our arrangement with AARP.

    Medicare Operations.  In the second quarter of 1998, we experienced a significant rise in the medical care ratio for our Medicare operations. The increase in medical costs was primarily due to the business growth in new markets with higher and more volatile medical cost trends, coupled with lower reimbursement rates. In response, we announced in October 1998 our decision to withdraw Medicare product offerings from 86 of the 206 counties we then served. The decision, effective January 1, 1999, affected approximately 60,000, or 12%, of Medicare members as of December 31, 1998. On July 1, 1999, we announced our decision to withdraw Medicare+Choice product offerings from an additional 49 counties. This decision, effective January 1, 2000, affected approximately 40,000 additional Medicare members. Also effective January 1, 2000, were significant benefit adjustments we had filed. These actions and other actions are expected to further reduce Medicare enrollment and may result in further withdrawals of Medicare product offerings, when and as permitted by our contracts with HCFA. As a consequence of these withdrawals, we are precluded from re-entering these counties with Medicare product offerings until 5 years after the respective effective date of withdrawal.

    We will continue to offer Medicare products in strong and economically viable markets. However, our ability to improve the financial results of all of our Medicare operations will depend on a number of factors, including future premium increases, growth in markets where we have achieved sufficient size to operate efficiently, benefit design, provider contracting and other factors. There can be no assurance that we will be able to successfully prevent future losses on our Medicare operations.

    Realignment of Operations.  In the second quarter of 1998 we recognized a charge to earnings for our realignment. The original operational realignment plan provided for substantial completion in 1999. We continue to implement our original realignment plan, however, some initiatives including the consolidation of certain claims and administrative processing functions and certain divestitures and market realignment activities are requiring additional time to complete in the most effective manner and will extend through 2000. Based on current facts and circumstances, we believe the remaining realignment reserve is adequate to cover the costs to be incurred in executing the remainder of the plan. However, as we proceed with the execution of the plan and more current information becomes available, it may be necessary to adjust our estimates for severance, lease obligations on exited facilities and losses on disposition of businesses.

    Government Programs and Regulation.  Our business is heavily regulated at federal, state and local levels. The laws and rules governing our business and interpretations of those laws and rules are subject to frequent change. Broad latitude is given to the agencies administering those regulations. Existing or future laws and rules could force us to change how we do business, restrict revenue and enrollment growth, increase our health care and administrative costs and capital requirements, and increase our liability for medical malpractice or other actions. We must obtain and maintain regulatory approvals to market many of our products. Delays in obtaining or failure to obtain or maintain these approvals could adversely affect our revenue or could increase our costs. We participate in federal, state and local government health care coverage programs. These programs generally are subject to frequent change, including changes that may reduce the number of persons enrolled or eligible, reduce the amount of reimbursement or payment levels,

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or reduce or increase our administrative or health care costs under such programs. Such changes have adversely affected our results and willingness to participate in such programs in the past and may also do so in the future.

    State legislatures and Congress continue to focus on health care issues. In Congress, managed health care has been the subject of proposed legislation, in the form of a "Patients Bill of Rights" bill. In addition, other proposed federal bills and regulations may impact certain aspects of our business including provider contracting, claims payments, confidentiality, treatment of medical data and government-funded programs. Further, tax code changes considered from time to time by Congress may make it easier and more cost effective for employers to establish deferred contribution plans. While we cannot predict if any of these initiatives will ultimately become binding law or regulation, or if enacted, what their terms will be, their enactment could increase our costs, expose us to expanded liability, require us to revise the ways in which we conduct business or put us at risk for a loss of business to new health care funding arrangements. Further, as our businesses continue to implement their e-commerce initiatives, uncertainty surrounding the regulatory authority and requirements in this area will make it difficult to ensure compliance.

    We are also subject to various governmental reviews, audits and investigations. Such oversight could result in the loss of licensure or the right to participate in certain programs, or the imposition of civil or criminal fines, penalties and other sanctions. In addition, disclosure of any adverse investigation or audit results or sanctions could damage our reputation in various markets and make it more difficult for us to sell our products and services. We are currently involved in various governmental investigations, audits and reviews. These include routine, regular and special audits by HCFA, state insurance departments, the Office of Personnel Management and the Office of the Inspector General. We do not believe the results of any of the current audits, individually or in the aggregate, will have a material adverse effect on our financial position or results.

    The National Association of Insurance Commissioners has adopted rules which, to the extent that they are implemented by the states, will set new minimum capitalization requirements for insurance companies, HMOs and other entities bearing risk for health care coverage. The requirements take the form of risk-based capital rules. The change in rules for insurance companies was effective December 31, 1998. The new HMO rules are subject to state-by-state adoption, but not many states have adopted the rules as of December 31, 1999. The HMO rules, if adopted by the states in their proposed form, would significantly increase the minimum capital required for certain of our subsidiaries. Although we believe we can redeploy capital among our regulated entities, such rule changes may require incremental investments of general corporate resources into regulated subsidiaries.

    Provider Relations.  One of the significant techniques we use to manage health care costs, coordinate care and monitor the quality of care being delivered is contracting with physicians, hospitals and other providers. Because our health plans are geographically diverse and most of those health plans contract with a large number of providers, we currently believe our aggregate exposure to provider relations issues is limited. Legislation is pending which would exempt certain providers from federal antitrust laws, which could impact this assessment. In any particular market, providers could refuse to contract, demand higher payments, or take other actions that could result in higher health care costs, less desirable products for customers and members, or difficulty meeting regulatory or accreditation requirements. In some markets, certain providers, particularly hospitals, physician/hospital organizations or multi-specialty physician groups, may have significant market positions or near monopolies. In addition, physician or practice management companies, which aggregate physician practices for administrative efficiency and marketing leverage, continue to expand. These providers may compete directly with us. If these providers refuse to contract with us, use their market position to negotiate favorable contracts, or place us at a competitive disadvantage, those activities could adversely affect our ability to market products or to be profitable in those areas.

    Litigation and Insurance.  We may be a party to a variety of legal actions that affect any business, such as employment and employment discrimination-related suits, employee benefit claims, breach of contract actions, tort claims, shareholder suits, including securities fraud, intellectual property related litigation. In

11

addition, because of the nature of our business, we are subject to a variety of legal actions relating to our business operations, including the design, management and offering of our products and services. These could include: claims relating to the denial of health care benefits; medical malpractice actions; allegations of anti-competitive and unfair business activities; provider disputes over compensation and termination of provider contracts; disputes related to self-funded business, including actions alleging claim administration errors and the failure to disclose network rate discounts and other fee and rebate arrangements; disputes over copayment calculations; claims related to the failure to disclose certain business practices; and claims relating to customer audits and contract performance. Recently, a number of class action lawsuits have been filed against us and certain of our competitors in the managed care business. The suits are purported class actions on behalf of all of our managed care members and network providers for alleged breaches of federal statutes, including ERISA and the Racketeer Influenced Corrupt Organization ("RICO") Act.

    While we believe these suits against us are without merit and we intend to defend our position vigorously, we will incur expenses in the defense of these matters and we cannot predict their outcome. Recent court decisions and legislative activity may increase our exposure for any of these types of claims. In some cases, substantial non-economic or punitive damages, or treble damages, may be sought. We currently have insurance coverage for some of these potential liabilities. Other potential liabilities may not be covered by insurance, insurers may dispute coverage, or the amount of insurance may not be enough to cover the damages awarded. In addition, certain types of damages, such as punitive damages, may not be covered by insurance and insurance coverage for all or certain forms of liability may become unavailable or prohibitively expensive in the future.

    Information Systems.  Our businesses depend significantly on effective information systems, and we have many different information systems for our various businesses. Our information systems require an ongoing commitment of significant resources to maintain and enhance existing systems and develop new systems in order to keep pace with continuing changes in information processing technology, evolving industry and regulatory standards, and changing customer preferences. For example, HIPAA's administrative simplification provisions and the DOL's proposed claim regulations may ultimately require significant changes to current systems. In addition, we may from time to time obtain significant portions of our systems-related or other services or facilities from independent third parties, which may make our operations vulnerable to such third parties' failure to perform adequately. As a result of our acquisition activities, we have acquired additional systems and have been taking steps to reduce the number of systems and have upgraded and expanded our information systems capabilities. Failure to maintain effective and efficient information systems could cause the loss of existing customers, difficulty in attracting new customers, customer and provider disputes, regulatory problems, increases in administrative expenses or other adverse consequences.

    Administrative and Management.  Efficient and cost-effective administration of our operations is essential to our profitability and competitive positioning. While we attempt to effectively manage expenses, staff-related and other administrative expenses may arise from time to time due to business or product start-ups or expansions, growth or changes in business, acquisitions, regulatory requirements or other reasons. These expense increases are not clearly predictable and may adversely affect results. Further, we believe we currently have an experienced, capable management and technical staff. The market for management and technical personnel, including information systems professionals, in the health care industry is very competitive. Loss of certain key employees or a number of managers or technical staff could adversely affect our ability to administer and manage our business.

    Marketing.  We market our products and services through both employed sales people and independent sales agents. Although we have many sales employees and agents, the departure of certain key sales employees or agents or a large subset of these individuals could impair our ability to retain existing customers and members. In addition, certain of our customers or potential customers consider rating, accreditation or certification of us by various private or governmental bodies or rating agencies necessary or important. Certain of our health plans or other business units may not have obtained or maintained, or

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may not desire or be able to obtain or maintain, such rating accreditation or certification, which could adversely affect our ability to obtain or retain business with these customers.

    Acquisitions and Dispositions.  We have made a number of acquisitions in recent years and have an active ongoing acquisition and disposition program under which we may engage in transactions involving the acquisition or disposition of assets, products or businesses, some or all of which may be material. These transactions may entail certain risks and uncertainties and may affect ongoing business operations because of unknown liabilities, unforeseen administrative needs or increased efforts to integrate the acquired operations. Failure to identify liabilities, anticipate additional administrative needs or effectively integrate acquired operations could result in reduced revenues, increased administrative and other costs or customer confusion or dissatisfaction.

    Data and Proprietary Information.  Many of the products that are part of our knowledge and information-related business depend significantly on the integrity of the data on which they are based. If the information contained in our databases were found or perceived to be inaccurate, or if such information were generally perceived to be unreliable, commercial acceptance of our database-related products would be adversely and materially affected. Furthermore, the use of patient identifiable data by our businesses is regulated at federal, state and local levels. These laws and rules are changed frequently by legislation or administrative interpretation. These restrictions could adversely affect revenues from certain of our products or services and, more generally, affect our business, financial condition and results of operations. There are various proposals currently under consideration that address the use of patient data from federal and state legislative and regulatory bodies. If enacted, some of these proposals may impose restrictions on our use of patient data and may increase our cost to use patient data. The success of our knowledge and information-related business also depends significantly on our ability to maintain proprietary rights to our products. We rely on our agreements with customers, confidentiality agreements with employees, and our trade secrets, copyrights and patents to protect our proprietary rights. We cannot assure that these legal protections and precautions will prevent misappropriation of our proprietary information. In addition, substantial litigation regarding intellectual property rights exists in the software industry, and we expect software products to be increasingly subject to third-party infringement claims as the number of products and competitors in this industry segment grows. Such litigation could have an adverse effect on the ability of our knowledge and information-related business to market and sell its products and on our business, financial condition and results of operations.

    Stock Market.  The market prices of the securities of the publicly-held companies in the industry in which we operate have shown volatility and sensitivity in response to many factors, including general market trends, public communications regarding managed care, litigation and judicial decisions, legislative or regulatory actions, health care cost trends, pricing trends, competition, earnings, membership reports of particular industry participants and acquisition activity. We cannot assure the level or stability of the price of our securities at any time or the impact of the foregoing or any other factors on such prices.

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EXECUTIVE OFFICERS OF THE REGISTRANT

Name	Age	Position at 12/31/99	First Elected as Executive Officer
William W. McGuire, M.D.	51	Chairman, Chief Executive Officer and Director	1988
Stephen J. Hemsley	47	President and Director	1997
Arnold H. Kaplan	60	Chief Financial Officer	1998
David J. Lubben	48	General Counsel and Secretary	1996
James B. Hudak	52	CEO, UnitedHealth Technologies	2000
Lois E. Quam	38	CEO, Ovations	1998
Jeannine R. Rivet	51	CEO, UnitedHealthcare	1998
R. Channing Wheeler	48	CEO, Uniprise	1998

    The Company's Board of Directors elects executive officers annually. The Company's executive officers serve until their successors are duly elected and qualified.

    Dr. McGuire became a director of UnitedHealth Group in February 1989 and the Chairman of the Board in May 1991. Dr. McGuire became an Executive Vice President of the Company in November 1988, was appointed the Company's Chief Operating Officer in May 1989, the Company's President in November 1989, and the Company's Chief Executive Officer in February 1991.

    Mr. Hemsley joined UnitedHealth Group in May 1997. He became President in May 1999 and a member of the Board of Directors in February 2000. Prior to that time, he served as Chief Operating Officer and Senior Executive Vice President of the Company. Prior to joining the Company, Mr. Hemsley was with Arthur Andersen LLP where he served since 1974 in various capacities, including Chief Financial Officer and Managing Partner, Strategy and Planning.

    Mr. Kaplan joined UnitedHealth Group in July 1998 as Chief Financial Officer. Prior to joining the Company, Mr. Kaplan was associated with Air Products & Chemicals, Inc. where he served since 1976 in various capacities, including Senior Vice President, Chief Financial Officer, Vice President Purchasing and Controller.

    Mr. Lubben became UnitedHealth Group's General Counsel and Secretary in October 1996. Prior to joining the Company, he was a partner in the law firm of Dorsey & Whitney LLP. Mr. Lubben first became associated with Dorsey & Whitney in 1977.

    Mr. Hudak joined UnitedHealth Group in January 2000 and is currently CEO, UnitedHealth Technologies. During the twenty years prior to joining the Company, Mr. Hudak held various management positions with Andersen Consulting, including Global Managing Partner.

    Ms. Quam joined UnitedHealth Group in 1989 and became the CEO, Ovations in April 1998. Prior to April 1998, Ms. Quam served in various capacities including CEO, AARP Division, Vice President, Public Sector Services and Director, Research. Prior to joining the Company, Ms. Quam served as Research Director from 1987-1989 for Partners National Health Plan.

    Ms. Rivet joined UnitedHealth Group in June 1990 and became CEO, UnitedHealthcare in April 1998. From October 1994 until March 1998, she was an Executive Vice President of UnitedHealthcare. She served as the Company's Senior Vice President, Health Plan Operations from September 1993 to September 1994 and the Company's Vice President of Health Service Operations from June 1990 to September 1993.

    Mr. Wheeler joined UnitedHealth Group in March 1995 and became CEO, Uniprise in May 1998. Prior to May 1998, he served in various capacities with the Company, including CEO, Northeast HealthPlans.

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ITEM 2. PROPERTIES

    As of December 31, 1999, the Company leased approximately 1.7 million aggregate square feet of space for its principal administrative offices in the greater Minneapolis/St. Paul, Minnesota area and in Hartford, Connecticut. Excluding these areas, as of December 31, 1999, the Company leased approximately 5.7 million aggregate square feet in the United States (including Puerto Rico) and Europe. Such space accommodates health plans, managed care services, specialty programs or satellite administrative offices. The Company's leases expire at various dates through May 31, 2026. As of December 31, 1999, the Company owned approximately 235,000 aggregate square feet of space for administrative offices in various states.

ITEM 3. LEGAL PROCEEDINGS

    Because of the nature of our business, we are routinely subject to suits alleging various causes of action. Some of these suits may include claims for substantial non-economic or punitive damages. We do not believe that any such actions, or any other types of actions, currently threatened or pending will, individually or in the aggregate, have a material adverse effect on our financial position or results of operations.

    On February 4, 2000, we entered into a settlement agreement with the attorneys representing the plaintiff classes that assert claims under the United States securities laws against UnitedHealth Group and certain of its current and former officers and directors. The proposed settlement agreement is subject to court approval. Our insurers have agreed to cover the cost of this settlement.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

    None.

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PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

    The information contained under the heading "Investor Information" in the Company's Annual Report to Shareholders for the fiscal year ended December 31, 1999, is incorporated herein by reference.

ITEM 6. SELECTED FINANCIAL DATA

    The information contained under the heading "Results of Operations" in the Company's Annual Report to Shareholders for the fiscal year ended December 31, 1999, is incorporated herein by reference.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

    The information contained under the heading "Results of Operations" in the Company's Annual Report to Shareholders for the fiscal year ended December 31, 1999, is incorporated herein by reference.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    The information contained on page 27 under the heading "Quantitative and Qualitative Disclosures About Market Risk" in the Company's Annual Report to Shareholders for the fiscal year ended December 31, 1999, is incorporated herein by reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

    The Company's consolidated financial statements together with the Report of Independent Public Accountants thereon appearing on pages 28 through 43 of the Company's Annual Report to Shareholders for the fiscal year ended December 31, 1999, are incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

    None.

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PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

    The information included under the headings "Election of Directors" and "Section 16(a) Beneficial Ownership Reporting Compliance" in the Company's definitive Proxy Statement for its Annual Meeting of Shareholders to be held May 10, 2000, is incorporated herein by reference.

    Pursuant to General Instruction G(3) to Form 10-K and Instruction 3 to Item 401(b) of Regulation S-K, information regarding executive officers of the Company is provided in Part I of this Form 10-K under separate caption.

ITEM 11. EXECUTIVE COMPENSATION

    The information included under the heading "Executive Compensation" in the Company's definitive Proxy Statement for the Annual Meeting of Shareholders to be held May 10, 2000, is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    The information included under the heading "Security Ownership of Certain Beneficial Owners and Management" in the Company's definitive Proxy Statement for the Annual Meeting of Shareholders to be held May 10, 2000, is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    Information regarding certain relationships and related transactions that appears under the heading "Certain Relationships and Transactions" in the Company's definitive Proxy Statement for the Annual Meeting of Shareholders to be held May 10, 2000, is incorporated herein by reference.

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PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) 1. Financial Statements

The following consolidated financial statements of the Company are included in the Company's Annual Report to Shareholders for the fiscal year ended December 31, 1999 and are incorporated herein by reference:

Consolidated Statements of Operations for the years ended December 31, 1999, 1998 and 1997.

Consolidated Balance Sheets as of December 31, 1999 and 1998.

Consolidated Statements of Changes in Shareholders' Equity for the years ended December 31, 1999, 1998 and 1997.

Consolidated Statements of Cash Flows for the years ended December 31, 1999, 1998 and 1997.

Notes to Consolidated Financial Statements.

Report of Independent Public Accountants.

(a) 2. Financial Statement Schedules

    None

(a) 3. Exhibits

3(a)	Articles of Merger amending the Company's Articles of Incorporation effective March 6, 2000.
3(b)	Second Restated Articles of Incorporation of the Company. (Incorporated by reference to Exhibit 3(a) to the Company's Annual Report on Form 10-K for the year ended December 31, 1996.)
3(c)	Amended and Restated Bylaws of the Company, as amended. (Incorporated by reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1998 and Exhibit 3(b) to the Company's Annual Report on Form 10-K for the year ended December 31, 1997.)
4(a)	Senior Indenture, dated as of November 15, 1998, between United HealthCare Corporation and the Bank of New York. (Incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form S-3 (SEC File No. 333-44569).)
4(b)	Pursuant to Item 601(b)(4)(iii) of Regulation S-K, copies of instruments defining the rights of certain holders of long-term debt are not filed. The Company agrees to furnish copies thereof to the Securities and Exchange Commission upon request.
*10(a)	United HealthCare Corporation 1990 Stock and Incentive Plan, as amended. (Incorporated by reference to Exhibit 10(f) to the Company's Annual Report on Form 10-K for the year ended December 31, 1992.)
*10(b)	United HealthCare Corporation Amended and Restated 1991 Stock and Incentive Plan, Amended and Restated Effective May 14, 1997. (Incorporated by reference to Exhibit 10(a) to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1997.)
*10(c)	United HealthCare Corporation Non-employee Director Stock Option Plan. (Incorporated by reference to Exhibit 10(x) to the Company's Annual Report on Form 10-K for the year ended December 31, 1994.)
*10(d)	UnitedHealth Group Incorporated Leadership Results Plan.

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*10(e)	UnitedHealth Group Incorporated's 2000 Executive Savings Plan Brochure.
*10(f)	Employment Agreement, dated as of October 13, 1999, between United HealthCare Corporation and William W. McGuire, M.D.
*10(g)	Employment Agreement dated as of October 13, 1999, between United HealthCare Corporation and Stephen J. Hemsley.
*10(h)	Employment Agreement, dated as of May 19, 1998, between United HealthCare Corporation and Arnold H. Kaplan.
*10(i)	Employment Agreement, dated as of October 16, 1998, between United HealthCare Corporation and Lois E. Quam.
*10(j)	Employment Agreement dated as of January 15, 2000, between United HealthCare Corporation and James B. Hudak.
*10(k)	Employment Agreement, dated as of October 16, 1998, between United HealthCare Services, Inc. and Jeannine Rivet. (Incorporated by reference to Exhibit 10(f) to the Company's Annual Report on Form 10-K for the year ended December 31, 1998.)
*10(l)	Employment Agreement, dated as of May 20, 1998, between United HealthCare Services, Inc. and R. Channing Wheeler. (Incorporated by reference to Exhibit 10(c) to the Company's Quarterly Report of Form 10-Q for the quarter ended June 30, 1998.)
*10(m)	Employment Agreement, dated as of October 16, 1998, between United HealthCare Services, Inc. and David J. Lubben. (Incorporated by reference to Exhibit 10(j) to the Company's Annual Report on Form 10-K for the year ended December 31, 1998.)
†10(n)	Information Technology Services Agreement between The MetraHealth Companies, Inc. and Integrated Systems Solutions Corporation dated as of November 1, 1995. (Incorporated by reference to Exhibit 10(t) to the Company's Annual Report on Form 10-K for the year ended December 31, 1995.)
†10(o)	AARP Health Insurance Agreement by and among American Association of Retired Persons, Trustees of the AARP Insurance Plan and United HealthCare Insurance Company dated as of February 26, 1997. (Incorporated by reference to Exhibit 10(p) to the Company's Annual Report on Form 10-K/A for the year ended December 31, 1996.)
†10(p)	First Amendment to the AARP Health Insurance Agreement by and among American Association of Retired Persons, Trustees of the AARP Insurance Plan and United HealthCare Insurance Company effective January 1, 1998. (Incorporated by reference to Exhibit 10(a) to the Company's Quarterly Report on Form 10-Q for the quarter period ended June 30, 1998.)
†10(q)	Second Amendment to the AARP Health Insurance Agreement by and among American Association of Retired Persons, Trustees of the AARP Insurance Plan and United HealthCare Insurance Company effective January 1, 1998. (Incorporated by reference to Exhibit 10(b) to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1998.)
†10(r)	Information Technology Services Agreement between United HealthCare Services, Inc., a wholly owned subsidiary of the Company, and Unisys Corporation dated June 1, 1996. (Incorporated by reference to Exhibit 10 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1998.)
11	Statement regarding computation of per share earnings. (Incorporated by reference to the information contained under the heading "Net Earnings (Loss) Per Common Share" in Note 2 to the Notes to Consolidated Financial Statements included in the Company's Annual Report to Shareholders for the fiscal year ended December 31, 1999 and which is included as part of Exhibit 13 hereto.)

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13	Portions of the Company's Annual Report to Shareholders for the fiscal year ended December 31, 1999.
21	Subsidiaries of the Company.
23	Consent of Independent Public Accountants.
24	Powers of Attorney.
27	Financial Data Schedule.
†	Pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, confidential portions of these Exhibits have been deleted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.
*	Denotes management contracts and compensation plans in which certain directors and named executive officers participate and which are being filed pursuant to Item 601(b)(10)(iii)(A) of Regulation S-K.

(b)  Reports on Form 8-K

The Company filed no Current Reports on Form 8-K during the three month period ended December 31, 1999.

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SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: March 30, 2000
	UNITEDHEALTH GROUP INCORPORATED
	By:	/s/ WILLIAM W. MCGUIRE, M.D William W. McGuire, M.D Chief Executive Officer

    Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ WILLIAM W. MCGUIRE, M.D. William W. McGuire, M.D.	Director, Chief Executive Officer (principal executive officer)	March 30, 2000
/s/ ARNOLD H. KAPLAN Arnold H. Kaplan	Chief Financial Officer (principal financial officer)	March 30, 2000
/s/ PATRICK J. ERLANDSON Patrick J. Erlandson	Chief Accounting Officer (principal accounting officer)	March 30, 2000
* William C. Ballard, Jr.	Director	March 30, 2000
* Richard T. Burke	Director	March 30, 2000
* Stephen J. Hemsley	Director	March 30, 2000
* James A. Johnson	Director	March 30, 2000

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* Thomas H. Kean	Director	March 30, 2000
* Douglas W. Leatherdale	Director	March 30, 2000
* Walter F. Mondale	Director	March 30, 2000
* Mary O. Mundinger	Director	March 30, 2000
* Robert L. Ryan	Director	March 30, 2000
* William G. Spears	Director	March 30, 2000
* Gail R. Wilensky	Director	March 30, 2000

*By	/s/ WILLIAM W. MCGUIRE, M.D.
	William W. McGuire, M.D. As Attorney-in-Fact

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EXHIBIT INDEX

Number	Description
3(a)	Articles of Merger amending the Company's Articles of Incorporation effective March 6, 2000.
3(b)	Second Restated Articles of Incorporation of the Company. (Incorporated by reference to Exhibit 3(a) to the Company's Annual Report on Form 10-K for the year ended December 31, 1996.)
3(c)	Amended and Restated Bylaws of the Company, as amended. (Incorporated by reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1998 and Exhibit 3(b) to the Company's Annual Report on Form 10-K for the year ended December 31, 1997.)
4(a)	Senior Indenture, dated as of November 15, 1998, between United HealthCare Corporation and the Bank of New York. (Incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form S-3 (SEC File No. 333-44569).)
4(b)	Pursuant to Item 601(b)(4)(iii) of Regulation S-K, copies of instruments defining the rights of certain holders of long-term debt are not filed. The Company agrees to furnish copies thereof to the Securities and Exchange Commission upon request.
10(a)	United HealthCare Corporation 1990 Stock and Incentive Plan, as amended. (Incorporated by reference to Exhibit 10(f) to the Company's Annual Report on Form 10-K for the year ended December 31, 1992.)
10(b)	United HealthCare Corporation Amended and Restated 1991 Stock and Incentive Plan, Amended and Restated Effective May 14, 1997. (Incorporated by reference to Exhibit 10(a) to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1997.)
10(c)	United HealthCare Corporation Non-employee Director Stock Option Plan. (Incorporated by reference to Exhibit 10(x) to the Company's Annual Report on Form 10-K for the year ended December 31, 1994.)
10(d)	UnitedHealth Group Incorporated Leadership Results Plan.
10(e)	UnitedHealth Group Incorporated's 2000 Executive Savings Plan Brochure.
10(f)	Employment Agreement, dated as of October 13, 1999, between United HealthCare Corporation and William W. McGuire, M.D.
10(g)	Employment Agreement dated as of October 13, 1999, between United HealthCare Corporation and Stephen J. Hemsley.
10(h)	Employment Agreement, dated as of May 19, 1998, between United HealthCare Corporation and Arnold H. Kaplan.
10(i)	Employment Agreement, dated as of October 16, 1998 between United HealthCare Corporation and Lois E. Quam.
10(j)	Employment Agreement dated as of January 15, 2000, between United HealthCare Corporation and James B. Hudak.
10(k)	Employment Agreement, dated as of October 16, 1998, between United HealthCare Services, Inc. and Jeannine Rivet. (Incorporated by reference to Exhibit 10(f) to the Company's Annual Report on Form 10-K for the year ended December 31, 1998.)
10(l)	Employment Agreement, dated as of May 20, 1998, between United HealthCare Services, Inc. and R. Channing Wheeler. (Incorporated by reference to Exhibit 10(c) to the Company's Quarterly Report of Form 10-Q for the quarter ended June 30, 1998.)

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10(m)	Employment Agreement, dated as of October 16, 1998, between United HealthCare Services, Inc. and David J. Lubben. (Incorporated by reference to Exhibit 10(j) to the Company's Annual Report on Form 10-K for the year ended December 31, 1998.)
†10(n)	Information Technology Services Agreement between The MetraHealth Companies, Inc. and Integrated Systems Solutions Corporation dated as of November 1, 1995. (Incorporated by reference to Exhibit 10(t) to the Company's Annual Report on Form 10-K for the year ended December 31, 1995.)
†10(o)	AARP Health Insurance Agreement by and among American Association of Retired Persons, Trustees of the AARP Insurance Plan and United HealthCare Insurance Company dated as of February 26, 1997. (Incorporated by reference to Exhibit 10(p) to the Company's Annual Report on Form 10-K/A for the year ended December 31, 1996.)
†10(p)	First Amendment to the AARP Health Insurance Agreement by and among American Association of Retired Persons, Trustees of the AARP Insurance Plan and United HealthCare Insurance Company effective January 1, 1998. (Incorporated by reference to Exhibit 10(a) to the Company's Quarterly Report on Form 10-Q for the quarter period ended June 30, 1998.)
†10(q)	Second Amendment to the AARP Health Insurance Agreement by and among American Association of Retired Persons, Trustees of the AARP Insurance Plan and United HealthCare Insurance Company effective January 1, 1998. (Incorporated by reference to Exhibit 10(b) to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1998.)
†10(r)	Information Technology Services Agreement between United HealthCare Services, Inc., a wholly owned subsidiary of the Company, and Unisys Corporation dated June 1, 1996. (Incorporated by reference to Exhibit 10 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1998.)
11	Statement regarding computation of per share earnings. (Incorporated by reference to the information contained under the heading "Net Earnings (Loss) Per Common Share" in Note 2 to the Notes to Consolidated Financial Statements included in the Company's Annual Report to Shareholders for the fiscal year ended December 31, 1999 and which is included as part of Exhibit 13 hereto.)
13	Portions of the Company's Annual Report to Shareholders for the fiscal year ended December 31, 1999.
21	Subsidiaries of the Company.
23	Consent of Independent Public Accountants.
24	Powers of Attorney.
27	Financial Data Schedule.
†	Pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, confidential portions of these Exhibits have been deleted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

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QuickLinks

PART I
ITEM 1. BUSINESS
ITEM 2. PROPERTIES
ITEM 3. LEGAL PROCEEDINGS
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
ITEM 6. SELECTED FINANCIAL DATA
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
EXHIBIT INDEX

EX-3.A

                               ARTICLES OF MERGER
                                       OF
                         UNITEDHEALTH GROUP INCORPORATED
                                      INTO
                          UNITED HEALTHCARE CORPORATION


         Pursuant to Section 302A.621 of the Minnesota Statutes, the undersigned
corporations execute the following articles of merger:

         FIRST: The names of the corporations participating in the merger and
the States under the laws of which they are respectively organized are as
follows:



               Name of Corporation                               State
               ------------------                                -----
                                                             
          United HealthCare Corporation                         Minnesota

          UnitedHealth Group Incorporated                       Minnesota


          SECOND: The name of the surviving corporation is UnitedHealth Group
Incorporated and the Articles of Incorporation of the surviving corporation are
to be amended by virtue of the merger provided for in this Agreement by amending
Article I of the Articles of Incorporation, as follows:
                                       "I.

          The name of this corporation is UnitedHealth Group Incorporated."

          THIRD: The following plan of merger was approved by the affirmative
vote of a majority of the directors present at a meeting of the Board of United
HealthCare Corporation and by written action of the Board of Directors of
UnitedHealth Group Incorporated:


                          AGREEMENT AND PLAN OF MERGER
                                     BETWEEN
                         UNITEDHEALTH GROUP INCORPORATED
                                      INTO
                          UNITED HEALTHCARE CORPORATION


This AGREEMENT AND PLAN OF MERGER, is made as of March 1, 2000, between
UnitedHealth Group Incorporated ("UHG"), a Minnesota corporation, and United
HealthCare Corporation ("UHC"), a Minnesota corporation (UHG and UHC hereinafter
collectively referred to as "Constituent Corporations").

                                   WITNESSETH:

WHEREAS, the Boards of Directors of the Constituent Corporations deem it
advisable and in the best interest of the Constituent Corporations and their
shareholders that UHG be merged with and into UHC (the "Merger").

NOW, THEREFORE, the Constituent Corporations hereby agree as follows:

     1.   The Merger shall be in accordance with Section 302A.621 of the
          Minnesota Business Corporation Act.

     2.   That the Effective Date hereof shall be March 6, 2000.

     3.   Upon the Effective Date, UHG shall be merged with and into UHC and UHC
          shall be the Surviving Corporation.

     4.   Upon the Effective Date, the separate existence of UHG shall cease and
          all the property, rights, privileges, immunities and franchises of UHG
          and all of the property, real, personal and mixed, and all the debts
          due on whatever account to UHG, as well as all stock subscriptions and
          other causes in action belonging to UHG, and the title to all real
          estate vested in UHG shall not revert or be in any way impaired by
          reason of the Merger, but shall be vested in the Surviving
          Corporation. The Surviving Corporation is responsible and liable for
          all the liabilities and obligations, including the rights and



          obligations under the agreements of UHG. A claim by or against or a
          pending proceeding by or against UHG may be prosecuted as if the
          Merger had not taken place, or the Surviving Corporation may be
          substituted in place of UHG. Neither the rights of creditors nor any
          liens upon the property of UHG are impaired by the Merger.

     5.   From and after the Effective Date and until further amended in
          accordance with the Minnesota Business Corporation Law, the Articles
          of Incorporation of UHC in effect immediately prior to the Effective
          Date shall be the Articles of Incorporation of the Surviving
          Corporation.

     6.   The directors and officers of UHC in office immediately prior to the
          Effective Date shall, from and after the Effective Date, be the
          directors and officers of the Surviving Corporation. Directors and
          officers will serve until their respective successors are duly
          appointed or elected and qualified in accordance with the Articles of
          Incorporation and Bylaws of the Surviving Corporation.

     7.   All of the outstanding shares of UHG common stock are owned by UHC. On
          the Effective Date, the shares of UHG will not be converted into
          shares of the Surviving Corporation, but instead shall be canceled
          (along with the certificates representing the same) and all rights in
          respect thereof shall thereupon cease to exist.

     8.   All of the outstanding shares of UHC common stock shall remain common
          stock of the Surviving Corporation and all rights in respect of such
          shares shall remain in full effect. On the Effective Date, all new
          shares issued going forward shall bear the name of UnitedHealth Group
          Incorporated.


          IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement and Plan of Merger as of the date written above.


UNITED HEATLHCARE CORPORATION               UNITEDHEALTH GROUP INCORPORATED


By       /s/ Stephen J. Hemsley             By     /s/ David J. Lubben
  ------------------------------------        ---------------------------------
         Stephen J. Hemsley, President              David J. Lubben, Secretary


                            SECRETARY'S CERTIFICATION

         David J. Lubben, being the Secretary of both United HealthCare
Corporation., a Minnesota corporation, and UnitedHealth Group Incorporated, a
Minnesota corporation, pursuant to Minnesota Statute ss.302A.621 does hereby
certify that the Boards of Directors of both corporations voted unanimously to
approve and adopt the attached Agreement and Plan of Merger on the 8th day of
February, 2000.


                                       By          /s/ David J. Lubben
                                         --------------------------------------
                                                   David J. Lubben, Secretary


STATE OF MINNESOTA         )
                           )ss.                       ACKNOWLEDGMENT
COUNTY OF HENNEPIN         )

         On this 1st day March, 2000, personally came before me, a Notary Public
for the State of Minnesota, David J. Lubben, known to me personally to be the
Secretary of United HealthCare Corporation and UnitedHealth Group Incorporated
and acknowledged said Agreement and Plan of Merger and the Secretary's
Certification of the same to be the act and deed of the signers and that the
facts stated therein are true.
         GIVEN under my hand and seal of office the day and year aforesaid.


                                       /s/Mary Borowski
                                      -----------------------------------------
                                       Notary Public

EX-10.(D)

                                REWARDING RESULTS





        AN OVERVIEW OF YOUR PERFORMANCE-BASED INCENTIVE COMPENSATION PLAN















                           THE LEADERSHIP RESULTS PLAN



LEADING THE WAY


- --------------------------------------------------------------------------------
As a leader, you are part of an essential group of people whose individual
performance is critical to the success and continued growth of UnitedHealth
Group and its businesses. One way we recognize the contributions of our key
people is through our incentive compensation plan, referred to as the
Leadership Results Plan.

The Leadership Results Plan supports our organizational structure by linking
incentive awards to each business segment's or corporate unit's performance
and to individual performance. This plan also supports our overall incentive
program framework for all employees--REWARDING RESULTs--which offers a
competitive approach to total compensation and the potential for significant
incentive pools. And, our incentive program reflects our values and how we
operate as a business--right in line with our commitment to integrity, the
Code of Conduct and overall compliance.

The financial performance of each business segment and corporate unit is the
key driver in determining incentive program funding. In addition, our
incentive plans encourage us to focus on important non-financial measures
(e.g., strategic, quality, and human capital initiatives)--in other words,
focusing on how we get the job done as well as, and as part of the end result.

We will continue to face challenges within our businesses as competition
builds. I am confident, however, that we have the right talent, services and
most importantly, the right leadership in place to move us forward. Your
leadership clearly impacts how we create value for our stakeholders and our
customers. As a result, it impacts your total compensation.

This brochure describes the Leadership Results Plan in more detail. You'll
find information about your business segment or Corporate and Enterprise
Services' unit in the back pocket of this material. Your support of REWARDING
RESULTS is important--and critical to driving our performance--so I encourage
you to review this information carefully.

I look forward to your continued strong leadership and commitment to
UnitedHealth Group and its businesses. Together, we can achieve great success.

Sincerely,





William W. McGuire, MD
President, Chairman, and Chief Executive Officer



A Message From Steve Hemsley


Our new incentive program--REWARDING RESULTS--has been designed to align with
our business segment operating model, focusing on exceptional performance
within clearly defined, high profile markets. Through the REWARDING RESULTS
program, you have an opportunity to earn significant incentive compensation.
This brochure outlines the specifics of the Leadership Results Plan and your
individual incentive opportunities.

We have great challenges facing us for 1999--financially and
operationally--from quality initiatives to customer service, human capital
advances, regulatory compliance goals and more.

Our approach to incentive compensation has evolved to directly connect our
performance and make our operating leadership more directly accountable for
specific results. Under the 1999 Leadership Results Plan, we pay significant
incentive compensation to you based on your achievement of performance
commitments.

For Corporate and Enterprise Services, the Leadership Results Plan focuses
your efforts on overall company earnings performance; that is, earnings per
share as well as certain strategic, non-financial performance measures.

For 1999, I propose a single non-financial goal--to reshape UnitedHealth
Group Corporate and Enterprise Services into a stronger, more strategic and
active ally, and a more effective controlling business model. This would
include engaging every member of the UnitedHealth Group Corporate and
Enterprise Services organization to act with greater speed and urgency and to
set the standard for cost-effectiveness in our business affairs with all our
business segments. We should strive to sharply reduce our overall numbers and
cost structure. The leadership of UnitedHealth Group Corporate and Enterprise
Services is committed to this agenda.

As we look to the future, our key challenges will be to better serve our
customers, grow and expand our markets, optimize our resources, and manage
our costs tightly.

We maintain our commitment to building a company that is more diverse, more
focused, and the best performing enterprise within the broad markets of
health and well-being. You are key to making our commitment a reality.

The Leadership Results Plan is a powerful element of your total
compensation--one that helps you reach your potential and helps drive our
business forward.

Sincerely,




Stephen J. Hemsley
Chief Operating Officer, UnitedHealth Group


                                      1



THE LEADERSHIP RESULTS PLAN:
HOW RESULTS BECOME REWARDS


- --------------------------------------------------------------------------------
Our Leadership Results Plan is driven by the performance--both financial and
non-financial--of each business segment and Corporate and Enterprise
Services' unit as well as the contribution of each leader. Generally, if you
are in salary grade 29 or above, you are eligible for the Leadership Results
Plan.

HOW IT WORKS

Each business segment and Corporate and Enterprise Services' unit has a pool
of incentive dollars based on eligible employees' base earnings, targets and
financial performance.

- -    Your individual range of opportunity for an incentive award is based on
     your salary, grade level, overall level of responsibility within the
     organization and the market. This range is expressed as a percentage of
     your base earnings.

- -    Your actual incentive award is based on your individual performance.

INCENTIVE POOLS

Incentive pools for 1999 will be closely aligned with the internal operating
income results of the business segments to reflect the operational alignment
of the organization. Corporate and Enterprise Services' units will be aligned
with company-wide performance, including Corporate earnings per share.

HOW INCENTIVE POOLS AND AWARDS ARE DETERMINED

Here are the performance measures that are used to determine incentive pools
and incentive awards:

- -    Your business segment's or Corporate and Enterprise Services'
     performance;

- -    Overall UnitedHealth Group performance, including Corporate earnings per
     share (for individuals in the executive career band only); and

- -    Your individual performance as compared to the goals and objectives
     established during the internal business planning process.

This blend of performance measurements helps ensure that UnitedHealth Group
and its businesses are working together toward common goals and allows us the
greatest opportunities for success.

Keep in mind, our internal targeted goals and measures always exceed the
externally anticipated results held by the investment community.


                                      2



BUSINESS SEGMENT AND CORPORATE AND ENTERPRISE SERVICES' PERFORMANCE

Funding for the Leadership Results Plan is based on the performance of your
business segment or Corporate and Enterprise Services' unit as follows:

- -    The financial measure for business segments is internal operating
     income, or IOI (as defined on page 4);

- -    The financial measure for Corporate and Enterprise Services is
     company-wide performance, including Corporate earnings per share;

- -    If we achieve operating income (earnings per share for Corporate and
     Enterprise Services) between 125% and 200% of payout target goal (high
     performance hurdle), potential exists for accelerated funding of the
     incentive pool at the discretion of the Office of the Chairman and the
     Board of Directors; and

- -    Non-financial performance is measured by how well your business segment
     or Corporate and Enterprise Services' unit achieves key strategic and
     quality initiatives specific to your business (such as revenue GROWTH,
     customer service, quality, compliance and human capital). The funding
     for incentive awards (as determined by financial measures) can be
     enhanced or decreased up to 20% based on accomplishment of non-financial
     strategic initiatives.

The strategic and financial initiatives for your business segment or
Corporate and Enterprise Services' unit are determined jointly by senior
leaders and the Office of the Chairman.

TIMING OF INCENTIVE AWARDS

Incentive awards generally are paid during the first quarter following the
close of the Corporate and Enterprise Services' and business segment books
for the fiscal year.

INDIVIDUAL PERFORMANCE

Your individual performance and accomplishment of individual goals and
objectives are also considered in determining the actual amount of your
incentive award.

UNITEDHEALTH GROUP PERFORMANCE

If you are a business segment executive career band member, a portion of your
incentive award (20% to 30%) is based on company-wide performance, including
Corporate earnings per share, as determined by the Office of the Chairman.


                                      3



THE INCENTIVE OPPORTUNITY: SOME EXAMPLES

Incentive awards are an important part of your total compensation package.
Each participant has a target and a range of opportunity (expressed in
percentages) for receiving an incentive award. This range is determined by
your grade, salary, overall level of responsibility within the organization
and market competitiveness.

These diagrams provide examples of how the Leadership Results Plan for a
business segment might be funded based on your segment's internal operating
income results. For this example, let's assume an IOI of $200 million.
Corporate and Enterprise Services will use company-wide performance including
Corporate earnings per share, and will operate similar to the IOI diagrams
illustrated below.

INTERNAL OPERATING INCOME THROUGH 125% PERFORMANCE


                                   [GRAPH]


INTERNAL OPERATING INCOME BEYOND THE 125% PERFORMANCE HURDLE


                                   [GRAPH]


                                      4



(SIDE-BAR THAT GOES WITH PREVIOUS PAGE)

MORE ABOUT INTERNAL OPERATING INCOME

Each business segment will be held accountable for achieving (and exceeding)
internal operating income (IOI) goals. The year-end IOI results will be a
significant measure for establishing incentive levels under the REWARDING
RESULTS program.

IOI includes revenues, directly incurred expenditures, negotiated charges
from other operating segments for services received (e.g., claims processing
support and IT usage) and amortization and depreciation related to the
segment's capital investments.

IOI excludes investment income, interest expense and Corporate allocations.
However, IOI is a migratory concept and as our financial accounting
segmentation processes progress, it is likely that certain, if not all, of
these items will eventually be moved within the business segment
accountability calculation in future years. This means that how we define IOI
may change over time.





Listed below are three examples of how incentive funding will be established.
For the following examples, please refer to charts one and two from the
previous page.

