UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

~~June~~November 261, 2012

(Date of earliest event reported)

HealthMarkets, Inc.

(Exact name of registrant as specified in its charter)


Delaware	001-14953	75-2044750
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

9151 Boulevard 26, North Richland Hills, Texas		76180
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (817) 255-5200

(former name and address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.)

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 15.~~01.~~02 ~~Entry~~Departure ~~into~~of aDirectors ~~Material~~or ~~Definitive~~Certain ~~Agreement.~~Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

As(b) ~~previously~~and ~~disclosed~~(c) On November 1, ~~in March 2005~~2012, HealthMarkets, Inc. (the “Company”) ~~received~~appointed ~~notification~~R. ~~that~~Scott ~~the~~Donovan, 55, ~~Market~~as ~~Analysis Working Group of~~ the ~~NAIC~~Company’s ~~had~~Executive ~~chosen~~Vice ~~the~~President ~~states of Washington~~ and ~~Alaska~~ toChief ~~lead~~Financial aOfficer, ~~multi-state~~effective ~~market~~immediately. ~~conduct~~Mr. Donovan ~~examination~~will ~~(the~~also ~~“Multistate~~serve ~~Examination”)~~as of the ~~Company’s~~Executive ~~insurance~~Vice ~~subsidiaries,~~President ~~The MEGA Life~~ and ~~Health~~Chief ~~Insurance~~Financial ~~Company~~Officer, ~~Mid-West~~and ~~National~~as ~~Life~~a ~~Insurance~~member ~~Company~~ of ~~Tennessee~~the ~~and~~Board ~~The Chesapeake~~of ~~Life~~Directors, ~~Insurance~~of the Company’s ~~(the~~insurance ~~“Insurance Companies”)~~subsidiaries. OnIn ~~May 29~~addition, ~~2008,~~Mr. Donovan ~~the~~will ~~Insurance~~serve ~~Companies~~as ~~entered~~Executive ~~into~~Vice aPresident ~~regulatory~~and ~~settlement~~Chief ~~agreement~~Financial ~~(“RSA”)~~Officer ~~with~~of the ~~states~~Company’s ofinsurance ~~Washington~~agency ~~and Alaska~~subsidiary, asInsphere ~~lead~~Insurance ~~regulators~~Solutions, ~~and three other states – Oklahoma, Texas and California (collectively, the “Monitoring Regulators”)~~Inc.

~~The~~Mr. Donovan ~~RSA provided,~~replaces ~~among~~Derrick ~~other~~A. ~~things~~Duke who, ~~for~~upon ~~a monetary penalty in the amount of $20~~Mr. ~~million~~Donovan’s appointment, astepped ~~potential~~down ~~additional~~from ~~monetary~~his ~~penalty~~position upas ~~to an additional $10 million if~~ the ~~Insurance~~Company’s ~~Companies~~Interim Chief ~~were~~Financial ~~found~~Officer. ~~not~~Mr. Duke tohad ~~comply~~been ~~with~~serving ~~the~~in ~~requirements~~this ofrole ~~the~~on ~~RSA when re-examined, and~~ an ~~“Outreach~~interim ~~Program”~~basis, tountil bea ~~administered~~permanent byChief ~~the~~Financial ~~Insurance~~Officer ~~Companies~~was ~~with~~in ~~certain~~place. ~~existing insureds~~Mr. Duke ~~The~~continues ~~Insurance~~to ~~Companies’~~serve ~~compliance~~as ~~with~~ the ~~RSA~~Company’s ~~was~~Senior ~~monitored~~Vice ~~by the Monitoring Regulators~~President, ~~through~~Treasurer ~~semi-annual reports~~and ~~from the~~ Chief Insurance ~~Companies.~~Operating ~~The Monitoring Regulators were responsible for determining the amount of the additional penalty for any failure to comply with the requirements of the RSA through a re-examination~~Officer.

~~Following~~Mr. Donovan ahas ~~re-examination~~extensive bysuccessful experience in the ~~Monitoring~~insurance ~~Regulators~~industry, honing his skills over a thirty year career that includes senior management roles with a number of insurance companies. From 1996 to ~~assess~~1999, Mr. Donovan served as Senior Vice President and Chief Financial Officer of the Coregis Insurance ~~Companies’~~Group, ~~performance~~a ~~with~~wholly ~~respect~~owned tosubsidiary ~~RSA~~of ~~Standards~~GE ~~for~~Capital ~~Performance~~Corporation. ~~Measurement,~~From ~~effective~~1999 ~~June 26,~~to ~~2012~~2002, ~~the~~he ~~Insurance~~served ~~Companies~~as ~~entered~~Managing ~~into~~Director anand ~~agreement~~Chief ~~with~~Financial ~~the~~Officer ~~Monitoring~~of ~~Regulators~~TIG ~~which~~Insurance ~~completes~~Group, before being promoted to President and ~~closes~~Chief ~~the~~Operating ~~Multistate~~Officer ~~Examination~~of ~~(the~~TIG ~~“Agreement”)~~Insurance Group, a position he held from 2002 through 2006. ~~The~~In ~~Agreement~~2006, ~~includes~~Mr. Donovan joined OdysseyRe Holdings Corp. as Executive Vice President and Chief Financial Officer, ~~in Attachment~~a Aposition tohe ~~the~~held ~~Agreement~~until 2010, ~~the~~at ~~re-examination~~which ~~report~~time ~~(the~~he ~~“Second~~became ~~Examination~~Executive ~~Report”)~~Vice President of Odyssey Reinsurance Company.