EXAMPLE 1: BUSINESS SEGMENT PERFORMS AT FINANCIAL PLAN AND DOES FAIRLY WELL
ON NON-FINANCIAL GOALS:



EXAMPLE CRITERIA                                                     FUNDING OF INCENTIVE POOL
- ------------------------------------------------------- -----------------------------------------------------
                                                     

Financial plan: IOI of $200 million                                             N/A
- ------------------------------------------------------- -----------------------------------------------------

Year-end actual: IOI of $200 million                                            100%
- ------------------------------------------------------- -----------------------------------------------------

Non-financial results: +/- up to 20%                                            10%
- ------------------------------------------------------- -----------------------------------------------------
- ------------------------------------------------------- -----------------------------------------------------

TOTAL INCENTIVE PLAN FUNDING                                                    110%


EXAMPLE 2: BUSINESS SEGMENT PERFORMS BEYOND THE HIGH PERFORMANCE HURDLE OF
125% OF PAYOUT TARGET GOAL AND ACHIEVES EXCELLENCE IN NON-FINANCIAL AREA:*



EXAMPLE CRITERIA                                                     FUNDING OF INCENTIVE POOL
- ------------------------------------------------------- -----------------------------------------------------
                                                     

Financial plan: IOI of $200 million                                             N/A
- ------------------------------------------------------- -----------------------------------------------------

Year-end actual: IOI of $226 million (refer to chart
depicting IOI beyond the 125% performance hurdle)                               150%
- ------------------------------------------------------- -----------------------------------------------------

Non-financial results: +/- up to 20%                                            20%
- ------------------------------------------------------- -----------------------------------------------------
- ------------------------------------------------------- -----------------------------------------------------

TOTAL INCENTIVE PLAN FUNDING                                                    170%


EXAMPLE 3: BUSINESS SEGMENT PERFORMS AT LESS THAN FINANCIAL PLAN AND FAILS TO
MEET THE NON-FINANCIAL GOALS:



EXAMPLE CRITERIA                                                     FUNDING OF INCENTIVE POOL
- ------------------------------------------------------- -----------------------------------------------------
                                                     

Financial plan: IOI of $200 million                                             N/A
- ------------------------------------------------------- -----------------------------------------------------

Year-end actual: IOI of $192.5 million                                          80%
- ------------------------------------------------------- -----------------------------------------------------

Non-financial results: +/- up to 20%                                            -15%
- ------------------------------------------------------- -----------------------------------------------------
- ------------------------------------------------------- -----------------------------------------------------

TOTAL INCENTIVE PLAN FUNDING                                                    65%


*    Any accelerated funding of the incentive pool is at the discretion of
     the Office of the Chairman and the Board of Directors.


                                      5



LEADERSHIP RESULTS PLAN GUIDELINES


- --------------------------------------------------------------------------------
Following are specific guidelines for the Leadership Results Plan.

ELIGIBILITY

Generally, regular employees grade 29 and above are eligible for the
Leadership Results Plan. At this level, positions are directly accountable
for achieving key Corporate and Enterprise Services' or business segment
results, generally manage staff, and determine and manage financial resources
and budgets. Certain positions are not eligible for the Leadership Results
Plan due to participation in other incentive plans, even if they meet the
eligibility criteria.

PAYMENTS

Payment of year-end incentive awards is typically separate from the normal
payroll cycle, and payments are made on a separate check. All payments will
be taxed at the current flat supplemental federal rate of 28% plus applicable
state, local and Social Security taxes. Incentive checks or pay advices (if
you're enrolled in direct deposit) are mailed directly to your home address.
Year-end incentive awards are generally paid in March following the plan year.

NEW HIRES AND PROMOTIONS

- -    New hires are eligible for the plan for the current year, depending upon
     their date of hire. New hires and promotions to salary grade 29 or above
     IN THE FOURTH QUARTER of a plan year are eligible for the Leadership
     Results Plan in the following year but are not eligible to participate
     in the plan for the current year. However, employees who were eligible
     for the Performance Results Plan or Business Results Plan prior to their
     promotion in the fourth quarter are eligible for a year-end award under
     these plans. This award will be considered by the management staff in
     the division in which you are employed as of December 31 of the plan
     year.

- -    If you are promoted to salary grade 29 or above during the year BEFORE
     THE FOURTH QUARTER, you will be eligible for the Leadership Results Plan
     at that time. The incentive funding will be based on a 5% target for the
     time you participated in the Performance Results Plan or Business
     Results Plan and your new target under the Leadership Results Plan for
     the remainder of the year. If you participated in a Sales Incentive Plan
     prior to your promotion, the incentive funding will be based solely on
     your Leadership Results Plan target from the date of promotion forward.

- -    Participants eligible for a full- or partial-year Leadership Results
     Plan incentive award are not eligible for an award under the Performance
     Results Plan or Business Results Plan.

- -    If you have multiple targets during the year, the incentive funding
     would be based on a combination of both your existing and new incentive
     targets. The targets are weighted according to the time you held each
     position.

LEAVES OF ABSENCE

- -    If you are on a leave of absence during the performance measurement
     period, any pay received during the leave (e.g., short-term disability)
     will not be included in your eligible base earnings for purposes of
     funding the incentive pool.


                                      6



- -    If you are on a leave of absence and are scheduled to receive an
     incentive award, you will receive that award upon your return to work.
     EMPLOYEES WHO DO NOT RETURN TO WORK FROM LEAVE ARE NOT ELIGIBLE TO
     RECEIVE AN INCENTIVE AWARD.

HOW INCENTIVE AWARDS AFFECT BENEFIT PLAN CONTRIBUTIONS

Leadership Results Plan incentive awards are considered compensation under
the Employee Stock Ownership Plan and 401(k) Savings Plan unless you are
eligible for the Executive Savings Plans (ESP). Employees eligible for the
ESP make deferrals on any incentive payments to the ESP rather than the
401(k) Savings Plan. Incentive payments are included in benefits compensation
for employees enrolled in the health and well-being benefit plans.

However, incentive awards are not eligible as contributions to the Employee
Stock Purchase Plan.

TRANSFERS

If a participant transfers during the year from a position that is eligible
for the Leadership Results Plan to a non-eligible position (e.g., sales), he
or she will not be eligible for a partial Leadership Results Plan incentive
award. EMPLOYEES MUST BE CLASSIFIED AS ELIGIBLE AT YEAR-END TO RECEIVE A
LEADERSHIP RESULTS PLAN AWARD.

TEMPORARY STATUS

If a participant is reclassified to temporary status, he or she is eligible
for an incentive award under the Leadership Results Plan award in the current
year if the reclassification occurs AFTER year-end.

REHIRES

- -    Incentive funding for rehired employees will be based on eligible base
     earnings from the employee's date of rehire. Earnings from service prior
     to their rehire date will not be considered. This does not apply to
     rehired employees who were previously laid off during the plan year.

- -    If you are rehired during the fourth quarter, you are not eligible to
     participate in the Leadership Results Plan. This does not apply to
     rehired employees who were previously laid off during the plan year.

TERMINATION AND DISCIPLINARY ACTION

To be eligible for an incentive award, you must be an active employee at the
time such payments are made. Employees who terminate employment prior to the
date incentive awards are paid out are not eligible for any awards. Employees
who have been on formal written disciplinary action anytime during the
performance year, including time of payout, are not generally eligible for
payment.


                                      7



TO SUM IT UP


- --------------------------------------------------------------------------------
As a leader within your business segment or Corporate and Enterprise
Services, you directly influence business performance in a variety of
ways--both through your own actions and decisions and through leadership you
provide to others.

REWARDING RESULTS illustrates our strong commitment to rewarding your high
performance. The Leadership Results Plan supports our organizational
structure by giving business segments control over setting targets, funding
and distributing incentive payments. And the plan offers you the opportunity
to earn incentive pay in addition to competitive base salary.

If you have questions after reading this material, contact your senior
business leader, your manager, or your Human Resources Generalist.



THERE IS NO GUARANTEE THAT ANY INCENTIVE PLAN PAYOUTS WILL BE MADE. UNITED
HEALTHCARE CORPORATION ("UNITEDHEALTH GROUP") HAS THE EXCLUSIVE AND BINDING
DISCRETION TO AMEND, TERMINATE OR INTERPRET THE TERMS OR CONDITIONS OF THE
INCENTIVE PLANS AT ANY TIME AND WITHOUT NOTICE. CHANGES OR EXCEPTIONS TO THIS
PLAN MUST BE MADE IN WRITING BY THE SENIOR VICE PRESIDENT OF HUMAN RESOURCES
OR THE CHIEF EXECUTIVE OFFICER OF THE COMPANY. UNITEDHEALTH GROUP ALSO HAS
THE DISCRETION TO UNILATERALLY MAKE BOTH LEGAL AND FACTUAL DETERMINATIONS
REGARDING THE PLAN. THE INCENTIVE PLANS ARE NOT AND SHALL NOT BE DEEMED TO BE
AN ENFORCEABLE CONTRACT OR AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT.

                                                                            6/99


                                      8

EX-10.(E)

                                   [PICTURE]



CONTENTS

                                                                   
Leading The Way To Financial Success...........................        1
     An Overview...............................................        1

The Basics.....................................................        2
     The ESP Advantage.........................................        2
     Who Is Eligible...........................................        2

Your Enrollment Options........................................        4
     Automatic Restoration Option Mirrors 401(k)...............        4
     Incentive Deferral Option Offers Company Match............        4
     Salary Deferral Option Offers Flexibility.................        5
     Making Changes............................................        5

Investing Your Savings.........................................        6
     Understanding Your Investment Choices.....................        6
     Changing Your Investment Choices..........................        6
     More About Your Investment Credit Choices.................        7
     Tracking Your Account Balance.............................        8

How And When Your ESP Account Is Distributed...................        9
     For New Participants Only--
     Choosing Your Distribution Method.........................        9

What You Need To Do............................................       10
     Enrollment Checklist......................................       10
     Make Your ESP Election Using The Voice Response System
     at the Retirement Plans Service Center....................       11

Questions & Answers About Your Deferral Options
Under The Executive Savings Plan Options.......................       12






LEADING THE WAY TO FINANCIAL SUCCESS

AS A MEMBER OF ITS SELECT GROUP OF MANAGEMENT AND HIGHLY COMPENSATED
EMPLOYEES, YOU ARE ELIGIBLE TO PARTICIPATE IN UNITEDHEALTH GROUP'S EXECUTIVE
SAVINGS PLANS, WHICH PROVIDE OPPORTUNITIES FOR YOU TO SAVE FOR YOUR OWN
FINANCIAL FUTURE VIA SEVERAL DEFERRAL "OPTIONS." TO PARTICIPATE IN THE PLANS
FOR THE 2000 PLAN YEAR OR OPT OUT OF THE AUTOMATIC RESTORATION OPTION, YOU
MUST MAKE THESE ELECTIONS BY DECEMBER 15, 1999.

AN OVERVIEW

As an important component of UnitedHealth Group's total compensation program,
the Executive Savings Plans (ESP) offer you a tremendous opportunity to save
on a tax-deferred basis for your future needs. For 2000, the ESP offers three
deferral options which include:

- -  Automatic Restoration Option

- -  Incentive Deferral (Leadership Plan) Option (formerly MIP)

- -  Salary Deferral Option

The Plans:

- -  Enable you to postpone income taxes by deferring your compensation until
   you leave the Company, or until your total permanent disability or death.

- -  Allow you, by participation in the Automatic Restoration Option, to enjoy
   the tax advantages of 401(k) Savings Plan that are otherwise limited by the
   Internal Revenue Code, including maximum income deferral and related
   Company matching contributions. You are automatically enrolled in the ESP
   Automatic Restoration Option.

- -  Allow you to defer under the Incentive Deferral Option, any Leadership
   Results Plan incentive award for which you are eligible, and receive a
   Company matching contribution.

- -  Allow you to defer additional compensation on an unmatched basis via the
   Salary Deferral Option.

- -  Allow you to choose among these deferral options to develop an individual
   deferral strategy that best meets your personal financial needs.

                           EXECUTIVE SAVINGS PLAN

For purposes of obtaining favorable state tax treatment for eligible
distributions, the non-qualified deferral options are established in two
separate Plans. One Plan consists of the Automatic Restoration Option, and
the other is comprised of the Incentive Deferral Option and the Salary
Deferral Option. The Plan Administrator and most election procedures are the
same for all options. This communication collectively refers to the Plans as
the "Executive Savings Plans." "Plans" or "ESP."







THE BASICS

AT UNITEDHEALTH GROUP, WE ARE COMMITTED TO PROVIDING YOU OPPORTUNITIES THAT
ARE INTENDED TO HELP YOU PREPARE FOR A FINANCIALLY SUCCESSFUL FUTURE.

THE ESP ADVANTAGE

UnitedHealth Group's 401(k) Savings Plan, Employee Stock Ownership Plan
(ESOP) and Employee Stock Purchase Plan offer eligible employees several
means of accumulating financial assets. However, these plans are subject to
restrictive IRS tax rules that limit the amount you can defer or receive
through them.

Recognizing that you and other eligible employees may want to save for the
future on a tax-deferred basis beyond the limits imposed on the 401(k)
Savings Plan and ESOP, UnitedHealth Group created the Executive Savings
Plans. They are non-qualified deferred compensation plans that allow you to
defer as much of your compensation as you wish within the current tax
environment. The Plans are not subject to the IRS restrictions that apply to
qualified plans, such as the annual elective deferral, compensation and
annual addition limits.

WHO IS ELIGIBLE

1.   In general, eligibility to participate in the ESP is determined under a
     selection process that is determined by grade level, compensation level,
     full-time status and/or length of service.

     a.  To participate in the Automatic Restoration Option, Incentive Deferral
         Option and the Salary Deferral Option for the 2000 plan year, an
         employee must meet the following selection criteria:

         i.   be employed by UnitedHealth Group on or before December 1, 1999

         ii.  be a regular, full- or part-time employee who is a member of one
              of the following grade levels:

              -  Executive Career Band

              -  Grades 31 and 32 (and meet certain compensation criteria)

              -  Medical Director in grades M2, M3 and M4

         iii. be a regular, full-time employee who is a member of:

              -  Clinical Medical Staff in grades CD2, CD3, CM2 and CM3

     b.  An employee may participate in the Plans as of January 1 of the year
         following the year in which the employee meets the eligibility
         criteria.


2


2.   Special Rules

     a.  Automatic Restoration Option

         i.   You are eligible to participate in the Automatic Restoration
              Option only if you participate in UnitedHealth Group's 401(k)
              Savings Plan, and only once you've reached one of the following
              IRS limits during 2000:

              -  You earn $170,000 in eligible compensation from UnitedHealth
                 Group.

              -  You make deferrals to a 401(k) plan that for 2000 reach the
                 annual IRS limit of $10,500.

         ii.  Once you reach one of these limits, you will automatically be
              enrolled in this Option, as described in further detail on the
              next page, unless you elect not to participate during this
              enrollment period. IF YOU DO NOT WANT TO PARTICIPATE IN THE
              AUTOMATIC RESTORATION OPTION, YOU MUST ELECT TO WAIVE
              PARTICIPATION BY DECEMBER 15, 1999.

         iii. If you do not actively participate in the 401(k) Savings Plan as
              of January 1, 2000, but elect later in 2000 to make deferral
              contributions to the 401(k) Savings Plan, you will also be
              automatically enrolled in this Option once you reach the limits
              described above, unless you elect not to participate during this
              enrollment period. IF YOU DO NOT WANT TO PARTICIPATE IN THE
              AUTOMATIC RESTORATION OPTION, YOU MUST ELECT TO WAIVE
              PARTICIPATION BY DECEMBER 15, 1999.

     b.  Incentive Deferral [Leadership Plan] Option and Salary Deferral
         Option

         i.  IF YOU WISH TO PARTICIPATE IN THE INCENTIVE DEFERRAL OR SALARY
             DEFERRAL OPTIONS FOR 2000, YOU MUST ELECT TO PARTICIPATE BY
             DECEMBER 15, 1999. Your elections will apply for the 2000 plan
             year only.


                                                                             3


YOUR ENROLLMENT OPTIONS

WHETHER YOU ARE NEWLY ELIGIBLE TO PARTICIPATE IN THE ESP OR HAVE PARTICIPATED
IN PRIOR YEARS, YOU MUST ENROLL (OR OPT OUT OF THE AUTOMATIC RESTORATION
OPTION) FOR THE 2000 PLAN YEAR BY DECEMBER 15, 1999. YOUR ENROLLMENT
ELECTIONS FOR ALL ESP OPTIONS WILL APPLY ONLY FOR THE 2000 PLAN YEAR. TO
CONTINUE PARTICIPATION IN ANY OR ALL OF THE OPTIONS IN FUTURE YEARS, YOU MUST
MAKE NEW ELECTIONS DURING THE ANNUAL ENROLLMENT PERIODS FOR THOSE FUTURE
YEARS.

AUTOMATIC RESTORATION OPTION MIRRORS 401(k)

If you participate in UnitedHealth Group's 401(k) Savings Plan during the 2000
plan year, you automatically participate in the ESP Automatic Restoration
Option once your elective deferrals in the 401(k) Savings Plan reach $10,500
or when you earn $170,000 in eligbile pay, whichever occurs first. Please note
that:

- -  Your deferral amount will be the same percentage of your eligible pay that
   you contribute to the 401(k) Savings Plan. If you wish to defer a different
   percentage of eligible pay to the Automatic Restoration Option, you must
   change your 401(k) deferral percentage BEFORE you reach the IRS deferral
   and/or compensation dollar limits. Once your deferrals under this Option
   begin, your deferral percentage cannot be changed for the rest of the 2000
   plan year.

- -  Your account will be credited with UnitedHealth Group matching
   contributions which are generally 50 cents for each dollar, up to the first
   6 percent of your eligible pay that you defer under the ESP.

- -  Once you reach one of the IRS annual limits (listed above), your Automatic
   Restoration Option deferrals automatically begin with the pay period in
   which you reach the limit.

- -  IF YOU DO NOT WISH TO PARTICIPATE IN THE AUTOMATIC RESTORATION OPTION FOR
   THE 2000 PLAN YEAR, YOU MUST "OPT OUT" BY DECEMBER 15, 1999. Call the
   Retirement Plans Service Center to make this election through the voice
   response system.

                       CALL THE RETIREMENT PLANS SERVICE
                         CENTER TO MAKE YOUR ELECTIONS:
                                 1-888-842-2756
                             TDD/TTY: 1-877-787-9759

You can make your elections through the Service Center's interactive voice
response system. Customer Service Representatives are available to assist you
from 8 a.m. to 8 p.m. Eastern time, Monday through Friday.

INCENTIVE DEFERRAL OPTION OFFERS COMPANY MATCH

This Option allows you to defer all or  a portion of your Leadership Results
Plan incentive award (award for 1999 performance, paid in 2000) into the ESP
and receive a Company matching contribution.

You may defer from 1 percent to 100 percent of your incentive award by making
a one-time election during this enrollment period. Your account will be
credit with United HealthGroup


4




matching contributions which generally are 50 cents for each dollar, up to
the first 6 percent of your Leadership Results Plan award, that you
contribute under this Option.

ENROLLMENT IN THIS OPTION IS NOT AUTOMATIC; YOU MUST ENROLL IN THIS OPTION BY
DECEMBER 15, 1999, IF YOU WISH TO DEFER ANY PORTION OF OR ALL OF THE
LEADERSHIP RESULTS PLAN AWARD WHICH YOU MAY BECOME ELIGIBLE TO RECEIVE IN
2000. You cannot change your incentive deferral election after December 15,
1999. Call the Retirement Plans Service Center to make this election through
the voice response system.


SALARY DEFERRAL OPTION OFFERS FLEXIBILITY

With this Option, you can defer from 1 percent to 100 percent of all 2000
eligible pay. Your eligible pay does not include any Leadership Results Plan
incentive award payments you may receive. Salary Deferral Option
contributions begin within your first eligible pay period in 2000. Because
this Option is intended as an additional deferral opportunity rather than a
"make up" for limitations imposed on your deferrals to the 401(k) Savings
Plan, you are not credited with a Company match on deferrals you make under
this Option.

ENROLLMENT IN THIS OPTION IS NOT AUTOMATIC; YOU MUST ENROLL IN THIS OPTION BY
DECEMBER 15, 1999, IF YOU WISH TO DEFER ANY PORTION OF OR ALL OF YOUR 2000
ELIGIBLE PAY. You cannot change your salary deferral election after December
15, 1999. Call the Retirement Plans Service Center to make this election
through the voice response system.

WHAT IS ELIGIBLE PAY?

For purposes of the Automatic Restoration Option and the Salary Deferral
Option, eligible pay is base salary plus any non-stock periodic incentives
other than your award under the Leadership Results Plan.

MAKING CHANGES

Under the current tax laws, once a deferral election is made, it is generally
irrevocable for the remainder of the plan year.



                                                                             5





100% VESTING

You are always 100 percent vested in your deferrals, matching Company
contributions, and the investment earnings and losses on both of them.


INVESTING YOUR SAVINGS

YOU MAY ELECT TO HAVE YOUR ESP DEFERRALS AND UNITEDHEALTH GROUP MATCHING
CONTRIBUTIONS CREDITED WITH INVESTMENT EARNINGS THAT ARE BASED ON ONE OR MORE
OF THE FOUR INVESTMENT CREDIT FUNDS OFFERED UNDER THE PLANS. YOUR INVESTMENT
ELECTION APPLIES TO ALL DEFERRALS UNDER THE ESP OPTIONS IN WHICH YOU
PARTICIPATE. KEEP IN MIND, THE INVESTMENT CREDIT FUNDS ARE MERELY MEASURING
TOOLS TO DETERMINE THE VALUE OF YOUR ACCOUNT UNDER THE PLANS, AND
UNITEDHEALTH GROUP IS NOT REQUIRED TO PURCHASE SUCH INVESTMENTS.

UNDERSTANDING YOUR INVESTMENT CHOICES

Your investment credit funds include:

- -    First American Prime Obligations Fund

- -    Loomis Sayles Bond Fund

- -    First American Equity Index Fund

- -    PBHG Growth Fund

As you select or change your investment credit fund(s), keep in mind that
your elections are subject to investment risk. As with any investment, if the
returns credited on the fund(s) you choose are positive, your account balance
will increase. If the returns credited are negative, your account balance
will decrease. Please review the fund information provided with your
enrollment materials before making your investment election. Also keep in
mind:

- -    If you are a new participant for the 2000 plan year and don't make an
     investment credit fund election by December 15, 1999, you will be deemed
     to have elected to receive credits under the Loomis Sayles Bond Fund, and
     that deemed election will continue until you elect to make a change as
     described in the next section of this brochure.

- -    If you participated in 1999 or a prior year and previously made or were
     deemed to have made an investment credit fund election, that election for
     your existing account balance and future contributions will carry over to
     and be effective in 2000, unless you make a new election during this
     enrollment period, or any month thereafter.

CHANGING YOUR INVESTMENT CHOICES

You can change the investment credit funds under which your existing ESP
account and/or any future deferrals are credited once per calendar month on
any day during the month. To make a change, call the Retirement Plans Service
Center toll-free at 1-888-842-2756. Follow the prompts on the voice response
system to make your elections.

Investment elections are only effective on business days, with the exception
of New York Stock Exchange holidays. If your elections are confirmed by
4 p.m. Eastern time, they will become effective the same business day. If
your elections are confirmed after


6





4 p.m. Eastern time, the change will become effective on the next business
day. If your intent is to change the investment funds for both future
deferrals and existing (cumulative) account balances, separate transactions
are required for each:

- -    To change future deferrals, select "Investment Direction" from the voice
     response system transaction menu.

- -    To change your existing (cumulative) account balances, select "Fund
     Transfers/Account Reallocations" from the voice response system
     transaction menu.

If you participated in the ESP in 1999 or a prior year, your INVESTMENT
DIRECTIONS that were in effect as of December 31, 1999 will carry over into
2000. No action is necessary on your part, unless you want to make a change.


MORE ABOUT YOUR INVESTMENT CREDIT CHOICES

You can elect that your account be credited with the investment performance
of one or any combination of the following four funds:

- -    First American Prime Obligations Fund. The fund's investment objective
     is maximum current income to the extent consistent with the preservation
     of capital and the maintenance of liquidity. The fund invests in money
     market instruments including debt obligations issued by the U.S.
     government, its agencies or instrumentalities, and corporate obligations
     including high-grade commercial paper, non-convertible corporate debt and
     loan participation interests. The fund may also invest in repurchase
     agreements related to these securities.

- -    Loomis Sayles Bond Fund. The fund's investment objective is high total
     investment return through a combination of current income and capital
     appreciation. The fund seeks to attain its objective by normally
     investing substantially all of its assets in debt securities (including
     convertibles), although up to 20 percent of its assets may be invested
     in preferred stocks. At least 65 percent of the fund's total assets will
     normally be invested in bonds. The fund may invest any portion of its
     assets in securities of Canadian issuers, and a limited portion (20
     percent) of its assets in securities of other foreign issuers. The fund
     will also invest up to 35 percent of its assets in securities of below
     investment grade quality.

- -    First American Equity Index Fund. This fund seeks to achieve investment
     results that correspond to the performance of the Standard and Poor's
     500 Composite Stock Price Index (S&P 500). Fund managers utilize a
     computer program that identifies which stocks should be purchased or
     sold to duplicate the composition of the S&P


                                                                              7




INVESTING YOUR SAVINGS (Continued)


500 as much as possible. The fund invests substantially in common stocks
included in the S&P 500. The fund's advisor believes that its objective can
best be achieved by investing in the common stocks of approximately 250 to
500 of the issues included in the S&P 500.

- -   PBHG Growth Fund. The fund seeks capital appreciation and invests
    primarily in common stocks and securities convertible into stocks of small
    and medium capitalization companies (companies with market
    capitalizations or annual revenues of up to $2 billion) believed by the
    advisor to have an outlook for strong earnings growth and the potential
    for significant capital appreciation. The average market capitalizations
    or annual revenues of holdings in the portfolio may fluctuate over time
    as a result of market valuation levels and the availability of specific
    investment opportunities.

You may elect that your accounts be credited with investment performance in
any combination of the investment credit funds in 1 percent increments, as
long as your total investment percentage equals 100 percent.


TRACKING YOUR ACCOUNT BALANCE

For your convenience, you have three ways to access information about your
ESP account balance.

- -   Internet Access. You can review your ESP account information via the
    Internet at http://benefits.unitedhealthgroup.com (without the "www") or
    https://online.merlife.com/401k/uhc. From benefits.unitedhealthgroup.com,
    click on "Your 401(k) and ESOP Information." This inquiry Web site allows
    you to track your ESP investments more closely, get an at-a-glance review
    of your account, obtain ESP investment credit performance, and much more.
    In addition, you can print any of the screens you access.

- -   Voice Response System. You have daily access to your account information
    by calling the Retirement Plans Service Center toll free at 1-888-842-2756.
    Use the automated voice response system or speak to a Customer Service
    Representative (CSR) to obtain information about your account or to
    initiate transactions. CSRs are available from 8 a.m. until 8 p.m. Eastern
    time, Monday through Friday.

- -   Quarterly Statement. You will receive a statement, currently on a
    quarterly basis, showing a summary of your fund credit activity, and how
    each transaction affects your total account credits. This statement will
    show the activity in your account since the last statement.


8


HOW AND WHEN YOUR ESP ACCOUNT IS DISTRIBUTED

YOUR ACCOUNT WILL BE DISTRIBUTED TO YOU WHEN YOUR EMPLOYMENT WITH
UNITEDHEALTH GROUP TERMINATES, YOU BECOME PERMANENTLY AND TOTALLY DISABLED AS
DETERMINED UNDER THE TERMS OF THE PLANS, OR IN THE EVENT OF YOUR DEATH.

FOR NEW PARTICIPANTS ONLY - CHOOSING YOUR DISTRIBUTION METHOD

If you are a new participant, upon your initial enrollment, you must elect an
irrevocable distribution method. You may choose from three distribution
methods. The method you elect will be used for distributions under all
Options in which you participate in the Executive Savings Plans.

If you do not elect a distribution option upon your first enrollment in the
ESP, your account balance will automatically be paid in a lump sum in
February of the year following the year in which your employment terminates,
you become permanently and totally disabled, or die.

YOUR DISTRIBUTION ELECTION IS IRREVOCABLE AND CANNOT BE CHANGED FOLLOWING
YOUR INITIAL ENROLLMENT.

Your distribution choices are:

- -   Lump Sum: A single payment of your entire account balance is paid to you
    or your designated beneficiary in February of the year following the year
    in which your employment terminates, you become permanently and totally
    disabled, or die. For example, if you terminate employment on January 14,
    2005, a single lump sum distribution will be made to you in February 2006.

- -   Three Annual Installments: Three substantially equal installments will be
    paid annually beginning in February of the year following the year in
    which your employment terminates, you become permanently and totally
    disabled, or die. For example, if you terminate employment on November 1,
    2005, your installments will be paid in February 2006, February 2007, and
    February 2008.

- -   Five Annual Installments: Five substantially equal installments will be
    paid annually beginning in February of the year following the year in
    which your employment terminates, you become permanently and totally
    disabled, or die. For example, if you terminate employment on April 25,
    2005, your installments will be paid in February 2006, February 2007,
    February 2008, February 2009, and February 2010.

TAXATION OF YOUR DISTRIBUTION

Whether you elect that your distribution be paid to you in a lump sum or in
installments, the payments will be taxable in the year you receive them. The
payments you eventually receive will not, however, be subject to FICA
taxation in the year you receive them. The reason for this is that the
amounts that you defer to the ESP are subject to FICA taxation in the year in
which you contribute them to the ESP.

No special tax treatments or early tax withdrawal penalties apply, as the
Executive Savings Plans are non-qualified plans. Also, the distributed
balance is not eligible for rollover into an Individual Retirement Account
(IRA) or another employer's plan.


                                                                              9


REMINDER: UNLIKE OTHER BENEFIT PROGRAMS, YOU MUST RE-ENROLL (OR OPT OUT OF
THE AUTOMATIC RESTORATION OPTION) DURING EACH YEAR'S APPLICABLE ENROLLMENT
PERIOD TO PARTICIPATE DURING THE UPCOMING PLAN YEAR. ENROLL BY DECEMBER 15,
1999 TO PARTICIPATE EFFECTIVE JANUARY 1, 2000.

CONSULT YOUR TAX OR FINANCIAL ADVISOR

Participating in the non-qualified Plans reduces your current take-home pay
by deferring your salary to a future point in time. Before deciding whether
or not to enroll in the Executive Savings Plans for 2000, you may want to
consult your personal tax or financial advisor to determine how these Plans
might fit into your long-term financial goals.

WHAT YOU NEED TO DO

IF YOU PLAN TO PARTICIPATE IN THE ESP FOR 2000, YOU MUST MAKE YOUR ELECTIONS
ON OR BEFORE DECEMBER 15, 1999. CALL THE RETIREMENT PLANS SERVICE CENTER AT
1-888-842-2756 (TDD/TTY: 1-877-787-9759) TO MAKE YOUR ELECTIONS VIA THE VOICE
RESPONSE SYSTEM. IF YOU NEED ASSISTANCE. CUSTOMER SERVICE REPRESENTATIVES ARE
AVAILABLE TO ASSIST YOU BETWEEN 8 A.M. AND 8 P.M. EASTERN TIME, MONDAY
THROUGH FRIDAY.

ENROLLMENT CHECKLIST

Automatic Restoration Option

/ / You automatically participate in the Automatic Restoration Option for the
    2000 plan year once your elective deferrals in the 401(k) Savings Plan
    reach $10,500 or when you earn $170,000 in eligible pay, whichever occurs
    first.

/ / If you wish to "opt out" of this Option, you must make this election by
    December 15, 1999, via the voice response system at the Retirement Plans
    Service Center.

Incentive Deferral and Salary Deferral Options

/ / Decide whether or not participation in the Incentive Deferral and/or
    Salary Deferral Options is right for you. You may find it helpful to
    consult with a tax or financial advisor. Then, if you decide to
    participate in 2000, make your elections by December 15, 1999, via the
    voice response system at the Retirement Plans Service Center.

/ / If you are currently participating in either or both Options, you must
    re-enroll by December 15, 1999 to continue participating in 2000.

/ / Remember, the only way to defer all or a portion of your Leadership
    Results Plan incentive award is to elect to participate in the Incentive
    Deferral Option.

Beneficiary Designations for All ESP Options

/ / If you decide to participate in the ESP, complete and return the
    beneficiary designation form included in your enrollment packet. Please
    note:

    -   If you have previously completed a beneficiary form for the ESP and
        do not wish to change that designation, no action is necessary. If you
        wish to change your beneficiary, complete the form and return it to
        the address indicated on the form.

    -   If you do not designate a beneficiary, your benefits will be paid in
        accordance with the Plans' provisions in the event of your death.


10



Questions

/ / If you have questions, call the Retirement Plans Service Center and elect
    to speak with a Customer Service Representative (CSR). CSRs are available
    from 8 a.m. until 8 p.m. Eastern time, Monday through Friday.


MAKE YOUR ESP ELECTIONS USING THE VOICE RESPONSE SYSTEM AT THE RETIREMENT
PLANS SERVICE CENTER

You can make your enrollment elections and change your investment elections
using the Retirement Plans Service Center's interactive voice response
system. You do not need to speak to a representative to process your
transactions. If you need assistance while making your elections, Customer
Service Representatives are available to assist you between 8 a.m. and 8 p.m.
Eastern time, Monday through Friday. To make a transaction, simply:

1.   Call 1-888-842-2756 anytime, except from Saturday at 11 p.m. to Sunday
     at 6 a.m. and Monday from 3 a.m. to 6 a.m. Eastern time.

2.   Enter your Social Security Number and your personal identification
     number (PIN). IF YOU ARE A NEW PARTICIPANT AND HAVE NEVER CALLED THE
     RETIREMENT PLANS SERVICE CENTER REGARDING THE ESP, THE 401(k) SAVINGS
     PLAN OR THE EMPLOYEE STOCK OWNERSHIP PLAN, YOUR TEMPORARY PIN WILL BE
     THE LAST FOUR DIGITS OF YOUR SOCIAL SECURITY NUMBER. You will be asked
     to enter a new PIN and then verify your selection.

3.   Listen and choose the appropriate option. If you call from a touch-tone
     telephone, make your decisions by pressing the appropriate number on your
     telephone keypad when prompted. If you don't have access to a touch-tone
     telephone, a CSR can make your elections for you.

4.   Confirm each transaction when prompted. After doing so, you will receive
     a confirmation number. If you hang up before confirming your transaction,
     your choices will not be entered into the system for processing. To
     cancel a pending transaction, you must speak to a CSR before 4 p.m.
     Eastern time on the same day you elected the transaction.

5.   Review your confirmation statement for accuracy. A confirmation of your
     elections will be mailed to your home address on record within two
     business days.


                                                                             11





QUESTIONS & ANSWERS

ABOUT YOUR DEFERRAL OPTIONS UNDER THE EXECUTIVE SAVINGS PLANS OPTIONS


Q1   WHAT ARE THE DIFFERENCES BETWEEN THE EXECUTIVE SAVINGS PLANS AND THE
     401(k) SAVINGS PLAN?

A1   UnitedHealth Group's 401(k) Savings Plan is intended to be a "qualified
     plan" under the Internal Revenue Code. Under 401(k) plans, participants
     can make pre-tax deferrals of income into a trust fund, subject to
     certain limits on the amount that can be deferred. The Executive Savings
     Plans apply only to a select group of senior management and highly
     compensated employees and are not qualified plans, thus, these
     limitations do not apply.
     These Executive Savings Plans offer several advantages:
     -   Under all three ESP Options, you have substantial deferral
         opportunities;
     -   Under the Automatic Restoration Option, your account will be
         credited with UnitedHealth Group matching contributions which are
         generally 50 cents for each dollar, up to the first 6 percent of your
         eligible pay, that is deferred; and
     -   Under the Incentive Deferral Option, you have the ability to receive
         matching contributions which are generally 50 cents for each dollar,
         up to the first 6 percent of your Leadership Results Plan award, that
         you defer.

     The main disadvantage is that your funds are not as secure as those held
     in a qualified plan.

Q2   DOES MY PARTICIPATION IN THE 401(k) SAVINGS PLAN AFFECT MY ABILITY TO
     PARTICIPATE IN THE ESP?

A2   No. Participation in the 401(k) Savings Plan does not affect your
     ability to participate in the Executive Savings Plans. You can
     participate in either or both Plans. However, you can participate in
     the Automatic Restoration Option and will be automatically enrolled in
     it only if you participate in the 401(k) Savings Plan and reach either
     the deferral or compensation limit.

Q3   WHAT ARE MY CHOICES FOR RECEIVING DISTRIBUTIONS FROM THE PLANS?

A3   When you elect to participate in the Plans for the first time, you must
     elect the form of payment you wish to eventually receive upon your
     employment termination, permanent and total disability, or death. Your
     distribution options are:
     -   One lump sum payment;
     -   Annual installments over a three-year period; or
     -   Annual installments over a five-year period.
     If you have participated in the ESP in prior years and did not elect a
     distribution method, or enroll for the fist time for the 2000 plan year
     and do not elect a distribution method, it will be automatically paid out
     in a lump sum in February of the year following the year of your
     employment termination, permanent and total disability, or death. The ESP
     distribution method you elect during your initial enrollment is
     irrevocable.


12





Q4   WHY DO I HAVE TO MAKE A DEFERRAL ELECTION BEFORE I KNOW WHAT I WILL BE
     PAID?

A4   In exchange for the opportunity to defer taxation on unearned income
     under the ESP, the IRS requires that an irrevocable election to defer
     income be made before the income is actually earned. Since your election
     will remain in effect for an entire year, you may want to carefully plan
     your deferral elections.

Q5   WHAT WOULD HAPPEN TO MY DEFERRALS IN THE EVENT THAT UNITEDHEALTH GROUP
     DECLARES BANKRUPTCY OR BECOMES INSOLVENT?

A5   In the unlikely event that UnitedHealth Group declares bankruptcy or
     becomes insolvent, ESP participants would be viewed as general creditors
     and the claims for their accounts would be treated as unsecured creditors
     of the Company. Typically, ESP participants would share, on a pro-rata
     basis with all other general unsecured creditors of the Company, in any
     assets that remain after payment of the Company's obligations to secured
     creditors. In contrast, benefits under the UnitedHealth Group 401(k)
     Savings Plan would not be affected by the bankruptcy or insolvency of
     UnitedHealth Group.

Q6   CAN DISTRIBUTIONS BE ROLLED OVER TO AN IRA OR ANOTHER EMPLOYER'S
     QUALIFIED OR NON-QUALIFIED PLAN?

A6   No. Because the Executive Savings Plans are not IRS tax-qualified plans,
     you cannot roll your ESP distributions into an IRA or to another
     employer's qualified or non-qualified plan when you leave UnitedHealth
     Group. We encourage you to seek professional tax advice in determining
     the best distribution election for your individual financial
     circumstances.

Q7   HOW CAN I DETERMINE HOW WELL THE INVESTMENT CREDIT OPTIONS ARE
     PERFORMING?

A7   You have several ways to access information about the investment credit
     options:

     -   Log on to http://benefits.unitedhealthgroup.com or
                   http://online.metlife.com/401k/ubc
         From benefits.unitedhealthgroup.com, click on "Your 401(k) and ESOP
         Information" to link to the site.

     -   You also have daily access to your account and the quarterly
         performance of the investment credit options by calling the
         Retirement Plans Service Center at 1-888-842-2756.

     -   In addition, you will receive a quarterly statement of your account
         balance. The statement includes the investment credit performance of
         each of the fund options.

                          (CONTINUED ON BACK COVER)


                                                                             13





QUESTIONS & ANSWERS (Continued)

Q8   CAN I CHANGE MY DISTRIBUTION ELECTION AFTER I BEGIN PARTICIPATING IN THE
     PLANS?

A8   No. Once your election has been made to defer funds into the Plans, the
     IRS requires that you not be permitted to exercise any subsequent control
     over the form or timing of your distribution. If you were allowed to
     change your distribution election, the IRS would generally consider you
     to be in constructive receipt of your account, and your account would be
     subject to tax in the year in which the election is changed.

Q9   ARE MY DEFERRAL CONTRIBUTIONS AND ANY COMPANY MATCHING CONTRIBUTIONS
     MADE TO THE ESP SUBJECT TO INCOME TAXES AND/OR SOCIAL SECURITY TAXES AT
     THE TIME THAT THEY ARE CONTRIBUTED TO THE ESP?

A9   The contributions that you make to the ESP, and the Company matching
     contributions, are not subject to federal income taxation in the year in
     which they are contributed to the ESP. Under the laws of most states,
     these contributions are also generally not subject to state income
     taxation in the year of contribution; however, some states have special
     rules that may cause a portion of your deferrals to be subject to tax.

     Your deferral contributions and any Company matching contributions are
     subject to FICA taxation in the year in which they are contributed to the
     ESP. Whether these contributions are actually taxed depends on the
     element of the FICA tax addressed. The FICA tax has two elements: the
     OASDI portion, for which an annual wage limit applies; and the Medicare
     hospital portion, for which no wage limit applies. The wage base for 2000
     for the OASDI portion of the tax is $76,200. If at the time that deferral
     and matching contributions are contributed to the ESP, you have not
     exceeded the OASDI wage base, the OASDI tax will be withheld before the
     contributions are made. Once you reach the $76,200 wage base, the OASDI
     tax will not be withheld from subsequent deferrals and match. On the
     other hand, since the Medicare hospital portion of the FICA tax is
     applied without limit to all of your compensation, this tax will be
     withheld from all of your deferrals and any matching contributions for
     2000, before they are contributed to the ESP.



THIS BROCHURE PROVIDES HIGHLIGHTS OF THE UNITED HEALTHCARE CORPORATION
("UNITEDHEALTH GROUP") EXECUTIVE SAVINGS PLANS. IF THERE IS A CONFLICT
BETWEEN THE INFORMATION IN THIS BROCHURE AND THE PLAN DOCUMENT, THE PLAN
DOCUMENT WILL GOVERN. UNITEDHEALTH GROUP RESERVES THE RIGHT TO AMEND, MODIFY
OR TERMINATE THE PLANS AT ANY TIME. PARTICIPATION IN THE EXECUTIVE SAVINGS
PLANS IS PROVIDED AS A BENEFIT TO ELIGIBLE EMPLOYEES. PARTICIPATION DOES NOT
GUARANTEE EMPLOYMENT.


14

EX-10.(F)

                              EMPLOYMENT AGREEMENT

This Agreement, effective as of October 13, 1999, is made by and between
William W. McGuire, M.D. ("Executive") and United HealthCare Corporation,
("UnitedHealth Group" or the "Company") for the purpose of setting forth the
terms and conditions of Executive's employment by UnitedHealth Group and to
protect UnitedHealth Group's knowledge, expertise, customer and provider
relationships, and the confidential information UnitedHealth Group has
developed about its customers, providers, products, operations, and services.
As of the Effective Date (as defined in Section 3(a)), this Agreement
supersedes that certain Employment Agreement, effective as of January 1,
1996, and any prior similar agreement or agreements between Executive and
UnitedHealth Group or any of UnitedHealth Group's subsidiaries or affiliates.

1.  EMPLOYMENT.  UnitedHealth Group hereby employs Executive to serve as its
Chief Executive Officer. Executive shall, during the term of his employment
hereunder and subject to the supervision and control of the Board of
Directors of UnitedHealth Group (the "Board of Directors"), perform such
duties, have such power, and exercise such supervision and control with
regard to the business of UnitedHealth Group as are commonly associated with
or appropriate to the office of Chief Executive Officer, including, but not
limited to, the day-to-day general management, supervision and control of all
businesses and operations of UnitedHealth Group and its subsidiaries. In
furtherance thereof, Executive shall report to the Board of Directors, and
all other senior executives of UnitedHealth Group and its subsidiaries shall
report to Executive or as Executive may direct. In addition, Executive shall
perform such other duties of a senior executive nature as the Board of
Directors and Executive from time to time determine to be mutually
acceptable. Executive accepts such employment on the terms and conditions set
forth in this Agreement and, except as specifically superseded by this
Agreement, subject to all of UnitedHealth Group's policies and procedures, as
changed from time-to-time, in regard to its employees generally. During the
period of his employment, the Board of Directors shall nominate Executive as
a director for election by the stockholders of UnitedHealth Group to the
Board of Directors and the Board of Directors shall elect Executive as
Chairman of the Board of Directors.

2.  COMPENSATION.

         (a)  BASE SALARY. Executive shall initially be paid a minimum base
              annual salary in the amount of $1,600,000 payable bi-weekly. From
              time-to-time the Board of Directors shall review Executive's
              performance and shall consider increasing Executive's
              compensation. Effective on each succeeding January 1 during the
              term of this Agreement, Executive's then-current minimum base
              annual salary shall be increased by a minimum of $100,000.

         (b)  ANNUAL STOCK OPTIONS. Executive shall receive each calendar year
              during the Initial Term of this Agreement (as defined in Section
              3(a)) and each calendar year during any extension of the Initial
              Term in accordance with this



              Agreement, nonqualified options to purchase a minimum of 325,000
              shares of UnitedHealth Group's Common Stock (the "Annual
              Options"). The Annual Options shall be granted on such date or
              dates as Executive requests by oral notification to the Chair of
              the Compensation and Human Resources Committee (with such
              notification confirmed promptly in writing).  To the extent
              Executive has not otherwise requested the issuance of Annual
              Options representing the right to purchase 325,000 shares in any
              year, Annual Options representing such amount shall be issued as
              of the last business day of such year. The exercise price for the
              Annual Options shall be the closing price for UnitedHealth Group
              Common Stock on the date of issuance. Each Annual Option issued
              pursuant to this Section 2(b) shall vest over a period of four
              years at the rate of 25 percent per year on January 1 of each
              year following the grant of such option, subject to earlier
              vesting as otherwise provided in Section 3 of this Agreement.
              Each Annual Option shall be subject to the terms and conditions
              of UnitedHealth Group's Amended and Restated 1991 Stock and
              Incentive Plan, or any substitute or similar successor plan
              (the "Stock Plan"). Notwithstanding the foregoing provisions of
              this Section 2(b), Executive shall be eligible to receive
              additional awards of nonqualified options, as determined by the
              Board of Directors, in accordance with the normal practices of
              UnitedHealth Group for successful performance.

         (c)  SPECIAL STOCK OPTION GRANT. In addition to the Annual Options
              contemplated by Section 2(b), Executive shall also receive an
              option (the "Special Option") to purchase 1,000,000 shares of
              UnitedHealth Group Common Stock. The Special Option shall be
              substantially in the form of Exhibit 2(c) and shall be subject to
              the terms and conditions of the Stock Plan. The exercise price of
              the Special Option shall be $40.125 per share subject to
              adjustment as provided in the Stock Plan. The Special Option will
              expire on the tenth anniversary of its issuance. The Special
              Option will become exercisable on the ninth anniversary of its
              issuance, subject to acceleration upon the occurrence of certain
              performance events as specified in the Special Option.

         (d)  BONUS AND STOCK PLANS. Executive shall be eligible to participate
              in UnitedHealth Group's incentive bonus and other bonus plans and
              shall be eligible to receive grants or awards pursuant to
              UnitedHealth Group's stock option and incentive plans, all in
              accordance with the terms and conditions of those plans and on a
              basis consistent with that customarily provided for senior
              officers at the highest level of UnitedHealth Group. For purposes
              of the Company's Management Leadership Results Plan or any
              substitute or similar successor plan, Executive's target incentive
              awards shall be equal to 150% of Executive's then current base
              annual salary.

                                       2



         (e)  SPECIAL BONUS. In recognition of Executive's strategic
              accomplishments over the past several years, including Executive's
              leadership in implementing the Company's realignment, in making
              successful startup investments in the health care field, in
              augmenting UnitedHealth Group's senior executive management and
              creating leadership succession, Executive shall be entitled to
              receive a special one-time bonus in the amount of $2,600,000 (the
              "Special Bonus"). The Special Bonus shall be paid in cash or
              UnitedHealth Group Common Stock, as Executive elects, upon
              reasonable notice to the Company. If Executive elects to be paid
              in Common Stock, the shares shall be valued at their closing price
              on the date of payment. The Special Bonus shall be paid on January
              4, 2000, subject only to Executive's continued employment as of
              such date.

         (f)  EMPLOYEE BENEFITS. Executive shall be eligible to participate in
              UnitedHealth Group's other employee benefit plans, including
              without limitation, any life, health, dental, short-term and
              long-term disability insurance coverage and any retirement or
              savings plans, in accordance with the terms and conditions of
              those plans and on a basis consistent with that customarily
              provided for senior officers at the highest level of UnitedHealth
              Group. Executive shall also receive other benefits consistent with
              his office and position, which benefits shall include, without
              limitation, an allowance to be determined periodically by the
              Chair of the Compensation and Human Resources Committee, on behalf
              of the Committee, and acceptable to Executive, for security
              considerations (such as home and personal security) and for tax
              and financial planning expenses. Executive may utilize any
              UnitedHealth Group aircraft for Executive's personal business up
              to such amount as represents an income tax benefit to the
              Executive of not more than 10% of Executive's then current base
              salary pursuant to Section 2(a). Executive shall be responsible
              for the payment of all income taxes payable by Executive as a
              result of the personal use of UnitedHealth Group aircraft.

         (g)  SUPPLEMENTAL EMPLOYEE RETIREMENT PLAN. UnitedHealth Group shall
              provide Executive a supplemental retirement benefit (the
              "Supplemental Employee Retirement Plan") in an amount equal to the
              following percentages of his average Cash Compensation (as defined
              in Section 5(a)) for the three calendar years immediately
              preceding termination of employment hereunder:




                       AGE               PERCENTAGE
                       ---               ----------
                                      
                       52                   47.5
                       53                   50.0
                       54                   52.5
                       55                   55.0
                       56                   56.0
                       57                   57.0


                                        3



                       58                   58.0
                       59                   59.0
                       60                   60.0
                       61                   61.0
                       62                   62.0
                       63                   63.0
                       64                   64.0
                       65                   65.0



              Executive will be 100 percent vested in such benefit as of January
              1, 1999. The supplemental benefit shall be paid as a joint and
              survivor annuity, and Executive's Spouse (as hereinafter defined)
              shall be entitled to a benefit, at no cost to Executive, equal to
              50 percent of the benefit payable to Executive upon termination of
              this Agreement. Provided, however, if Executive dies while
              actively employed, his Spouse shall receive a survivor annuity as
              if Executive had terminated this Agreement the day before his
              death. Executive shall have the option to convert such annuity to
              a lump sum payment or such other actuarial equivalent optional
              form of payment if Executive makes an irrevocable election at
              least one year prior to termination of this Agreement or if less
              than one year prior to termination of this Agreement if such
              election is agreeable to UnitedHealth Group in its sole
              discretion. The actuarial equivalent value of any optional form of
              benefit shall be determined on the basis of an interest rate of 4%
              per annum and such other actuarial assumptions as are reasonable
              and agreeable to the Executive and UnitedHealth Group. The
              supplemental benefit shall be payable in accordance with Section 3
              or as the parties otherwise agree. For purposes of this section,
              "Spouse" means the person to whom Executive was legally married on
              the date of Executive's death. If the age difference between
              Executive and Spouse exceeds five years, the benefit payable to
              the Spouse shall be actuarially determined as if the age
              difference between Executive and Spouse were five years.

         (h)  VACATION AND ILLNESS. Executive shall be entitled to paid vacation
              and sick leave benefits each year in accordance with UnitedHealth
              Group's then-current policies and on a basis consistent with that
              customarily provided for senior officers at the highest level of
              UnitedHealth Group.

         (i)  ADDITIONAL INSURANCE. In addition to any other insurance to which
              Executive is entitled to under Section 2(f), UnitedHealth Group
              shall provide and pay for, and Executive shall own, a term life
              insurance policy on Executive in an amount equal to $5,500,000,
              which policy shall include an option for Executive to purchase, at
              Executive's expense, additional term life insurance on Executive
              in an amount equal to $3,200,000, and an individual supplemental
              long term "own occupation" disability insurance policy, which may
              be self-

                                          4



              insured by UnitedHealth Group, providing for monthly disability
              income payments to Executive equal to his then-applicable monthly
              pro rata annual base salary reduced by any monthly payments to
              Executive under other individual or group disability income plans
              or policies provided and paid for by UnitedHealth Group. The
              monthly disability income payments to Executive shall begin at
              such time as Executive becomes Permanently Disabled as defined
              in Section 5(a) and shall continue until Executive ceases to be
              disabled, until five years have elapsed, or until Executive
              reaches age 65. UnitedHealth Group shall compensate Executive
              on an after-tax basis for any additional income taxes payable by
              Executive as a result of UnitedHealth Group's payment of
              premiums with respect to the insurance policies described in this
              subsection.

3.       TERM AND TERMINATION.

         (A)  TERM. The term of this Agreement shall begin effective as of
              October 13, 1999 (the "Effective Date") and shall continue in full
              force and effect until the fifth anniversary of the Effective Date
              (the "Initial Term"), unless and until terminated as set forth
              below. The term of this Agreement shall be automatically extended
              for an additional one-year period at the end of each year of the
              Initial Term and of each year thereafter, unless and until
              terminated as set forth below, unless either party shall have
              delivered a written notice to the other party of its intention not
              to renew this Agreement at least 120 days prior to October 13 of
              any such year.

         (B)  TERMINATION OF AGREEMENT.

                  (i)      This Agreement may be terminated at any time by the
                           mutual written agreement of the parties.

                  (ii)     This Agreement and Executive's employment may be
                           terminated by UnitedHealth Group for any reason and
                           at any time upon 30 days' prior written notice to
                           Executive.

                  (iii)    Executive may resign his employment and terminate
                           this Agreement without Good Reason (as defined in
                           Section 5(a)) by 30 days' prior written notice to
                           UnitedHealth Group.

                  (iv)     This Agreement shall automatically terminate upon the
                           death or Permanent Disability (as defined in Section
                           5(a)) of Executive.

                  (v)      This Agreement may be terminated by UnitedHealth
                           Group for Cause immediately upon written notice to
                           Executive.

                                      5



                  (vi)     This Agreement and Executive's employment may be
                           terminated by Executive for Good Reason (as defined
                           in Section 5(a)) upon 30 days' prior written notice
                           from Executive to UnitedHealth Group, specifying such
                           Good Reason; provided that such notice is given
                           within 120 days after the initial occurrence of such
                           Good Reason, and provided further that the events
                           giving rise to Good Reason shall not have been
                           remedied as of the date of such notice.

         (c)  TERMINATION OF EMPLOYMENT BY UNITEDHEALTH GROUP FOR CAUSE. If
              Executive's employment with UnitedHealth Group is terminated by
              UnitedHealth Group under Section 3(b)(v) for Cause prior to the
              end of the term of this Agreement then upon termination of the
              Executive's employment:

                  (i)      All cash compensation payable to Executive shall
                           cease as of the date of termination.

                  (ii)     Executive shall be entitled to begin receiving
                           payments under the Supplemental Employee Retirement
                           Plan described in Section 2(g) as of the date of
                           termination.

                  (iii)    Executive's participation in the health care
                           coverage, life insurance, or other employee benefit
                           plans of UnitedHealth Group shall terminate in
                           accordance with applicable law and those plans' terms
                           and conditions. Executive shall receive any benefits
                           payable under Section 2(f) of this Agreement within
                           sixty days of such termination.

                  (iv)     Any stock options or grants awarded Executive under
                           any of UnitedHealth Group's stock option or grant or
                           similar stock plans shall expire and cease to be
                           exercisable at the end of ninety days from the
                           effective date of such termination.

                  (v)      All accrued and unpaid vacation to the date of
                           termination shall be paid to the Executive.

         (d)  TERMINATION OF EMPLOYMENT BY UNITEDHEALTH GROUP WITHOUT CAUSE OR
              BY EXECUTIVE FOR GOOD REASON. If Executive's employment with
              UnitedHealth Group is terminated by UnitedHealth Group under
              Section 3(b)(ii) without Cause prior to the end of the term of
              this Agreement or Executive's employment with UnitedHealth Group
              is terminated by Executive under Section 3(b)(vi) prior to the end
              of the term of this Agreement then upon termination of the
              Executive's employment:

                                       6



                  (i)      For a period of thirty-six months following the
                           effective date of the termination of employment,
                           Executive shall receive biweekly payments equal to
                           1/26 of Executive's annualized Cash Compensation. In
                           the event of any anticipated tax law change during
                           the payment period that would increase Executive's
                           taxes on such income, Executive may elect to take and
                           receive his remaining compensation under this Section
                           3(d)(i), discounted at an interest rate of 4% per
                           annum to the present value thereof, in a single lump
                           sum payable within thirty days after written request
                           therefor setting forth such anticipated tax law
                           change.

                  (ii)     The percentage of Cash Compensation paid pursuant to
                           the Supplemental Employee Retirement Plan
                           contemplated by Section 2(g) shall be determined as
                           of, and payments under such plan shall commence on,
                           the third anniversary of the termination date as if
                           Executive had been continuously employed by
                           UnitedHealth Group through such third anniversary.

                  (iii)    Executive shall be entitled to continue participation
                           in the health care coverage as provided in Section
                           3(j) below and in all other life insurance or other
                           employee benefit plans of UnitedHealth Group
                           established under Section 2(f) of this Agreement.
                           UnitedHealth Group shall for a period of thirty-six
                           months following the effective date of the
                           termination (A) continue to pay disability coverage
                           premiums or provide disability coverage on a
                           self-funded basis for Executive and his dependents
                           with UnitedHealth Group and Executive sharing the
                           costs associated with such coverage as if Executive
                           were still actively employed by UnitedHealth Group,
                           and (B) maintain and pay the premiums with respect
                           to the additional insurance policies provided for in
                           Section 2(i). Executive shall continue to receive
                           health care coverage as provided in Section 3(j) of
                           this Agreement. If Executive cannot be covered under
                           any of UnitedHealth Group's group plans or policies,
                           UnitedHealth Group shall reimburse Executive for his
                           full cost of obtaining comparable alternative group
                           or individual coverage elsewhere, less any
                           contribution that Executive would have been required
                           to make under UnitedHealth Group's group plans or
                           policies. Executive shall receive any benefits
                           payable under Section 2(f) of this Agreement within
                           sixty days of such termination.

                  (iv)     Any vesting requirements or other conditions that an
                           employee or participant complete a longer period of
                           service or employment as shall otherwise theretofore
                           pertain to any of Executive's rights or

                                        7



                           benefits under outstanding options (excluding the
                           Special Option granted pursuant to Section 2(c) or
                           other similar option that specifies it will not vest
                           in this particular instance) or any bonus, incentive
                           compensation, deferred compensation, stock grant,
                           restricted stock, or similar plans, from time to time
                           implemented by UnitedHealth Group or its successor or
                           assign, shall automatically terminate and be of no
                           further force or effect. All such rights and benefits
                           shall continue to be deemed to be fully vested and,
                           as the case may be, subject to accrual, payment or
                           exercise in full, or transfer (unless expressly
                           non-transferrable) without regard to such
                           restrictions. Stock options or grants awarded
                           Executive under any of UnitedHealth Group's stock
                           option or grant or similar stock plans (including the
                           Special Option granted pursuant to Section 2(c)) to
                           the extent vested shall continue to be exercisable in
                           accordance with their terms for a period of up to
                           seventy-two months after termination of Executive's
                           employment subject to earlier termination upon
                           expiration of the option or grant in accordance with
                           the terms of such option or grant.

                  (v)      UnitedHealth Group shall provide Executive with
                           office, secretarial, and administrative support
                           reasonably customary for executives comparable to
                           Executive for a period of thirty-six months following
                           termination of employment.

                  (vi)     All accrued and unpaid vacation to the date of
                           termination shall be paid to the Executive.

                  (vii)    In the event the payments, the acceleration of
                           vesting of stock options or the provision of any
                           other benefits under this Agreement are "parachute
                           payments" within the meaning of, and the regulations,
                           rulings and procedures under, Sections 280G and 4999
                           of the Internal Revenue Code of 1986, as the same
                           from time to time may be amended (the "Code"), or
                           other related or successor sections and provisions of
                           the Code at any time applicable thereto, and become
                           subject to excise taxes under Section 4999 of the
                           Code, UnitedHealth Group will pay Executive the
                           amount of such excise taxes plus all federal, state,
                           and local taxes applicable to UnitedHealth Group's
                           payment of such excise taxes, including any
                           additional excise taxes due under Section 4999 of the
                           Code with respect to payments made pursuant to this
                           Section 3(d)(vii). All determinations required by
                           this Section 3(d), upon termination of Executive's
                           employment and at UnitedHealth Group's sole expense,
                           shall forthwith be made by UnitedHealth Group's
                           regularly engaged

                                       8



                           independent public accounting firm. In determining
                           the amount of excise tax which would be payable by
                           Executive pursuant to Section 4999 of the Code, such
                           accounting firm shall take into consideration and
                           apply all non-includible, excludable and exempt
                           amounts of compensation in accordance with Section
                           280G of the Code. The parties shall cooperate fully
                           by promptly providing such accounting firm all
                           information required to complete such
                           determinations. Such determinations shall be set
                           forth in a written statement and analysis thereof
                           issued by such accounting firm which shall be
                           promptly finished to and shall be binding upon the
                           parties. In the event Executive is subject to any
                           audit with respect to the amount of such excise
                           taxes, Executive and UnitedHealth Group will mutually
                           cooperate in contesting such audit; provided that
                           UnitedHealth Group will pay the cost of such contest
                           and will reimburse Executive on an after tax basis
                           for any additional excise taxes payable as a result
                           of such audit and for any income taxable to Executive
                           as a result of UnitedHealth Group paying the cost of
                           such audit and any additional excise taxes. In the
                           event any such audit results in a refund of excise
                           taxes paid, Executive will turn over the refund to
                           UnitedHealth Group less any income taxes incurred by
                           Executive in respect of the receipt of the refund.

         (e)  TERMINATION OF EMPLOYMENT BY EXECUTIVE FOLLOWING A CHANGE IN
              CONTROL. If a Change in Control of UnitedHealth Group occurs and
              either (y) within a period following such Change in Control of six
              months (or such lesser period of time as is acceptable to the
              Company or its successor) and twelve months Executive terminates
              employment under Section 3(b), or (z) at anytime after a Change of
              Control, Executive's employment with UnitedHealth Group is
              terminated by UnitedHealth Group under Section 3(b)(ii) without
              Cause prior to the end of the term of this Agreement or by
              Executive for Good Reason under Section 3(b)(vi) prior to the end
              of the term of this Agreement, then upon termination of
              Executive's employment:

                  (i)      For a period of thirty-six months following the
                           effective date of the termination of employment
                           Executive shall receive biweekly payments equal to
                           1/26 of Executive's annualized Cash Compensation. In
                           the event of any anticipated tax law change during
                           the payment period that would increase Executive's
                           taxes on such income, Executive may elect to take and
                           receive his remaining compensation under this Section
                           3(e)(i), discounted at an interest rate of 4% per
                           annum to the present value thereof, in a single lump
                           sum payable within thirty days after written request
                           therefor setting forth such anticipated tax law
                           change.

                                       9



                  (ii)     The percentage of Cash Compensation paid pursuant to
                           the Supplemental Employee Retirement Plan
                           contemplated by Section 2(g) shall be determined as
                           of, and payments under such plan shall commence on,
                           the third anniversary of the termination date as if
                           Executive had been continuously employed by
                           UnitedHealth Group through such third anniversary.

                  (iii)    Executive shall be entitled to continue participation
                           in the health care coverage as provided in Section
                           3(j) below and in all other life insurance or other
                           employee benefit plans of UnitedHealth Group
                           established under Section 2(f) of this Agreement to
                           the extent permitted by applicable law and the terms
                           and conditions of those plans. UnitedHealth Group
                           shall for a period of thirty-six months following the
                           effective date of the termination (A) continue to pay
                           disability coverage premiums or provide disability
                           coverage on a self-funded basis for Executive and his
                           dependents with UnitedHealth Group and Executive
                           sharing the costs associated with such coverage as if
                           Executive were still actively employed by
                           UnitedHealth Group, and (B) maintain and pay the
                           premiums with respect to the additional insurance
                           policies provided for in Section 2(i). Executive
                           shall continue to receive health care coverage as
                           provided in Section 3(j) of this Agreement. If
                           Executive cannot be covered under any of UnitedHealth
                           Group's group plans or policies, UnitedHealth Group
                           shall reimburse Executive for his full cost of
                           obtaining comparable alternative group or individual
                           coverage elsewhere, less any contribution that
                           Executive would have been required to make under
                           UnitedHealth Group's group plans or policies.
                           Executive shall receive any benefits payable under
                           Section 2(f) of this Agreement within sixty (60) days
                           of such termination.

                  (iv)     Any vesting requirements or other conditions that an
                           employee or participant complete a longer period of
                           service or employment as shall otherwise theretofore
                           pertain to any of Executive's rights or benefits
                           under all outstanding options (excluding the Special
                           Option granted pursuant to Section 2(c) which shall
                           already have been fully vested and exercisable upon
                           the Change of Control in accordance with its terms)
                           shall automatically terminate and be of no further
                           force or effect. All such rights and benefits shall
                           continue to be deemed to be fully vested and, as the
                           case may be, subject to accrual, payment or exercise
                           in full, or transfer (unless expressly
                           non-transferable) without regard to such
                           restrictions. The options and any other grants
                           awarded Executive under any of UnitedHealth Group's
                           stock option

                                      10



                           or grant or similar stock plans, including the
                           Special Option, shall continue to be exercisable
                           in accordance with their terms for a period of up
                           to seventy-two months after termination of
                           Executive's employment subject to earlier termination
                           upon expiration of the option or grant in accordance
                           with the terms of such option or grant.

                  (v)      UnitedHealth Group shall pay a reasonable amount for
                           outplacement and job search services for Executive by
                           a firm selected by Executive and reasonably
                           acceptable to UnitedHealth Group.

                  (vi)     UnitedHealth Group shall provide Executive with
                           office, secretarial, and administrative support
                           reasonably customary for executives comparable to
                           Executive and shall provide Executive with use of
                           Company aircraft for personal business to the same
                           extent Executive could so use such aircraft for
                           personal business prior to termination, all for a
                           period of thirty-six months following termination of
                           employment.

                  (vii)    All accrued and unpaid vacation to the date of
                           termination shall be paid to Executive.

                  (viii)   In the event the payments, the acceleration of
                           vesting of stock options or the provision of any
                           other benefits under this Agreement or the Special
                           Option are "parachute payments" within the meaning
                           of, and the regulations, rulings and procedures
                           under, Sections 280G and 4999 of the Code or other
                           related or successor sections and provisions of the
                           Code at any time applicable thereto, and become
                           subject to excise taxes under Section 4999 of the
                           Code, UnitedHealth Group will pay Executive the
                           amount of such excise taxes plus all federal, state,
                           and local taxes applicable to UnitedHealth Group's
                           payment of such excise taxes, including any
                           additional excise taxes due under Section 4999 of the
                           Code with respect to payments made pursuant to this
                           Section 3(e)(viii). All determinations required by
                           this Section 3(e), upon termination of Executive's
                           employment and at UnitedHealth Group's sole expense,
                           shall forthwith be made by UnitedHealth Group's
                           regularly engaged independent public accounting firm.
                           In determining the amount of excise tax which would
                           be payable by Executive pursuant to Section 4999 of
                           the Code, such accounting firm shall take into
                           consideration and apply all non-includible,
                           excludable and exempt amounts of compensation in
                           accordance with Section 280G of the Code. The parties
                           shall cooperate fully by promptly providing such
                           accounting firm all information required to complete
                           such determinations. Such

                                        11



                           determinations shall be set forth in a written
                           statement and analysis thereof issued by such
                           accounting firm which shall be promptly furnished
                           to and shall be binding upon the parties. In the
                           event Executive is subject to any audit with respect
                           to the amount of such excise taxes, Executive and
                           UnitedHealth Group will mutually cooperate in
                           contesting such audit; provided that UnitedHealth
                           Group will pay the cost of such contest and will
                           reimburse Executive on an after tax basis for any
                           additional excise taxes payable as a result of such
                           audit and for any income taxable to Executive
                           as a result of UnitedHealth Group paying the cost of
                           such audit and any additional excise taxes. In the
                           event any such audit results in a refund of excise
                           taxes paid, Executive will turn over the refund to
                           UnitedHealth Group less any income taxes incurred by
                           Executive in respect of the receipt of the refund.

         (f)  TERMINATION OF EMPLOYMENT BY EXECUTIVE UPON RETIREMENT. If
              Executive terminates employment under Section 3(b)(iii) without
              Good Reason prior to the end of the term of this Agreement, and at
              the time of termination the Board of Directors of UnitedHealth
              Group or its Compensation and Human Resources Committee determines
              that such termination by Executive constitutes a retirement in
              good standing, then upon the termination of Executive's
              employment:

                  (i)      Unless the Board of Directors of UnitedHealth Group
                           or its Compensation and Human Resources Committee
                           otherwise determine, all cash compensation payable to
                           Executive shall cease as of the date of termination.

                  (ii)     Unless the Board of Directors of UnitedHealth Group
                           or its Compensation and Human Resources Committee
                           otherwise determine, with consent of Executive to
                           continue vesting of the Supplemental Employee
                           Retirement Plan and to defer its payout, Executive
                           shall be entitled to begin receiving payments under
                           the Supplemental Employee Retirement Plan described
                           in Section 2(g) as of the date of retirement.

                  (iii)    Executive shall be entitled to continue participation
                           in the health care coverage as provided in Section
                           3(j) below and all other life insurance or other
                           employee benefit plans of UnitedHealth Group
                           established under Section 2(f) of this Agreement to
                           the extent permitted by applicable law and the terms
                           and conditions of those plans. UnitedHealth group
                           shall for a period of thirty-six months following the
                           effective date of the termination (A) continue to pay

                                       12



                           disability coverage premiums or provide disability
                           coverage on a self-funded basis for Executive and his
                           dependents with UnitedHealth Group and Executive
                           sharing the costs associated with such coverage as if
                           Executive were still actively employed by
                           UnitedHealth Group, and (B) maintain and pay the
                           premiums with respect to the additional insurance
                           policies provided for in Section 2(i). Executive
                           shall continue to receive health care coverage as
                           provided in Section 3(j) of this Agreement. If
                           Executive cannot be covered under any of UnitedHealth
                           Group's group plans or policies, UnitedHealth Group
                           shall reimburse Executive for his full cost of
                           obtaining comparable alternative group or individual
                           coverage elsewhere, less any contribution that
                           Executive would have been required to make under
                           UnitedHealth Group's group plans or policies.
                           Executive shall receive any benefits payable under
                           Section 2(f) of this Agreement within sixty days of
                           such termination.

                  (iv)     Any vesting requirements or other conditions that an
                           employee or participant complete a longer period of
                           service or employment as shall otherwise theretofore
                           pertain to any of Executive's rights or benefits
                           under all outstanding options (excluding the Special
                           Option granted pursuant to Section 2(c) unless at the
                           time of retirement the Board of Directors of
                           UnitedHealth Group or its Compensation and Human
                           Resources Committee determines it is appropriate in
                           its discretion to vest all or a portion of the
                           unvested Special Option Shares and excluding any
                           option that specifies it will not vest in this
                           particular instance) or any bonus, incentive
                           compensation, deferred compensation, stock grant,
                           restricted stock, or similar plans, from time to time
                           implemented by UnitedHealth Group or its successor or
                           assign, shall automatically terminate and be of no
                           further force or effect. All such rights and benefits
                           shall continue to be deemed to be fully vested and,
                           as the case may be, subject to accrual, payment or
                           exercise in full, or transfer (unless expressly
                           non-transferable) without regard to such
                           restrictions. Stock options or grants awarded
                           Executive under any of UnitedHealth Group's stock
                           option or grant or similar stock plans to the extent
                           vested shall continue to be exercisable in accordance
                           with their terms for a period of up to seventy-two
                           months after termination of Executive's employment
                           subject to earlier termination upon expiration of the
                           option or grant in accordance with the terms of such
                           option or grant.

                  (v)      UnitedHealth Group shall provide Executive with
                           office, secretarial, and administrative support
                           reasonably customary for executives comparable to
                           Executive and shall provide Executive with use of


                                       13


                           company aircraft for personal business to the same
                           extent Executive could so use such aircraft for
                           personal business prior to termination, all for a
                           period of thirty-six months following termination of
                           employment.

                  (vi)     All accrued and unpaid vacation to the date of
                           termination shall be paid to Executive.

                  (vii)    In the event the payments, the acceleration of
                           vesting of stock options or the provision of any
                           other benefits under this Agreement are "parachute
                           payments" within the meaning of, and the regulations,
                           rulings and procedures under, Sections 280G and 4999
                           of the Code or other related or successor sections
                           and provisions of the Code at any time applicable
                           thereto, and become subject to excise taxes under
                           Section 4999 of the Code, UnitedHealth Group will pay
                           Executive the amount of such excise taxes plus all
                           federal, state, and local taxes applicable to
                           UnitedHealth Group's payment of such excise taxes,
                           including any additional excise taxes due under
                           Section 4999 of the Code with respect to payments
                           made pursuant to this Section 3(d)(v). All
                           determinations required by this Section 3(f), upon
                           termination of Executive's employment and at
                           UnitedHealth Group's sole expense, shall forthwith be
                           made by UnitedHealth Group's regularly engaged
                           independent public accounting firm. In determining
                           the amount of excise tax which would be payable by
                           Executive pursuant to Section 4999 of the Code, such
                           accounting firm shall take into consideration and
                           apply all non-includible, excludable and exempt
                           amounts of compensation in accordance with Section
                           280G of the Code. The parties shall cooperate fully
                           by promptly providing such accounting firm all
                           information required to complete such determinations.
                           Such determinations shall be set forth in a written
                           statement and analysis thereof issued by such
                           accounting firm which shall be promptly furnished to
                           and shall be binding upon the parties. In the event
                           Executive is subject to any audit with respect to the
                           amount of such excise taxes, Executive and
                           UnitedHealth Group will mutually cooperate in
                           contesting such audit; provided that UnitedHealth
                           Group will pay the cost of such contest and will
                           reimburse Executive on an after tax basis for any
                           additional excise taxes payable as a result of such
                           audit and for any income taxable to Executive as a
                           result of UnitedHealth Group paying the cost of such
                           audit and any additional excise taxes. In the event
                           any such audit results in a refund of excise taxes
                           paid, Executive will turn over the refund to


                                       14


                           UnitedHealth Group less any income taxes incurred by
                           Executive in respect of the receipt of the refund.

         (g)  TERMINATION OF EMPLOYMENT BY EXECUTIVE WITHOUT GOOD REASON. If
              Executive's employment with UnitedHealth Group is terminated by
              Executive under Section 3(b)(iii) without Good Reason prior to the
              end of the term of this Agreement then upon the termination of
              Executive's employment:

                  (i)      For a period of twenty-four months following the
                           effective date of the termination of employment,
                           Executive shall receive bi-weekly payments equal to
                           1/26 of Executive's annualized Cash Compensation. In
                           the event of any anticipated tax law change during
                           the payment period that would increase Executive's
                           taxes on such income, Executive may elect to take and
                           receive his remaining compensation under this Section
                           3(g)(i), discounted at an interest rate of 4% per
                           annum to the present value thereof, in a single lump
                           sum payable within thirty days after written request
                           therefor setting forth such anticipated tax law
                           change.

                  (ii)     The percentage of Cash Compensation paid pursuant to
                           the Supplemental Employee Retirement Plan
                           contemplated by Section 2(g) shall be determined as
                           of the date of termination. Payments under such plan
                           shall commence on the second anniversary of the
                           termination date.

                  (iii)    Executive's participation in the life insurance or
                           other employee benefit plans of UnitedHealth Group
                           shall terminate in accordance with applicable law and
                           those plans' terms and conditions. Executive shall
                           continue to receive health care coverage as provided
                           in Section 3(j) of this Agreement. Executive shall
                           receive any benefits payable under Section 2(f) of
                           this Agreement, within sixty days of such
                           termination.

                  (iv)     Any stock options or grants awarded Executive under
                           any of UnitedHealth Group's stock option or grant or
                           similar stock plans shall cease to vest following the
                           effective date of termination and, to the extent
                           vested, shall be exercisable for up to
                           thirty-six-months following the effective date of
                           termination subject to earlier termination of the
                           option or grant in accordance with the terms of such
                           option or grant.

                  (v)      All accrued and unpaid vacation to the date of
                           termination shall be paid to Executive.


                                       15


         (h)  TERMINATION OF EMPLOYMENT IN THE EVENT OF DEATH. If Executive's
              employment with UnitedHealth Group is terminated under Section
              3(b)(iv) due to the death of Executive prior to the end of the
              term of this Agreement then upon the termination of Executive's
              employment:

                  (i)      For a period of twenty-four months following
                           Executive's death, Executive's beneficiaries shall
                           receive bi-weekly payments equal to 1/26 of
                           Executive's annualized Cash Compensation. In the
                           event of any anticipated tax law change during the
                           payment period that would increase Executive's taxes
                           on such income, Executive's beneficiaries may elect
                           to take and receive his remaining compensation under
                           this Section 3(h)(i), discounted at an interest rate
                           of 4% per annum to the present value thereof, in a
                           single lump sum payable within thirty days after
                           written request therefor setting forth such
                           anticipated tax law change.

                  (ii)     The Cash Compensation payable pursuant to the
                           Supplemental Employee Retirement Plan contemplated by
                           Section 2(f) shall commence.

                  (iii)    Executive's beneficiaries shall be entitled to
                           receive all proceeds from the life insurance provided
                           in accordance with this Agreement and any benefit
                           payable under Section 2(f) of this Agreement.
                           Executive's spouse and children shall continue to
                           receive health care coverage as provided in Section
                           3(j) of this Agreement.

                  (iv)     Any stock options or grants awarded Executive under
                           any of UnitedHealth Group's stock option or grant or
                           similar stock plans (excluding the Special Option
                           granted pursuant to Section 2(c) and any other option
                           that specifies it will not vest in this particular
                           instance) shall vest immediately upon Executive's
                           death and shall be exercisable by Executive's
                           beneficiaries for up to thirty-six-months following
                           the effective date of termination subject to earlier
                           termination of the option or grant in accordance with
                           the terms of such option or grant.

                  (v)      All accrued and unpaid vacation to the date of
                           termination shall be paid to Executive's estate.

         (i)  TERMINATION OF EMPLOYMENT IN THE EVENT OF PERMANENT DISABILITY. If
              Executive's employment with UnitedHealth Group is terminated under
              Section 3(b)(iv) due


                                       16


              to the Permanent Disability of Executive prior to the end of the
              term of this Agreement then:

                  (i)      For a period of twenty-four months, Executive shall
                           receive bi-weekly payments equal to 1/26 of
                           Executive's annualized Cash Compensation. In the
                           event of any anticipated tax law change during the
                           payment period that would increase Executive's taxes
                           on such income, Executive may elect to take and
                           receive his remaining compensation under this Section
                           3(i)(i), discounted at an interest rate of 4% per
                           annum to the present value thereof, in a single lump
                           sum payable within thirty days after written request
                           therefor setting forth such anticipated tax law
                           change.

                  (ii)     The Cash Compensation payable pursuant to the
                           Supplemental Employee Retirement Plan contemplated by
                           Section 2(f) shall be determined as of, and the
                           payments shall commence on, the second anniversary of
                           the termination date.

                  (iii)    Executive shall be entitled to receive health care
                           coverage in accordance with Section 3(j) of this
                           Agreement and disability benefits provided under any
                           other employee benefit plans or compensation policies
                           of UnitedHealth Group to executive officers of
                           similar rank in accordance with applicable law and
                           those plans' terms and conditions. Executive shall
                           receive any benefits payable under Section 2(f) of
                           this Agreement within sixty days of such termination.

                  (iv)     Any stock options or grants awarded Executive under
                           any of UnitedHealth Group's stock option or grant or
                           similar stock plans (excluding the special option
                           granted pursuant to Section 2(c) and any other option
                           that specifies it will not vest in this particular
                           instance) shall vest immediately and shall be
                           exercisable for up to thirty-six-months following the
                           effective date of termination subject to earlier
                           termination of such option or grant in accordance
                           with the terms and conditions of such option or
                           grant.

                  (v)      All accrued and unpaid vacation to the date of
                           termination shall be paid to Executive.

         (j)  HEALTH CARE CONTINUATION COVERAGE. Notwithstanding any other
              provision of this Agreement to the contrary, if Executive is
              terminated other than for Cause pursuant to Section 3(b)(v),
              UnitedHealth Group shall continue to provide, at no cost to
              Executive, health care coverage for Executive and his wife for the
              remainder of their lives and for his children until they attain
              age 25,


                                       17


              substantially as in effect on the date of termination. If
              Executive, his wife, or his children cannot be covered under any
              of UnitedHealth Group's group plans or policies, UnitedHealth
              Group shall reimburse Executive for his full cost of obtaining
              comparable alternative group or individual coverage elsewhere,
              less any contribution that Executive would have been required to
              make under UnitedHealth Group's group health plans or policies.

4.       PROPERTY RIGHTS, CONFIDENTIALITY, NON-SOLICIT AND NON-COMPETE
         PROVISIONS.

         (a) UNITEDHEALTH GROUP'S PROPERTY.

                  (i)      Executive shall promptly disclose to UnitedHealth
                           Group in writing all inventions, discoveries, and
                           works of authorship, whether or not patentable or
                           copyrightable, which are conceived, made, discovered,
                           written, or created by Executive alone or jointly
                           with another person, group or entity, whether during
                           the normal hours of employment at UnitedHealth Group
                           or on Executive's own time, during the term of this
                           Agreement. Executive assigns all rights to all such
                           inventions and works of authorship to UnitedHealth
                           Group. Executive shall give UnitedHealth Group any of
                           the assistance it reasonably requires in order for
                           UnitedHealth Group to perfect, protect and use its
                           rights to inventions and works of authorship.

                           This provision shall not apply to an invention,
                           discovery, or work of authorship for which no
                           equipment, supplies, facility, or trade secret
                           information of UnitedHealth Group was used and which
                           was developed entirely on the Executive's own time
                           and which does not relate to the business of
                           UnitedHealth Group, to UnitedHealth Group's
                           anticipated research or development, or does not
                           result from any work performed by Executive for
                           UnitedHealth Group.

                  (ii)     Executive shall not remove any records, documents, or
                           any other tangible items (excluding Executive's
                           personal property) from the premises of UnitedHealth
                           Group in either original or duplicate form, except as
                           is needed in the ordinary course of conducting
                           business for UnitedHealth Group.

                  (iii)    Executive shall immediately deliver to UnitedHealth
                           Group, upon termination of employment with
                           UnitedHealth Group, or at any other time upon
                           UnitedHealth Group's request, any property, records,
                           documents, and other tangible items (excluding
                           Executive's personal property) in Executive's
                           possession or control, including data incorporated in
                           word processing, computer, and other data storage


                                       18


                           media, and all copies of such records, documents, and
                           information, including all Confidential Information,
                           as defined below.

         (b)  CONFIDENTIAL INFORMATION. During the course of his employment
              Executive will develop, become aware of, and accumulate expertise,
              knowledge, and information regarding UnitedHealth Group's
              organization, strategies, business, and operations and
              UnitedHealth Group's past, current, or potential customers,
              providers, and suppliers. UnitedHealth Group considers such
              expertise, knowledge, and information to be valuable,
              confidential, and proprietary. For purposes of this Agreement,
              "Confidential Information" shall mean non-public information
              concerning the financial data, business strategies, product
              development (and proprietary product data), marketing plans, past,
              current, or potential customers, providers, and suppliers, and
              other proprietary information concerning UnitedHealth Group.
              During this Agreement and at all times thereafter, Executive shall
              not use such Confidential Information or disclose it to other
              persons or entities except as is necessary for the performance of
              Executive's duties for UnitedHealth Group or as has been expressly
              permitted in writing by UnitedHealth Group. Provided, however,
              that the foregoing covenant shall not apply to any information
              possessed by Executive prior to his employment by UnitedHealth
              Group, or to any information which is in or has entered the public
              domain or has been disclosed within any industry segment in which
              UnitedHealth Group or any subsidiary or affiliated company of
              UnitedHealth Group operates by or pursuant to the authority of
              UnitedHealth Group or any subsidiary or affiliated company of
              UnitedHealth Group.

         (c)  NON-SOLICITATION. During (i) the term of this Agreement, (ii) any
              period for which Executive is receiving payments under Sections
              3(d), 3(e), 3(f), or 3(g) of this Agreement, notwithstanding any
              lump-sum payment that Executive might receive under any such
              Section, (iii) any period following the termination of this
              Agreement in which Executive remains employed by UnitedHealth
              Group, and (iv) for a period of one year after the last day of the
              latest of any period described in (i), (ii) or (iii), Executive
              shall not directly or indirectly attempt to hire away any
              then-current employee of UnitedHealth Group or a subsidiary of
              UnitedHealth Group or to persuade any such employee to leave
              employment with UnitedHealth Group.

         (d)  NON-COMPETITION.

                  (i)      During the term of this Agreement and ending one year
                           after the later of (A) any period for which Executive
                           is receiving payments under Section 3(d), 3(e), 3(f),
                           or 3(g) of this Agreement, notwithstanding any
                           lump-sum payment that Executive might receive


                                       19


                           under any such Section or (B) the last day in which
                           Executive remains employed by UnitedHealth Group
                           following termination of this Agreement (the
                           "Restriction Period"), Executive shall not directly
                           or indirectly solicit, divert, or take away from
                           UnitedHealth Group, or attempt to solicit, divert, or
                           take away from UnitedHealth Group, the business of
                           any person, partnership, company, or corporation with
                           which UnitedHealth Group, or any subsidiary or
                           affiliated company thereof in which UnitedHealth
                           Group has a more than 20% equity interest (the
                           "UnitedHealth Group Companies"), has established a
                           business or customer relationship; PROVIDED, HOWEVER,
                           that this Section 4(d)(i) shall apply only to the
                           business(es) in which UnitedHealth Group or any of
                           the UnitedHealth Group Companies were engaged prior
                           to or planned to be engaged in within six months
                           after the termination of this Agreement.

                  (ii)     During the Restriction Period, without UnitedHealth
                           Group's prior written consent, Executive shall not
                           engage or participate, either individually or as an
                           employee, consultant or principal, partner, agent,
                           trustee, officer or director of a corporation,
                           partnership, or other business entity, in any
                           business in which UnitedHealth Group or any of the
                           UnitedHealth Group Companies is engaged; PROVIDED,
                           HOWEVER, that this Section 4(d)(ii) shall apply only
                           to businesses whose primary business is in
                           competition with a material business of UnitedHealth
                           Group as of the date of termination of this
                           Agreement.

                  (iii)    Except as otherwise set forth below in Section
                           4(d)(iv), Executive's obligations under this Section
                           4(d) shall remain in effect only so long as
                           UnitedHealth Group continues to make the payments and
                           provide the benefits specified in Section 3(d), 3(e),
                           3(f), or 3(g) notwithstanding any lump sum payment
                           that Executive might receive under any such Section
                           (though UnitedHealth Group shall have no option to
                           discontinue such payments on its own).

                  (iv)     The provisions of this Section 4(d) shall terminate
                           one year after the date of termination of this
                           Agreement if Executive (A) elects not to receive any
                           further payments and benefits specified in Section
                           3(d), 3(e), 3(f), or 3(g), (B) pays to UnitedHealth
                           Group an amount equal to (1) any profits realized by
                           Executive upon the exercise of UnitedHealth Group
                           stock options (with profits equaling the spread
                           between the exercise price and the fair market value
                           at the close of business on the respective date of
                           exercise) that are accelerated pursuant to any such
                           Section, but only to the extent such options would
                           not otherwise have vested prior to exercise had
                           Executive


                                       20


                           remained an employee of UnitedHealth Group,
                           multiplied by (2) the percentage of the period of
                           time pursuant to any such Section 3(d) for which this
                           Section shall no longer remain in effect, and (C)
                           reimburses UnitedHealth Group for that portion of any
                           single lump sum payment Executive received pursuant
                           to any such Section which represents the period of
                           time for which this Section shall no longer remain in
                           effect.

5.       MISCELLANEOUS.

         (a) DEFINITIONS.  For purposes of this Agreement:

                  (i)      "Cash Compensation" means the sum of Executive's base
                           annual compensation together with Executive's
                           incentive compensation as hereinafter determined. In
                           determining base annual compensation, the greater of
                           $1,600,000 or the Executive's highest annualized base
                           salary shall be used. Executive's incentive
                           compensation shall equal the average incentive
                           compensation actually earned by Executive for the two
                           years preceding the date of determination for which
                           an incentive determination has been made.
                           Notwithstanding the foregoing, if Executive's
                           severance compensation is paid pursuant to Sections
                           3(e) or 3(f), then Executive's incentive compensation
                           will equal the greater of the amount determined in
                           accordance with this paragraph or an amount Executive
                           would have been paid at Executive's then target
                           level. In any event, incentive compensation shall
                           include the cash equivalent value at the time earned
                           of any incentive compensation earned and paid or
                           payable in Company Common Stock or other form of
                           consideration. The Special Bonus paid pursuant to
                           Section 2(e) shall be treated as if it were incentive
                           compensation received equally for 1997 and 1998.

                  (ii)     "Cause" means (A) the willful and continued failure
                           by Executive substantially to perform his duties
                           hereunder (other than any such failure resulting from
                           his disability or from termination by Executive for
                           Good Reason), after a written demand for substantial
                           performance is delivered to Executive that
                           specifically identifies the manner in which Executive
                           has not remedied such failure within a reasonable
                           time after receipt of such written notice; (B) a
                           violation of United's Code of Conduct that is
                           materially detrimental to UnitedHealth Group and that
                           Executive has not remedied within a reasonable time
                           after receipt of a written notice from UnitedHealth
                           Group that specifically identifies such violation;
                           (C) the conviction of Executive of a felony; or (D)
                           any other willful and material breach of


                                       21


                           this Agreement by Executive that Executive has not
                           remedied within a reasonable time after receipt of a
                           written notice from UnitedHealth Group that
                           specifically identifies such breach. For purposes of
                           this paragraph, no act, or failure to act, on
                           Executive's part will be deemed "willful" unless
                           done, or omitted to be done, by Executive not in good
                           faith and without reasonable belief that his action
                           or omission was in the best interest of UnitedHealth
                           Group.

                  (iii)    "Change in Control" means (A) the acquisition by an
                           individual, entity or group (within the meaning of
                           Section 13(d)(3) or 14(d)(2) of the Securities
                           Exchange Act of 1934, as amended (the "Exchange
                           Act")) of beneficial ownership (within the meaning of
                           Rule 13d-3 promulgated under the Exchange Act) of 50%
                           or more of the then outstanding shares of common
                           stock of UnitedHealth Group (the "Outstanding Common
                           Stock"); (B) individuals who, as of the date hereof,
                           constitute UnitedHealth Group's Board of Directors
                           (the "Incumbent Board") cease for any reason to
                           constitute at least a majority of the UnitedHealth
                           Group Board of Directors, provided, however, that any
                           individual becoming a director subsequent to the date
                           hereof whose election, or nomination for election by
                           UnitedHealth Group's shareholders, was approved by a
                           vote of at least a majority of the directors then
                           comprising the Incumbent Board shall be considered as
                           though such individual were a member of the Incumbent
                           Board, but excluding, for this purpose, any such
                           individual whose initial assumption of office occurs
                           as a result of either an actual or threatened
                           election contest (as such terms are used in Rule
                           14a-11 of Regulation 14A promulgated under the
                           Exchange Act) or other actual or threatened
                           solicitation of proxies or consents; (C) the approval
                           by the stockholders of UnitedHealth Group of a
                           reorganization, merger or consolidation, in each
                           case, with respect to which the beneficial owners of
                           the Outstanding Common Stock immediately prior to
                           such reorganization, merger or consolidation,
                           beneficially own, directly or indirectly, less than
                           two-thirds of the then outstanding shares of common
                           stock and the combined voting power of the then
                           outstanding voting securities entitled to vote
                           generally in the election of directors of the
                           corporation resulting from such reorganization,
                           merger or consolidation in substantially the same
                           proportions as their ownership, immediately prior to
                           such reorganization, merger or consolidation; or (D)
                           the approval by the stockholders of UnitedHealth
                           Group of (i) a complete liquidation or dissolution of
                           UnitedHealth Group or (ii) the sale or other
                           disposition of all or substantially all of the assets
                           of UnitedHealth Group.


                                       22


                  (iii)    "Confidential Information" shall have the meaning set
                           forth in Section 4(b).

                  (iv)     "Permanent Disability" means Executive's inability by
                           reason of accident, illness, or injury to perform any
                           of the principal duties, responsibilities, or
                           functions of Executive's employment for a period of
                           180 days or such shorter period as provided in the
                           policy for the Supplemental Long-Term Disability
                           Benefit.

                  (v)      "Good Reason" means (A) the assignment to Executive
                           of any duties inconsistent in any respect with
                           Executive's position (including status, offices,
                           titles and reporting relationships), authority,
                           duties or responsibilities as contemplated by Section
                           1 or any other action by UnitedHealth Group which
                           results in a diminution in such position, authority,
                           duties or responsibilities, excluding for this
                           purpose an isolated, insubstantial and inadvertent
                           action not taken in bad faith and which is remedied
                           by UnitedHealth Group promptly after receipt of
                           notice thereof given by Executive; (B) the failure by
                           UnitedHealth Group to elect Executive to the position
                           of the Chairman and Chief Executive Officer and as a
                           member of the Board of Directors or any other action
                           by UnitedHealth Group which results in the diminution
                           of Executive's position, authority, duties, or
                           responsibilities, excluding an isolated,
                           insubstantial and inadvertent action not taken in bad
                           faith and which is remedied by UnitedHealth Group
                           promptly after receipt of notice thereof given by
                           Executive; (C) any failure of UnitedHealth Group to
                           pay base salary or incentive compensation or to grant
                           Annual Options in accordance with Section 2(a), (b)
                           and (d) or any failure by UnitedHealth Group to
                           maintain or provide the plans, programs, policies and
                           practices, or benefits described in Section 4(f),
                           (g), (h) and (i) on the most favorable basis such
                           plans programs, policies and practices were
                           maintained and benefits are provided to Executive on
                           the Effective Date; (D) UnitedHealth Group's
                           requiring Executive to be based at any office or
                           location other than its principal executive offices
                           at its current location in Minnetonka, Minnesota or
                           within twenty-five miles of such current location,
                           except for travel reasonably required in the
                           performance of the Executive's responsibilities; (E)
                           any purported termination by UnitedHealth Group of
                           Executive's employment otherwise than as expressly
                           permitted by this Agreement; (F) any other material
                           breach of this Agreement by UnitedHealth Group that
                           is not remedied within a reasonable time after
                           written notice from Executive to UnitedHealth Group
                           that specifically identifies such breach; or (G) any
                           failure by UnitedHealth Group to comply with and
                           satisfy Section 5(b) of this


                                       23


                           Agreement. For purposes of the definition of "Good
                           Reason," any good faith determination of "Good
                           Reason" made by the Executive on or after the Change
                           of Control Date shall be conclusive.

                  (vi)     "Spouse" shall have the meaning set forth in Section
                           2(g).

         (b)  ASSIGNMENT. This Agreement shall be binding upon and shall inure
              to the benefit of the parties and their respective legal and
              personal representatives, heirs, successors, and assigns, but may
              not be assigned by either party (except by operation of law upon
              death or disability of Executive) without the prior written
              consent of the other party, provided that any assignment by
              UnitedHealth Group shall not relieve UnitedHealth Group of its
              obligations under this Agreement. UnitedHealth Group will require
              any successor (whether direct or indirect, by purchase, merger,
              consolidation or otherwise) to all or substantially all of its
              business and/or assets to assume expressly and agree to perform
              this Agreement in the same manner and to the same extent that
              UnitedHealth Group is required to perform under this Agreement if
              no such succession had taken place. As used in this Agreement,
              "UnitedHealth Group" shall mean each as hereinbefore defined and
              any successor to its business and/or assets as aforesaid which
              assumes and agrees to perform this Agreement by operation of law,
              or otherwise.


         (c)  NOTICES. All notices under this Agreement shall be in writing and
              shall be deemed to have been duly given if delivered by hand or
              mailed by registered or certified mail, return receipt requested,
              postage prepaid, to the party to receive the same at the address
              set forth below or at such other address as may have been
              furnished by proper notice.

              UnitedHealth Group:           300 Opus Center
                                            9900 Bren Road East
                                            Minnetonka, MN 55343
                                            Attn: General Counsel

                       Executive:

         (d)  ENTIRE AGREEMENT. This Agreement contains the entire understanding
              of the parties with respect to its subject matter and may be
              amended or modified only by a subsequent written amendment
              executed by the parties. This Agreement replaces and supersedes
              any and all prior employment or employment related agreements and
              understandings, including any letters or memos which may


                                       24


              have been construed as agreements, between Executive and
              UnitedHealth Group or any of its subsidiaries and affiliated
              companies.

         (e)  CHOICE OF LAW. This Agreement shall be construed and interpreted
              under the applicable laws and decisions of the State of Minnesota.

         (f)  WAIVERS. No failure on the part of either party to exercise, and
              no delay in exercising, any right or remedy under this Agreement
              shall operate as a waiver; nor shall any single or partial
              exercise of any right or remedy preclude any other or further
              exercise of any right or remedy.

         (g)  ADEQUACY OF CONSIDERATION. Executive acknowledges and agrees that
              he has received, prior to or contemporaneously with the Effective
              Date, adequate consideration from UnitedHealth Group to enter into
              this Agreement.

         (h)  DISPUTE RESOLUTION AND REMEDIES. Any dispute arising between the
              parties relating to this Agreement or to Executive's employment by
              UnitedHealth Group shall be resolved by binding arbitration held
              in the City of Minneapolis pursuant to the Rules of the American
              Arbitration Association, except as hereinafter expressly modified.
              If the disputing and responding parties are unable to agree upon a
              resolution within forty-five business days after the responding
              party's receipt of written notice from the disputing party setting
              forth the nature of the dispute, within the following ten business
              days the disputing and responding parties shall select a mutually
              acceptable single arbitrator to resolve the dispute or, if the
              parties fail or are unable to do so, each shall within the
              following ten business days select a single arbitrator, and the
              two so selected shall select a third arbitrator within the
              following ten business days. Such single arbitrator or, as the
              case may be, panel of three arbitrators acting by majority
              decision, shall resolve the dispute within sixty days after the
              date such arbitrator, or the last of them so selected, is
              selected, or as soon thereafter as practicable. If either party
              refuses or fails to select an arbitrator within the time therefor,
              the other party may do so on such refusing or failing party's
              behalf. The arbitrators shall have no power to award any punitive
              or exemplary damages or may construe or interpret but shall not
              ignore or vary the terms of this Agreement and shall be bound by
              controlling law. The parties acknowledge that Executive's failure
              to comply with the Confidentiality, Non-Solicit and Non-Compete
              provisions of this Agreement will cause immediate and irreparable
              injury to UnitedHealth Group and that therefore the arbitrators,
              or a court of competent jurisdiction if an arbitration panel
              cannot be immediately convened, will be empowered to provide
              injunctive relief, including temporary or preliminary relief, to
              restrain any such failure to comply. The party not prevailing in
              the proceeding shall bear the costs and expenses thereof,
              including without limitation, the reasonable attorneys' fees of
              the prevailing


                                       25


              party. The arbitration award or other resolution may be entered
              as a judgment at the request of the prevailing party by any court
              of competent jurisdiction in Minnesota or elsewhere.

         (i)  SURVIVAL. The provisions of Sections 2(f), 2(i), 3(c)-3(j), 4 and
              5 shall survive any termination of this Agreement pursuant to
              Section 3(b).


THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION THAT MAY BE ENFORCED BY
THE PARTIES.


UNITEDHEALTH GROUP                          WILLIAM W. MCGUIRE, M.D.

By______________________________            _________________________________

Date____________________________            Date_____________________________


                                       26

EX-10.(G)

                              EMPLOYMENT AGREEMENT


         This Agreement, effective as of October 13, 1999 (the "Effective
Date"), is made by and between Stephen J. Hemsley ("Executive") and United
HealthCare Corporation ("UnitedHealth Group" or the "Company") for the purpose
of setting forth the terms and conditions of Executive's employment by
UnitedHealth Group and to protect UnitedHealth Group's knowledge, expertise,
customer and provider relationships, and the confidential information
UnitedHealth Group has developed about its customers, providers, products,
operations, and services. Unless the context otherwise requires, when used in
this Agreement all references to "UnitedHealth Group" include any entity
affiliated with UnitedHealth Group.

         1. EMPLOYMENT. UnitedHealth Group hereby employs Executive as the
President of UnitedHealth Group. Executive shall, during the term of his
employment hereunder and subject to the supervision and control of the Chief
Executive Officer of UnitedHealth Group, perform such duties, have such power,
and exercise such supervision and control with regard to the business of
UnitedHealth Group as are commonly associated with or appropriate to the office
of the President. Executive shall report to the Chief Executive Officer of
UnitedHealth Group. Executive accepts such employment on the terms and
conditions set forth in this Agreement and, except as specifically superseded by
this Agreement, subject to all of UnitedHealth Group's policies and procedures,
as changed from time-to-time, in regard to its employees generally. As of the
Effective Date, all other prior employment related agreements between Executive
and UnitedHealth Group shall terminate in their entirety and no longer be of any
force or effect, except for any outstanding stock options or restricted stock
grants which shall continue in accordance with their terms.

         2. COMPENSATION.

         (a) BASE SALARY. Executive shall initially be paid a base annual salary
in the amount of $750,000 payable bi-weekly in accordance with UnitedHealth
Group's then current payroll practices, less all applicable withholdings and
deductions. From time-to-time the Chief Executive Officer shall review
Executive's performance and shall consider increasing Executive's compensation.

         (b) ANNUAL STOCK OPTIONS. Executive shall, each calendar year beginning
with 1999, receive nonqualified stock option grants to purchase a minimum of
150,000 shares of UnitedHealth Group's Common Stock (the "Annual Options"). The
exercise price for each share of common stock underlying the Annual Options
shall be the fair market value of one share of UnitedHealth Group Common Stock
at the time of the grant and vesting of the Annual Options shall be




in not more than four equal annual installments commencing the year after the
grant based on the achievement of performance goals as determined by the
Board of Directors or a committee thereof, provided that each Annual Option
shall be fully vested on the ninth anniversary of the date of grant and the
Annual Options shall be subject to certain adjustments customary for options
of this type and consistent with UnitedHealth Group's options then being
granted. Each Annual Option shall be in accordance with and subject to the
terms and conditions of the UnitedHealth Group Corporation Amended and
Restated 1991 Stock and Incentive Plan, or any substitute or similar
successor plan (the "Stock Plan"). Notwithstanding the foregoing provisions
of this Section 2(b), the Executive shall be eligible to receive additional
awards of options to purchase shares of UnitedHealth Group stock, as
determined by the Board of Directors or an authorized committee thereof, in
accordance with the normal practices of UnitedHealth Group.

         (c) SPECIAL STOCK OPTION GRANT. In addition to the Annual Options
contemplated by Section 2(b) Executive shall also receive an option (the
"Special Option") to purchase 500,000 shares of UnitedHealth Group Common Stock.
The Special Option shall be substantially in the form of Exhibit 2(c) and shall
be subject to the terms and conditions of the Stock Plan. The exercise price for
the Special Option shall be $40.125 per share, subject to adjustment as provided
in the Stock Plan. The Special Option will expire on the tenth anniversary of
its issuance. The Special Option will become exercisable on the ninth
anniversary of its issuance, subject to acceleration upon the occurrence of
certain performance events as specified in the Special Option.

         (d) BONUS AND STOCK PLANS. Executive shall be eligible to participate
in UnitedHealth Group's incentive bonus and other bonus plans and shall be
eligible to receive grants or awards pursuant to UnitedHealth Group's stock
option and other incentive plans, all in accordance with the terms and
conditions of those plans and on a basis consistent with that customarily
provided for senior officers at the highest level of UnitedHealth Group.
Executive shall be eligible for a target annual payment under UnitedHealth
Group's Management Leadership Results Plan or successor plan of at least 125
percent of his then-current base annual salary.

         (e) SPECIAL BONUS. In recognition of Executive's strategic
accomplishments over the past two years, Executive shall be entitled to receive
a special one-time bonus in the amount of $600,000 (the "Special Bonus"). The
Special Bonus shall be paid in cash or UnitedHealth Group Common Stock, as
Executive elects upon reasonable notice to the Company. If Executive elects to
be paid in Common Stock the shares shall be valued at their closing price on the
date of payment. The Special Bonus shall be paid on January 4, 2000, subject
only to Executive's continued employment as of such date.


                                       2


         (f) EMPLOYEE BENEFITS. Executive shall be eligible to participate in
UnitedHealth Group's other employee benefit plans, including without limitation,
any life, health, dental, short-term and long-term disability insurance coverage
and any retirement or savings plans, in accordance with the terms and conditions
of those plans and on a basis consistent with that customarily provided for
senior officers at the highest level of UnitedHealth Group. Executive shall also
receive other benefits consistent with his office and position, which benefits
shall include, without limitation, an expense allowance the amount of which
shall be determined by the Chief Executive Officer and acceptable to Executive,
to be used for security considerations, such as home and personal security, tax
planning and financial planning expenses.

         (g) SUPPLEMENTAL EMPLOYEE RETIREMENT PLAN. Prior to the end of 2000,
UnitedHealth Group shall use its best efforts to establish and provide Executive
a supplemental retirement benefit plan, the terms of which shall be reasonable
and customary for executives of a similar position in comparably sized companies
(the "Supplemental Retirement Plan").

         (h) VACATION AND ILLNESS. Executive shall be entitled to paid vacation
and sick leave benefits each year in accordance with UnitedHealth Group's
then-current policies and on a basis consistent with that customarily provided
for senior officers at the highest level of UnitedHealth Group.

         (i) ADDITIONAL INSURANCE. In addition to any other insurance to which
Executive is entitled under Section 2(f), UnitedHealth Group shall provide and
pay for, and Executive (or a trust designated by Executive) shall own, a life
insurance policy on Executive in an amount equal to $2,000,000 (the "Life
Insurance"). UnitedHealth Group shall also make available for Executive to
purchase, at Executive's expense, additional life insurance on Executive in an
amount equal to $1,000,000 (the "Supplemental Life Insurance"). UnitedHealth
Group shall also provide for Executive an individual supplemental long term "own
occupation" disability insurance policy, which may be self-insured by
UnitedHealth Group, providing for monthly disability income payments to
Executive equal to 80% of his annual base salary on the Effective Date of this
Agreement, reduced by any monthly payments to Executive under other individual
or group disability income plans or policies provided and paid for by
UnitedHealth Group (the "Supplemental Long-Term Disability Benefit"). To the
extent that such Supplemental Long-Term Disability Benefit is insured,
UnitedHealth Group will increase the compensation of Executive by the amount of
the insurance premiums and Executive (or UnitedHealth Group on behalf of
Executive) will pay such premiums. The Life Insurance and Supplemental Long-Term
Disability Benefit policies called for by this subsection shall be maintained
throughout the term of this Agreement and during the period for which payments
are being made under Section 3(d) and Section 3(g). Executive shall be deemed
permanently disabled for purposes of such policy


                                       3


if by reason of accident, illness, or injury he is unable to perform any of
the principal duties, responsibilities, or functions of his employment for a
period of 180 consecutive days (the "qualification period") or such shorter
period as provided in the policy for the Supplemental Long-Term Disability
Benefit. The monthly disability income payments to Executive shall begin
immediately after the running of the qualification period and shall continue
throughout the period of Executive's disability for the greater of five years
or until Executive reaches age sixty-five. UnitedHealth Group shall
compensate Executive on an after-tax basis for any additional income taxes
payable by Executive as a result of UnitedHealth Group's payment of premiums
with respect to the insurance policies described in this subsection.

         3. TERM AND TERMINATION.

         (a) TERM. The term of this Agreement shall begin on the Effective Date
and shall continue in full force and effect until terminated as set forth below.

         (b) TERMINATION OF AGREEMENT.

                  (i) This Agreement and Executive's employment hereunder may be
         terminated at any time by the mutual written agreement of the parties.

                  (ii) This Agreement and Executive's employment may be
         terminated by UnitedHealth Group for any reason and at any time upon 30
         days' prior written notice to Executive.

                  (iii) Executive may resign his employment and terminate this
         Agreement without Good Reason (as defined below) upon 30 days' prior
         written notice to UnitedHealth Group.

                  (iv) This Agreement and Executive's employment shall
         automatically terminate upon the death or permanent disability (as
         defined in Section 2(i) above) of Executive.

                  (v) This Agreement and Executive's employment may be
         terminated by UnitedHealth Group for Cause (as defined below)
         immediately upon written notice to Executive.

                  (vi) This Agreement and Executive's employment may be
         terminated by Executive for Good Reason upon 30 days' prior written
         notice from Executive to UnitedHealth Group specifying such Good
         Reason, provided that such notice is given within 120 days after the
         initial occurrence of such Good Reason, and provided further that the
         events


                                       4


         giving rise to Good Reason shall not have been remedied as of the date
         of such notice.

         (c) TERMINATION OF EMPLOYMENT BY UNITEDHEALTH GROUP FOR CAUSE. If
Executive's employment with UnitedHealth Group is terminated by UnitedHealth
Group under Section 3(b)(v) for Cause then, upon termination of the Executive's
employment:

                  (i)      All cash compensation payable to Executive shall
                           cease.

                  (ii)     All options to purchase shares of UnitedHealth Group
                           stock shall terminate.

                  (iii)    All accrued and unpaid vacation to the date of
                           termination shall be paid to Executive.

                  (iv)     Executive's participation in the health care
                           coverage, life insurance, or other employee benefit
                           plans of UnitedHealth Group shall terminate in
                           accordance with applicable law and those plans' terms
                           and conditions. Executive shall receive any benefits
                           payable under Sections 2(f) and (g) of this
                           Agreement, including commencement of the benefit
                           under the Supplemental Retirement Plan, within sixty
                           days of such termination.

         (d) TERMINATION OF EMPLOYMENT BY UNITEDHEALTH GROUP WITHOUT CAUSE OR BY
EXECUTIVE FOR GOOD REASON. If Executive's employment with UnitedHealth Group is
terminated by UnitedHealth Group under Section 3(b)(ii) without Cause or if
Executive's employment with UnitedHealth Group is terminated by Executive under
Section 3(b)(vi) for Good Reason then upon termination of Executive's
employment:

                  (i)      If such termination does not occur within one year of
                           a Change in Control (as defined below) or, in the
                           case of a termination for Good Reason under clause
                           (F) of the definition of Good Reason, within 30
                           months after the Change of Control, then for a period
                           of 12 months following the effective date of the
                           termination of employment, Executive shall receive
                           biweekly payments equal to 1/26 of two times the sum
                           of (A) Executive's annualized highest base salary,
                           plus (B) the average of the bonus or incentive
                           compensation paid or payable to Executive for the two
                           most recent calendar years (excluding any special or
                           one-time bonus or incentive compensation payments),
                           less all applicable withholdings or deductions.
                           Provided, however, in the event of any anticipated
                           tax law change during the payment period that would
                           increase Executive's taxes on


                                       5


                           such income, Executive may elect to take and
                           receive his remaining compensation under this
                           Section 3(d)(i), discounted at a market rate to
                           the present value thereof, in a single lump sum
                           payable within thirty days after written request
                           therefor setting forth such anticipated tax law
                           change.

                  (ii)     If such termination occurs within one year of a
                           Change in Control (as defined below) or, in the case
                           of a termination for Good Reason under clause (F) of
                           the definition of Good Reason, within 30 months after
                           a Change in Control, then for a period of 12 months
                           following the effective date of the termination of
                           employment, Executive shall receive biweekly payments
                           equal to 1/26 of three times the sum of (A)
                           Executive's annualized highest base salary plus (B)
                           the greater of (1) the annual bonus that would be
                           payable to Executive under any incentive compensation
                           plans in which Executive then participates at
                           Executive's then-current target level, or (2) the
                           average of the bonus or incentive compensation paid
                           or payable to Executive for the two most recent
                           calendar years (excluding any special or one-time
                           bonus or incentive compensation payments), less all
                           applicable withholdings or deductions. Provided,
                           however, in the event of any anticipated tax law
                           change during the payment period that would increase
                           Executive's taxes on such income, Executive may elect
                           to take and receive his remaining compensation under
                           this Section 3(d)(ii), discounted at a market rate to
                           the present value thereof, in a single lump sum
                           payable within thirty days after written request
                           therefor setting forth such anticipated tax law
                           change.

                  (iii)    If such termination does not occur within one year of
                           a Change in Control or, in the case of a termination
                           for Good Reason under clause (F) of the definition of
                           Good Reason, within 30 months after a Change in
                           Control, then at the time of termination the Board of
                           Directors, or duly authorized committee, of the
                           Company shall give consideration to vesting otherwise
                           unvested options held by Executive and shall also
                           give consideration to the period of time following
                           termination during which Executive may exercise
                           options held by Executive. If such termination occurs
                           within one year of a Change in Control, or, in the
                           case of a termination for Good Reason under clause
                           (F) of the definition of Good Reason, within 30
                           months after a Change in Control, all options not
                           otherwise vested, including the Special Option issued
                           pursuant to Section 2(c), shall vest upon the change
                           in Control and shall remain exercisable for a period
                           of three years following termination.

                  (iv)     Executive shall be entitled to continue participation
                           in the health care coverage as provided in Section
                           3(i) below and in the other life insurance or other
                           employee benefit plans of UnitedHealth Group
                           including, without limitation, the Supplemental
                           Retirement established


                                       6


                           under Section 2(g) of this Agreement and the Life
                           Insurance, the Supplemental Long-Term Disability
                           Benefit provided under Section 2(i) of this
                           Agreement, according to and if permitted by
                           applicable law and those plans' terms and
                           conditions. If Executive cannot be covered under
                           any of UnitedHealth Group's group plans or
                           policies, UnitedHealth Group shall reimburse
                           Executive for his full cost of obtaining
                           comparable alternative group or individual
                           coverage elsewhere, less any contribution that
                           Executive would have been required to make under
                           UnitedHealth Group's group plans or policies.
                           UnitedHealth Group shall compensate Executive on
                           an after-tax basis for any additional income taxes
                           payable by Executive as a result of UnitedHealth
                           Group's payment of premiums with respect to the
                           insurance policies described in this subsection.
                           Executive shall receive any benefits payable under
                           Section 2(f) of this Agreement, as well as the
                           supplemental retirement benefit payable under
                           Section 2(g), within sixty days of such
                           termination.

                  (v)      UnitedHealth Group shall pay a reasonable amount for
                           outplacement and job search services for Executive by
                           a firm selected by the Executive and mutually
                           acceptable to UnitedHealth Group.

                  (vi)     All accrued and unpaid vacation to the date of
                           termination shall be paid to the Executive.

                  (vii)    In the event any of the payments, the acceleration of
                           vesting of stock options or the provision of any
                           other benefits under this Agreement or the Special
                           Option are "parachute payments" within the meaning
                           of, and the regulations, rulings and procedures
                           under, Sections 280G and 4999 of the Internal Revenue
                           Code of 1986, as the same from time to time may be
                           amended (the "Code"), or other related or successor
                           sections and provisions of the Code at any time
                           applicable thereto, and become subject to excise
                           taxes under Section 4999 of the Code, UnitedHealth
                           Group will pay Executive the amount of such excise
                           taxes plus all federal, state, and local taxes
                           applicable to UnitedHealth Group's payment of such
                           excise taxes, including any additional excise taxes
                           due under Section 4999 of the Code with respect to
                           payments made pursuant to this Section 3(d)(vii). All
                           determinations required by this Section 3(d), upon
                           termination of Executive's employment and at
                           UnitedHealth Group's sole expense, shall forthwith be
                           made by UnitedHealth Group's regularly engaged
                           independent public accounting firm. In determining
                           the amount of excise tax which would be payable by
                           the Executive pursuant to Section 4999 of the Code,
                           such accounting firm shall take into consideration
                           and apply all non-includible, excludable and exempt
                           amounts of compensation in accordance with Section
                           280G of the Code. The parties shall cooperate fully
                           by promptly providing such accounting firm all
                           information required to


                                       7


                           complete such determinations. Such determinations
                           shall be set forth in a written statement and
                           analysis thereof issued by such accounting firm
                           which shall be promptly furnished to and shall be
                           binding upon the parties. In the event Executive
                           is subject to any audit with respect to the amount
                           of such excise taxes, Executive and UnitedHealth
                           Group will mutually cooperate in contesting such
                           audit; provided that UnitedHealth Group will pay
                           the cost of such contest and will reimburse
                           Executive on an after tax basis for any additional
                           excise taxes payable as a result of such audit and
                           for any income taxable to Executive as a result of
                           UnitedHealth Group paying the cost of such audit
                           and any additional excise taxes. In the event any
                           such audit results in a refund, Executive will
                           turn over the refund to UnitedHealth Group less
                           any income taxes incurred by Executive in respect
                           of the receipt of the refund.

         (e) TERMINATION OF EMPLOYMENT BY EXECUTIVE WITHOUT GOOD REASON. If
Executive's employment with UnitedHealth Group is terminated by Executive under
Section 3(b)(iii) without Good Reason then upon termination of Executive's
employment:

                  (i) All cash compensation payable to Executive shall cease.

                  (ii) Executive shall be entitled to continue participation in
         the health care coverage as provided in Section 3(i) below and
         Executive's participation in the life insurance or other employee
         benefit plans of UnitedHealth Group, including, without limitation, the
         Supplemental Retirement Plan, Life Insurance, and the Supplemental
         Long-Term Disability Benefit, shall terminate in accordance with
         applicable law and those plans' terms and conditions. Executive shall
         receive any benefits payable under Section 2(f) of this Agreement, as
         well as the benefit under the Supplemental Retirement Plan, within 60
         days of such termination.

                  (iii) All accrued and unpaid vacation to the date of
         termination shall be paid to the Executive.

         (f) TERMINATION OF EMPLOYMENT IN THE EVENT OF DEATH. If Executive's
employment with UnitedHealth Group is terminated under Section 3(b)(iv) due to
the death of Executive then upon termination of Executive's employment:

                  (i) For a period of twelve months from the date of Executive's
         death Executive's beneficiaries shall receive (A) biweekly payments
         equal to 1/26 of Executive's annualized highest base salary as of the
         date of Executive's employment termination, plus (B) the average of the
         bonus or incentive compensation paid or payable to Executive for the
         two most recent calendar years (excluding any special or one-time bonus
         or incentive


                                       8


         compensation payments), less all applicable withholdings or
         deductions. Provided, however, in the event of any anticipated tax
         law change during the payment period that would increase Executive's
         taxes on such income, Executive's beneficiaries may elect to take and
         receive his remaining compensation under this Section 3(f)(i),
         discounted at a market rate to the present value thereof, in a single
         lump sum payable within thirty days after written request therefor
         setting forth such anticipated tax law change.

                  (ii) Executive's beneficiaries shall be entitled to receive
         all proceeds from the Life Insurance and Supplemental Life Insurance,
         if any, provided in accordance with this Agreement and any benefit
         payable under Section 2(f) of this Agreement, as well as the benefits
         under the Supplemental Retirement Plan. Executive's spouse and
         dependent children under age 25 shall continue to receive health care
         coverage as provided in Section 3(i) of this Agreement.

                  (iii) Any stock options or grants awarded Executive under any
         of UnitedHealth Group's stock option or grant or similar stock plans,
         other than the Special Option issued pursuant to Section 2(c), shall
         vest immediately upon Executive's death and shall be exercisable by
         Executive's beneficiaries during a period of three years following the
         termination.

                  (iv) All accrued and unpaid vacation to the date of
         termination shall be paid to the Executive's estate.

         (g) TERMINATION OF EMPLOYMENT IN THE EVENT OF DISABILITY. If
Executive's employment with UnitedHealth Group is terminated under Section
3(b)(iv) due to the permanent disability of Executive then upon termination of
Executive's employment:

                  (i) For a period of twelve months from the effective date of
         Executive's disability Executive shall receive (A) biweekly payments
         equal to 1/26 of Executive's annualized highest base salary as of the
         date of Executive's employment termination, plus (B) the average of the
         bonus or incentive compensation paid or payable to Executive for the
         two most recent calendar years (excluding any special or one-time bonus
         or incentive compensation payments), less all applicable withholdings
         or deductions. Provided, however, in the event of any anticipated tax
         law change during the payment period that would increase Executive's
         taxes on such income, Executive may elect to take and receive his
         remaining compensation under this Section 3(g)(i), discounted at a
         market rate to the present value thereof, in a single lump sum payable
         within thirty days after written request therefor setting forth such
         anticipated tax law change.


                                       9



                  (ii) Executive, his spouse and children under 25 shall
         continue to receive health care coverage in accordance with Section
         3(i) of this Agreement. Executive shall receive the Supplemental
         Long-Term Disability Disability Benefit under Section 2(i) and any
         disability benefits provided under any other employee benefit plans or
         compensation policies of UnitedHealth Group to executive officers of
         similar rank in accordance with applicable law and those plans' terms
         and conditions. Executive shall receive any benefits payable under
         Section 2(f) of this Agreement and the benefit under the Supplemental
         Retirement Plan within sixty (60) days of such termination.

                  (iii) Any stock options or grants awarded Executive under any
         of UnitedHealth Group's stock option or grant or similar stock plans,
         other than the Special Option issued pursuant to Section 2(c) shall
         vest immediately and shall be exercisable during the period of three
         years following the termination.

                  (iv) All accrued and unpaid vacation to the date of
         termination shall be paid to the Executive.

         (h) DEFINITIONS. For purposes of this Agreement:

                  (i) "Cause" means (A) the willful and continued failure by
         Executive substantially to perform his duties hereunder (other than any
         such failure resulting from his disability or from termination by
         Executive for Good Reason), after a written demand for substantial
         performance is delivered to Executive that specifically identifies the
         manner in which Executive has not substantially performed his duties,
         and Executive has not remedied such failure within a reasonable time
         after receipt of such written notice; (B) a violation of UnitedHealth
         Group's Code of Conduct that is materially detrimental to UnitedHealth
         Group and that Executive has not remedied within a reasonable time
         after receipt of a written notice from UnitedHealth Group that
         specifically identifies such violations; (C) the conviction of
         Executive of a felony; or (D) any other willful and material breach of
         this Agreement by Executive that Executive has not remedied within a
         reasonable time after receipt of a written notice from UnitedHealth
         Group that specifically identifies such breach. For purposes of this
         paragraph, no act, or failure to act, on Executive's part will be
         deemed "willful" unless done, or omitted to be done, by Executive not
         in good faith and without reasonable belief that his action or omission
         was in the best interest of UnitedHealth Group.

                  (ii) "Change in Control" means (A) the acquisition by an
         individual, entity or group (within the meaning of Section 13(d)(3) or
         14(d)(2)


                                      10



         of the Securities Exchange Act of 1934, as amended (the "Exchange
         Act")) of beneficial ownership (within the meaning of Rule 13d-3
         promulgated under the Exchange Act) of 50% or more of the then
         outstanding shares of common stock of UnitedHealth Group (the
         "Outstanding Common Stock"); (B) individuals who, as of the date
         hereof, constitute UnitedHealth Group's Board of Directors (the
         "Incumbent Board") cease for any reason to constitute at least a
         majority of the UnitedHealth Group Board of Directors, provided,
         however, that any individual becoming a director subsequent to the
         date hereof whose election, or nomination for election by
         UnitedHealth Group's shareholders, was approved by a vote of at
         least a majority of the directors then comprising the Incumbent
         Board shall be considered as though such individual were a member of
         the Incumbent Board, but excluding, for this purpose, any such
         individual whose initial assumption of office occurs as a result of
         either an actual or threatened election contest (as such terms are
         used in Rule 14a-11 of Regulation 14A promulgated under the Exchange
         Act) or other actual or threatened solicitation of proxies or
         consents; (C) the approval by the stockholders of UnitedHealth Group
         of a reorganization, merger or consolidation, in each case, with
         respect to which the beneficial owners of the Outstanding Common
         Stock immediately prior to such reorganization, merger or
         consolidation, beneficially own, directly or indirectly, less than
         two-thirds of the then outstanding shares of common stock and the
         combined voting power of the then outstanding voting securities
         entitled to vote generally in the election of directors of the
         corporation resulting from such reorganization, merger or
         consolidation in substantially the same proportions as their
         ownership, immediately prior to such reorganization, merger or
         consolidation; or (D) the approval by the stockholders of
         UnitedHealth Group of (i) a complete liquidation or dissolution of
         UnitedHealth Group or (ii) the sale or other disposition of all or
         substantially all of the assets of UnitedHealth Group.

                  (iii) "Good Reason" means (A) the assignment to Executive of
         any duties inconsistent in any respect with Executive's position
         (including status, offices, titles and reporting relationships),
         authority, duties or responsibilities as contemplated by Section 1 or
         any other action by UnitedHealth Group which results in a diminution in
         such position, authority, duties or responsibilities, excluding for
         this purpose an isolated, insubstantial and inadvertent action not
         taken in bad faith and which is remedied by UnitedHealth Group promptly
         after receipt of notice thereof given by Executive; (B) the failure by
         UnitedHealth Group to elect Executive to the position of the President
         or any other action by UnitedHealth Group which results in the
         diminution of Executive's position, authority, duties, or
         responsibilities, excluding an isolated, insubstantial and inadvertent
         action not taken in bad faith and which is remedied by Group promptly
         after receipt of notice thereof given by Executive; (C) any failure of
         UnitedHealth Group


                                      11




         to pay base salary or incentive compensation or to grant Annual
         Options in accordance with Section 2(a), (b) and (d) or any failure
         by UnitedHealth Group to maintain or provide the plans, programs,
         policies and practices, or benefits described in Section 4(f), (g),
         (h) and (i) on the most favorable basis such plans programs,
         policies and practices were maintained and benefits are provided to
         Executive on the Effective Date; (D) UnitedHealth Group's requiring
         Executive to be based at any office or location other than its
         principal executive offices at its current location in Minnetonka,
         Minnesota or within twenty-five miles of such current location,
         except for travel reasonably required in the performance of the
         Executive's responsibilities; (E) any purported termination by
         UnitedHealth Group of Executive's employment otherwise than as
         expressly permitted by this Agreement; (F) the resignation or
         termination of William W. McGuire, M.D., as Chief Executive Officer
         of UnitedHealth Group for any reason, provided, however, that the
         initial occurrence of Good Reason by reason of Dr. McGuire's
         termination or resignation shall not exist for the purposes of this
         clause (F) until twelve months after the effective date of such
         resignation or termination by Dr. McGuire; (G) any other material
         breach of this Agreement by UnitedHealth Group that is not remedied
         within a reasonable time after written notice from Executive to
         UnitedHealth Group that specifically identifies such breach; or (H)
         any failure by UnitedHealth Group to comply with and satisfy Section
         5(a) of this Agreement. For purposes of the definition of "Good
         Reason," any good faith determination of "Good Reason" made by the
         Executive on or after the Change of Control Date shall be conclusive.

         (i) HEALTH CARE CONTINUATION COVERAGE. Notwithstanding any other
provision of this Agreement to the contrary, if Executive's employment is
terminated for any reason other than by UnitedHealth Group for Cause,
UnitedHealth Group shall continue to provide, at no cost to Executive, health
care coverage for Executive and his wife until each of them has reached age 65
and for his dependent children until they attain age 25, as in effect on the
date of termination. UnitedHealth Group's obligation so to provide health care
coverage shall cease at such time as Executive becomes eligible for health care
coverage from another employer. If Executive, his wife, or his dependent
children under the age of 25 cannot be covered under any of UnitedHealth Group's
group plans or policies, UnitedHealth Group shall reimburse Executive for his
full cost of obtaining comparable alternative group or individual coverage
elsewhere, less any contribution that Executive would have been required to make
under UnitedHealth Group's group health plans or policies. UnitedHealth Group
shall compensate Executive on an after-tax basis for any additional income taxes
payable by Executive as a result of UnitedHealth Group's payment of premiums
with respect to the insurance policies described in this subsection.


                                      12





4.       PROPERTY RIGHTS, CONFIDENTIALITY, NON-SOLICIT AND NON-COMPETE
PROVISIONS.

         (a)      PROPERTY RIGHTS.

                  (i) Executive shall promptly disclose to UnitedHealth Group in
         writing all inventions, discoveries, and works of authorship, whether
         or not patentable or copyrightable, which are conceived, made,
         discovered, written, or created by Executive alone or jointly with
         another person, group, or entity, whether during the normal hours of
         employment at UnitedHealth Group or on Executive's own time, during the
         term of this Agreement. Executive assigns all rights to all such
         inventions and works of authorship to UnitedHealth Group. Executive
         shall give UnitedHealth Group any of the assistance it reasonably
         requires in order for UnitedHealth Group to perfect, protect and use
         its rights to inventions and works of authorship.

         This provision shall not apply to an invention, discovery, or work of
         authorship for which no equipment, supplies, facility, or trade secret
         information of UnitedHealth Group was used and which was developed
         entirely on the Executive's own time and which does not relate to the
         business of UnitedHealth Group, to UnitedHealth Group's anticipated
         research or development, or does not result from any work performed by
         Executive for UnitedHealth Group.

                  (ii) Executive shall not remove any records, documents, or any
         other tangible items (excluding Executive's personal property) from the
         premises of UnitedHealth Group in either original or duplicate form,
         except as is needed in the ordinary course of conducting business for
         UnitedHealth Group.

                  (iii) Executive shall immediately deliver to UnitedHealth
         Group, upon termination of employment with UnitedHealth Group, or at
         any other time upon UnitedHealth Group's request, any property,
         records, documents, and other tangible items (excluding Executive's
         personal property) in Executive's possession or control, including data
         incorporated in word processing, computer, and other data storage
         media, and all copies of such records, documents, and information,
         including all Confidential Information, as defined below.

         (b) CONFIDENTIAL INFORMATION. During the course of his employment
Executive will develop, become aware of, and accumulate expertise, knowledge,
and information regarding UnitedHealth Group's organization, strategies,
business, and operations and UnitedHealth Group's past, current, or potential
customers, providers, and suppliers. UnitedHealth Group considers such
expertise,

                                      13




knowledge, and information to be valuable, confidential, and proprietary, and
it shall be considered Confidential Information for purposes of this
Agreement. During this Agreement and at all times thereafter Executive shall
not use such Confidential Information or disclose it to other persons or
entities except as is necessary for the performance of Executive's duties for
UnitedHealth Group or as has been expressly permitted in writing by
UnitedHealth Group. Provided, however, that the foregoing covenant shall not
apply to any information possessed by Executive prior to his employment by
UnitedHealth Group, or to any information which is in or has entered the
public domain or has been disclosed within any industry segment in which
UnitedHealth Group or any subsidiary or affiliated company of UnitedHealth
Group operates by or pursuant to the authority of UnitedHealth Group or any
subsidiary or affiliated company of UnitedHealth Group.

         (c) NON-SOLICITATION. During (i) the term of this Agreement, (ii) any
period for which Executive is entitled to receive payments under Section 3 of
this Agreement, notwithstanding any lump-sum payment that Executive might
receive under Section 3(d)(i) or (ii), (iii) any period following the
termination of this Agreement in which Executive remains employed by
UnitedHealth Group, and (iv) for a period of one year after the last day of the
latest of any period described in (i), (ii) or (iii), Executive shall not
directly or indirectly attempt to hire away any then-current employee of
UnitedHealth Group or a subsidiary of UnitedHealth Group or to persuade any such
employee to leave employment with UnitedHealth Group.

         (d) NON-COMPETITION.

                  (i) During (A) the term of this Agreement, (B) any period for
         which Executive is entitled to receive payments under Section 3 of this
         Agreement, notwithstanding any lump-sum payment that Executive might
         receive under Section 3(d)(i) or (ii), and (C) any period following
         termination of this Agreement in which Executive remains employed by
         UnitedHealth Group (the "Restriction Period"), Executive shall not
         directly or indirectly solicit, divert, or take away from UnitedHealth
         Group, or attempt to solicit, divert, or take away from UnitedHealth
         Group, the business of any person, partnership, company, or corporation
         with which UnitedHealth Group has established a business or customer
         relationship; PROVIDED, HOWEVER, that this Section 4(d)(i) shall apply
         only to the business(es) in which UnitedHealth Group was engaged prior
         to or planned to be engaged in within six months after the termination
         of this Agreement.

                  (ii) During the Restriction Period, without UnitedHealth
         Group's prior written consent, Executive shall not engage or
         participate, either individually or as an employee, consultant or
         principal, partner, agent, trustee, officer or director of a
         corporation, partnership, or other business


                                      14



         entity, in any business in which UnitedHealth Group or any of the
         UnitedHealth Group Companies is engaged; PROVIDED, HOWEVER, that
         this Section 4(d)(ii) shall apply only to businesses whose primary
         business is in competition with a material business of UnitedHealth
         Group as of the date of termination of this Agreement.

                  (iii) Executive's obligations under this Section 4(d) shall
         remain in effect only so long as UnitedHealth Group continues to make
         the payments and provide the benefits specified in Section 3(d)
         notwithstanding any lump sum payment that Executive might receive under
         Section 3(d)(i) or (ii) (though UnitedHealth Group shall have no option
         to discontinue such payments on its own).

                  (iv) If Executive elects to terminate Executive's employment
         pursuant to Section 3(b)(iii), UnitedHealth Group may elect to have the
         provisions of this Section 4(d) be in effect for up to 12 months
         following the effective date of such resignation if during such period
         UnitedHealth Group makes the payments specified in Section 3(d)(i). To
         be effective UnitedHealth Group shall notify Executive of its intention
         to make payments hereunder within ten days following Executive's notice
         of resignation.

5.       MISCELLANEOUS.

         (a) ASSIGNMENT. This Agreement shall be binding upon and shall inure to
the benefit of the parties and their respective legal and personal
representatives, heirs, successors, and assigns, but may not be assigned by
either party (except by operation of law upon death or disability of Executive
and except that UnitedHealth Group may assign its obligations hereunder to a
wholly owned subsidiary provided that such assignment shall not relieve
UnitedHealth Group of its obligations under this Agreement) without the prior
written consent of the other party. UnitedHealth Group will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of its business and/or assets to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that UnitedHealth Group is required to perform under this Agreement if no
such succession had taken place. As used in this Agreement, "UnitedHealth Group"
shall mean each as hereinbefore defined and any successor to its business and/or
assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.

         (b) NOTICES. All notices under this Agreement shall be in writing and
shall be deemed to have been duly given if delivered by hand or mailed by
registered or certified mail, return receipt requested, postage prepaid, to the
party to receive the same at the address set forth below or at such other
address as may have been furnished by proper notice.


                                      15




         UnitedHealth Group:            300 Opus Center
                                        9900 Bren Road East
                                        Minnetonka, MN 55343
                                        Attn:  General Counsel

                  Executive:

         (c) ENTIRE AGREEMENT. This Agreement contains the entire understanding
of the parties with respect to its subject matter and may be amended or modified
only by a subsequent written amendment executed by the parties. This Agreement
replaces and supersedes any and all prior employment or employment related
agreements and understandings, including any letters or memos which may have
been construed as agreements, between Executive and UnitedHealth Group or any of
its subsidiaries and affiliated companies.

         (d) CHOICE OF LAW. This Agreement shall be construed and interpreted
under the applicable laws and decisions of the State of Minnesota.

         (e) WAIVERS. No failure on the part of either party to exercise, and no
delay in exercising, any right or remedy under this Agreement shall operate as a
waiver; nor shall any single or partial exercise of any right or remedy preclude
any other or further exercise of any right or remedy.

         (f) ADEQUACY OF CONSIDERATION. Executive acknowledges and agrees that
he has received, prior to or contemporaneously with the Effective Date, adequate
consideration from UnitedHealth Group to enter into this Agreement.

         (g) DISPUTE RESOLUTION AND REMEDIES. Any dispute arising between the
parties relating to this Agreement or to Executive's employment by UnitedHealth
Group shall be resolved by binding arbitration held in the City of Minneapolis
pursuant to the Rules of the American Arbitration Association, except as
hereinafter expressly modified. If the disputing and responding parties are
unable to agree upon a resolution within forty-five business days after the
responding party's receipt of written notice from the disputing party setting
forth the nature of the dispute, within the following ten business days the
disputing and responding parties shall select a mutually acceptable single
arbitrator to resolve the dispute or, if the parties fail or are unable to do
so, each shall within the following ten business days select a single
arbitrator, and the two so selected shall select a third arbitrator within the
following ten business days. Such single arbitrator or, as the case may be,
panel of three arbitrators acting by majority decision, shall resolve the
dispute within sixty days after the date such arbitrator, or the last of them so
selected, is selected, or as soon thereafter as practicable. If either party
refuses or fails to select an arbitrator within the time therefor, the other
party may do so on such


                                      16



refusing or failing party's behalf. The arbitrators shall have no power to
award any punitive or exemplary damages or may construe or interpret but
shall not ignore or vary the terms of this Agreement and shall be bound by
controlling law. The parties acknowledge that Executive's failure to comply
with the Confidentiality, Non-Solicit and Non-Compete provisions of this
Agreement will cause immediate and irreparable injury to UnitedHealth Group
and that therefore the arbitrators, or a court of competent jurisdiction if
an arbitration panel cannot be immediately convened, will be empowered to
provide injunctive relief, including temporary or preliminary relief, to
restrain any such failure to comply. The party not prevailing in the
proceeding shall bear the costs and expenses thereof, including without
limitation, the reasonable attorneys' fees of the prevailing party. The
arbitration award or other resolution may be entered as a judgment at the
request of the prevailing party by any court of competent jurisdiction in
Minnesota or elsewhere.

         (h) SURVIVAL. The provision of Sections 2(f), 2(g), 2(i), 3(c)-3(i), 4
and 5 shall survive any termination of this Agreement.

THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION THAT MAY BE ENFORCED BY
THE PARTIES.



         IN WITNESS WHEREOF, this Agreement has been signed by the parties
hereto on the date set forth below.


UnitedHealth Group                     Stephen J. Hemsley



By:
   ---------------------------         --------------------------------
Date:                                  Date:
     -------------------------              ---------------------------


                                      17

EX-10.(H)

                                                                   EXHIBIT 10(h)

                             EMPLOYMENT AGREEMENT

     This Agreement is made effective this 19th day of May, 1998 (the
"Effective Date") by and between Arnold H. Kaplan ("Executive") and United
HealthCare Services, Inc. ("UHS") (when used in this Agreement, UHS includes
any affiliated entity of UHS) for the purpose of setting forth certain terms
and conditions of Executive's employment by UHS and to protect UHS's
knowledge, expertise, customer relationships and the confidential information
UHS has developed about its customers, products, operations and services. As
of the Effective Date, this Agreement supersedes any prior employment-related
agreement or agreements between Executive and UHS or any subsidiary or
affiliate of UHS.

1.   EMPLOYMENT AND DUTIES.

     A.     EMPLOYMENT. UHS hereby directly or through its subsidiaries
     employs Executive. Executive accepts such employment on the terms and
     conditions set forth in this Agreement and, except as specifically
     superseded by this Agreement, subject to all of UHS's policies and
     procedures in regard to its employees.

     B.     DUTIES. Executive shall perform such duties as are commonly
     associated with his position as the Chief Financial Officer of United
     HealthCare Corporation ("UHC") or such other senior executive level
     responsibilities as are reasonably assigned to Executive by his
     supervisor from time-to-time. As Chief Financial Officer, Executive will
     report directly to UHC's Senior Executive Vice President, such
     executive's successor, or another member of UHC's Office of the
     Chairman, excluding, however, any Chief Administrative Officer that may
     from time to time be appointed by UHC and serve as a member of the Office
     of the Chairman. Executive agrees to devote substantially all of his
     business time and energy to the performance of his duties in a diligent
     and proper manner. UHS acknowledges that Executive shall maintain his
     permanent residence in Emmaus, Pennsylvania.

2.   COMPENSATION.

     A.     BASE SALARY. Executive shall initially be paid a base annual
     salary in the amount of $375,000 payable bi-weekly, less all applicable
     withholdings and deductions. Executive shall receive a periodic
     performance review from his supervisor and consideration for an increase
     of such base salary.

     B.     BONUS AND STOCK PLANS. Executive shall be eligible to participate
     in UHS's incentive compensation plans and its stock option and grant
     plans, in accordance with the terms and conditions of those plans and
     applicable laws and regulations. Without limiting the generality of the
     foregoing, as long as Executive remains employed by UHS:

     1.  Executive will be entitled to participate in the UHC Management
     Incentive Program. Executive's minimum initial participation will be 75%
     of Executive's base annual salary. For 1998, Executive's payment, before
     applicable withholding and deductions, shall not be less than $141,000.
     For 1999, Executive's payment before applicable withholding and
     deductions shall not be less than the sum of $141,000 and half of the
     product of the "factor" applied to Executive's functional unit and
     Executive's then participation factor.

     2.  Executive will be entitled to participate in the UHC Long Term
     Incentive Plan. Executive's participation shall include UHS' start up
     cycle and first cycle on a time-calculated pro rata basis beginning on
     the Effective Date.

     3.  Executive will be entitled to participate in the UHC Stock Option
     Plan from and after the Effective Date without any proration or other
     limitation based on length of tenure. While not contractually binding, UHC
     has advised Executive that currently executives comparable to Executive
     annually receive options to purchase



     approximately 25,000 shares of UHC Common Stock. Pursuant to the UHC
     Stock Option Plan, Executive will receive an initial option grant to
     purchase 75,000 shares of UHC Common Stock at an exercise price of
     $32.25, which option grant will vest equally over a four-year period on
     the anniversary of Executive's employment. Options granted to
     Executive, including the initial option grant described above, will
     fully vest upon Executive's retirement or any other termination of this
     Agreement, other than a termination for Cause as herein defined. Options
     granted to Executive, once vested, shall remain exercisable for the
     remaining term of the option, subject to any forfeiture or "clawback"
     provisions in any option. Any stock options granted to Executive will
     provide that upon a UHC change of control all options granted to
     Executive shall be deemed fully vested.

     C.     INITIAL BONUS. As an additional incentive payment, UHS agrees to
    pay Executive a one-time payment of $30,000, less all applicable
    withholding and deductions provided that Executive commences employment no
    later than July 1, 1998. This payment will be made approximately one month
    following the date on which Executive commences active employment hereunder.

    D.      MOVING ALLOWANCE. UHS will provide Executive with relocation
    benefits equal to $75,000 in accordance with UHS policies previously
    provided to Executive. In addition, for a period of six months following
    July 1, 1998, UHS will reimburse Executive for reasonable transition
    expenses that Executive incurs. UHS will reimburse Executive the cost of
    any federal and state income taxes payable with respect to the payments
    made under this paragraph.

    E.      EMPLOYEE BENEFITS. The Executive shall be eligible to participate
    in UHS's other employee benefit plans, including without limitation, any
    life, health, dental, short-term and long-term disability insurance
    coverages and any retirement plans, in accordance with the terms and
    conditions of those plans and applicable laws and regulations. Without
    limiting the generality of the foregoing, Executive will be entitled to
    receive a monthly benefit payment of $1,200, a one-time payment of $750 for
    business related expenses, and annual financial planning benefits up to
    $6,000, all in accordance with the terms and conditions of such plans and
    programs.

    F.      VACATION; ILLNESS. Executive shall be entitled to paid vacation
    and sick leave each year in accordance with UHS's then-current policies.

3.  TERM AND TERMINATION.

    A.      TERM. The term of this Agreement shall begin on the Effective
    Date and shall continue unless and until terminated as set forth in
    Section 3B.

    B.      TERMINATION OF AGREEMENT AND/OR EMPLOYMENT.

            1.    This Agreement may be terminated at any time by the mutual
            written agreement of the parties.

            2.    UHS may terminate Executive's employment or terminate this
            Agreement by giving written notice of termination which is received
            by Executive at least 30 days before the effective date of
            termination of employment or of this Agreement, as the case may be.

            3.    Executive may terminate his employment by giving written
            notice of termination of employment which is received by UHS at
            least 30 days before the effective date of termination of
            employment.

            4.    This Agreement shall automatically terminate on the
            effective date of the termination of Executive's employment or on
            the date of Executive's death, retirement or permanent and total


                                       2


          disability which renders Executive incapable of performing
          Executive's duties.  UHS has the sole discretion to determine
          whether Executive is permanently or totally disabled with the
          meaning of this Section 3B4.

     C.   SEVERANCE EVENTS AND COMPENSATION.  In the event (i) Executive's
     employment with UHS is terminated by UHS pursuant to Section 3B2 and
     without Cause or (ii) a Change in Employment occurs which Executive
     elects to treat as a termination of Executive's employment under
     Section 3B2 ((i) and (ii) are collectively referred to as the "Severance
     Events"), then:

          1.     For the "Severance Period," as hereinafter defined,
          Executive shall receive biweekly payments equal to the greater of
          (a)(i) the quotient of $1,000,000 and 36 if the Severence Event
          occurs within 24 months of the Effective Date or (ii) the quotient
          of $700,000 and 24 if the Severance Event occurs more than 24
          months after the Effective Date but within 36 months of the
          Effective Date and (b) an amount equal to 1/26 of (i) Executive's
          annualized base salary at the effective date of termination, plus
          (ii) one-half of the total of any bonus or incentive compensation
          (but not including any special or one-time bonus or incentive
          compensation payments) paid or payable to Executive for the two
          most recent calendar years or other periods generally used by UHS
          to determine such bonus or incentive compensation, or if Executive
          has been eligible for such bonus or incentive compensation payments
          for less than two such periods, the last such payment paid or
          payable to Executive (the amounts paid pursuant to (a) or (b) are
          referred to as the "Severance Compensation").  The Severance
          Compensation shall be reduced by any compensation which Executive
          receives or reasonably could have received in each biweekly period
          as a result of employment or work as an independent contractor
          elsewhere.  Executive shall promptly disclose to UHS any such
          compensation.  For purposes of this Agreement, the "Severance
          Period" shall equal:  18 months if a Severance Event occurs within
          24 months of the Effective Date; 12 months if a Severance Event
          occurs more than 24 but within 36 months of the Effective Date;
          and such period of time as is consistent with UHS' then prevailing
          severance policies for executive officers comparable to the Executive
          if a Severance Event occurs more than 36 months after the Effective
          Date. Any payments hereunder will be reduced by all applicable
          withholdings or deductions required by law or Executive's elections
          under any employee benefit plans which Executive continues to
          participate in under Section 3C2.  If a Severance Event occurs more
          than 36 months after the Effective Date in connection with a change
          of control of UHC Executive shall receive Severance Compensation
          equal to the greater of $700,000 or such amount as is payable in
          accordance with UHC's prevailing policies.

          2.     As of the effective date of termination of employment,
          Executive shall cease to be eligible for all benefit plans
          maintained by UHS, except as required by federal or state
          continuation of coverage laws.  If Executive elects continuation of
          coverage under one or more benefit plans subject to such
          continuation requirements, UHS shall, for the Severance Period, pay
          on behalf of Executive an amount equal to UHS's employer
          contribution for similarly situated active employees' coverages
          under such benefit plans.  During the Severance Period Executive's
          share of coverage costs for such benefit plans shall be deducted
          automatically through after-tax payroll deduction from the
          Severance Compensation.

          3.     During the Severance Period UHS shall pay to an outplacement
          firm selected by UHS an amount deemed reasonable by UHS for
          outplacement and job search services for Executive.

          4.     Executive shall be paid a portion of the Management
          Incentive Program payments for the year in which termination of
          this Agreement occurs and shall also be entitled to a portion of
          the payments under the Long-Term Incentive Plan.  Payments shall be
          prorated based on the time at which this Agreement terminates and
          shall be paid promptly following their determination in accordance
          with the plans.


                                       3


     The payments and benefits to Executive under this Section 3C shall be the
     sole liability of UHS to Executive in the event of a Severance Event and
     shall replace and be in lieu of any payments or benefits which otherwise
     might be owed by UHS under any other severance plan or program and such
     payments and benefits may be conditioned by UHS upon receipt of a release
     of claims from Executive.

     D.   DEFINITIONS AND PROCEDURE.

          1.     For purposes of this Agreement, "Cause" shall mean (a) the
          refusal of Executive to follow the reasonable directions of UHS's
          Board of Directors or Executive's supervisor or to perform any duties
          reasonably required on material matters by UHS, (b) material
          violations of UHS's Code of Conduct or (c) the commission of any
          criminal act of fraud or dishonesty by Executive in connection with
          Executive's employment by UHS.  Prior to the termination of
          Executive's employment under subsection (a) of this Cause definition,
          UHS shall provide Executive with a 30 day notice specifying the basis
          for Cause.  If the Cause described in the notice is cured to UHS's
          reasonable satisfaction prior to the end of the 30 day notice
          period, Executive's employment shall not be terminated on that
          basis.

          2.     For purposes of this Agreement a "Change in Employment"
          shall be deemed to have occurred (a) if (i) Executive's duties are
          materially adversely changed without Executive's prior consent or
          (ii) Executive's salary or benefits are reduced other than as a
          general reduction of salaries and benefits by UHS or (iii) without
          terminating Executive's employment this Agreement is terminated by
          UHS pursuant to Section 3B2, and (b) if in each case under
          subsections (a) (i), (ii), and (iii), in the period beginning 60
          days before the time the Change in Employment occurs, Cause does
          not exist or if Cause does exist UHS has not given Executive
          written notice that Cause exists.  Executive may elect to treat a
          Change in Employment as a termination of employment by UHS. To do
          so Executive shall send written notice of such election to UHS
          within 60 days after the date Executive receives notice from UHS or
          otherwise is definitively informed of the events constituting the
          Change in Employment.  No Change in Employment shall be deemed to have
          occurred if Executive fails to send the notice of election within
          the 60 day period.  Executive's failure to treat a particular
          Change in Employment as a termination of employment shall not
          preclude Executive from treating a subsequent Change in Employment
          as a termination of employment.  The effective date of a Change in
          Employment termination shall be the date 30 days after UHS receives
          the written notice of election.

4.  PROPERTY RIGHTS, CONFIDENTIALITY, NON-SOLICIT AND NON-COMPETE PROVISIONS.

    A.    UHS'S PROPERTY.

          1.     Executive shall promptly disclose to UHS in writing all
          inventions, discoveries and works of authorship, whether or not
          patentable or copyrightable, which are conceived, made, discovered,
          written or created by Executive alone or jointly with another
          person, group or entity, whether during the normal hours of
          employment at UHS or on Executive's own time, during the term of
          this Agreement.  Executive assigns all rights to all such
          inventions and works of authorship to UHS.  Executive shall give
          UHS any assistance it reasonably requires in order for UHS to
          perfect, protect, and use its rights to inventions and works of
          authorship.

          This provision shall not apply to an invention for which no
          equipment, supplies, facility or trade secret information of UHS
          was used and which was developed entirely on the Executive's own
          time and which (1) does not relate to the business of UHS or to
          UHS's anticipated research or development, or (2) does not result
          from any work performed by the Executive for UHS.


                                       4








          2.     Executive shall not remove any records, documents, or any other
          tangible items (excluding Executive's personal property) from the
          premises of UHS in either original or duplicate form, except as is
          needed in the ordinary course of conducting business for UHS.

          3.     Executive shall immediately deliver to UHS, upon termination of
          employment with UHS, or at any other time upon UHS's request, any
          property, records, documents, and other tangible items (excluding
          Executive's personal property) in Executive's possession or control,
          including data incorporated in word processing, computer and other
          data storage media, and all copies of such records, documents and
          information, including all Confidential Information, as defined
          below.

    B.    CONFIDENTIAL INFORMATION.  During the course of his employment
    Executive will develop, become aware of and accumulate expertise,
    knowledge and information regarding UHS's organization, strategies,
    business and operations and UHS's past, current or potential
    customers and suppliers. UHS considers such expertise, knowledge and
    information to be valuable, confidential and proprietary and it
    shall be considered Confidential Information for purposes of this
    Agreement. During this Agreement and at all times thereafter
    Executive shall not use such Confidential Information or disclose it
    to other persons or entities except as is necessary for the
    performance of Executive's duties for UHS or as has been expressly
    permitted in writing by UHS.

    C.    NON-SOLICITATION.  During (i) the term of this Agreement, (ii) any
    period for which Executive is receiving payments under Section 3C of
    this Agreement, (iii) any period following the termination or
    expiration of this Agreement during which Executive remains employed
    by UHS and (iv) for a period of one year after the last day of the
    latest of any period described in (i), (ii) or (iii), Executive
    shall not (y) directly or indirectly attempt to hire away any
    then-current employee of UHS or a subsidiary of UHS or to persuade
    any such employee to leave employment with UHS, or (z) directly or
    indirectly solicit, divert, or take away, or attempt to solicit,
    divert, or take away, the business of any person, partnership,
    company or corporation with whom UHS (including any subsidiary or
    affiliated company in which UHS has a more than 20% equity interest)
    has established or is actively seeking to establish a business or
    customer relationship.

    D.    NON-COMPETITION.  During (i) the term of this Agreement, (ii) any
    period for which Executive is receiving payments under Section 3C of
    this Agreement, and (iii) any period following the termination or
    expiration of this Agreement during which Executive remains employed
    by UHS, Executive shall not, without UHS's prior written consent,
    engage or participate, either individually or as an employee,
    consultant or principal, partner, agent, trustee, officer or
    director of a corporation, partnership or other business entity, in
    any business in which UHS (including any subsidiary or affiliated
    company in which UHS has a more than 20% equity interest) is
    engaged. In the event that Executive elects to terminate Executive's
    employment pursuant to Section 3B3, UHS may elect to have the
    provisions of this Section 4D be in effect for up to 18 months
    following the effective date of such resignation if, during the
    period up to 18 months specified by UHS, UHS pays Executive biweekly
    payments equal to 1/26 of the Severance Compensation. UHS must send
    written notice of such election within 10 days after it receives
    written notice of the termination of employment. Executive shall use
    reasonable efforts to find appropriate employment or work as an
    independent contractor not inconsistent with this Section 4D and a
    biweekly payment shall be reduced by any compensation which
    Executive receives or reasonably could have received in that
    biweekly period as a result of employment or work as an independent
    contractor elsewhere. Executive shall promptly disclose to UHS any
    such compensation.

5.  MISCELLANEOUS.

    A.  ASSIGNMENT.  This Agreement shall be binding upon and shall
    inure to the benefit of the parties and their successors and assigns,
    but may not be assigned by either party without the prior written
    consent of the other party, except that UHS in its sole discretion
    may assign this Agreement to an entity controlled by UHS at the time
    of the assignment. If UHS subsequently loses or gives up control of
    the entity to which this

                                       5


    Agreement is assigned, such entity shall become UHS for all purposes
    under this Agreement, beginning on the date on which UHS loses or
    gives up control of the entity. Any successor to UHS shall be deemed
    to be UHS for all purposes of this Agreement.

    B.  NOTICES.  All notices under this Agreement shall be in writing
    and shall be deemed to have been duly given if delivered by hand or
    mailed by registered or certified mail, return receipt requested,
    postage prepaid, to the party to receive the same at the address set
    forth below or at such other address as may have been furnished by
    proper notice.

                   UHS:          300 Opus Center
                                 9900 Bren Road East
                                 Minnetonka, MN 55343
                                 Attn: General Counsel

                   Executive:



    C.  ENTIRE AGREEMENT.  This Agreement contains the entire
    understanding of the parties with respect to its subject matter and
    may be amended or modified only by a subsequent written amendment
    executed by the parties.  This Agreement replaces and supersedes any
    and all prior employment or employment related agreements and
    understandings, including any letters or memos which may have been
    construed as agreements, between the Executive and UHS or any of
    its subsidiaries and affiliated companies.

    D.  CHOICE OF LAW.  This Agreement shall be construed and
    interpreted under the applicable laws and decisions of the State of
    Minnesota

    E.  WAIVERS.  No failure on the part of either party to exercise,
    and no delay in exercising, any right or remedy under this Agreement
    shall operate as a waiver, nor shall any single or partial exercise
    of any right or remedy preclude any other or further exercise of any
    right or remedy.

    F.  ADEQUACY OF CONSIDERATION.  Executive acknowledges and agrees
    that he/she has received adequate consideration from UHS to enter
    into this Agreement.

    G.  DISPUTE RESOLUTION AND REMEDIES.  Any dispute arising between
    the parties relating to this Agreement and future agreements or to
    Executive's employment by UHS shall be resolved by binding
    arbitration pursuant to the Rules of the American Arbitration
    Association. In no event may the arbitration be initiated more than
    one year after the date one party first gave written notice of the
    dispute to the other party. The arbitrators shall not ignore or vary
    the terms of this Agreement and shall be bound by and apply
    controlling law, but may not in any case award any
    punitive or exemplary damages. The parties acknowledge that
    Executive's failure to comply with the Confidential Information,
    Non-Solicitation and Non-Competition provisions of this Agreement
    will cause immediate and irreparable injury to UHS and that
    therefore the arbitrators, or a court of competent jurisdiction if
    an arbitration panel cannot be immediately convened, will be
    empowered to provide injunctive relief, including temporary or
    preliminary relief, to restrain any such failure to comply.

    H.  NO THIRD-PARTY BENEFICIARIES.  This Agreement shall not confer
    or be deemed or construed to confer any rights or benefits upon any
    person other than the parties.

                                       6


    THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION THAT MAY BE
    ENFORCED BY THE PARTIES.

    UNITED HEALTHCARE SERVICES, INC.

    By /s/ Stephen J. Hemsley              /s/ Arnold H. Kaplan
       -------------------------------    -------------------------------
       Stephen J. Hemsley                 Arnold H. Kaplan

                                       7

EX-10.(I)

                                                              EXHIBIT 10(i)

                            EMPLOYMENT AGREEMENT

         This Agreement, effective as of October 16, 1998 (the "Effective
Date"), is made by and between Lois E. Quam ("Executive") and United
HealthCare Services, Inc. ("United HealthCare") for the purpose of setting
forth the terms and conditions of Executive's employment by United
HealthCare, or an affiliate or subsidiary of United HealthCare, and to
protect United HealthCare's knowledge, expertise, customer relationships and
the confidential information United HealthCare has developed about its
customers, products, operations and services.  Unless the context otherwise
requires, when used in this Agreement "United HealthCare" includes any entity
affiliated with United HealthCare.

        WHEREAS, as additional consideration for entering into this Agreement
Executive shall receive, upon execution of this Agreement, a nonqualified
stock option to purchase 40,000 shares of United HealthCare Corporation
("UHC") common stock with a grant date the same as the Effective Date
pursuant to the terms of the UHC Amended and Restated 1991 Stock and
Incentive Plan.

        WHEREAS, Executive and United HealthCare desire to enter into this
Agreement, which shall supersede any and all other prior employment-related
agreements between Executive and United HealthCare.

        NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained and intending to be legally bound hereby, the
parties hereto agree as follows:

1.  EMPLOYMENT AND DUTIES; TERMINATION OF PRIOR AGREEMENTS.

    A.  EMPLOYMENT.  United HealthCare hereby employs Executive, either
    directly or through an affiliate or subsidiary of United HealthCare, and
    Executive hereby accepts such employment on the terms and conditions set
    forth in this Agreement.  Except as specifically superseded by this
    Agreement, Executive's employment hereunder shall be subject to all of
    United HealthCare's policies and procedures in regard to its employees.
    Executive's employment hereunder shall begin on the Effective Date and
    shall continue until terminated as set forth in Section 3 hereof.

    B.  DUTIES.  Executive shall initially hold the executive level position
    of CEO, Ovations and perform the duties associated therewith.  Executive
    shall perform such other executive level responsibilities as are
    reasonably assigned Executive from time to time.  Executive agrees to
    devote substantially all of Executive's business time and energy to the
    performance of Executive's duties in a diligent and proper manner.

    C.  TERMINATION OF PRIOR AGREEMENTS.  As of the Effective Date all other
    prior employment related agreements between Executive and United
    HealthCare will terminate in their entirety and no longer be of any force
    or effect.




2.  COMPENSATION.

    A.  BASE SALARY.  Executive shall initially be paid a base annual salary,
    payable biweekly, less all applicable withholdings and deductions (the
    "Initial Base Salary").  Executive shall receive a periodic performance
    review and consideration for an increase in the Initial Base Salary.

    B.  BONUS AND STOCK PLANS.  Executive shall be eligible to participate in
    the incentive compensation plans and the stock option and grant plans
    maintained by United HealthCare or an affiliate or subsidiary of United
    HealthCare, in the sole discretion of United HealthCare and in accordance
    with the terms and conditions of those plans and applicable laws and
    regulations.

    C.  EMPLOYEE BENEFITS.  Executive shall be eligible to participate in the
    employee benefit plans maintained by either United HealthCare or an
    affiliate or subsidiary of United HealthCare, including without
    limitation, any life, health, dental, short-term and long-term disability
    insurance coverages and any retirement plans, in the sole discretion of
    United HealthCare and in accordance with the terms and conditions of
    those plans and applicable laws and regulations.

    D.  VACATION; ILLNESS.  Executive shall be eligible for paid vacation and
    sick leave each year in accordance with the then-current policies of
    either United HealthCare or an affiliate or subsidiary of United
    HealthCare, in the sole discretion of United HealthCare and in accordance
    with the terms and conditions of those plans and applicable laws and
    regulations.

3.  TERM AND TERMINATION.

    A.  TERM.  The term of this Agreement shall begin on the Effective Date
    and shall continue until terminated as set forth in Section 3B.

    B.  TERMINATION OF AGREEMENT.

        1.  BY MUTUAL AGREEMENT.  This Agreement and Executive's employment
        hereunder may be terminated at any time by the mutual written
        agreement of the parties.

        2.  BY UNITED HEALTHCARE.  United HealthCare may terminate this
        Agreement and Executive's employment hereunder on 30 days' written
        notice.

        3.  BY EXECUTIVE.  Executive may terminate this Agreement and
        Executive's employment hereunder on 30 days' written notice.

        4.  DEATH, DISABILITY, ETC.  This Agreement and Executive's
        employment by United HealthCare shall terminate immediately upon
        Executive's death.  This Agreement



    and Executive's employment hereunder shall automatically terminate in the
    event of a permanent and total disability which renders Executive incapable
    of performing Executive's duties, with or without reasonable accommodation.
    United HealthCare has the sole discretion to determine whether Executive is
    permanently or totally disabled with the meaning of this Section 3B4, and
    the effective date on which Executive was rendered so disabled.

C. EMPLOYEE BENEFITS.  On the effective date of the termination of this
Agreement and Executive's employment by United HealthCare, Executive shall
cease to be eligible for all employee benefit plans maintained by United
HealthCare, except as required by federal or state continuation of coverage
laws ("COBRA Benefits").  If Executive elects COBRA Benefits, Executive shall
pay the entire cost of such benefits either through after-tax payroll
deductions from the cash component of any severance compensation Executive
receives or directly if Executive does not receive such severance
compensation or if such severance compensation ceases.

D.  SEVERANCE EVENTS AND BENEFITS.  If a Severance Event, as hereinafter
defined, occurs, Executive shall receive the severance benefits set forth in
this Section 3D for a period of 12 months from the effective date of the
applicable Severance Event (the "Severance Period").  For purposes of this
Agreement a Severance Event shall occur if and when:

(i)    United HealthCare (a) terminates this Agreement and Executive's
       employment without Cause, as hereinafter defined, or (b) terminates
       this Agreement without terminating Executive's employment and Executive
       elects to treat such termination of this Agreement as a Change in
       Employment, as hereinafter defined (collectively a "Termination
       without Cause"), or

(ii)   Within two years following a Change in Control, as hereinafter
       defined, either (a) United HealthCare terminates this Agreement and
       Executive's employment without Cause, or (b) a Change in Employment
       occurs and Executive elects to treat such Change in Employment as a
       termination of Executive's employment (collectively a "Termination
       following a Change in Control").

    1. SEVERANCE COMPENSATION.  Executive shall receive the following
    severance compensation (the "Severance Compensation"):

        a) TERMINATION WITHOUT CAUSE.  Subject to Section 3D(1)(b) below,
        upon a Termination without Cause Executive shall receive biweekly
        payments equal to 1/26 of the sum of (1) two times Executive's
        annualized base salary as of the date of the Severance Event, less all
        applicable withholdings or deductions required by law and Executive's
        COBRA Benefit payments, if any, plus (2) one-half of the total of any
        bonus or incentive compensation paid or payable to Executive for the
        two most recent calendar years (excluding any special or one-time bonus
        or incentive compensation payments), or if Executive has been eligible
        for such bonus



        or incentive compensation payments for less than two such periods, the
        last such payment paid or payable to Executive (excluding any special
        or one-time bonus or incentive compensation payments).

        b) TERMINATION FOLLOWING A CHANGE IN CONTROL.  Upon a Termination
        following a Change in Control, Executive shall receive biweekly
        payments equal to 1/26 of the sum of (1) three times Executive's
        highest annualized base salary during the 2 year period immediately
        preceding the Severance Event, less all applicable withholdings or
        deductions required by law and Executive's COBRA Benefit payments, if
        any, plus (2) the greater of (i) all bonuses that would be payable to
        Executive under any incentive compensation plans in which Executive
        then participates at Executive's then-current target level, or (ii)
        one-half of the total of any bonus or incentive compensation paid or
        payable to Executive for the two most recent calendar years (excluding
        any special or one-time bonus or incentive compensation payments), or
        if Executive has been eligible for such bonus or incentive compensation
        payments for less than two such periods, the last such payment paid or
        payable to Executive (excluding any special or one-time bonus or
        incentive compensation payments.

    2. CASH PAYMENT.  Executive shall receive a one-time cash payment within
    a reasonable time following commencement of the Severance Period in an
    amount equal to the portion of the premiums that United HealthCare, or its
    affiliate or subsidiary, as applicable, subsidizes for employee-only health,
    dental and group term life benefit coverages (the "Cash Payment").  The Cash
    Payment shall cover the Severance Period and shall be determined as of the
    effective date of the applicable Severance Event.

    3. JOB SEARCH FEES.  For a period not to exceed the Severance Period,
    United HealthCare shall pay to an outplacement firm selected by United
    HealthCare an amount deemed reasonable by United HealthCare for
    outplacement and job search services for Executive.

    4. EXCISE TAX PAYMENT. If any portion of the Severance Compensation
    payable upon a Termination following a Change in Control constitutes an
    Excess Parachute Payment, as hereinafter defined, such that an Excise Tax,
    as hereinafter defined, is due, Executive shall receive a one-time cash
    payment in an amount sufficient to cover (a) the full cost of the Excise
    Tax plus (b) Executive's federal, state and city income, employment and
    Excise Tax on this one-time cash payment and on all such iterative payments
    so that Executive is made entirely whole for the impact of the Excise Tax
    (collectively the "Gross-Up Payment").  United HealthCare shall calculate
    these amounts on a timely and accurate basis, and for this purpose Executive
    shall be deemed to be in the highest marginal rate of federal, state and
    city taxes.  The Gross-Up Payment shall be made within 30 days following the
    effective date of Executive's employment termination.  For purposes of this
    Agreement the term "Excess Parachute Payment" shall have the


          meaning set forth in Section 280G of the Internal Revenue Code of
          1986, as amended (the "Code").  For purposes of this Agreement the
          term "Excise Tax" shall mean the tax imposed on an Excess Parachute
          Payment pursuant to Sections 280G and 4999 of the Code.

This Section 3D shall be the sole liability of United HealthCare to Executive
upon the termination of this Agreement and Executive's employment hereunder,
and shall replace and be in lieu of any payments or benefits which otherwise
might be owed Executive under any other severance plan or program maintained
by United HealthCare.  Such compensation and benefits shall be conditioned on
receipt by United HealthCare of a separation agreement and a release of
claims by Executive on terms and conditions acceptable to United HealthCare
in its sole discretion.

      E.  DEFINITIONS AND PROCEDURES.

          1.  CAUSE.  For purposes of this Agreement "Cause" shall mean (a)
          the refusal of Executive to follow the reasonable direction of the
          Board of Directors of United HealthCare or Executive's supervisor
          or to perform any duties reasonably required on material matters by
          United HealthCare, (b) material violations of United HealthCare's
          Code of Conduct or (c) the commission of any criminal act or act of
          fraud or dishonesty by Executive in connection with Executive's
          employment by United HealthCare.  Prior to the termination of
          Executive's employment under subsection (a) of this definition of
          Cause, United HealthCare shall provide Executive with a 30 day
          notice specifying the basis for Cause.  If the Cause described in
          the notice is cured to United HealthCare's reasonable satisfaction
          prior to the end of the 30 day notice period, Executive's
          employment hereunder shall not be terminated on that basis.

          2.  CHANGE IN CONTROL.  For purposes of this Agreement "Change in
          Control" shall mean (a) the acquisition by any person, entity or
          "group," within the meaning of Section 13(d)(3) or 14(d)(2) of the
          Securities Exchange Act of 1934 (the "Exchange Act"), other than
          United HealthCare or any employee benefit plan of United
          HealthCare, of beneficial ownership (as defined in the Exchange
          Act) of 20% or more of the common stock of UHC or the combined
          voting power of UHC's then-outstanding voting securities in a
          transaction or series of transactions not approved in advanced by a
          vote of at least three-quarters of the directors of UHC; (b) a
          change in 50% or more of the directors of UHC in any 12 month
          period; (c) the approval by the shareholders of UHC of a
          reorganization, merger, consolidation, liquidation or dissolution
          of UHC or of the sale (in one transaction or a series of related
          transactions) of all or substantially all of the assets of UHC
          other than a reorganization, merger, consolidation, liquidation,
          dissolution or sale approved in advance by a vote of at least
          three-quarters of the directors; (d) the first purchase under any
          tender offer or exchange offer (other than an offer by UHC)
          pursuant to which shares of UHC common stock are purchased; or (e)
          at least a majority of the directors of UHC determine in their sole
          discretion that there has been a change of control of UHC.


          3.  CHANGE IN EMPLOYMENT.  For purposes of this Agreement a "Change
          in Employment" shall be deemed to have occurred (a) if (i)
          Executive's duties are materially and adversely changed without
          Executive's prior consent, (ii) Executive's salary or benefits are
          reduced other than as a general reduction of salaries and benefits
          by United HealthCare, (iii) without terminating Executive's
          employment United HealthCare terminates this Agreement, or (iv) the
          geographic location for the performance of Executive's duties
          hereunder is moved more than 50 miles from the geographic location
          at the Effective Date without Executive's prior consent, and (b) if
          in each case under subsections (a) (i), (ii), (iii) and (iv), in
          the period beginning 90 days before the time the Change in
          Employment occurs, Cause does not exist or if Cause does exist
          United HealthCare has not given Executive written notice that Cause
          exists.  Notwithstanding the foregoing, an isolated, insubstantial
          or inadvertent action by United HealthCare, which is remedied by
          United HealthCare within 30 days after receipt of notice thereof by
          Executive, shall not constitute a Change in Employment.  Executive
          may elect to treat a Change in Employment as a termination of this
          Agreement and Executive's employment hereunder.  To do so Executive
          shall send written notice of such election to United HealthCare
          within 90 days after the date Executive receives notice from United
          HealthCare or otherwise is definitively informed of the events
          constituting the Change in Employment.  No Change in Employment
          shall be deemed to have occurred if Executive fails to send the
          notice of election within the 90 day period.  Executive's failure
          to treat a particular Change in Employment as a termination of
          employment shall not preclude Executive from treating a subsequent
          Change in Employment as a termination of employment.  The effective
          date of a Change in Employment termination shall be the date 30
          days after United HealthCare receives the written notice of
          election.

4.  PROPERTY RIGHTS, CONFIDENTIALITY, NON-DISPARAGEMENT, NON-SOLICIT AND
NON-COMPETE PROVISIONS.

      A.  UNITED HEALTHCARE'S PROPERTY.

          1.  ASSIGNMENT OF PROPERTY RIGHTS.  Executive shall promptly
          disclose to United HealthCare in writing all inventions,
          discoveries and works of authorship, whether or not patentable or
          copyrightable, which are conceived, made, discovered, written or
          created by Executive alone or jointly with another person, group or
          entity, whether during the normal hours of employment at United
          HealthCare or on Executive's own time, during the term of this
          Agreement.  Executive assigns all rights to all such inventions and
          works of authorship to United HealthCare.  Executive shall give
          United HealthCare any assistance it reasonably requires in order
          for United HealthCare to perfect, protect, and use its rights to
          inventions and works of authorship.

          This provision shall not apply to an invention for which no
          equipment, supplies, facility or trade secret information of United
          HealthCare was used and which was








          developed entirely on Executive's own time and which (1) does not
          relate to the business of United HealthCare or to United
          HealthCare's anticipated research or development, or (2) does not
          result from any work performed by the Executive for United
          HealthCare.

          2.  NO REMOVAL OF PROPERTY.  Executive shall not remove any
          records, documents, or any other tangible items (excluding
          Executive's personal property) from the premises of United
          HealthCare in either original or duplicate form, except as is
          needed in the ordinary course of conducting business for United
          HealthCare.

          3.  RETURN OF PROPERTY.  Executive shall immediately deliver to
          United HealthCare, upon termination of employment with United
          HealthCare, or at any other time upon United HealthCare's request,
          any property, records, documents, and other tangible items
          (excluding Executive's personal property) in Executive's possession
          or control, including data incorporated in word processing,
          computer and other data storage media, and all copies of such
          records, documents and information, including all Confidential
          Information, as defined below.

      B.  CONFIDENTIAL INFORMATION.  During the course of employment
      Executive will develop, become aware of and accumulate expertise,
      knowledge and information regarding United HealthCare's organization,
      strategies, business and operations and United HealthCare's past, current
      or potential customers and suppliers.  United HealthCare considers such
      expertise, knowledge and information to be valuable, confidential and
      proprietary and it shall be considered Confidential Information for
      purposes of this Agreement.  During this Agreement and at all times
      thereafter Executive shall not use such Confidential Information or
      disclose it to other persons or entities except as is necessary for the
      performance of Executive's duties for United HealthCare or as has been
      expressly permitted in writing by United HealthCare.  This Section 4B
      shall survive the termination of this Agreement.

      C.  NON-DISPARAGEMENT.  Executive agrees that he will not criticize,
      make any negative comments or otherwise disparage or put in disrepute
      United HealthCare, or those associated with United HealthCare, in any
      way, whether orally, in writing or otherwise, directly or by
      implication in communication with any person, including but not limited
      to customers or agents of United HealthCare.  This Section 4C shall
      survive the termination of this Agreement.

      D.  NON-SOLICITATION.  During (i) the term of this Agreement, (ii) the
      Severance Period or any period in which Executive receives severance
      compensation pursuant to United HealthCare' election under Section 4E,
      as applicable (iii) any period following the termination or expiration
      of this Agreement during which Executive remains employed by United
      HealthCare and (iv) for a period of one year after the last day of the
      latest of any period described in (i), (ii) or (iii), Executive shall
      not (y) directly or indirectly attempt to hire away any then-current
      employee of United HealthCare or a subsidiary of United HealthCare or
      to persuade any such employee to leave employment with United
      HealthCare, or (z) directly or indirectly solicit, divert, or take
      away, or attempt




      to solicit, divert, or take away, the business of any person,
      partnership, company or corporation with whom United HealthCare
      (including any subsidiary or affiliated company in which United
      HealthCare has a more than 20% equity interest) has established or is
      actively seeking to establish a business or customer relationship.
      This Section 4D shall survive the termination of this Agreement.

      E.  NON-COMPETITION.  During (i) the term of this Agreement, (ii) the
      Severance Period or any period in which Executive receives severance
      compensation pursuant to United HealthCare's election under this
      Section 4E, as applicable, and (iii) any period following the
      termination or expiration of this Agreement during which Executive
      remains employed by United HealthCare, Executive shall not, without
      United HealthCare's prior written consent, engage or participate,
      either individually or as an employee, consultant or principal, partner,
      agent, trustee, officer or director of a corporation, partnership or
      other business entity, in any business in which United HealthCare
      (including any subsidiary or affiliated company in which United
      HealthCare has more than a 20% equity interest) is engaged.  If
      Executive terminates this Agreement, and as of such termination or
      within 90 days of such termination Executive also terminates
      Executive's employment by United HealthCare, United HealthCare may elect
      to have the provisions of this Section 4E be in effect for up to 24
      months following the effective date of Executive's employment
      termination if, during the period up to 24 months specified by United
      HealthCare, United HealthCare pays Executive severance compensation
      equal to biweekly payments of 1/26 of the Severance Compensation and the
      Cash Payment.  United HealthCare must send written notice of such
      election within 10 days after it receives written notice of
      Executive's termination of employment.  This Section 4E shall survive
      the termination of this Agreement.

  5.  MISCELLANEOUS.

      A.  ASSIGNMENT.  This agreement shall be binding upon and shall inure
      to the benefit of the parties and their successors and assigns, but may
      not be assigned by either party without the prior written consent of
      the other party, except that United HealthCare in its sole discretion
      may assign this Agreement to an entity controlled by United HealthCare
      at the time of the assignment.  If United HealthCare subsequently loses
      or gives up control of the entity to which this Agreement is assigned,
      such entity shall become United HealthCare for all purposes under this
      Agreement, beginning on the date on which United HealthCare loses or
      gives up control of the entity.  Any successor to United HealthCare
      shall be deemed to be United HealthCare for all purposes of this
      Agreement.

      B.  NOTICES.  All notices under this Agreement shall be in writing and
      shall be deemed to have been duly given if delivered by hand or mailed
      by registered or certified mail, return receipt requested, postage
      prepaid, to the party to receive the same at the address set forth
      below or at such other address as may have been furnished by proper
      notice.

                United HealthCare:         300 Opus Center








                                       9900 Bren Road East
                                       Minnetonka, MN  55343
                                       Attn: General Counsel

                    Executive:


     C. ENTIRE AGREEMENT.  This Agreement contains the entire understanding
     of the parties with respect to its subject matter and may be amended or
     modified only by a subsequent written amendment executed by the parties.
     This Agreement replaces and supersedes any and all prior employment or
     employment related agreements and understandings, including any letters
     or memos which may have been construed as agreements, between the
     Executive and United HealthCare.

     D. CHOICE OF LAW.  This Agreement shall be construed and interpreted
     under the applicable laws and decisions of the State of Minnesota.

     E. WAIVERS.  No failure on the part of either party to exercise, and no
     delay in exercising, any right or remedy under this Agreement shall
     operate as a waiver; nor shall any single or partial exercise of any
     right or remedy preclude any other or further exercise of any right or
     remedy.

     F. ADEQUACY OF CONSIDERATION.  Executive acknowledges and agrees that
     Executive has received adequate consideration from United HealthCare to
     enter into this Agreement.

     G. DISPUTE RESOLUTION AND REMEDIES.  Any dispute arising between the
     parties relating to this Agreement or to Executive's employment by
     United HealthCare shall be resolved by binding arbitration pursuant to
     United HealthCare' Employment Arbitration Policy.  The arbitrators shall
     not ignore or vary the terms of this Agreement and shall be bound by and
     apply controlling law.  The parties acknowledge that Executive's failure
     to comply with the Confidential Information, Non-Solicitation and
     Non-Competition provisions of this Agreement will cause immediate and
     irreparable injury to United HealthCare and that therefore the
     arbitrators, or a court of competent jurisdiction if an arbitration
     panel cannot be immediately convened, will be empowered to provide
     injunctive relief, including temporary or preliminary relief, to
     restrain any such failure to comply.

     H. NO THIRD-PARTY BENEFICIARIES.  This Agreement shall not confer or be
     deemed or construed to confer any rights or benefits upon any person
     other than the parties.

THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION THAT MAY BE ENFORCED
BY THE PARTIES.




         IN WITNESS WHEREOF, this Agreement has been signed by the parties
     hereto as of the Effective Date set forth above.

     United HealthCare Services, Inc.       Executive



     By   /s/ Robert J. Backes                /s/ Lois E. Quam
       ------------------------------       ---------------------------------
     Its  SRVPHR
        ------------------------------

EX-10.(J)

                              EMPLOYMENT AGREEMENT

         This Agreement, effective as of January 15, 2000 (the "Effective
Date"), is made by and between James Hudak ("Executive") and United HealthCare
Services, Inc. ("United HealthCare") for the purpose of setting forth the terms
and conditions of Executive's employment by United HealthCare, or an affiliate
or subsidiary of United HealthCare, and to protect United HealthCare's
knowledge, expertise, customer relationships and the confidential information
United HealthCare has developed about its customers, products, operations and
services. Unless the context otherwise requires, when used in this Agreement
"United HealthCare" includes any entity affiliated with United HealthCare.

         WHEREAS, Executive and United HealthCare desire to enter into this
Agreement, which shall supersede any and all other prior employment-related
agreements between Executive and United HealthCare.

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and intending to be legally bound hereby, the parties
hereto agree as follows:

1.   EMPLOYMENT AND DUTIES; TERMINATION OF PRIOR AGREEMENTS.

     A.   EMPLOYMENT. United HealthCare hereby employs Executive, either
     directly or through an affiliate or subsidiary of United HealthCare, and
     Executive hereby accepts such employment on the terms and conditions set
     forth in this Agreement. Except as specifically superseded by this
     Agreement, Executive's employment hereunder shall be subject to all of
     United HealthCare's policies and procedures in regard to its employees.
     Executive's employment hereunder shall begin on the Effective Date and
     shall continue until terminated as set forth in Section 3 hereof.

     B.   DUTIES. Executive shall initially hold the executive level position of
     Chief Executive Officer of UnitedHealth Technologies and perform the duties
     associated therewith. Executive shall perform such other executive level
     responsibilities as are reasonably assigned Executive from time to time.
     Executive agrees to devote substantially all of Executive's business time
     and energy to the performance of Executive's duties in a diligent and
     proper manner.

     C.   TERMINATION OF PRIOR AGREEMENTS. As of the Effective Date all other
     prior employment related agreements between Executive and United HealthCare
     will terminate in their entirety and no longer be of any force or effect.

2.   COMPENSATION.

     A.   BASE SALARY. Executive shall initially be paid a base annual salary in
     the amount of $400,000.00 payable bi-weekly, less all applicable
     withholdings and deductions (the "Initial Base Salary"). Executive shall
     receive a periodic performance review and consideration for an increase in
     the Initial Base Salary.





     B.   BONUS AND STOCK PLANS. Executive shall be eligible to participate in
     the incentive compensation plans and the stock option and grant plans
     maintained by United HealthCare or an affiliate or subsidiary of United
     HealthCare, in the sole discretion of United HealthCare and in accordance
     with the terms and conditions of those plans and applicable laws and
     regulations.

     C.   EMPLOYEE BENEFITS. Executive shall be eligible to participate in the
     employee benefit plans maintained by either United HealthCare or an
     affiliate or subsidiary of United HealthCare, including without limitation,
     any life, health, dental, short-term and long-term disability insurance
     coverages and any retirement plans, in the sole discretion of United
     HealthCare and in accordance with the terms and conditions of those plans
     and applicable laws and regulations.

     D.   VACATION; ILLNESS. Executive shall be eligible for paid vacation and
     sick leave each year in accordance with the then-current policies of either
     United HealthCare or an affiliate or subsidiary of United HealthCare, in
     the sole discretion of United HealthCare and in accordance with the terms
     and conditions of those plans and applicable laws and regulations.

3.   TERM AND TERMINATION.

     A.   TERM. The term of this Agreement shall begin on the Effective Date and
     shall continue until terminated as set forth in Section 3B.

     B.   TERMINATION OF AGREEMENT.

          1.   BY MUTUAL AGREEMENT. This Agreement and Executive's employment
          hereunder may be terminated at any time by the mutual written
          agreement of the parties.

          2.   BY UNITED HEALTHCARE. United HealthCare may terminate this
          Agreement and Executive's employment hereunder on 30 days' written
          notice.

          3.   BY EXECUTIVE. Executive may terminate this Agreement and
          Executive's employment hereunder on 30 days' written notice.

          4.   DEATH, DISABILITY, ETC. This Agreement and Executive's employment
          by United HealthCare shall terminate immediately upon Executive's
          death. This Agreement and Executive's employment hereunder shall
          automatically terminate in the event of a permanent and total
          disability which renders Executive incapable of performing Executive's
          duties, with or without reasonable accommodation. United HealthCare
          has the sole discretion to determine whether Executive is permanently
          or totally disabled with the meaning of this Section 3B4, and the
          effective date on which Executive was rendered so disabled.


                                      -2-



     C.   EMPLOYEE BENEFITS. On the effective date of the termination of this
     Agreement and Executive's employment by United HealthCare, Executive shall
     cease to be eligible for all employee benefit plans maintained by United
     HealthCare, except as required by federal or state continuation of coverage
     laws ("COBRA Benefits"). If Executive elects COBRA Benefits, Executive
     shall pay the entire cost of such benefits either through after-tax payroll
     deductions from the cash component of any severance compensation Executive
     receives or directly if Executive does not receive such severance
     compensation or if such severance compensation ceases.

     D.   SEVERANCE EVENTS AND BENEFITS. If a Severance Event, as hereinafter
     defined, occurs, Executive shall receive the severance benefits set forth
     in this Section 3D for a period of 12 months from the effective date of the
     applicable Severance Event (the "Severance Period"). For purposes of this
     Agreement a Severance Event shall occur if and when:

     (i)  United HealthCare (a) terminates this Agreement and Executive's
          employment without Cause, as hereinafter defined, or (b) terminates
          this Agreement without terminating Executive's employment and
          Executive elects to treat such termination of this Agreement as a
          Change in Employment, as hereinafter defined (collectively a
          "Termination without Cause"), or

     (ii) Within two years following a Change in Control, as hereinafter
          defined, either (a) United HealthCare terminates this Agreement and
          Executive's employment without Cause, or (b) a Change in Employment
          occurs and Executive elects to treat such Change in Employment as a
          termination of Executive's employment (collectively a "Termination
          following a Change in Control").

        1.   SEVERANCE COMPENSATION. Executive shall receive the following
        severance compensation (the "Severance Compensation"):

          a)   TERMINATION WITHOUT CAUSE. Subject to Section 3D(1)(b) below,
          upon a Termination without Cause Executive shall receive biweekly
          payments equal to 1/26 of two times the sum of (1) Executive's
          annualized base salary as of the date of the Severance Event, less all
          applicable withholdings or deductions required by law and Executive's
          COBRA Benefit payments, if any, plus (2) one-half of the total of any
          bonus or incentive compensation paid or payable to Executive for the
          two most recent calendar years (excluding any special or one-time
          bonus or incentive compensation payments), or if Executive has been
          eligible for such bonus or incentive compensation payments for less
          than two such periods, the last such payment paid or payable to
          Executive (excluding any special or one-time bonus or incentive
          compensation payments).

          b)   TERMINATION FOLLOWING A CHANGE IN CONTROL. Upon a Termination
          following a Change in Control, Executive shall receive biweekly
          payments equal to 1/26 of three times the sum of (1) Executive's
          highest annualized

                                         -3-



          base salary during the 2 year period immediately preceding the
          Severance Event, less all applicable withholdings or deductions
          required by law and Executive's COBRA Benefit payments, if any,
          plus (2) the greater of (i) all bonuses that would be payable to
          Executive under any incentive compensation plans in which Executive
          then participates at Executive's then-current target level, or (ii)
          one-half of the total of any bonus or incentive compensation paid or
          payable to Executive for the two most recent calendar years (excluding
          any special or one-time bonus or incentive compensation payments), or
          if Executive has been eligible for such bonus or incentive
          compensation payments for less than two such periods, the last such
          payment paid or payable to Executive (excluding any special or
          one-time bonus or incentive compensation payments).

     2.   CASH PAYMENT. Executive shall receive a one-time cash payment within a
     reasonable time following commencement of the Severance Period in an amount
     equal to the portion of the premiums that United HealthCare, or its
     affiliate or subsidiary, as applicable, subsidizes for employee-only
     health, dental and group term life benefit coverages (the "Cash Payment").
     The Cash Payment shall cover the Severance Period and shall be determined
     as of the effective date of the applicable Severance Event.

     3.   JOB SEARCH FEES. For a period not to exceed the Severance Period,
     United HealthCare shall pay to an outplacement firm selected by United
     HealthCare an amount deemed reasonable by United HealthCare for
     outplacement and job search services for Executive.

     4.   EXCISE TAX PAYMENT. If any portion of the Severance Compensation
     payable upon a Termination following a Change in Control constitutes an
     Excess Parachute Payment, as hereinafter defined, such that an Excise Tax,
     as hereinafter defined, is due, Executive shall receive a one-time cash
     payment in an amount sufficient to cover (a) the full cost of the Excise
     Tax plus (b) Executive's federal, state and city income, employment and
     Excise Tax on this one-time cash payment and on all such iterative payments
     so that Executive is made entirely whole for the impact of the Excise Tax
     (collectively the "Gross-Up Payment"). United HealthCare shall calculate
     these amounts on a timely and accurate basis, and for this purpose
     Executive shall be deemed to be in the highest marginal rate of federal,
     state and city taxes. The Gross-Up Payment shall be made within 30 days
     following the effective date of Executive's employment termination. For
     purposes of this Agreement the term "Excess Parachute Payment" shall have
     the meaning set forth in Section 280G of the Internal Revenue Code of 1986,
     as amended (the "Code"). For purposes of this Agreement the term "Excise
     Tax" shall mean the tax imposed on an Excess Parachute Payment pursuant to
     Sections 280G and 4999 of the Code.

This Section 3D shall be the sole liability of United HealthCare to Executive
upon the termination of this Agreement and Executive's employment hereunder, and
shall replace

                                        -4-



and be in lieu of any payments or benefits which otherwise might be owed
Executive under any other severance plan or program maintained by United
HealthCare. Such compensation and benefits shall be conditioned on receipt by
United HealthCare of a separation agreement and a release of claims by
Executive on terms and conditions acceptable to United HealthCare in its sole
discretion.

     E.   DEFINITIONS AND PROCEDURES.

          1.   CAUSE. For purposes of this Agreement "Cause" shall mean (a) the
          refusal of Executive to follow the reasonable direction of the Board
          of Directors of United HealthCare or Executive's supervisor or to
          perform any duties reasonably required on material matters by United
          HealthCare, (b) material violations of United HealthCare's Code of
          Conduct or (c) the commission of any criminal act or act of fraud or
          dishonesty by Executive in connection with Executive's employment by
          United HealthCare. Prior to the termination of Executive's employment
          under subsection (a) of this definition of Cause, United HealthCare
          shall provide Executive with a 30 day notice specifying the basis for
          Cause. If the Cause described in the notice is cured to United
          HealthCare's reasonable satisfaction prior to the end of the 30 day
          notice period, Executive's employment hereunder shall not be
          terminated on that basis.

          2.   CHANGE IN CONTROL. For purposes of this Agreement "Change in
          Control" shall mean (a) the acquisition by any person, entity or
          "group," within the meaning of Section 13(d)(3) or 14(d)(2) of the
          Securities Exchange Act of 1934 (the "Exchange Act"), other than
          United HealthCare or any employee benefit plan of United HealthCare,
          of beneficial ownership (as defined in the Exchange Act) of 20% or
          more of the common stock of UHC or the combined voting power of UHC's
          then-outstanding voting securities in a transaction or series of
          transactions not approved in advanced by a vote of at least
          three-quarters of the directors of UHC; (b) a change in 50% or more of
          the directors of UHC in any 12 month period; (c) the approval by the
          shareholders of UHC of a reorganization, merger, consolidation,
          liquidation or dissolution of UHC or of the sale (in one transaction
          or a series of related transactions) of all or substantially all of
          the assets of UHC other than a reorganization, merger, consolidation,
          liquidation, dissolution or sale approved in advance by a vote of at
          least three-quarters of the directors; (d) the first purchase under
          any tender offer or exchange offer (other than an offer by UHC)
          pursuant to which shares of UHC common stock are purchased; or (e) at
          least a majority of the directors of UHC determine in their sole
          discretion that there has been a change of control of UHC.

          3.   CHANGE IN EMPLOYMENT. For purposes of this Agreement a "Change in
          Employment" shall be deemed to have occurred (a) if (i) Executive's
          duties are materially and adversely changed without Executive's prior
          consent, (ii) Executive's salary or benefits are reduced other than as
          a general reduction of salaries and benefits by United HealthCare,
          (iii) without terminating Executive's employment United HealthCare
          terminates this Agreement, or (iv) the geographic location for

                                       -5-



          the performance of Executive's duties hereunder is moved more than 50
          miles from the geographic location at the Effective Date without
          Executive's prior consent, and (b) if in each case under subsections
          (a) (i), (ii), (iii) and (iv), in the period beginning 90 days before
          the time the Change in Employment occurs, Cause does not exist or if
          Cause does exist United HealthCare has not given Executive written
          notice that Cause exists. Notwithstanding the foregoing, an isolated,
          insubstantial or inadvertent action by United HealthCare, which is
          remedied by United HealthCare within 30 days after receipt of notice
          thereof by Executive, shall not constitute a Change in Employment.
          Executive may elect to treat a Change in Employment as a termination
          of this Agreement and Executive's employment hereunder. To do so
          Executive shall send written notice of such election to United
          HealthCare within 90 days after the date Executive receives notice
          from United HealthCare or otherwise is definitively informed of the
          events constituting the Change in Employment. No Change in Employment
          shall be deemed to have occurred if Executive fails to send the notice
          of election within the 90 day period. Executive's failure to treat a
          particular Change in Employment as a termination of employment shall
          not preclude Executive from treating a subsequent Change in Employment
          as a termination of employment. The effective date of a Change in
          Employment termination shall be the date 30 days after United
          HealthCare receives the written notice of election.

4.   PROPERTY RIGHTS, CONFIDENTIALITY, NON-DISPARAGEMENT, NON-SOLICIT AND
NON-COMPETE PROVISIONS.

     A.   UNITED HEALTHCARE'S PROPERTY.

          1.   ASSIGNMENT OF PROPERTY RIGHTS. Executive shall promptly disclose
          to United HealthCare in writing all inventions, discoveries, processes
          and procedures, and works of authorship, whether or not patentable or
          copyrightable, which are conceived, made, discovered, written or
          created by Executive alone or jointly with another person, group or
          entity, whether during the normal hours of employment at United
          HealthCare or on Executive's own time, during the term of this
          Agreement (the "Works"). Executive agrees to assign and hereby assigns
          to United HealthCare all Executive's rights, including all copyrights
          and patent rights, to all such Works. Executive shall give United
          HealthCare any assistance it reasonably requires in order for United
          HealthCare to perfect, protect, and use its rights to the Works. This
          assignment provision obligates Executive to assign to United
          HealthCare all the Works, including, without limitation, business
          processes and procedures and methods of doing business.

          This provision shall not apply to an invention for which no equipment,
          supplies, facility or trade secret information of United HealthCare
          was used and which was developed entirely on Executive's own time and
          which (1) does not relate to the business of United HealthCare or to
          United HealthCare's anticipated research or development, or (2) does
          not result from any work performed by Executive for

                                        -6-



          United HealthCare.  This provision 4A shall survive the termination
          of this Agreement.

          2.   NO REMOVAL OF PROPERTY. Executive shall not remove any records,
          documents, or any other tangible items (excluding Executive's personal
          property) from the premises of United HealthCare in either original or
          duplicate form, except as is needed in the ordinary course of
          conducting business for United HealthCare.

          3.   RETURN OF PROPERTY. Executive shall immediately deliver to United
          HealthCare, upon termination of employment with United HealthCare, or
          at any other time upon United HealthCare's request, any property,
          records, documents, and other tangible items (excluding Executive's
          personal property) in Executive's possession or control, including
          data incorporated in word processing, computer and other data storage
          media, and all copies of such records, documents and information,
          including all Confidential Information, as defined below.

     B.   CONFIDENTIAL INFORMATION. During the course of employment Executive
     will develop, become aware of and accumulate expertise, knowledge and
     information regarding United HealthCare's organization, strategies,
     business and operations and United HealthCare's past, current or potential
     customers and suppliers. United HealthCare considers such expertise,
     knowledge and information to be valuable, confidential and proprietary and
     it shall be considered Confidential Information for purposes of this
     Agreement. During this Agreement and at all times thereafter Executive
     shall not use such Confidential Information or disclose it to other persons
     or entities except as is necessary for the performance of Executive's
     duties for United HealthCare or as has been expressly permitted in writing
     by United HealthCare. This Agreement does not restrict use or disclosures
     of information: (I) that is available to the general public; (ii) that
     Executive had in his/her possession prior to working for United HealthCare;
     or (iii) that Executive receives from a source outside United HealthCare,
     without an obligation of confidentiality. This Section 4B shall survive the
     termination of this Agreement.

     C.   NON-DISPARAGEMENT. Executive agrees that Executive will not criticize,
     make any negative comments or otherwise disparage or put in disrepute
     United HealthCare, or those associated with United HealthCare, in any way,
     whether orally, in writing or otherwise, directly or by implication in
     communication with any person, including but not limited to customers or
     agents of United HealthCare. This Section 4C shall survive the termination
     of this Agreement.

     D.   NON-SOLICITATION. During (i) the term of this Agreement, (ii) the
     Severance Period or any period in which Executive receives severance
     compensation pursuant to United HealthCare' election under Section 4E, as
     applicable (iii) any period following the termination or expiration of this
     Agreement during which Executive remains employed by United HealthCare and
     (iv) for a period of one year after the last day of the latest of any
     period described in (i), (ii) or (iii), Executive shall not (y) directly or
     indirectly attempt to hire away any then-current employee of United
     HealthCare or a subsidiary


                                       -7-




     of United HealthCare or to persuade any such employee to leave
     employment with United HealthCare, or (z) directly or indirectly
     solicit, divert, or take away, or attempt to solicit, divert, or take
     away, the business of any person, partnership, company or corporation
     with whom United HealthCare (including any subsidiary or affiliated company
     in which United HealthCare has a more than 20% equity interest) has
     established or is actively seeking to establish a business or customer
     relationship. This Section 4D shall survive the termination of this
     Agreement.

     E.   NON-COMPETITION. During (i) the term of this Agreement, (ii) the
     Severance Period or any period in which Executive receives severance
     compensation pursuant to United HealthCare' election under this Section 4E,
     as applicable, and (iii) any period following the termination or expiration
     of this Agreement during which Executive remains employed by United
     HealthCare, Executive shall not, without United HealthCare's prior written
     consent, engage or participate, either individually or as an employee,
     consultant or principal, partner, agent, trustee, officer or director of a
     corporation, partnership or other business entity, in any business in which
     United HealthCare (including any subsidiary or affiliated company in which
     United HealthCare has more than a 20% equity interest) is engaged. If
     Executive terminates this Agreement, and as of such termination or within
     90 days of such termination Executive also terminates Executive's
     employment by United HealthCare, United HealthCare may elect to have the
     provisions of this Section 4E be in effect for up to 12 months following
     the effective date of Executive's employment termination if, during the
     period up to 12 months specified by United HealthCare, United HealthCare
     pays Executive severance compensation equal to biweekly payments of 1/26 of
     the Severance Compensation and the Cash Payment. United HealthCare must
     send written notice of such election within 10 days after it receives
     written notice of Executive's termination of employment. This Section 4E
     shall survive the termination of this Agreement.



5.   MISCELLANEOUS.

     A.   ASSIGNMENT. This Agreement shall be binding upon and shall inure to
     the benefit of the parties and their successors and assigns, but may not be
     assigned by either party without the prior written consent of the other
     party, except that United HealthCare in its sole discretion may assign this
     Agreement to an entity controlled by United HealthCare at the time of the
     assignment. If United HealthCare subsequently loses or gives up control of
     the entity to which this Agreement is assigned, such entity shall become
     United HealthCare for all purposes under this Agreement, beginning on the
     date on which United HealthCare loses or gives up control of the entity.
     Any successor to United HealthCare shall be deemed to be United HealthCare
     for all purposes of this Agreement.

     B.   NOTICES. All notices under this Agreement shall be in writing and
     shall be deemed to have been duly given if delivered by hand or mailed by
     registered or certified mail, return receipt requested, postage prepaid, to
     the party to receive the same at the

                                      -8-



     address set forth below or at such other address as may have been furnished
     by proper notice.

              United HealthCare:            300 Opus Center
                                            9900 Bren Road East
                                            Minnetonka, MN 55343
                                            Attn: General Counsel

                      Executive:


     C.   ENTIRE AGREEMENT. This Agreement contains the entire understanding of
     the parties with respect to its subject matter and may be amended or
     modified only by a subsequent written amendment executed by the parties.
     This Agreement replaces and supersedes any and all prior employment or
     employment related agreements and understandings, including any letters or
     memos which may have been construed as agreements, between Executive and
     United HealthCare.

     D.   CHOICE OF LAW. This Agreement shall be construed and interpreted under
     the applicable laws and decisions of the State of Minnesota.

     E.   WAIVERS. No failure on the part of either party to exercise, and no
     delay in exercising, any right or remedy under this Agreement shall operate
     as a waiver; nor shall any single or partial exercise of any right or
     remedy preclude any other or further exercise of any right or remedy.

     F.   ADEQUACY OF CONSIDERATION. Executive acknowledges and agrees that
     Executive has received adequate consideration from United HealthCare to
     enter into this Agreement.

     G.   DISPUTE RESOLUTION AND REMEDIES. Any dispute arising between the
     parties relating to this Agreement or to Executive's employment by United
     HealthCare shall be resolved by binding arbitration pursuant to United
     HealthCare's Employment Arbitration Policy. The arbitrators shall not
     ignore or vary the terms of this Agreement and shall be bound by and apply
     controlling law. The parties acknowledge that Executive's failure to comply
     with the Confidential Information, Non-Solicitation and Non-Competition
     provisions of this Agreement will cause immediate and irreparable injury to
     United HealthCare and that therefore the arbitrators, or a court of
     competent jurisdiction if an arbitration panel cannot be immediately
     convened, will be empowered to provide injunctive relief, including
     temporary or preliminary relief, to restrain any such failure to comply.

     H.   NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer or be
     deemed or construed to confer any rights or benefits upon any person other
     than the parties.

                                       -9-



THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION THAT MAY BE ENFORCED BY
THE PARTIES.

         IN WITNESS WHEREOF, this Agreement has been signed by the parties
hereto as of the Effective Date set forth above.

United HealthCare Services, Inc.              Executive


By /s/ Robert J. Backes                         /s/ James Hudak
  ------------------------------              -----------------------
Its Senior Vice President
    Human Resources



                                       -10-

EX-13

                                                                      Exhibit 13
Results of Operations



1999 FINANCIAL PERFORMANCE HIGHLIGHTS

1999 was the strongest year in the history of UnitedHealth Group, resulting from
business growth and continued productivity improvements. Financial performance
highlights include(1):
- -  Record earnings from operations, net earnings applicable to common
shareholders, and diluted net earnings per common share of $943 million, $568
million and $3.20 per share, respectively, representing increases over 1998 of
10%, 12% and 22%, respectively.
- -  Record revenues of $19.6 billion, a 13% increase over 1998.
- -  Segment operating earnings of $953 million, up 20% over 1998, with each
segment delivering strong year-over-year gains.
- -  Record cash flows of $1.2 billion generated from operating activities, an
11% increase over 1998.
- - Continued financing initiatives to achieve a more efficient capital
structure, including the repurchase of 19.4 million shares of our common
stock.
- -  1999 return on equity of 14.1%, up from 11.9% in 1998.

(1) Where applicable, 1998 results exclude special operating charges.

Following is a five-year summary of selected financial data:




                                                               For the Year Ended December 31,
(in millions, except per share data)           1999            1998         1997          1996           1995
- --------------------------------------------------------------------------------------------------------------------
                                                                                       
CONSOLIDATED OPERATING RESULTS
Revenues                                      $ 19,562      $ 17,355       $ 11,794      $ 10,074      $  5,67(1)
Earnings (Loss) From Operations               $    943      $    (42)1     $    742      $    581(2)   $   461(3)
- --------------------------------------------------------------------------------------------------------------------
Net Earnings (Loss)                           $    568      $   (166)      $    460      $    356(2)   $   286(3)
Net Earnings (Loss) Applicable to
   Common Shareholders                        $    568      $   (214)(1)   $    431      $    327      $   279
- --------------------------------------------------------------------------------------------------------------------
Basic Net Earnings (Loss) per
   Common Share                               $   3.26      $  (1.12)      $   2.30      $   1.80      $  1.61
Diluted Net Earnings (Loss) per
   Common Share                               $   3.20      $  (1.12)1     $   2.26      $   1.76(2)   $  1.57(3)
- --------------------------------------------------------------------------------------------------------------------
Common Stock Dividends per Share              $   0.03      $   0.03       $   0.03      $   0.03      $  0.03
- --------------------------------------------------------------------------------------------------------------------

CONSOLIDATED CASH FLOWS FROM
   OPERATING ACTIVITIES                       $  1,189      $  1,071       $    683      $    562      $   435
- --------------------------------------------------------------------------------------------------------------------

CONSOLIDATED FINANCIAL CONDITION
(As of December 31)
- --------------------------------------------------------------------------------------------------------------------
Cash and Investments                          $  4,719      $  4,424       $  4,041      $  3,453      $ 3,078
Total Assets                                  $ 10,273      $  9,675       $  7,623      $  6,997      $ 6,161
Debt                                          $    991      $    708(4)    $    -        $    -        $   -
Convertible Preferred Stock                   $    -        $    -            4$500      $    500      $   500
Shareholders' Equity                          $  3,863      $  4,038       $  4,534      $  3,823      $ 3,188
- --------------------------------------------------------------------------------------------------------------------

Results of Operations should be read together with the accompanying Consolidated
Financial Statements and Notes.

1 Excluding the operational realignment and other charges of $725 million, $175
million of charges related to contract losses associated with certain Medicare
markets and other increases to commercial and Medicare medical costs payable
estimates, and the $20 million convertible preferred stock redemption premium
from 1998 results, earnings from operations and net earnings applicable to
common shareholders would have been $858 million and $509 million, or $2.62
diluted net earnings per common share.

2 Excluding the merger costs associated with the acquisition of HealthWise of
America, Inc. of $15 million ($9 million after tax, or $0.05 diluted net
earnings per common share) and the provision for future losses on two large
multi-year contracts of $45 million ($27 million after tax, or $0.15 diluted net
earnings per common share), 1996 earnings from operations and net earnings would
have been $641 million and $392 million, or $1.96 diluted net earnings per
common share.

3 Excluding restructuring charges associated with the acquisition of The
MetraHealth Companies, Inc. of $154 million ($97 million after tax, or $0.55
diluted net earnings per common share), 1995 earnings from operations and net
earnings would have been $615 million and $383 million, or $2.12 diluted net
earnings per common share.

4 During 1998, we issued debt totaling $708 million and redeemed $500 million of
convertible preferred stock.


                                                                              21


1999 RESULTS COMPARED TO 1998 RESULTS
CONSOLIDATED FINANCIAL RESULTS

REVENUES

Revenues are comprised of: 1) premium revenues associated with risk-based
products (those where we assume financial responsibility for health care costs);
2) management services and fees associated with administrative services, managed
health plans, and our Specialized Care Services and Ingenix businesses; and 3)
investment and other income.

    Consolidated revenues increased 13% in 1999 to $19.6 billion, reflecting
balanced growth across all business segments. Following is a discussion of 1999
consolidated revenue trends for each of our three revenue components.

PREMIUM REVENUES

Consolidated premium revenues in 1999 totaled $17.6 billion, an increase of $2.0
billion, or 13%, compared to 1998. This increase was driven by
UnitedHealthcare's average year-over-year premium yield increases on risk-based
commercial groups of approximately 9%. The balance of the increase is
attributable to growth in individuals served by United Behavioral Health, and
our acquisitions of HealthPartners of Arizona, Inc. in October 1998 and Dental
Benefit Providers, Inc. in June 1999.

MANAGEMENT SERVICES AND FEE REVENUES

Management services and fee revenues in1999 totaled $1.8 billion, representing
an increase of $203 million, or 13%, over 1998. The overall increase in
management services and fee revenues is primarily the result of strong growth in
Uniprise's multi-site customer base, price increases in fee business, and
acquisitions and growth from our Ingenix business.

INVESTMENT AND OTHER INCOME

Investment and other income during the year ended December 31, 1999, totaled
$219 million, representing a decrease of $30 million from 1998. This decrease is
primarily the result of net realized capital losses from the sale of investments
in 1999 as opposed to net realized capital gains in 1998, along with decreases
in cash and investments and associated investment income resulting from our
stock repurchase activities and business acquisitions. Rising interest rates
during 1999 resulted in declines in the fair value of fixed income investments
and we realized net capital losses of $6 million during 1999, excluding the gain
on the transfer of Healtheon Corporation (Healtheon) common stock to
UnitedHealth Foundation (see Note 7 to the financial statements). For the year
ended December 31, 1998, we realized net capital gains of $26 million.

OPERATING EXPENSES

MEDICAL COSTS

The combination of our pricing and care coordination efforts is reflected in the
medical care ratio (medical costs as a percentage of premium revenues).

    Our consolidated medical care ratio decreased from 87.2% in 1998 to 85.7% in
1999. Excluding the AARP business and the effects of 1998 special charges, on a
year-over-year basis, the medical care ratio decreased 10 basis points to 84.2%.

    On an absolute dollar basis, the increase of $1.5 billion, or 11%, in
medical costs over 1998 is driven by a combination of growth in individuals
served with risk-based products, medical cost inflation, benefit changes and
product mix changes.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative (SG&A) expenses as a percent of total
revenues (the operating cost ratio) was 17.1% in 1999, consistent with 1998.
SG&A reductions in 1999 were partially offset by $39 million of incremental
expenses over 1998 expense levels related to core process improvement
initiatives and platform system conversions. Additionally, changes in revenue
mix affect our operating cost ratio. Our fastest growing businesses (Uniprise,
Specialized Care Services and Ingenix) maintain proportionately higher SG&A
costs as the majority of their direct costs of revenue are included in SG&A
expenses, not medical costs. On a comparable revenue mix basis, the operating
cost ratio would have decreased 30 basis points to 16.8%.

    On an absolute dollar basis, SG&A expenses increased by $379 million, or
13%, over 1998. This increase reflects the additional costs to support the
corresponding 13% increase in consolidated revenues in 1999, and the incremental
core process improvement expenses described above.

DEPRECIATION AND AMORTIZATION

Depreciation and amortization was $233 million in 1999 and $185 million in 1998.
This increase resulted from a combination of increased levels of capital
expenditures in 1998 and 1999 to support business growth and technology
enhancements and amortization of goodwill and other intangible assets related to
acquisitions.


22


BUSINESS SEGMENTS
The following summarizes the operating results of our business segments for the
years ended December 31 (in millions):



REVENUES                                                                                                        Percent
                                                           1999                           1998                   Change
- ------------------------------------------------------------------------------------------------------------------------------------

                                                                                                           
Health Care Services                                   $ 17,581                       $ 15,612                      13%
Uniprise                                                  1,865                          1,624                      15%
Specialized Care Services                                   726                            618                      17%
Ingenix                                                     258                            184                      40%
Corporate and Eliminations                                 (868)                          (683)                      nm
- ------------------------------------------------------------------------------------------------------------------------------------
     Consolidated Revenues                             $ 19,562                       $ 17,355                      13%
- ------------------------------------------------------------------------------------------------------------------------------------

EARNINGS (LOSS) FROM OPERATIONS
                                                                                         1998
                                                                          -------------------------------           Percent
                                                           1999            Reported         Adjusted (a)           Change (b)
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                  
Health Care Services                                   $   578                 $(46)               $ 503             15%
Uniprise                                                   222                   10                  161             38%
Specialized Care Services                                  128                   14                  109             17%
Ingenix                                                     25                  (66)                  20             25%
- ------------------------------------------------------------------------------------------------------------------------------------
     Total Operating Segments                              953                  (88)                 793             20%
Corporate and Eliminations                                (10)                   46                   65             nm
- ------------------------------------------------------------------------------------------------------------------------------------
     Consolidated Earnings (Loss) from Operations      $   943                 $(42)               $ 858             10%
- ------------------------------------------------------------------------------------------------------------------------------------


(a) Excludes $725 million of operational realignment and other charges and $175
million of charges related to contract losses associated with certain Medicare
markets and other increases to commercial and Medicare medical costs payable
estimates.
(b) Calculated as percentage change between 1999 results and 1998 results, as
adjusted.
nm - not meaningful

HEALTH CARE SERVICES
The Health Care Services segment consists of the UnitedHealthcare and Ovations
businesses. UnitedHealthcare designs and operates network-based health and
well-being services, including commercial, Medicare and Medicaid products for
locally based employers and individuals in six broad regional markets. Ovations,
which administers Medicare Supplement benefits on behalf of AARP (American
Association of Retired Persons), offers health and well-being services for
Americans age 50 and older.
    The Health Care Services segment posted record revenues of $17,581 million,
representing an increase of $1,969 million, or 13%, over 1998. This increase is
primarily attributable to UnitedHealthcare's average net premium yield increases
on commercial business of approximately 9% and the acquisition of HealthPartners
of Arizona, Inc. in October 1998.
    The Health Care Services segment contributed earnings from operations of
$578 million in 1999, an increase of $75 million, or 15%, over 1998. The
increase is primarily due to growth in the average number of individuals served
by UnitedHealthcare during 1999 and reduced operating costs as a percentage of
revenues driven by our realignment process improvement initiatives.
    The following table summarizes UnitedHealthcare's medical care ratios by
product line for the years ended December 31:



                                                   1998
                                         ---------------------------
                                    1999  Reported  Adjusted (a)
- --------------------------------------------------------------------
                                              
UnitedHealthcare
  Commercial                       84.6%     85.6%     84.9%
  Medicare                         89.6%     92.0%     87.0%
  Medicaid                         86.3%     85.2%     85.2%
- --------------------------------------------------------------------


(a) Excludes the effects of $175 million of contract losses associated with
certain Medicare markets and other increases to commercial and Medicare medical
costs payable estimates.

UnitedHealthcare's commercial medical care ratio improved on a year-over-year
basis, driven by net premium yield increases in excess of underlying medical
costs. Commercial health plan premium rates are established based on anticipated
benefit costs. During 1999, our total cost of benefits, including the effects of
medical cost inflation, benefit changes and product mix, increased at a rate of
approximately 8% while average premium yield increases were approximately 9%.
For 2000, we are pricing renewal commercial business with average 9% to 10%
premium yield increases, while our projected total cost of benefits increase is
8.0% to 8.5%.
    UnitedHealthcare's Medicare medical care ratio increased in 1999 compared to
1998 (excluding 1998 special charges). We continue to evaluate Medicare markets
and alter benefit designs to further improve our Medicare product margins.
    Our year-over-year Medicare enrollment decreased 9% as a result of actions
taken to better position this program for long-term success. Effective January
1, 1999, we withdrew Medicare+Choice product offerings from 86 counties,
affecting approximately 60,000, or 12%, of our Medicare members as of December
31, 1998. On July 1, 1999, we announced plans to withdraw, effective January 1,
2000, from the Medicare+Choice product program in another 49 counties affecting
40,000 existing members, and also filed significant benefit adjustments. Annual
revenues for 1999 from the Medicare markets we exited effective January 1, 2000,
were approximately $230 million. These actions are expected to further reduce
Medicare enrollment, but better position this program in the long term in terms
of profitability relative to its cost of capital and required resource
management.
    We will continue to evaluate the markets we serve and, where necessary, take
actions that may result in further withdrawals of Medicare product offerings or
reductions in membership, when and as permitted by our contracts with the Health
Care Financing Administration (HCFA).
    The following table summarizes individuals served by UnitedHealthcare, by
product and funding arrangement, as of December 31 (in thousands)(1):



                                        1999           1998
- -----------------------------------------------------------------
                                                
Commercial
   Risk-based                          5,150          5,141
   Fee-based                           1,745          1,616
- -----------------------------------------------------------------
     Total Commercial                  6,895          6,757


   Medicare                              437            482
   Medicaid                              479            430
- -----------------------------------------------------------------

     Total UnitedHealthcare            7,811          7,669
- -----------------------------------------------------------------


(1) Excludes individuals served through UnitedHealthcare platforms located in
Puerto Rico and Pacific Coast regions. The company is transitioning these
markets.


                                                                              23


UNIPRISE
Uniprise provides network-based health and well-being services,
business-to-business transactional infrastructure services, consumer
connectivity and service, and technology support for large employers and health
plans. Uniprise's revenues increased by $241 million, or 15%, over 1998 driven
primarily by continued growth in its large multi-site customer base, as
demonstrated by 11% growth in individuals served, and price increases on
fee-based business. Uniprise served 5,980,000 and 5,400,000 individuals as of
December 31, 1999 and 1998, respectively. Uniprise's earnings from operations
grew by $61 million, or 38%, over 1998 as a result of the increased revenues,
ongoing process improvement initiatives, and improved operating margins on
risk-based products.

SPECIALIZED CARE SERVICES
Specialized Care Services is an expanding portfolio of health and well-being
companies, each serving a specialized market need with a unique blend of
benefits, provider networks, services and resources. Specialized Care Services'
revenues increased by $108 million, or 17%, over 1998. This increase was driven
primarily by an increase in the number of individuals served by United
Behavioral Health, our mental health and substance abuse services business, and
the acquisition of Dental Benefit Providers, Inc. in June 1999. Earnings from
operations of $128 million increased by 17% compared with 1998, commensurate
with 1999 revenue growth.

INGENIX
Ingenix is a leading health care information and research company that offers a
comprehensive line of health care knowledge and information products and
services to pharmaceutical companies, health insurers and payers, care
providers, large employers and governments. Revenues increased by $74 million,
or 40%, over 1998 primarily as a result of acquisitions during the last half of
1998 and during 1999. Earnings from operations of $25 million increased by 25%
compared with 1998.

CORPORATE AND ELIMINATIONS
Corporate includes investment income derived from cash and investments not
assigned to operating segments and the company-wide costs associated with core
process improvement initiatives. The decrease of $75 million in 1999 Corporate
earnings is attributable to $39 million of incremental core process improvement
costs over 1998 levels and a decline in the level of unassigned cash and
investments and associated investment income, primarily resulting from share
repurchases and business acquisitions.

OPERATIONAL REALIGNMENT AND OTHER CHARGES
In conjunction with our operational realignment initiatives, we developed
and, in the second quarter of 1998, approved a comprehensive plan (the Plan)
to implement our operational realignment. We recognized corresponding charges
to operations of $725 million in the second quarter of 1998, which reflected
the estimated costs to be incurred under the Plan. The charges included costs
associated with asset impairments; employee terminations; disposing of or
discontinuing business units, product lines and contracts; and consolidating
and eliminating certain claim processing operations and associated real
estate obligations.
    The asset impairments consisted principally of: 1) purchased in-process
research and development associated with our acquisition of Medicode, Inc; 2)
goodwill and other long-lived assets including fixed assets, computer hardware
and software, and leasehold improvements associated with businesses we intend to
dispose of or markets where we plan to curtail operations or change our
operating presence; and 3) other realignment initiatives. Activities associated
with the Plan will result in the reduction of approximately 5,200 positions,
affecting approximately 6,400 people in various locations. Through December 31,
1999, we had eliminated approximately 3,900 positions, affecting approximately
3,700 people, pursuant to the Plan. The remaining positions are expected to be
eliminated by December 31, 2000.
    In August 1999, we completed the sale of our managed workers' compensation
business. During the second half of 1998 and the first half of 1999, we also
completed the sale of our medical provider clinics and reconfigured our small
group insurance business and a non-strategic health plan market. The balances
accrued in our operational realignment and other charges were sufficient to
cover actual costs associated with the disposition and reconfiguration of these
businesses.
    Remaining markets where we plan to curtail or make changes to our operating
presence include two health plan markets that are in non-strategic markets. In
Puerto Rico, we expect to complete the sale of this business prior to April 30,
2000. In the Pacific Coast region, we will be exiting our operations related to
small and mid-sized customer groups with anticipated completion in 2000. We
believe the balances accrued in our operational realignment and other charges
will be sufficient to cover expenses incurred in the sale and exit of these
markets.
    Our accompanying financial statements include the operating results of
businesses and markets to be disposed of or discontinued in connection with the
operational realignment. The carrying value of the net assets held for sale or
disposal was approximately $20 million as of December 31, 1999. Our accompanying
Consolidated Statements of Operations for the years ended December 31, 1999 and
1998, include revenues of $689 million and $964 million, respectively, and
losses from operations of $41 million and $52 million, respectively, from
businesses disposed of or to be disposed of and markets we plan to exit.
    The revenues and operating losses described above do not include operating
results from the counties where we withdrew our Medicare product offerings,
effective January 1, 1999, and where we are withdrawing our Medicare product
offerings, effective January 1, 2000. Annual revenues for 1998 for Medicare
counties we exited in January 1999 were approximately $225 million. Annual
revenues for 1999 from the Medicare counties we are exiting in January 2000 were
approximately $230 million.
    The operational realignment and other charges do not cover certain aspects
of the Plan, including new information systems, data conversions, process
re-engineering and employee relocation and training. These costs are charged to
expense as incurred or capitalized, as appropriate. During 1999 and 1998, we
incurred expenses of approximately $52 million and $13 million, respectively,
related to these activities.
    The Plan provided for substantial completion in 1999. However, some
initiatives, including the consolidation of certain claim and administrative
processing functions and certain divestitures and market realignment activities
are requiring additional time in order to complete them in the most effective
manner and will extend through 2000. Based on current facts and circumstances,
we believe the remaining realignment reserve is adequate to cover the costs to
be incurred in executing the remainder of the Plan. However, as we proceed with
the execution of the Plan and more current information becomes available, it may
be necessary to adjust our estimates for severance, lease obligations on exited
facilities, and losses on disposition of businesses.


24


The table below summarizes accrued operational realignment and other charges
through December 31, 1999 (in millions):



                                                                Severance and                   Disposition of
                                                     Asset      Outplacement     Noncancelable   Business and
                                                  Impairments       Costs      Lease Obligations  Other Costs       Total
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                 
Balance at December 31, 1997                    $        -      $       -       $       -       $        -      $       -
  Provision for Operational Realignment
   and Other Charges                                   430            142              82               71            725
  Additional Charges (Credits)                          21            (20)             (9)               8              -
  Cash Payments                                          -            (19)             (6)             (13)           (38)
  Noncash Charges                                     (451)             -               -                -           (451)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1998                             -            103              67               66            236
  Additional Charges (Credits)                           -            (22)             13                9              -
  Cash Payments                                          -            (46)            (18)             (45)          (109)
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1999                    $        -       $     35       $      62       $       30      $     127
- ------------------------------------------------------------------------------------------------------------------------------------


1998 RESULTS COMPARED TO 1997 RESULTS
CONSOLIDATED FINANCIAL RESULTS

REVENUES
PREMIUM REVENUES
Consolidated premium revenues in 1998 totaled $15.5 billion, an increase of $5.4
billion, or 53%, compared to 1997. On January 1, 1998, our Health Care Services'
Ovations business began delivering Medicare Supplement insurance and other
medical insurance coverage to approximately 4 million AARP members. Premium
revenues from our portion of the AARP insurance offerings during 1998 were $3.5
billion.
    Excluding the AARP business, 1998 consolidated premium revenues totaled $12
billion, an increase of 19% over 1997. This increase was primarily the result of
growth in our Health Care Services' UnitedHealthcare business. On a
year-over-year same-store basis, UnitedHealthcare's premium revenues increased
$1.7 billion, or 18%, during 1998. The increase reflected same-store commercial
health plan enrollment growth of 10% and average year-over-year premium yield
increases on renewing commercial health plan groups of approximately 5% to 6%.
    Growth in UnitedHealthcare's Medicare programs also contributed to the
increase in premium revenues, with same-store growth of 33% in Medicare
enrollment. Significant growth in Medicare enrollment affects year-over-year
comparability. The Medicare product generally has per member premium rates three
to four times higher than average commercial premium rates because Medicare
members typically use proportionately more medical services. On a
year-over-year, same-store basis, UnitedHealthcare's commercial health plan and
Medicare products accounted for $1.8 billion of premium revenue growth during
1998.

MANAGEMENT SERVICES AND FEE REVENUES
Management services and fee revenues during 1998 totaled $1.6 billion,
representing an increase of approximately $160 million over 1997. The increase
was primarily the result of acquisitions by Ingenix during 1997 and 1998.
Additionally, our Specialized Care Services business - most notably in United
Behavioral Health and Optum-Registered Trademark-, our telephone- and
Internet-based health information and services business increased the number of
individuals it serves.

INVESTMENT AND OTHER INCOME
Investment and other income increased to $249 million in 1998 from $231 million
in 1997. The increase of $18 million was primarily attributable to an increase
in average cash and investments from $3.6 billion in 1997 to $4.1 billion in
1998. Net realized capital gains were $26 million in both 1998 and 1997.

OPERATING EXPENSES
MEDICAL COSTS
The following table summarizes our medical care ratio by product line for the
years ended December 31:



                                        1998
                               ----------------------

                                Reported   Adjusted(1)  1997
- --------------------------------------------------------------------
                                               
UnitedHealthcare:
  Commercial                      85.6%      84.9%      85.7%
  Medicare                        92.0%      87.0%      83.3%
  Medicaid                        85.2%      85.2%      82.8%
- --------------------------------------------------------------------
Consolidated UnitedHealth Group   87.2%      86.0%      84.3%
- --------------------------------------------------------------------
Consolidated (excluding AARP)     85.8%      84.3%      84.3%
- --------------------------------------------------------------------


(1) Excludes the effects of contract losses associated with certain Medicare
markets and other increases to commercial and Medicare medical costs payable
estimates.

    Our consolidated medical care ratio increased to 87.2% in 1998 from 84.3% in
1997. The year-over-year increase includes the effects of the AARP business on
our medical care ratio. We experience a medical care ratio of approximately 92%
related to our portion of the AARP insurance offerings, which we began
delivering on January 1, 1998. Excluding the AARP business, on a year-over-year
basis, the medical care ratio increased to 85.8%.
    The increase in the 1998 medical care ratio was primarily due to average
Medicare premium rate increases of 2.5%, which were more than offset by
increased medical utilization reflected mostly in hospital costs. In 13 of our
24 Medicare markets, representing half of our annual Medicare premiums of $2.4
billion, we incurred contract losses of $111 million. Six of these 13 markets
were generally newer markets where we had been unable to achieve the scale of
operations necessary to achieve profitability. In numerous counties in the other
seven markets, we experienced increased medical costs that exceeded the fixed
Medicare premiums, which only increased 2.5% on average.
    Despite increasing commercial medical cost trends in certain health plan
markets, UnitedHealthcare's commercial medical care ratio improved slightly to
85.6% in 1998 from 85.7% in 1997.


                                                                              25


SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses as a percent of total revenues
(the operating cost ratio) decreased from 20.0% in 1997 to 17.1% in 1998. The
improvement in the year-over-year operating cost ratio principally reflected
the operating leverage we gained with the addition of the AARP business. On
an absolute dollar basis, selling, general and administrative costs increased
by $600 million, or 25%, over 1997. The increase primarily reflected the
additional infrastructure needed to support the $5.4 billion, or 53%,
increase in premium-based business.

DEPRECIATION AND AMORTIZATION

Depreciation and amortization was $185 million in 1998, and $146 million in
1997. This increase resulted from a combination of higher levels of capital
expenditures to support business growth and amortization of goodwill and other
intangible assets related to recent acquisitions.

FINANCIAL CONDITION AND LIQUIDITY AT DECEMBER 31, 1999

During 1999, we generated $1.2 billion in cash from operating activities. We
continued to maintain a strong financial condition and liquidity position, with
cash and investments of $4.7 billion at December 31, 1999, an increase of $295
million from December 31, 1998.

    Cash and investments included $484 million and $111 million of equity
securities as of December 31, 1999 and 1998, respectively. The increase in
equity securities is primarily attributable to unrealized gains of $318 million
during 1999, largely resulting from our investment in Healtheon common stock,
which increased in value subsequent to Healtheon's initial public stock offering
in February 1999.

    As further described under "Regulatory Capital and Dividend Restrictions,"
many of our subsidiaries are subject to various government regulations. After
taking into account these regulations, approximately $300 million (excluding
equity securities of $484 million) of our $4.7 billion of cash and investments
at December 31, 1999, was available for general corporate use, including share
repurchases, acquisitions and working capital needs. Of this amount,
approximately $200 million was maintained at year-end as part of our Year 2000
risk mitigation planning. Our operating cash flows and financing capability also
provide us with funds, as needed, for general corporate use.

    During 1999, we issued commercial paper and, as of December 31, 1999, we had
$591 million outstanding, with interest rates ranging from 5.5% to 6.3%.

    In November 1999, we also issued a $150 million two-year floating rate note.
The interest rate for the initial three-month period is 6.65%.

    We used the proceeds from the commercial paper and the floating rate note to
repay $400 million of unsecured notes in December 1999.

    In August 1999, we increased our commercial paper program and our
supporting credit arrangements with a group of banks to an aggregate of $900
million. The supporting credit arrangements are composed of a $300 million
revolving credit facility, expiring in December 2003, and a $600 million 364-day
facility, expiringin August 2000. We also have the capacity to issue
approximately $180 million of extendible commercial notes (ECNs). At December
31, 1999, we had no amounts outstanding under our credit facilities or ECN
programs.

    Our debt arrangements and credit facilities contain various covenants, the
most restrictive of which place limitations on secured and unsecured borrowings
and require us to exceed minimum interest coverage levels. We are in compliance
with the requirements of all debt covenants.

    Our senior debt is rated "A" by Standard & Poor's and Duff & Phelps, and
"A3" by Moody's. Our commercial paper and ECN programs are rated "A-1" by
Standard & Poor's, "D-1" by Duff & Phelps, and "P-2" by Moody's.

    The aggregate issuing capacity of all securities covered by shelf
registration statements for common stock, preferred stock, debt securities and
other securities is $1.25 billion. We may publicly offer such securities from
time to time at prices and terms to be determined at the time of offering.

    Under the board of directors' authorization, we are operating a common stock
repurchase program. Repurchases may be made from time to time at prevailing
prices, subject to certain restrictions on volume, pricing and timing. During
1999, we repurchased 19.4 million shares for an aggregate of $983 million. Since
inception of our stock repurchase activities in November 1997 and through
December 31, 1999, we have repurchased 30.9 million shares for an aggregate of
$1.4 billion. As of December 31, 1999, we have board of directors' authorization
to purchase up to an additional 13.9 million shares of our common stock.

    In the second quarter of 1998, we recognized special charges to operations
of $725 million associated with implementing our operational realignment plan.
We believe our remaining after-tax cash outlay associated with these charges
will be approximately $80 million over the next 12 months.

    We expect our available cash and investment resources, operating cash flows
and financing capability will be sufficient to meet our current operating
requirements and other corporate development initiatives. A substantial portion
of our long-term investments ($2.6 billion as of December 31, 1999) is
classified as available for sale. Subject to the previously described
regulations, these investments may be sold prior to their maturity to fund
working capital or for other purposes.

    Currently, we do not have any other material definitive commitments that
require cash resources; however, we continually evaluate opportunities to expand
our operations. This includes internal development of new products and programs
and may include acquisitions.

    During 1999, we formed and initiated funding of the UnitedHealth Foundation
using a portion of our investment in Healtheon common stock valued at
approximately $50 million. UnitedHealth Foundation is dedicated to improving
Americans' health and well-being by supporting consumer and physician education
and awareness programs, generating objective information that will contribute to
improving health care delivery, and sponsoring community-based health and
well-being activities.

REGULATORY CAPITAL AND DIVIDEND RESTRICTIONS

Our operations are conducted through our wholly-owned subsidiaries, which
include health maintenance organizations (HMOs) and insurance companies. HMOs
and insurance companies are subject to state regulations that, among other
things, may require the maintenance of minimum levels of statutory capital, as
defined by each state, and restrict the timing and amount of dividends and other
distributions that may be paid to their respective parent companies. Generally,
the amount of dividend distributions that may be paid by regulated insurance and
HMO companies, without prior approval by state regulatory authorities, is
limited based on the entity's level of statutory net income and statutory
capital and surplus.

    As of December 31, 1999, our regulated subsidiaries had aggregate statutory
capital and surplus of approximately $1.5 billion, compared with their aggregate
minimum statutory capital and surplus requirements of approximately $350
million.


26


    The National Association of Insurance Commissioners has adopted rules which,
to the extent that they are implemented by the states, will set new minimum
capitalization requirements for insurance companies, HMOs and other entities
bearing risk for health care coverage. The requirements take the form of
risk-based capital rules. The change in rules for insurance companies was
effective December 31, 1998. The new HMO rules are subject to state-by-state
adoption, but not many states had adopted the rules as of December 31, 1999. The
HMO rules, if adopted by the states in their proposed form, would significantly
increase the minimum capital required for certain of our subsidiaries. However,
we believe we can redeploy capital among our regulated entities to minimize the
need for incremental capital investment of general corporate financial resources
into regulated subsidiaries. As such, we do not anticipate a significant impact
on our aggregate capital or investments in regulated subsidiaries.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk represents the risk of changes in value of a financial instrument
caused by fluctuations in interest rates and equity prices.

    Approximately $4.2 billion of our cash and investments at December 31, 1999,
was invested in fixed income securities. We manage our investment portfolio
within risk parameters approved by our board of directors; however our fixed
income securities are subject to the effects of market fluctuations in interest
rates. Assuming a hypothetical and immediate 1% increase in rates applicable to
our fixed income portfolio at December 31, 1999, the fair value of our fixed
income investments would decrease by approximately $110 million.

    As of December 31, 1999, we owned approximately 7.8 million shares of
Healtheon common stock. With Healtheon's public stock offering in February 1999
and subsequent increases to the fair value of Healtheon's stock, we have
recorded a $283 million unrealized gain, or $178 million net of income tax
effects, in shareholders' equity as of December 31, 1999. Assuming an immediate
decrease of 25% in Healtheon's stock price, the hypothetical reduction in
shareholders' equity related to these holdings is estimated to be $45 million
(net of income tax effects), or 1% of total shareholders' equity at December 31,
1999.

INFLATION

Although the general rate of inflation has remained relatively stable and health
care cost inflation has stabilized in recent years, the national health care
cost inflation rate still exceeds the general inflation rate. We use various
strategies to mitigate the negative effects of health care cost inflation,
including setting commercial premiums based on anticipated health care costs,
care coordination with various health care providers, and various health care
cost containment measures. Specifically, health plans try to control medical and
hospital costs through contracts with independent providers of health care
services. Through these contracted care providers, our health plans emphasize
preventive health care and appropriate use of specialty and hospital services.

    While we currently believe our strategies to mitigate health care cost
inflation will continue to be successful, competitive pressures, new health care
and pharmaceutical product introductions, demands from health care providers and
customers, applicable regulations or other factors may affect our ability to
control the impact of health care cost increases. In addition, certain
non-network-based products do not have health care cost containment measures
similar to those in place for network-based products. As a result, there is
added health care cost inflation risk with these products, which constitute
approximately 4% of our consolidated risk-based membership. We consider these
inflation risks when determining prices for those products.

YEAR 2000 INFRASTRUCTURE MODIFICATION ACTIVITIES

Our Year 2000 infrastructure remediation efforts were successful and, during
2000, we have not experienced any business disruptions or system failures.

LEGAL MATTERS

See Note 13 to the accompanying consolidated financial statements for a
discussion of legal matters.

CAUTIONARY STATEMENT REGARDING "FORWARD-LOOKING" STATEMENTS

The statements contained in Results of Operations, and other sections of this
annual report to shareholders, include forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 (the PSLRA).
When used herein, the words or phrases "believes," "expects," "anticipates,"
"intends," "will likely result," "estimates," "projects" or similar expressions
are intended to identify such forward-looking statements. Any of these
forward-looking statements involve risks and uncertainties that may cause the
Company's actual results to differ materially from the results discussed in the
forward-looking statements. Statements that are not strictly historical are
"forward-looking" statements under the safe harbor provisions of the PSLRA.
Forward-looking statements involve known and unknown risks, which may cause
actual results and corporate developments to differ materially from those
expected. Factors that could cause results and developments to differ materially
from expectations include, without limitation: the effects of state and federal
regulations, the effects of acquisitions and divestitures, and other risks
described from time to time in each of UnitedHealth Group's SEC reports,
including quarterly reports on Form 10-Q, annual reports on Form 10-K, and
reports on Form 8-K.


                                                                              27


Consolidated Statements of Operations UNITEDHEALTH GROUP






                                                                       For the Year Ended December 31,

(in millions, except per share data)                                  1999           1998           1997
- ------------------------------------------------------------------------------------------------------------
                                                                                       
REVENUES
   Premiums                                                       $ 17,550       $ 15,516       $ 10,135
   Management Services and Fees                                      1,793          1,590          1,428
   Investment and Other Income                                         219            249            231
- ------------------------------------------------------------------------------------------------------------
   Total Revenues                                                   19,562         17,355         11,794
- ------------------------------------------------------------------------------------------------------------

OPERATING EXPENSES
   Medical Costs                                                    15,043         13,523          8,542
   Selling, General and Administrative Expenses                      3,343          2,964          2,364
   Depreciation and Amortization                                       233            185            146
   Operational Realignment and Other Charges                           -              725            -
- ------------------------------------------------------------------------------------------------------------
   Total Operating Expenses                                         18,619         17,397         11,052
- ------------------------------------------------------------------------------------------------------------

EARNINGS (LOSS) FROM OPERATIONS                                        943            (42)           742
   Interest Expense                                                    (49)            (4)           -
- ------------------------------------------------------------------------------------------------------------

EARNINGS (LOSS) BEFORE INCOME TAXES                                    894            (46)           742
   Provision for Income Taxes                                         (326)          (120)          (282)
- ------------------------------------------------------------------------------------------------------------

NET EARNINGS (LOSS)                                                    568           (166)           460

CONVERTIBLE PREFERRED STOCK DIVIDENDS AND REDEMPTION PREMIUM           -              (48)           (29)
- ------------------------------------------------------------------------------------------------------------

NET EARNINGS (LOSS) APPLICABLE TO COMMON SHAREHOLDERS             $    568       $   (214)      $    431
- ------------------------------------------------------------------------------------------------------------

BASIC NET EARNINGS (LOSS) PER COMMON SHARE                        $   3.26       $  (1.12)      $   2.30
- ------------------------------------------------------------------------------------------------------------

DILUTED NET EARNINGS (LOSS) PER COMMON SHARE                      $   3.20       $  (1.12)      $   2.26
- ------------------------------------------------------------------------------------------------------------

BASIC WEIGHTED-AVERAGE NUMBER OF COMMON
   SHARES OUTSTANDING                                                174.1          190.6          187.0
DILUTIVE EFFECT OF OUTSTANDING STOCK OPTIONS                           3.4            -              3.8
- ------------------------------------------------------------------------------------------------------------

WEIGHTED-AVERAGE NUMBER OF COMMON SHARES
   OUTSTANDING, ASSUMING DILUTION                                    177.5          190.6          190.8
- ------------------------------------------------------------------------------------------------------------

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.



28


CONSOLIDATED BALANCE SHEETS  UNITEDHEALTH GROUP




                                                                                                       As of December 31,
(in millions, except share and per share data)                                                      1999              1998
- ------------------------------------------------------------------------------------------------------------------------------------

                                                                                                             
ASSETS
   Current Assets
      Cash and Cash Equivalents                                                                 $   1,605          $ 1,644
      Short-Term Investments                                                                          546              170
      Accounts Receivable, net of allowances of $117 and $64                                          912              965
      Assets Under Management                                                                       1,328            1,155
      Other Current Assets                                                                            177              320
- ------------------------------------------------------------------------------------------------------------------------------------
         Total Current Assets                                                                       4,568            4,254
   Long-Term Investments                                                                            2,568            2,610
   Property and Equipment, net of accumulated depreciation of $482 and $463                           278              294
   Goodwill and Other Intangible Assets, net of accumulated amortization
      of $376 and $258                                                                              2,859            2,517
- ------------------------------------------------------------------------------------------------------------------------------------
         Total Assets                                                                           $  10,273          $ 9,675
- ------------------------------------------------------------------------------------------------------------------------------------


LIABILITIES AND SHAREHOLDERS' EQUITY
   Current Liabilities
      Medical Costs Payable                                                                     $   2,915          $ 2,780
      Accounts Payable and Accrued Liabilities                                                      1,003              949
      Other Policy Liabilities                                                                        910              714
      Short-Term Debt                                                                                 591              459
      Unearned Premiums                                                                               473              414
- ------------------------------------------------------------------------------------------------------------------------------------
         Total Current Liabilities                                                                  5,892            5,316
   Long-Term Debt                                                                                     400              249
   Deferred Income Taxes and Other Liabilities                                                        118               72
   Commitments and Contingencies (Note 13)
- ------------------------------------------------------------------------------------------------------------------------------------
   Shareholders' Equity
      Common Stock, $0.01 par value - 500,000,000 shares authorized;
         167,470,000 and 183,930,000 issued and outstanding                                             2                2
      Additional Paid-in Capital                                                                      249            1,107
      Retained Earnings                                                                             3,447            2,885
      Accumulated Other Comprehensive Income:
         Net Unrealized Holding Gains on Investments Available for Sale,
               net of income tax effects                                                              165               44
- ------------------------------------------------------------------------------------------------------------------------------------
         Total Shareholders' Equity                                                                 3,863            4,038
- ------------------------------------------------------------------------------------------------------------------------------------
         Total Liabilities and Shareholders' Equity                                             $  10,273          $ 9,675
- ------------------------------------------------------------------------------------------------------------------------------------

See notes to consolidated financial statements.


                                                                              29


Consolidated Statements of Changes in Shareholders' Equity  UNITEDHEALTH GROUP




                                                                                           Net Unrealized
                                                                                           Holding Gains
                                                                                            (Losses) on
                                                      Common Stock   Additional              Investments    Total
                                                    ---------------   Paid-in    Retained     Available  Shareholders' Comprehensive
(in millions, except per share data)                Shares   Amount   Capital    Earnings     for Sale      Equity    Income (Loss)
- -----------------------------------------------------------------------------------------------------------------------------------
                                                                                  
BALANCE AT DECEMBER 31, 1996                          185      $ 2     $1,148     $ 2,680       $  (7)      $3,823
   Issuance of Common Stock
      Stock Plans and Related Tax Benefits              3       -         116           -           -          116
      Acquisitions                                      3       -         144           -           -          144
   Stock Repurchases                                    -       -         (10)          -           -          (10)
   Comprehensive Income
      Net Earnings                                      -       -           -         460           -          460     $   460
      Other Comprehensive Income Adjustments
         Change in Net Unrealized Holding
            Gains (Losses) on Investments Available
            for Sale, net of income tax effects         -       -           -           -          36           36          36
                                                                                                                         ------
               Comprehensive Income                     -       -           -           -           -           -      $   496
                                                                                                                         ------
   Cash Dividends
      Common Stock ($0.03 per share)                    -       -           -          (6)          -           (6)
      Convertible Preferred Stock ($57.50 per share)    -       -           -         (29)          -          (29)
- -----------------------------------------------------------------------------------------------------------------------------------

BALANCE AT DECEMBER 31, 1997                          191        2      1,398       3,105          29        4,534
   Issuance of Common Stock
      Stock Plans and Related Tax Benefits              4       -         131           -           -          131
      Acquisitions                                      -       -          14           -           -           14
   Stock Repurchases                                  (11)      -        (436)          -           -         (436)
   Comprehensive Income (Loss)
      Net Loss                                          -       -           -        (166)          -         (166)    $  (166)
      Other Comprehensive Income Adjustments
         Change in Net Unrealized Holding
            Gains on Investments Available
            for Sale, net of income tax effects         -       -           -           -          15           15          15
                                                                                                                         ------
               Comprehensive Loss                       -       -           -           -           -           -      $  (151)
                                                                                                                         ------
   Cash Dividends
      Common Stock ($0.03 per share)                    -       -           -          (6)          -           (6)
      Convertible Preferred Stock ($56.03 per share)    -       -           -         (28)          -          (28)
   Convertible Preferred Stock Redemption Premium       -       -           -         (20)          -          (20)
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1998                          184        2      1,107       2,885          44        4,038
   Issuance of Common Stock
      Stock Plans and Related Tax Benefits              3       -         125           -           -          125
   Stock Repurchases                                  (20)      -        (983)          -           -         (983)
   Comprehensive Income
      Net Earnings                                      -       -           -         568           -          568     $   568
      Other Comprehensive Income Adjustments
         Change in Net Unrealized Holding
            Gains on Investments Available
            for Sale, net of income tax effects         -       -           -           -         121          121         121
                                                                                                                         ------
               Comprehensive Income                     -       -           -           -           -           -      $   689
                                                                                                                         ------
   Cash Dividends
      Common Stock ($0.03 per share)                    -       -           -          (6)          -           (6)

- -----------------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1999                          167      $ 2     $  249     $ 3,447       $ 165       $3,863
- -----------------------------------------------------------------------------------------------------------------------------------


See notes to consolidated financial statements.


30


Consolidated Statements of Cash Flows  UnitedHealth Group




                                                                                       For the Year Ended December 31,

(in millions)                                                                      1999             1998              1997
- ------------------------------------------------------------------------------------------------------------------------------------

OPERATING ACTIVITIES
                                                                                                          
   Net Earnings (Loss)                                                          $   568           $  (166)         $   460
   Noncash Items
         Depreciation and Amortization                                              233               185              146
         Deferred Income Taxes and Other                                             35              (184)              91
         Asset Impairments                                                            -               451                -
   NetChange in Other Operating Items, net of effects from acquisitions, sales
      of subsidiaries and changes in AARP balances
         Accounts Receivable and Other Current Assets                                84                67              (84)
         Medical Costs Payable                                                      165               269               53
         Accounts Payable and Other Current Liabilities                              60               347              (30)
         Unearned Premiums                                                           44               102               47
- ------------------------------------------------------------------------------------------------------------------------------------
         Cash Flows From Operating Activities                                     1,189             1,071              683
- ------------------------------------------------------------------------------------------------------------------------------------

INVESTING ACTIVITIES
   Cash Paid for Acquisitions, net of cash assumed and other effects               (334)             (464)               -
   Purchases of Property and Equipment and Capitalized Software                    (196)             (210)            (187)
   Proceeds from Sales of Property and Equipment
      and Disposition of Businesses                                                  51                59                -
   Purchases of Investments                                                      (2,208)           (2,799)          (6,706)
   Maturities/Sales of Investments                                                2,064             3,435            5,889
- ------------------------------------------------------------------------------------------------------------------------------------
         Cash Flows (Used For) From Investing Activities                           (623)               21           (1,004)
- ------------------------------------------------------------------------------------------------------------------------------------

FINANCING ACTIVITIES
   Proceeds from Stock Option Exercises                                             102                84               79
   Proceeds from Short-Term Borrowings, net of payments                             132               459                -
   Proceeds from Issuance of Long-Term Debt                                         150               249                -
   Common Stock Repurchases                                                        (983)             (436)             (10)
   Redemption of Convertible Preferred Stock                                          -              (520)               -
   Dividends Paid                                                                    (6)              (34)             (35)
- ------------------------------------------------------------------------------------------------------------------------------------
         Cash Flows (Used For) From Financing Activities                           (605)             (198)              34
- ------------------------------------------------------------------------------------------------------------------------------------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                    (39)              894             (287)
- ------------------------------------------------------------------------------------------------------------------------------------

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                    1,644               750            1,037
- ------------------------------------------------------------------------------------------------------------------------------------

CASH AND CASH EQUIVALENTS, END OF PERIOD                                       $  1,605          $  1,644          $   750
- ------------------------------------------------------------------------------------------------------------------------------------

See notes to consolidated financial statements.


                                                                              31


Notes to Consolidated Financial Statements  UnitedHealth Group


(1) DESCRIPTION OF BUSINESS
UnitedHealth Group Incorporated (also referred to as "UnitedHealth Group," "the
Company," "we," "us," "our") is a national leader in forming and operating
orderly, efficient markets for the exchange of high quality health and
well-being services. Through five distinct but strategically aligned businesses
operating in separate market segments, we offer health care coverage and related
services to help people achieve improved health and well-being.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
We have prepared the consolidated financial statements in accordance with
generally accepted accounting principles and have included the accounts of
UnitedHealth Group and its subsidiaries. We have eliminated all significant
intercompany balances and transactions.

USE OF ESTIMATES
These financial statements include some amounts that are based on our best
estimates and judgments. The most significant estimates relate to medical costs
payable and other policy liabilities, intangible asset valuations and
integration reserves relating to acquisitions, and liabilities and asset
impairments relating to our operational realignment activities. These estimates
may be adjusted as more current information becomes available, and any
adjustment could be significant.

REVENUE RECOGNITION
Premium revenues are recognized in the period enrolled members are entitled to
receive health care services. Premium payments received from our customers prior
to such period are recorded as unearned premiums. Management services and fee
revenues are recognized in the period the related services are performed.
Premium revenues related to Medicare and Medicaid programs as a percentage of
total premium revenues were 21% in 1999, 20% in 1998, and 22% in 1997.

MEDICAL COSTS AND MEDICAL COSTS PAYABLE
Medical costs include claims paid, claims adjudicated but not yet paid,
estimates for claims received but not yet adjudicated, and estimates for claims
incurred but not yet received.
    The estimates of medical costs and medical costs payable are developed using
actuarial methods based upon historical data for payment patterns, cost trends,
product mix, seasonality, utilization of health care services and other relevant
factors including product changes. The estimates are subject to change as
actuarial methods change or as underlying facts upon which estimates are based
change. We did not change our actuarial methods during 1999, 1998 or 1997. The
impact of any changes in estimates is included in the determination of earnings
in the period of change. Management believes that the amount of medical costs
payable is adequate to cover the company's liability for unpaid claims as of
December 31, 1999.

CASH, CASH EQUIVALENTS AND INVESTMENTS
Cash and cash equivalents are highly liquid investments with an original
maturity of three months or less. The fair value of cash and cash equivalents
approximates their carrying value because of the short maturity of the
instruments. Investments with a maturity of less than one year are classified as
short-term.
    Investments held by trustees or agencies according to state regulatory
requirements are classified as held-to-maturity based on our ability and intent
to hold these investments to maturity. Such investments are reported at
amortized cost and are included in long-term investments. All other investments
are classified as available for sale and reported at fair value based on quoted
market prices and are classified as short-term or long-term depending on their
maturity term. Periodically, we sell investments classified as long-term prior
to their maturity to fund working capital or for other purposes.
    Unrealized gains and losses on investments available for sale are excluded
from earnings and reported as a separate component of shareholders' equity, net
of income tax effects. To calculate realized gains and losses on the sale of
investments available for sale, we use the specific cost of each investment
sold. We have no investments classified as trading securities.

ASSETS UNDER MANAGEMENT
Under our 10-year agreement with AARP, we are administering certain aspects of
AARP's insurance program that were transferred from the program's previous
carrier (see Note 6). Pursuant to our agreement with AARP, the associated assets
are managed separately from our general investment portfolio and are used to
fund expenditures associated with the AARP Program. These assets are invested at
our discretion, within certain investment guidelines approved by the AARP. At
December 31, 1999, the assets were invested in marketable debt securities.
Interest earnings and realized investment gains and losses on these assets
accrue to the AARP policyholders and, as such, are not included in our
determination of earnings. Assets under management are reported at their fair
value. Unrealized gains and losses are included in the rate stabilization fund
associated with the AARP Program (see Note 6). As of December 31, 1999, the AARP
investment portfolio included net unrealized losses of $34 million compared with
net unrealized gains of $12 million as of December 31, 1998.

OTHER POLICY LIABILITIES
Other policy liabilities include the rate stabilization fund associated with the
AARP Program (see Note 6) and retrospective rate credit liabilities and customer
balances related to experience-rated indemnity products.
    Retrospective rate credit liabilities represent premiums we received in
excess of amounts contractually owed by customers based on actual claim
experience. Liabilities established for closed policy years are based on actual
experience, while liabilities for open years are based on estimates of premiums,
claims and expenses incurred.


32


    Customer balances consist principally of deposit accounts and reserves that
have accumulated under certain experience-rated contracts. At the customer's
option, these balances may be returned to the customer or used to pay future
premiums or claims under eligible contracts.

PROPERTY AND EQUIPMENT

Property and equipment is stated at cost. Depreciation is calculated using the
straight-line method over the estimated useful life of the respective assets,
ranging from three years to 30 years. The weighted-average useful life of
property and equipment at December 31, 1999, was approximately four years.

GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill represents the purchase price and transaction costs associated with
businesses we have acquired in excess of the estimated fair value of the net
assets of these businesses. To the extent possible, a portion of the excess
purchase price and transaction costs is assigned to identifiable intangible
assets. Goodwill and other intangible assets are being amortized on a
straight-line basis over useful lives ranging from three years to 40 years, with
a weighted-average useful life of 34 years at December 31, 1999.

    The useful lives of goodwill and other intangible assets have been assigned
based on our best judgment. We periodically evaluate whether certain
circumstances may affect the estimated useful lives or the recoverability of the
unamortized balance of goodwill or other intangible assets.

    The most significant components of goodwill and other intangible assets are
composed of goodwill of $2.1 billion at December 31, 1999, and $1.8 billion at
December 31, 1998, and employer group contracts, supporting infrastructure,
distribution networks and institutional knowledge of $550 million at December
31, 1999, and $570 million at December 31, 1998, net of accumulated
amortization.

LONG-LIVED ASSETS

We review long-lived assets for events or changes in circumstances that would
indicate we may not recover their carrying value. We consider a number of
factors, including estimated future undiscounted cash flows associated with the
long-lived asset, to make this decision. We record assets held for sale at the
lower of their carrying amount or fair value, less any costs associated with the
final settlement.

INCOME TAXES

Deferred income tax assets and liabilities are recognized for the differences
between the financial and income tax reporting bases of assets and liabilities
based on enacted tax rates and laws. The deferred income tax provision or
benefit generally reflects the net change in deferred income tax assets and
liabilities during the year. The current income tax provision reflects the tax
consequences of revenues and expenses currently taxable or deductible on various
income tax returns for the year reported.

STOCK-BASED COMPENSATION

We use the intrinsic value method for determining stock-based compensation
expenses. Under the intrinsic value method, we do not recognize compensation
expense when the exercise price of an employee stock option equals or exceeds
the fair market value of the stock on the date the option is granted.
Information on what our stock-based compensation expenses would have been had we
calculated those expenses using the fair market values of outstanding stock
options is included in Note 11.

NET EARNINGS (LOSS) PER COMMON SHARE

Basic net earnings (loss) per common share is computed by dividing net earnings
(loss) applicable to common shareholders by the weighted-average number of
common shares outstanding during the period. Diluted net earnings (loss) per
common share is determined using the weighted-average number of common shares
outstanding during the period, adjusted for the dilutive effect of common stock
equivalents, consisting of shares that might be issued upon exercise of common
stock options. In periods where losses are reported, the weighted-average number
of common shares outstanding excludes common stock equivalents, since their
inclusion would be anti-dilutive.

COMPREHENSIVE INCOME

Comprehensive income and its components are reported in the Consolidated
Statements of Changes in Shareholders' Equity. Comprehensive income is defined
as changes in the equity of our business excluding changes resulting from
investments and distributions to our shareholders.

RECENTLY ISSUED ACCOUNTING STANDARD

In June 1998, a new standard on accounting for derivative financial instruments
and hedging activities was issued. This new standard will not materially affect
our financial results or disclosures based upon our current investment
portfolio.

RECLASSIFICATIONS

Certain 1998 and 1997 amounts in the consolidated financial statements have been
reclassified to conform to the 1999 presentation. These reclassifications have
no effect on net earnings (loss) or shareholders' equity as previously reported.

(3) ACQUISITIONS

In September 1999, our Ingenix business segment acquired Worldwide Clinical
Trials, Inc. (WCT), a leading contract research organization. We paid $214
million in cash in exchange for all outstanding shares of WCT. We accounted for
the purchase using the purchase method of accounting, which means the purchase
price was allocated to assets and liabilities acquired based on their estimated
fair values at the date of acquisition and only the post-acquisition results of
WCT are included in our consolidated financial statements. The purchase price
and costs associated with the acquisition exceeded the preliminary estimated
fair value of net assets acquired by $214 million, which has been assigned to
goodwill and is being amortized over its estimated useful life of 30 years. The
pro forma effects of the WCT acquisition on our consolidated financial
statements were not material.

    In June 1999, our Specialized Care Services business segment acquired Dental
Benefit Providers, Inc. (DBP), one of the largest managed dental care services
companies in the United States. We paid $105 million in cash, and we accounted
for the acquisition using the purchase method of accounting. The purchase price
and costs associated with the acquisition exceeded the preliminary estimated
fair value of net assets acquired by $105 million, which has been assigned to
goodwill and is being amortized over its estimated useful life of 40 years. The
pro forma effects of the DBP acquisition on our consolidated financial
statements were not material.

    In October 1998, our Health Care Services segment acquired HealthPartners of
Arizona, Inc. (HPA), with 509,000 members as of the acquisition date. We paid
$235 million in cash in exchange for all outstanding shares of HPA. We accounted
for the acquisition using

                                                                              33


the purchase method of accounting. The purchase price and costs associated with
the acquisition exceeded the estimated fair value of net assets acquired by $223
million, which has been assigned to goodwill and is being amortized over its
estimated useful life of 40 years. The pro forma effects of the HPA acquisition
on our consolidated financial statements were not material.
    During 1998, our Ingenix segment acquired Kern McNeill International, Inc.
(KMI), a leading contract research organization, and St. Anthony Publishing,
Inc. (St. Anthony), a leader in the health care coding and reimbursement
publications market. In the aggregate, we paid $188 million in cash and assumed
liabilities of $17 million in exchange for all of the common stock of KMI and
St. Anthony. We accounted for these acquisitions using the purchase method of
accounting. The purchase price and costs associated with these acquisitions
exceeded the preliminary fair value of net assets acquired by $205 million,
which has been assigned to trade names and goodwill and is being amortized over
their estimated useful lives ranging from 15 to 40 years. The pro forma effects
of these acquisitions on our consolidated financial statements were not
material.
    On December 31, 1997, our Ingenix segment acquired Medicode, Inc.
(Medicode), a leading provider of health care information products. We issued
2.4 million shares of common stock and 507,000 common stock options with a total
fair value of $127 million in exchange for all outstanding shares of Medicode.
We accounted for the acquisition using the purchase method of accounting. The
purchase price and costs associated with the acquisition exceeded the
preliminary estimated fair value of net assets acquired by $123 million, which
was originally assigned entirely to goodwill. During the second quarter of 1998,
the Company completed the valuation of the intangible assets acquired in the
Medicode transaction. Pursuant to the valuation, we expensed $68 million of the
excess purchase price representing purchased in-process technology that
previously had been assigned to goodwill. In management's judgment, this amount
reflects the amount we would reasonably expect to pay an unrelated party for
each project included in the technology. The value of in-process research and
development of $68 million represented approximately 48% of the purchase price
and was determined by estimating the costs to develop the purchased technology
into commercially viable products, then estimating the resulting net cash flows
from each project that was incomplete at the acquisition date, and discounting
the resulting net cash flows to their present value. As of the date of our
acquisition, Medicode had invested $8.5 million in in-process research and
development projects. An additional $5 million was expended through September
30, 1999, at which time all projects that were in-process as of the acquisition
date were complete. The $68 million charge is included as a component of
Operational Realignment and Other Charges in the accompanying Consolidated
Statements of Operations for the year ended December 31, 1998. Based on the
final valuation, the remaining excess purchase price of $55 million was assigned
to existing technologies, trade names and goodwill and is being amortized over
their estimated useful lives, averaging 13 years. The pro forma effects of the
Medicode acquisition on our consolidated financial statements were not material.

(4) SPECIAL OPERATING CHARGES
OPERATIONAL REALIGNMENT AND OTHER CHARGES
In conjunction with our operational realignment initiatives, we developed and,
in the second quarter of 1998, approved a compre hensive plan (the Plan) to
implement our operational realignment. We recognized corresponding charges to
operations of $725 million in the second quarter of 1998, which reflected the
estimated costs to be incurred under the Plan. The charges included costs
associated with asset impairments; employee terminations; disposing of or
discontinuing business units, product lines and contracts; and consolidating and
eliminating certain claim processing operations and associated real estate
obligations.
    The asset impairments consisted principally of: 1) purchased in-process
research and development associated with our acquisition of Medicode, Inc.; 2)
goodwill and other long-lived assets including fixed assets, computer hardware
and software, and leasehold improvements associated with businesses we intend to
dispose of or markets where we plan to curtail our operations or change our
operating presence; and 3) other realignment initiatives. Activities associated
with the Plan will result in the reduction of approximately 5,200 positions,
affecting approximately 6,400 people in various locations. Through December 31,
1999, we had eliminated approximately 3,900 positions, affecting approximately
3,700 people, pursuant to the Plan. The remaining positions are expected to be
eliminated by December 31, 2000.
    In August 1999, we completed the sale of our managed workers' compensation
business. During the second half of 1998 and the first half of 1999, we also
completed the sale of our medical provider clinics and the reconfiguration of
our small group insurance business and a non-strategic health plan market. The
balances accrued in our operational realignment and other charges were
sufficient to cover actual costs associated with the disposition and
reconfiguration of these businesses.
    Remaining markets where we plan to curtail or make changes to our operating
presence include two health plan markets that are in non-strategic markets. In
Puerto Rico, we expect to complete the sale of this business prior to April 30,
2000. In the Pacific Coast region, we will be exiting our operations related to
small and mid-sized customer groups with anticipated completion in 2000. We
believe the balances accrued in our operational realignment and other charges
will be sufficient to cover expenses incurred in the sale and exit of these
markets.
    Our accompanying financial statements include the operating results of
businesses and markets to be disposed of or discontinued in connection with the
operational realignment. The carrying value of the net assets held for sale or
disposal is approximately $20 million as of December 31, 1999. Our accompanying
Consolidated Statements of Operations include revenues and operating losses from
businesses disposed of or to be disposed of, and markets we plan to exit for the
years ended December 31 as follows (in millions):



                                              1999      1998
- ----------------------------------------------------------------
                                                
Revenues                                $      689    $   964
Loss from operations                    $      (41)   $   (52)
- ----------------------------------------------------------------


    The table above does not include operating results from the counties where
we withdrew our Medicare product offerings, effective January 1, 1999, and where
we will be withdrawing our Medicare product offerings, effective January 1,
2000. Annual revenues for 1998 for Medicare counties we exited in January 1999
were approximately $225 million. Annual revenues for 1999 from the Medicare
counties we are exiting in January 2000 were approximately $230 million.
    The operational realignment and other charges do not cover certain aspects
of the Plan, including new information systems, data conversions, process
re-engineering, and employee relocation and training. These costs are charged to
expense as incurred or capitalized, as appropriate. During 1999 and 1998, we
incurred expenses of approximately $52 million and $13 million, respectively,
related to these activities.
    The Plan provided for substantial completion in 1999. However, some
initiatives, including the consolidation of certain claim and


34


administrative processing functions and certain divestitures and market
realignment activities are requiring additional time in order to complete them
in the most effective manner and will extend through 2000. Based on current
facts and circumstances, we believe the remaining realignment reserve is
adequate to cover the costs to be incurred in executing the remainder of the
Plan. However, as we proceed with the execution of the Plan and more current
information becomes available, it may be necessary to adjust our estimates for
severance, lease obligations on exited facilities, and losses on disposition of
businesses.

The accrual for operational realignment and other charges is included in
Accounts Payable and Accrued Liabilities in the accompanying Consolidated
Balance Sheets. The table below summarizes accrued operational realignment and
other charges through December 31, 1999 (in millions):



                                                                  Severance and                  Disposition of
                                                      Asset       Outplacement    Noncancelable   Business and
                                                   Impairments        Costs     Lease Obligations  Other Costs       Total
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                  
Balance at December 31, 1997                      $      -         $    -           $   -           $    -         $    -
  Provision for Operational Realignment
   and Other Charges                                   430            142              82               71            725
  Additional Charges (Credits)                          21            (20)             (9)               8              -
  Cash Payments                                          -            (19)             (6)             (13)           (38)
  Noncash Charges                                     (451)             -               -                -           (451)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1998                             -            103              67               66            236
  Additional Charges (Credits)                           -            (22)             13                9              -
  Cash Payments                                          -            (46)            (18)             (45)          (109)
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1999                      $      -          $  35            $ 62            $  30           $127
- ------------------------------------------------------------------------------------------------------------------------------------


MEDICAL COSTS
During the second quarter of 1998, we recorded $175 million of medical cost
charges. Of this amount, $101 million related to Medicare contract losses, $19
million related to other increases to Medicare medical costs payable estimates,
and $55 million related to increases to commercial medical costs payable
estimates.
    The $101 million of contract losses were incurred in 13 of our 24 Medicare
markets. These plans contributed half of our annual Medicare premiums of $2.4
billion in 1998. Six of these markets were generally newer markets where we had
been unable to achieve the scale of operations necessary to achieve
profitability. In numerous counties in the other seven markets, we experienced
increased medical costs that exceeded the fixed Medicare premiums, which only
increased 2.5% on average.

(5) PROVISION FOR FUTURE LOSSES
In the second quarter of 1996, we recorded a provision to medical costs of $45
million to cover estimated losses we expected to incur through the remaining
terms of two large multi-year contracts in our St. Louis health plan. One of the
contracts expired in December 1998 and contained a premium rate increase cap of
2.5% per year. The other contract expires in December 2000 and generally limits
premium rate increases to annual Consumer Price Index adjustments. As of
December 31, 1999, there were 40,000 members covered under this contract. During
1999 and 1998, we utilized $6 million and $8 million, respectively, of the
accrual for future losses. At December 31, 1999, we had $7 million remaining in
the accrual for future losses, which is included in Medical Costs Payable in the
accompanying Consolidated Balance Sheets. We expect this accrual will be
sufficient to cover expected future losses from the remaining contract.

(6) AARP (AMERICAN ASSOCIATION OF RETIRED PERSONS)
On January 1, 1998, we entered into a 10-year contract to provide insurance
products and services to members of the AARP. Under the terms of the contract,
we are compensated for claim administration and other services as well as for
assuming underwriting risk. We are also engaged in product development
activities to complement the insurance offerings under this program. AARP has
also contracted with certain other vendors to provide other member and marketing
services. We report premium revenues associated with the AARP Program net of the
administrative fees paid to these vendors and an administrative allowance we pay
to AARP. Premium revenues from our portion of the AARP insurance offerings were
approximately $3.5 billion during both 1999 and 1998.
    The underwriting results related to the AARP business are recorded as an
increase or decrease to a rate stabilization fund (RSF). The primary components
of the underwriting results are premium revenue, medical costs, investment
income, administrative expenses, member service expenses, marketing expenses and
premium taxes. To the extent underwriting losses exceed the balance in the RSF,
we would be required to fund the deficit. Any deficit we fund could be recovered
by underwriting gains in future periods of the contract. The RSF balance was
$713 million as of December 31, 1999, and $509 million as of December 31, 1998,
and is included in Other Policy Liabilities in the accompanying Consolidated
Balance Sheets. We believe the RSF balance is sufficient to cover potential
future underwriting or other risks associated with the contract.
    We assumed the policy and other policy liabilities related to the AARP
program and received cash and premium receivables from the previous insurance
carrier equal to the carrying value of the liabilities assumed as of January 1,
1998. The following AARP Program-related assets and liabilities are included in
our Consolidated Balance Sheets (in millions):



                                  Balance as of December 31,
                                    1999            1998
- ---------------------------------------------------------------
                                          
Assets Under Management           $  1,307       $   1,155
Accounts Receivable               $    276       $     287
Medical Costs Payable             $    791       $     830
Other Policy Liabilities          $    713       $     509
Accounts Payable and
  Accrued Liabilities             $     79       $     103
- ---------------------------------------------------------------


    The effects of changes in balance sheet amounts associated with the AARP
Program accrue to AARP policyholders through the RSF balance. Accordingly, we do
not include the effect of such changes in our Consolidated Statements of Cash
Flows.


                                                                              35


(7) CASH, CASH EQUIVALENTS AND INVESTMENTS
As of December 31, the amortized cost, gross unrealized holding gains and
losses, and fair value of cash, cash equivalents, and investments were as
follows (in millions):



                                                                        Gross Unrealized  Gross Unrealized
1999                                                   Amortized Cost     Holding Gains    Holding Losses     Fair Value
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                 
Cash and Cash Equivalents                                  $1,605            $    -           $    -            $1,605
- ------------------------------------------------------------------------------------------------------------------------------------

Debt Securities - Available for Sale
   U.S. Government and Agencies                               726                 -              (18)              708
   State and State Agencies                                   555                 2               (9)              548
   Municipalities                                             527                 2               (9)              520
   Corporate                                                  797                 -              (22)              775
- ------------------------------------------------------------------------------------------------------------------------------------
Debt Securities - Available for Sale                        2,605                 4              (58)            2,551
Equity Securities - Available for Sale                        166               318                -               484
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments Available for Sale                        2,771               322              (58)            3,035
- ------------------------------------------------------------------------------------------------------------------------------------


Investments Held to Maturity
   U.S. Government and Agencies                                58                 -                -                58
   State and State Agencies                                     1                 -                -                 1
   Municipalities                                               1                 -                -                 1
   Corporate                                                   19                 -                -                19
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments Held to Maturity                             79                 -                -                79
- ------------------------------------------------------------------------------------------------------------------------------------
      Total Cash and Investments                           $4,455            $  322           $  (58)           $4,719
- ------------------------------------------------------------------------------------------------------------------------------------

1998
- ------------------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents                                  $1,644            $    -           $    -            $1,644
- ------------------------------------------------------------------------------------------------------------------------------------
Debt Securities - Available for Sale
   U.S. Government and Agencies                               668                10                -               678
   State and State Agencies                                   675                27                -               702
   Municipalities                                             535                20                -               555
   Corporate                                                  628                10               (2)              636
- ------------------------------------------------------------------------------------------------------------------------------------
Debt Securities - Available for Sale                        2,506                67               (2)            2,571
Equity Securities - Available for Sale                        105                 6                -               111
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments Available for Sale                        2,611                73               (2)            2,682
- ------------------------------------------------------------------------------------------------------------------------------------

Investments Held to Maturity
   U.S. Government and Agencies                                53                 -                -                53
   State and State Agencies                                    16                 -                -                16
   Municipalities                                               1                 -                -                 1
   Corporate                                                   17                 -                -                17
   Other                                                       11                 -                -                11
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments Held to Maturity                             98                 -                -                98
- ------------------------------------------------------------------------------------------------------------------------------------
      Total Cash and Investments                           $4,353            $   73           $   (2)           $4,424
- ------------------------------------------------------------------------------------------------------------------------------------




As of December 31, 1999, the contractual maturities of our investments in debt securities were as follows (in millions):

                                         Less Than         One to       More Than Five to    More Than
YEARS TO MATURITY                        One Year        Five Years         Ten Years        Ten Years           Total
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                
At Amortized Cost:
   Investments Available for Sale        $   202           $  851            $  835           $  717            $2,605
   Investments Held to Maturity               36               43                -               -                  79
- ------------------------------------------------------------------------------------------------------------------------------------
      Total Debt Securities              $   238           $  894            $  835           $  717            $2,684
- ------------------------------------------------------------------------------------------------------------------------------------

At Fair Value:
   Investments Available for Sale        $   202           $  841            $  816           $  692            $2,551
   Investments Held to Maturity               36               43               -                -                  79
- ------------------------------------------------------------------------------------------------------------------------------------
      Total Debt Securities              $   238           $  884            $  816           $  692            $2,630
- ------------------------------------------------------------------------------------------------------------------------------------


Gross realized gains of $9 million, $31 million and $37 million and gross
realized losses of $15 million, $5 million and $11 million were recognized in
1999, 1998 and 1997, respectively, and are included in Investment and Other
Income in the accompanying Consolidated Statements of Operations.
    During 1999, we contributed approximately 1.2 million shares of Healtheon
Corporation common stock valued at approximately $50 million to the UnitedHealth
Foundation. The difference between the realized gain of approximately $49
million on the stock transfer and the related contribution expense of $50
million was $1 million. The net effect of this transaction is included in
Investment and Other Income in the accompanying Consolidated Statement of
Operations for 1999.


36


(8) DEBT
Debt consisted of the following as of December 31(in millions):



                                   1999               1998
                            ----------------- ------------------
                             Carrying   Fair   Carrying    Fair
                               Value    Value    Value    Value
- ---------------------------------------------------------------
                                                
Commercial Paper              $ 591      $591      $ 59      $ 59

5.65% Senior Unsecured Note
  due December 1999               -         -       400       400

Floating Rate Note
  due November 2001             150       150         -         -

6.60% Senior Unsecured Note
  due December 2003             250       238       249       249
- ---------------------------------------------------------------------
Total Debt                    $ 991     $ 979     $ 708     $ 708

Less Current Portion           (591)     (591)     (459)     (459)
- ---------------------------------------------------------------------
Total Long-Term Debt          $ 400     $ 388     $ 249     $ 249
- ---------------------------------------------------------------------


As of December 31, 1999, we had $591 million of commercial paper outstanding,
with interest rates ranging from 5.5% to 6.3%. In November 1999, we also issued
a $150 million two-year floating rate note. The interest rate is adjusted
quarterly to the three-month LIBOR (London Interbank Offered Rate) plus 0.5%,
which was 6.65% as of December 31, 1999.
    The repayment of the $400 million unsecured note in December 1999 was
financed with the $150 million floating rate note and commercial paper issuance.
    In August 1999, we increased our commercial paper program and our supporting
credit arrangements with a group of banks to an aggregate of $900 million. The
supporting credit arrangements are comprised of a $300 million revolving credit
facility, expiring in December 2003, and a $600 million 364-day facility,
expiring in August 2000. We also have the capacity to issue approximately $180
million of extendible commercial notes (ECNs) under our ECN program. At December
31, 1999, we had no amounts outstanding under our credit facilities or ECN
program.
    Our debt agreements and credit facilities contain various covenants, the
most restrictive of which place limitations on secured and unsecured borrowings
and require us to exceed minimum interest coverage levels. We are in compliance
with the requirements of all debt covenants.
    Maturities of long-term debt for the years ending December 31 are as follows
(in millions):



   2000       2001        2002         2003         2004
- ------------------------------------------------------------

                                     
     -      $ 150           -        $ 250            -
- ------------------------------------------------------------


We made cash payments for interest of $43 million in 1999.

(9) CONVERTIBLE PREFERRED STOCK
In December 1998, we redeemed all 500,000 outstanding shares of 5.75% Series A
Convertible Preferred Stock (Preferred Stock). This Preferred Stock was issued
to certain former shareholders of The MetraHealth Companies, Inc. (MetraHealth)
as a portion of the total consideration of our 1995 acquisition of MetraHealth.
The redemption price per share of stock was $1,040 per share, or $520 million in
the aggregate, which included a redemption premium of $40 per share or $20
million in the aggregate. The redemption premium of $20 million is deducted from
Net Earnings (Loss) to arrive at Net Earnings (Loss) Applicable to Common
Shareholders in the accompanying Consolidated Statement of Operations for 1998.

(10) SHAREHOLDERS' EQUITY
REGULATORY CAPITAL AND DIVIDEND RESTRICTIONS
Our operations are conducted through our wholly-owned subsidiaries, which
include health maintenance organizations (HMOs) and insurance companies. HMOs
and insurance companies are subject to state regulations that, among other
things, may require the maintenance of minimum levels of statutory capital, as
defined by each state, and restrict the timing and amount of dividends and other
distributions that may be paid to their respective parent companies. Generally,
the amount of dividend distributions that may be paid by regulated insurance and
HMO companies, without prior approval by state regulatory authorities, is
limited based on the entity's level of statutory net income and statutory
capital and surplus.
    As of December 31, 1999, the Company's regulated subsidiaries had aggregate
statutory capital and surplus of approximately $1.5 billion, compared with their
aggregate minimum statutory capital and surplus requirements of approximately
$350 million.
    The National Association of Insurance Commissioners has adopted rules which,
to the extent that they are implemented by the states, will set new minimum
capitalization requirements for insurance companies, HMOs and other entities
bearing risk for health care coverage. The requirements take the form of
risk-based capital rules. The change in rules for insurance companies was
effective December 31, 1998. The new HMO rules are subject to state-by-state
adoption, but not many states had adopted the rules as of December 31, 1999. The
HMO rules, if adopted by the states in their proposed form, would significantly
increase the minimum capital required for certain of our subsidiaries. However,
we believe we can redeploy capital among our regulated entities to minimize the
need for incremental capital investment of general corporate financial resources
into regulated subsidiaries. As such, we do not anticipate a significant impact
on our aggregate capital or investments in regulated subsidiaries.

STOCK REPURCHASE PROGRAM
Under the board of directors' authorization, we are operating a common stock
repurchase program. Repurchases may be made from time to time at prevailing
prices, subject to certain restrictions on volume, pricing and timing. During
1999, we repurchased 19.4 million shares for an aggregate of $983 million. Since
inception of our stock repurchase activities in November 1997 and through
December 31, 1999, we have repurchased 30.9 million shares for an aggregate of
$1.4 billion. As of December 31, 1999, we have board of directors' authorization
to purchase up to an additional 13.9 million shares of our common stock.

DIVIDENDS
On February 10, 2000, the board of directors approved an annual dividend for
2000 of $0.03 per share to holders of common stock.

(11) STOCK-BASED COMPENSATION PLANS
We have stock and incentive plans (the Stock Plans) for the benefit of eligible
employees. As of December 31, 1999, the Stock Plans allowed for the future
granting of up to 7.2 million shares as incentive or non-qualified stock
options, stock appreciation rights, restricted stock awards and performance
awards to employees.
     In 1995, we adopted the Non-employee Director Stock Option Plans (the 1995
Plan) to benefit members of the board of directors who are not employees. As of
December 31, 1999, 479,000 shares were available for future grants of
non-qualified stock options under the 1995 Plan.
    Stock options are granted at an exercise price not less than the fair market
value of the common stock at the date of grant. They may be exercised over
varying periods and up to 10 years from the date of grant.

                                                                              37


A summary of the activity under our Stock Plans and the 1995 Plan during 1999,
1998 and 1997 is presented in the table below (shares in thousands):


                                                        1999                               1998                1997
                                           --------------------------   --------------------------    -------------------------
                                                     Weighted-Average            Weighted-Average              Weighted-Average
                                            Shares     Exercise Price    Shares   Exercise Price       Shares   Exercise Price
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                             
Outstanding at Beginning of Year            18,374        $  37         17,113         $  34          16,894      $  29
Granted                                      7,203        $  40          5,847         $  39           4,366      $  44
Issued in Acquisition                            -        $   -              -         $   -             507      $   4
Exercised                                   (2,333)       $  33         (3,379)        $  23          (3,095)     $  20
Forfeited                                   (1,204)       $  39         (1,207)        $  39          (1,559)     $  35
- ------------------------------------------------------------------------------------------------------------------------------------
Outstanding at end of year                  22,040        $  38         18,374         $  37          17,113      $  34
- ------------------------------------------------------------------------------------------------------------------------------------
Exercisable at end of year                   7,779        $  34          6,725         $  33           6,702      $  28
- ------------------------------------------------------------------------------------------------------------------------------------


The following table summarizes information about stock options outstanding at
December 31, 1999 (shares in thousands):


                                          Options Outstanding                               Options Exercisable
                                -------------------------------------------------      -----------------------------------
                                            Weighted-Average
                                   Number       Remaining        Weighted-Average             Number    Weighted-Average
Range of Exercise Prices       Outstanding   Option Term (years)  Exercise Price          Exercisable  Exercise Price
- ---------------------------------------------------------------------------------------------------------------------------
                                                                                         
$ 0 - $22                          1,591           2.9              $ 16                    1,529          $ 16
$23 - $35                          5,500           7.4              $ 33                    2,630          $ 33
$36 - $46                         11,834           8.5              $ 41                    2,996          $ 41
$47 - $55                          3,050           7.2              $ 50                      581          $ 50
$56 - $73                             65           8.5              $ 68                       43          $ 72
- ---------------------------------------------------------------------------------------------------------------------------
$ 0 - $73                         22,040           7.6              $ 38                    7,779          $ 34


We increased additional paid-in capital $23 million in 1999, $47 million in
1998, and $37 million in 1997 to reflect the tax benefit we received upon the
exercise of non-qualified stock options.
    We do not recognize compensation expense in connection with stock option
grants related to the Stock Plans and the 1995 Plan because we grant stock
options at exercise prices that equal or exceed the fair market value of the
stock at the time options are granted. If we had determined compensation expense
using fair market values for the stock options, net earnings (loss) per common
share would have been reduced to the following pro forma amounts:


                                      1999    1998     1997
- ----------------------------------------------------------------
Net Earnings (Loss) (in millions)
                                             
  As Reported                        $ 568   $(166)   $ 460
  Pro Forma                          $ 531   $(206)   $ 430
- ----------------------------------------------------------------
Diluted Net Earnings (Loss) Per
   Common Share
  As Reported                        $ 3.20  $(1.12)  $ 2.26
  Pro Forma                          $ 2.99  $(1.33)  $ 2.10
- ----------------------------------------------------------------
Weighted-Average Fair Value Per Share
  of Options Granted                 $  23   $  16    $  25
- ----------------------------------------------------------------


    To determine compensation cost under the fair value method, the fair value
of each option grant is estimated on the date of grant using the Black-Scholes
option-pricing model. Principal assumptions used in applying the Black-Scholes
model were as follows:



                                      1999    1998     1997
- -----------------------------------------------------------------
                                             
Risk-Free Interest Rate                 6.7%    5.2%     6.0%
Expected Volatility                      50%     46%      56%
Expected Dividend Yield                 0.1%    0.1%     0.1%
Expected Life in Years                  5.0     5.8      5.6
- -----------------------------------------------------------------


    Because we did not apply the fair value method of accounting to options
granted prior to January 1, 1995, the resulting pro forma compensation cost may
not be representative of what can be expected in future years.

EMPLOYEE STOCK OWNERSHIP PLAN
We have a non-leveraged Employee Stock Ownership Plan (ESOP) for the benefit of
all eligible employees. Company contributions to the ESOP are made at the
discretion of the board of directors. We made contributions to the ESOP of $5
million in 1999, $4 million in 1998 and $4 million in 1997.

EMPLOYEE STOCK PURCHASE PLAN
The Employee Stock Purchase Plan (ESPP) allows all eligible employees to
purchase shares of common stock on semiannual offering dates at a price that is
the lesser of 85% of the fair market value of the shares on the first day or the
last day of the semiannual period. Employee contributions to the ESPP were $19
million for 1999, $19 million for 1998 and $17 million for 1997. Through the
ESPP, we issued to employees 460,000 shares for 1999, 206,000 shares for 1998,
and 422,000 for 1997. As of December 31, 1999, 2.5 million shares were available
for future issue.


38


(12) INCOME TAXES
Components of the Provision (Benefit) for Income Taxes




Year Ended December 31, (in millions)            1999      1998    1997
- ----------------------------------------------------------------------------
                                                         
Current
  Federal                                          $ 264   $ 273    $ 171
  State                                               36      31       20
- ----------------------------------------------------------------------------

   Total Current                                     300     304      191
Deferred                                              26    (184)      91
- ----------------------------------------------------------------------------

   Total Provision                                 $ 326   $ 120    $ 282
- ----------------------------------------------------------------------------


Reconciliation of the Tax Provision at the U.S. Federal Statutory Rate to the
Provision for Income Taxes




Year Ended December 31, (in millions)        1999     1998    1997
- -----------------------------------------------------------------------
                                                     
Tax Provision (Benefit) at the
  U.S. Federal Statutory Rate                $ 313   $ (16)   $ 259
State Income Taxes,
  net of federal benefit                        24      19       21
Tax-Exempt Investment Income                   (16)    (25)     (21)
Non-Deductible Amortization                     25      24       21
Non-Deductible Asset
  Impairments                                    -     100        -
Non-Deductible Losses
  and Expenses                                   3      12        7
Charitable Contributions                       (16)      -        -
Other, net                                      (7)      6       (5)
- -----------------------------------------------------------------------
  Provision for Income Taxes                 $ 326   $ 120    $ 282
- -----------------------------------------------------------------------


Components of Deferred Income Tax Assets and Liabilities



December 31, (in millions)                        1999         1998
- ---------------------------------------------------------------------------
                                                        
Deferred Income Tax Assets
  Accrued Operational Realignment and Other
   Charges, and Restructuring Reserves          $  63           $ 138
  Unearned Premiums                                87              68
  Loss Reserve Discounting                         52              51
  Net Operating Loss Carryforwards                 43              34
  Bad Debt Allowance                               29              13
  Medical Costs Payable and
   Other Policy Liabilities                        19              22
  Intangible Amortization                           5               7
  Other                                            10               8
- ---------------------------------------------------------------------------
Subtotal                                          308             341
  Less: Valuation allowances                      (52)            (34)
- ---------------------------------------------------------------------------
Total Deferred Income Tax Assets                  256             307
- ---------------------------------------------------------------------------

Deferred Income Tax Liabilities
  Net Unrealized Gains on Investments
   Available for Sale                             (97)            (23)
  Capitalized Software Development                (54)            (31)
  Depreciation                                     (9)            (12)
  Other                                           -                (2)
- ---------------------------------------------------------------------------
Total Deferred Income Tax Liabilities            (160)            (68)
- ---------------------------------------------------------------------------
Net Deferred Income Tax Assets                  $  96           $ 239
- ---------------------------------------------------------------------------


Valuation allowances are provided when it is considered unlikely that deferred
tax assets will be realized. The valuation allowance primarily relates to future
tax benefits on certain purchased domestic and foreign net operating losses.
    We made cash payments for income taxes of $214 million in 1999, $245 million
in 1998 and $124 million in 1997.
    Consolidated income tax returns for fiscal years 1997 and 1996 are currently
being examined by the Internal Revenue Service. We do not believe any
adjustments that may result will have a significant impact on our consolidated
operating results or financial position.

(13) COMMITMENTS AND CONTINGENCIES
LEASES
We lease facilities, computer hardware and other equipment under long-term
operating leases that are noncancelable and expire on various dates through
2011. Rent expense under all operating leases was $129 million in 1999, $119
million in 1998 and $104 million in 1997.
    At December 31, 1999, future minimum annual lease payments under all
noncancelable operating leases were as follows (in millions):



  2000       2001      2002      2003      2004    Thereafter
- -----------------------------------------------------------------
                                       
  $102       $ 86      $ 72      $ 59      $ 48       $197
- -----------------------------------------------------------------


SERVICE AGREEMENTS
On June 1, 1996, and November 16, 1995, we entered into two separate contracts
with nonaffiliated third parties for information technology services, each with
an approximate term of 10 years. Under the terms of the contracts, the third
parties assumed responsibility for certain data center operations and support.
On September 19, 1996, we entered into a 10-year contract with a third party for
certain data network and voice communication services. Future payments under all
of these contracts are estimated to be $1.3 billion; however, the actual timing
and amount of payments will vary based on usage. Expenses incurred in connection
with these agreements were $172 million in 1999, $162 million in 1998 and $125
million in 1997.


                                                                              39


LEGAL MATTERS
Because of the nature of our business, we are routinely subject to suits
alleging various causes of action. Some of these suits may include claims for
substantial noneconomic or punitive damages. We do not believe that any such
actions, or any other types of actions, currently threatened or pending will,
individually or in the aggregate, have a material adverse effect on our
financial position or results of operations.
    On February 4, 2000, we entered into a settlement agreement with the
attorneys representing the plaintiff classes that assert claims under the U.S.
securities laws against UnitedHealth Group and certain of its current and former
officers and directors. The proposed settlement agreement is subject to court
approval. Our insurers have agreed to cover the cost of this settlement.

GOVERNMENT REGULATION
Our business is regulated on a federal, state and local level. The laws and
rules governing our business are subject to ongoing change, and latitude is
given to the agencies administering those regulations. Existing or future laws
and rules could affect how we do business, increase our health care and
administrative costs and capital requirements, and increase our obligations.
Further, we must obtain and maintain regulatory approvals to market many of our
products.
    State legislatures and Congress continue to focus on health care issues. In
Congress, managed health care has been the subject of proposed legislation. Any
such legislation could expand health plan liability and could have an impact on
the costs and revenues of our health plans. Proposed federal bills and
regulations may also impact other aspects of our business.
    We are also subject to various governmental reviews, audits and
investigations. However, we do not believe the results of any of the current
audits, individually or in the aggregate, will have a material adverse effect on
our financial position or results of operations.

CONCENTRATIONS OF CREDIT RISK
Investments in financial instruments such as marketable securities and
commercial premiums receivable may subject UnitedHealth Group to concentrations
of credit risk. Our investments in marketable securities are managed under an
investment policy authorized by the board of directors. These policies limit the
amounts that may be invested in any one issuer. Concentrations of credit risk
with respect to commercial premiums receivable are limited to the large number
of employer groups that constitute our customer base. As of December 31, 1999,
there were no significant concentrations of credit risk.


40


(14) SEGMENT FINANCIAL INFORMATION
Our accounting policies for business segment operations are the same as those
described in the Summary of Significant Accounting Policies (see Note 2).
Transactions between business segments are recorded at their estimated fair
value, as if they were purchased from or sold to third parties. All intersegment
transactions are eliminated in consolidation. In accordance with generally
accepted accounting principles, segments with similar economic characteristics
may be combined. The financial results of UnitedHealthcare and Ovations have
been combined in the Health Care Services segment column in the tables presented
below.



                                        Health Care                   Specialized                   Corporate
1999                                     Services       Uniprise     Care Services    Ingenix   and Eliminations Consolidated
- -----------------------------------------------------------------------------------------------------------------------------------
                                                                                               
Revenues - External Customers            $ 17,419       $  1,398       $   328       $    198       $      -       $ 19,343
Revenues - Intersegment                         -            445           393             59           (897)             -
Investment and Other Income                   162             22             5              1             29            219
- -----------------------------------------------------------------------------------------------------------------------------------
Total Revenues                           $ 17,581       $  1,865       $   726       $    258       $   (868)      $ 19,562
- -----------------------------------------------------------------------------------------------------------------------------------

Earnings (Loss) From Operations          $    578       $    222       $   128       $     25       $    (10)      $    943
Total Assets(1)                          $  7,198       $  1,411       $   365       $    683       $    453       $ 10,110
Net Assets(1)                            $  2,726       $    953       $   149       $    573       $    468       $  4,869

Purchases of Property and Equipment
   and Capitalized Software              $     69       $     71       $    28       $     28       $      -       $    196
Depreciation and Amortization            $     97       $     76       $    23       $     37       $      -       $    233
- -----------------------------------------------------------------------------------------------------------------------------------

 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Revenues - External Customers            $ 15,463       $  1,238       $   274       $    131       $      -       $ 17,106
Revenues - Intersegment                         -            357           339             52           (748)             -
Investment and Other Income                   149             29             5              1             65            249
- -----------------------------------------------------------------------------------------------------------------------------------
Total Revenues                           $ 15,612       $  1,624       $   618       $    184       $   (683)      $ 17,355
- -----------------------------------------------------------------------------------------------------------------------------------

Earnings From Operations(2)              $    503       $    161       $   109       $     20       $     65       $    858
Total Assets(1)                          $  6,652       $  1,499       $   231       $    472       $    555       $  9,409
Net Assets(1)                            $  2,512       $    940       $    89       $    388       $    555       $  4,484

Purchases of Property and Equipment
   and Capitalized Software              $     80       $     93       $    27       $     10       $      -       $    210
Depreciation and Amortization            $     90       $     59       $    14       $     22       $      -       $    185
- -----------------------------------------------------------------------------------------------------------------------------------

1997
- -----------------------------------------------------------------------------------------------------------------------------------
Revenues - External Customers            $ 10,103       $  1,182       $   255       $     23       $      -       $ 11,563
Revenues - Intersegment                         -            297           291             59           (647)             -
Investment and Other Income                   106             11             3              1            110            231
- -----------------------------------------------------------------------------------------------------------------------------------
Total Revenues                           $ 10,209       $  1,490       $   549       $     83       $   (537)      $ 11,794
- -----------------------------------------------------------------------------------------------------------------------------------

Earnings From Operations                 $    379       $    159       $    92       $      2       $    110       $    742
Total Assets(1)                          $  4,124       $  1,447       $   208       $    204       $  1,599       $  7,582
Net Assets(1)                            $  2,152       $  1,008       $   116       $    170       $  1,599       $  5,045

Purchases of Property and Equipment
   and Capitalized Software              $     80       $     79       $    23       $      5       $      -       $    187
Depreciation and Amortization            $     78       $     54       $    12       $      2       $      -       $    146
- -----------------------------------------------------------------------------------------------------------------------------------


(1) Total Assets and Net Assets exclude, where applicable, debt and accrued
interest of $1,002 million and $708 million, income tax-related assets of
$163 million and $266 million, and income tax-related liabilities of $167
million and $4 million as of December 31, 1999 and 1998, respectively. In
1997, Total Assets and Net Assets exclude, where applicable, redeemable
preferred stock of $500 million, income tax-related assets of $41 million,
and income tax-related liabilities of $52 million.

(2) For comparability purposes, 1998 results are adjusted to exclude $725
million of operational realignment and other charges and $175 million of charges
related to contract losses associated with certain Medicare markets and other
increases to commercial and Medicare medical costs payable estimates. Including
these charges, 1998 segment earnings (loss) from operations were as follows:




                                          Year Ended December 31, 1998
- ------------------------------------------------------------------------
                                       
Health Care Services                            $  (46)
Uniprise                                            10
Specialized Care Services                           14
Ingenix                                            (66)
- ------------------------------------------------------------------------
   Total Operating Segments                        (88)
Corporate                                           46
- ------------------------------------------------------------------------
   Total Consolidated                           $  (42)
- ------------------------------------------------------------------------



                                                                              41


(15) QUARTERLY FINANCIAL DATA (UNAUDITED)
The following is a summary of unaudited quarterly results of operations for the
years ended December 31, 1999 and 1998 (in millions, except per share data):



                                                                                    Quarters Ended
                                                               -------------------------------------------------------------------
                                                                 March 31         June 30    September 30       December 31
- ----------------------------------------------------------------------------------------------------------------------------------

                                                                                                      
1999
Revenues                                                       $  4,809        $  4,858         $  4,903          $ 4,992
Operating Expenses                                             $  4,588        $  4,633         $  4,664          $ 4,734
Net Earnings Applicable to Common Shareholders                 $    132        $    135         $    144          $   157(1)
Basic Net Earnings per Common Share                            $   0.73        $   0.78         $   0.83          $  0.93
Diluted Net Earnings per Common Share                          $   0.72        $   0.76         $   0.81          $  0.91(1)
- ----------------------------------------------------------------------------------------------------------------------------------

1998
Revenues                                                       $  4,115        $  4,235         $  4,360          $ 4,645
Operating Expenses                                             $  3,906        $  4,914         $  4,146          $ 4,431
Net Earnings (Loss)                                            $    132        $   (565)        $    135          $   132
Net Earnings (Loss) Applicable to Common Shareholders          $    125        $   (572)(2)     $    128          $   105(3)
Basic Net Earnings (Loss) per Common Share                     $   0.65        $  (2.96)        $   0.67          $  0.57
Diluted Net Earnings (Loss) per Common Share                   $   0.63        $  (2.96)(2)     $   0.66          $  0.57(3)
- ----------------------------------------------------------------------------------------------------------------------------------


(1) Includes a net permanent tax benefit primarily related to the contribution
of Healtheon Corporation common stock to the UnitedHealth Foundation. Excluding
this benefit, Net Earnings Applicable to Common Shareholders and Diluted Net
Earnings per Common Share were $152 million and $0.88 per share, respectively.

(2) Includes $725 million of operational realignment and other charges and $175
million of charges related to contract losses associated with certain Medicare
markets and other increases to commercial and Medicare medical costs payable
estimates. Excluding these charges, Net Earnings Applicable to Common
Shareholders would have been $132 million, or $0.66 Diluted Net Earnings per
Common Share.

(3) Includes $20 million convertible preferred stock redemption premium.
Excluding the effects of the convertible preferred stock redemption premium, Net
Earnings Applicable to Common Shareholders would have been $125 million, or
$0.67 Diluted Net Earnings per Common Share.


42


Report of Independent
Public Accountants


TO THE SHAREHOLDERS AND DIRECTORS
OF UNITEDHEALTH GROUP INCORPORATED:
We have audited the accompanying consolidated balance sheets of UnitedHealth
Group Incorporated (a Minnesota Corporation) and Subsidiaries as of December 31,
1999 and 1998, and the related consolidated statements of operations, changes in
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 1999. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
    We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
    In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of UnitedHealth Group
Incorporated and its Subsidiaries as of December 31, 1999 and 1998, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1999, in conformity with generally accepted
accounting principles.


ARTHUR ANDERSEN LLP
Minneapolis, Minnesota
February 10, 2000


Report of Management


The management of UnitedHealth Group is responsible for the integrity and
objectivity of the consolidated financial information contained in this annual
report. The consolidated financial statements and related information were
prepared according to generally accepted accounting principles and include some
amounts that are based on management's best estimates and judgments.
    To meet its responsibility, management depends on its accounting systems and
related internal accounting controls. These systems are designed to provide
reasonable assurance, at an appropriate cost, that financial records are
reliable for use in preparing financial statements and that assets are
safeguarded. Qualified personnel throughout the organization maintain and
monitor these internal accounting controls on an ongoing basis. Internal
auditors review the accounting practices, systems of internal control and
compliance with these practices and controls.
    The Audit Committee of the board of directors, composed entirely of
directors who are not employees of the Company, meets periodically and privately
with the Company's independent public accountants and its internal auditors, as
well as management, to review accounting, auditing, internal control, financial
reporting and other matters.


William W. McGuire, M.D.
Chairman and Chief Executive Officer

Stephen J. Hemsley
President and Chief Operating Officer

Arnold H. Kaplan
Chief Financial Officer


                                                                              43


Investor Information  UnitedHealth Group

MARKET PRICE OF COMMON STOCK
The following table shows the range of high and low sales prices for the
Company's stock as reported on the New York Stock Exchange Composite Tape for
the calendar periods shown through February 25, 2000. These prices do not
include commissions or fees associated with purchasing or selling this security.



                                 High               Low
- -------------------------------------------------------------
2000
First Quarter 2000
                                          
   Through February 25, 2000   $   64.69         $  50.56
- -------------------------------------------------------------
1999
First Quarter 1999             $   54.68         $  39.43
Second Quarter 1999            $   70.00         $  44.69
Third Quarter 1999             $   66.69         $  48.06
Fourth Quarter 1999            $   58.50         $  39.38
- -------------------------------------------------------------
1998
First Quarter 1998             $   66.81         $  46.56
Second Quarter 1998            $   73.94         $  61.25
Third Quarter 1998             $   66.50         $  29.56
Fourth Quarter 1998            $   50.62         $  33.38
- -------------------------------------------------------------

As of February 25, 2000, the Company had 11,271 shareholders of record.


ACCOUNT QUESTIONS
Our transfer agent, Norwest Bank Minnesota, N.A., can help you with a variety of
shareholder-related services, including:
    Change of address
    Lost stock certificates
    Transfer of stock to another person
    Additional administrative services
You can call our transfer agent at (800) 468-9716
or locally at (651) 450-4064.
You can write to them at:
    Norwest Shareowner Services
    P.O. Box 64854
    St. Paul, MN  55164-0854
Or you can e-mail our transfer agent at:
stocktransfer@norwest.com.

INVESTOR RELATIONS
You can contact UnitedHealth Group's Investor Relations group any time to order,
without charge, financial documents, such as the annual report and Form 10-K.
You can write to us at:
    Investor Relations
    UnitedHealth Group
    P.O. Box 1459, Route MN008-8092
    Minneapolis, MN  55440-1459

ANNUAL MEETING
We invite UnitedHealth Group shareholders to attend our annual meeting, which
will be held on Wednesday, May 10, 2000, at 3:00 p.m., at the Lutheran
Brotherhood Building, 625 Fourth Avenue South, Minneapolis, Minnesota.

DIVIDEND POLICY
UnitedHealth Group's dividend policy was established by the board of directors
in August 1990. The policy requires the board to review the Company's audited
consolidated financial statements following the end of each fiscal year and
decide whether it is advisable to declare a dividend on the outstanding shares
of common stock. Shareholders of record on April 1, 1999, received an annual
dividend for 1999 of $0.03 per share. On February 10, 2000, the Company's board
of directors announced an annual dividend for 2000 of $0.03 per share. The
dividend will be paid on April 19, 2000, to shareholders of record at the close
of business on April 3, 2000.

STOCK LISTING
The Company's common stock is traded on the New York Stock Exchange under the
symbol UNH.

INFORMATION ONLINE
You can view our annual report and obtain more information about UnitedHealth
Group and its businesses via the Internet. Our Internet address is:
www.unitedhealthgroup.com.


46


Corporate and Business Leaders


UNITEDHEALTH GROUP
WILLIAM W. MCGUIRE, M.D.
Chairman and
Chief Executive Officer

STEPHEN J. HEMSLEY
President and
Chief Operating Officer

ARNOLD H. KAPLAN
Chief Financial Officer

DAVID J. LUBBEN
General Counsel

ROBERT J. BACKES
Senior Vice President
Human Resources

JOHN S. PENSHORN
Director of Capital Markets
Communications and Strategy


UNITEDHEALTHCARE
JEANNINE M. RIVET
Chief Executive Officer


OVATIONS
LOIS QUAM
Chief Executive Officer


UNIPRISE
R. CHANNING WHEELER
Chief Executive Officer


SPECIALIZED CARE SERVICES
RONALD B. COLBY
Chief Executive Officer


INGENIX
KEVIN W. PEARSON
Chief Executive Officer
Ingenix Health Information

KEVIN H. ROCHE
Chief Executive Officer
Ingenix International


UNITEDHEALTH TECHNOLOGIES
JAMES B. HUDAK
Chief Executive Officer


44


Board of Directors


WILLIAM C. BALLARD, JR.
Of Counsel
Greenbaum,
Doll & McDonald
Louisville, Kentucky, law firm

RICHARD T. BURKE
Chief Executive Officer
and Governor
Phoenix Coyotes
National Hockey League team

STEPHEN J. HEMSLEY
President and
Chief Operating Officer
UnitedHealth Group

JAMES A. JOHNSON
Chairman and
Chief Executive Officer
Johnson Capital Partners
Private investment company

THOMAS H. KEAN
President
Drew University

DOUGLAS W. LEATHERDALE
Chairman and
Chief Executive Officer
The Saint Paul Companies, Inc.
Insurance and related services

WILLIAM W. MCGUIRE, M.D.
Chairman and
Chief Executive Officer
UnitedHealth Group


WALTER F. MONDALE
Partner
Dorsey & Whitney LLP
Minneapolis, Minnesota, law firm

MARY O. MUNDINGER
Dean and Professor, School of
Nursing, and Associate Dean,
Faculty of Medicine
Columbia University

ROBERT L. RYAN
Senior Vice President and
Chief Financial Officer
Medtronic, Inc.
Medical devices company

WILLIAM G. SPEARS
Managing Partner
W. G. Spears Grisant &
Brown LLC
New York City-based investment
counseling and management firm

GAIL R. WILENSKY
Senior Fellow
Project HOPE
International health foundation


AUDIT COMMITTEE

WILLIAM C. BALLARD, JR.
JAMES A. JOHNSON
DOUGLAS W. LEATHERDALE
ROBERT L. RYAN

COMPENSATION AND HUMAN
RESOURCES COMMITTEE
THOMAS H. KEAN
MARY O. MUNDINGER
WILLIAM G. SPEARS

COMPLIANCE AND GOVERNMENT
AFFAIRS COMMITTEE
RICHARD T. BURKE
WALTER F. MONDALE
GAIL R. WILENSKY

EXECUTIVE COMMITTEE
WILLIAM C. BALLARD, JR.
DOUGLAS W. LEATHERDALE
WILLIAM W. MCGUIRE, M.D.
WILLIAM G. SPEARS

NOMINATING COMMITTEE
WILLIAM C. BALLARD, JR.
THOMAS H. KEAN
DOUGLAS W. LEATHERDALE
WILLIAM W. MCGUIRE, M.D.
WILLIAM G. SPEARS


                                                                              45

EX-21

                                   EXHIBIT 21
                         SUBSIDIARIES OF THE REGISTRANT



                                                            State of
                Name of Entity                            Incorporation            Subsidiary of What Entity
- ----------------------------------------------------------------------------------------------------------------------------
                                                                        
Ingenix, Inc.                                             Delaware            UnitedHealth Group Incorporated
Ovations, Inc.                                            Delaware            United HealthCare Services, Inc.
Specialized Care Services, Inc.                           Delaware            United HealthCare Services, Inc.
Unimerica, Inc.                                           Delaware            United HealthCare Services, Inc.
Uniprise, Inc.                                            Delaware            United HealthCare Services, Inc.
UnitedHealth Networks, Inc.                               Delaware            United HealthCare Services, Inc.
UnitedHealthcare, Inc.                                    Delaware            United HealthCare Services, Inc.
UnitedHealth Capital, Inc.                                Delaware            United HealthCare Services, Inc
United HealthCare Services, Inc.                          Minnesota           UnitedHealth Group Incorporated
UnitedHealthcare International, Inc.                      Delaware            UnitedHealth Group Incorporated
United HealthCare Insurance Company                       Connecticut         UnitedHealth Group Incorporated

United HealthCare of Alabama, Inc.                        Alabama             United HealthCare Services, Inc.
United HealthCare of Arizona, Inc.                        Arizona             United HealthCare Services, Inc.
United HealthCare of Arkansas                             Arkansas            United HealthCare Services, Inc.
United HealthCare of California, Inc.                     California          MetraHealth Care Management Corporation
United HealthCare of Colorado, Inc.                       Colorado            MetraHealth Care Management Corporation
United HealthCare of Florida, Inc.                        Florida             United HealthCare Services, Inc.
United HealthCare of Georgia, Inc.                        Georgia             United HealthCare Services, Inc.
United HealthCare of Illinois, Inc.                       Delaware            United HealthCare Services, Inc.
United HealthCare of Kentucky, Ltd.                       Kentucky            United HealthCare Services, Inc.
United HealthCare of Louisiana, Inc.                      Louisiana           United HealthCare Services, Inc.
United HealthCare of Mississippi, Inc.                    Mississippi         United HealthCare Services, Inc.
United HealthCare of Nevada, Inc.                         Nevada              United HealthCare Services, Inc.
United HealthCare of New England, Inc.                    Rhode Island        United HealthCare Services, Inc.
UnitedHealthcare of New Jersey, Inc.                      New Jersey          MetraHealth Care Management Corporation
UnitedHealthcare of New York, Inc.                        New York            MetraHealth Care Management Corporation
UnitedHealthcare of North Carolina, Inc.                  North Carolina      United HealthCare Services, Inc.
United HealthCare of Ohio, Inc.                           Ohio                United HealthCare Services, Inc.
United HealthCare of Oregon, Inc.                         Oregon              United HealthCare Services, Inc.
United HealthCare of Tennessee, Inc.                      Tennessee           United HealthCare Services, Inc.
United HealthCare of Texas, Inc.                          Texas               United HealthCare Services, Inc.
United HealthCare of Utah                                 Utah                United HealthCare Services, Inc.
United HealthCare of Virginia, Inc.                       Virginia            United HealthCare Services, Inc.
United HealthCare of Washington, Inc.                     Washington          United HealthCare Services, Inc.
UnitedHealthcare of Wisconsin, Inc.                       Wisconsin           United HealthCare Services, Inc.
United HealthCare of the Mid-Atlantic, Inc.               Maryland            United HealthCare Services, Inc.
United HealthCare of the Midlands Network, Inc.           Nebraska            United HealthCare Services, Inc.
United HealthCare of the Midlands, Inc.                   Nebraska            United HealthCare Services, Inc.
United HealthCare of the Midwest, Inc.                    Missouri            United HealthCare Services, Inc.
UnitedHealthCare Plans of Puerto Rico, Inc.               Puerto Rico         United HealthCare Services, Inc.
United HealthCare Service Corp.                           New York            United HealthCare Services, Inc.

The Ovations Press, Inc.                                  Delaware            Ovations, Inc.

National Benefit Resources, inc.                          Minnesota           Specialized Care Services, Inc.
United Resource Networks, Inc.                            Delaware            Specialized Care Services, Inc.
Coordinated Vision Care, Inc.                             Delaware            United HealthCare Services, Inc.
Dental Benefit Providers, Inc.                            Delaware            United HealthCare Services, Inc.
United Behavioral Health                                  California          United HealthCare Services, Inc.

Clarite, LLC                                              Delaware            United HealthCare Insurance Company



MetraHealth Care Management Corporation                   Delaware            United HealthCare Insurance Company
The MetraHealth Employee Benefits Company, Inc.           Connecticut         United HealthCare Insurance Company
United HealthCare Insurance Company of Illinois           Illinois            United HealthCare Insurance Company
United HealthCare Insurance Company of New York           New York            United Healthcare Insurance Company
United HealthCare Insurance Company of Ohio               Ohio                United HealthCare Insurance Company

EX-23

                                                                     EXHIBIT 23

                   CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation of our
report dated February 10, 2000 incorporated by reference in this Form 10-K, into
the Company's previously filed Registration Statement File Nos. 2-95342,
33-3558, 33-22310, 33-27208, 33-36579, 33-50282, 33-67918, 33-68300, 33-75846,
33-79632,33-79634, 33-79636, 33-79638, 33-59083, 33-59623, 33-63885, 333-01527,
333-01915, 333-02525, 333-04875, 333-04401, 333-05717, 333-05291, 333-06533,
333-25923, 333-27277, 333-44569, 333-44613, 333-45319, 333-41661, 333-45269,
333-50461, 333-55777, 333-66013, 333-71007, 333-81337, 333-87243 and 333-90247.


                                                  /s/ ARTHUR ANDERSEN LLP


Minneapolis, Minnesota,
March 30, 2000

EX-24

                                                                      EXHIBIT 24


                               POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints William W. McGuire, M.D. Stephen J.
Hemsley, and David J. Lubben, and each of them, his or her true and lawful
attorneys-in-fact and agents, each actin alone, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities, to sign an Annual Report on Form 10-K
of UnitedHealth Group Incorporated, and any and all amendments thereto, and
to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting
authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, each acting alone, or
his or her substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.

Dated:  March 30, 2000

                                         
/s/ William C. Ballard, Jr.                 /s/ William W. McGuire, M.D.
- -----------------------------------         -----------------------------------
William C. Ballard Jr.                      William W. McGuire, M.D.

/s/ Richard T. Burke Sr.                    /s/ Walter F. Mondale
- -----------------------------------         -----------------------------------
Richard T. Burke Sr.                        Walter F. Mondale

/s/ Stephen J. Hemsley                      /s/ Mary O'Neil Mundinger
- -----------------------------------         -----------------------------------
Stephen J. Hemsley                          Mary O'Neil Mundinger

/s/ James A. Johnson                        /s/ Robert L. Ryan
- -----------------------------------         -----------------------------------
James A. Johnson                            Robert L. Ryan

/s/ Thomas H. Kean                          /s/ William G. Spears
- -----------------------------------         -----------------------------------
Thomas H. Kean                              William G. Spears

/s/ Douglas W. Leatherdale                  /s/ Gail R. Wilensky
- -----------------------------------         -----------------------------------
Douglas W. Leatherdale                      Gail R. Wilensky

EX-27

 


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