The ~~Agreement~~Company’s ~~provides, among~~related ~~other~~press ~~things,~~release is filed as ~~follows:~~Exhibit 99.1 hereto and is incorporated herein by reference.

1.(e) ~~With~~On ~~respect~~November 1, to2012, the ~~potential~~Company ~~additional~~entered ~~penalty~~into ofan upemployment toagreement ~~$10 million for failure to comply~~ with ~~the~~Mr. Donovan ~~requirements of the RSA when re-examined, the Insurance Companies will pay a monetary penalty of $325,000~~ (the “~~Penalty~~Employment Agreement”), governing ~~to settle~~ the ~~re-examination,~~terms ~~including~~of ~~the~~his ~~re-examination~~employment ~~findings~~as ~~described~~Executive inVice ~~the~~President ~~Second~~and ~~Examination~~Chief ~~Report~~Financial Officer.

2. The ~~Penalty~~Employment Agreement is ~~payable~~effective immediately ~~within~~and ~~ten~~has ~~business~~an ~~days~~initial term of ~~the~~three ~~effective~~years. ~~date~~Thereafter, of the Employment Agreement. ~~The~~will ~~Penalty~~automatically ~~will~~renew befor ~~paid~~successive ~~consistently~~one-year ~~with~~terms unless either party notifies the ~~pro~~other ~~rata~~that ~~state~~it ~~allocation~~does ~~used~~not wish to ~~pay~~renew the ~~original~~Employment ~~RSA penalty~~Agreement.

3Mr. Donovan ~~The~~will ~~Penalty~~receive isan annual base salary of $500,000 and he will participate in the ~~sole~~Company’s annual incentive program on terms and ~~exclusive~~conditions ~~remedy~~no ~~provided~~less favorable than those available to similarly situated executives of the ~~Participating~~Company, ~~Regulators~~with ~~(defined~~a astarget ~~each~~bonus opportunity of ~~the~~100% ~~state~~of ~~insurance~~Mr. Donovan’s ~~regulators~~annual ~~who~~base ~~signed~~salary. ~~onto~~For the ~~RSA~~Company’s fiscal year 2012, Mr. Donovan ~~other~~will ~~than~~be entitled to a pro-rated annual incentive award (at the ~~Monitoring~~greater ~~Regulators~~of actual performance (as determined by the Executive Compensation Committee of the Company’s Board of Directors (the “Committee”)) ~~with~~and ~~regard~~target level) and for the Company’s fiscal year 2013 Mr. Donovan will be entitled to ~~non-compliance~~an annual incentive award at the greater of actual performance (as determined by the ~~Insurance~~Committee) ~~Companies~~and ~~with~~target level. For the ~~RSA~~Company’s ~~Standards~~fiscal ~~for~~year ~~Performance~~2014 ~~Measurement~~and thereafter during the employment term, asMr. Donovan ~~reflected~~will continue to participate in the ~~Second~~Company’s ~~Examination~~annual ~~Report~~incentive program with no guaranteed minimum bonus.

4The Company has agreed to grant Mr. Donovan Bya ~~entering~~stock ~~into~~option ~~the~~to ~~Agreement~~purchase 250,000 shares of the Company’s ~~Monitoring~~Class A-1 ~~Regulators~~common ~~and~~stock ~~the~~(“Shares”), ~~Insurance~~as ~~Companies~~well ~~intend~~as to120,000 ~~resolve~~restricted ~~all~~Shares, ofin ~~the~~each ~~findings~~case inunder the ~~Second~~Company’s ~~Examination~~2006 ~~Report,~~Management ~~including~~Option ~~any~~Plan. ~~violations~~The ofstock ~~law~~options and ~~regulations~~restricted Shares granted to Mr. Donovan will vest in equal quarterly installments, ~~and~~through December 1, 2017, subject to ~~conclude~~Mr. Donovan’s ~~and~~continued ~~close~~employment ~~all~~through ~~proceedings~~the ~~related~~applicable vesting date (subject to earlier vesting in the ~~Multistate~~case ~~Examination~~of certain qualifying terminations or a Change of Control (as defined in the Employment Agreement)).

5.The ~~Each~~Employment ~~Signatory~~Agreement ~~Regulator~~provides ~~(defined~~for asa ~~the~~$250,000 ~~Monitoring~~cash ~~Regulators~~sign-on ~~and~~bonus ~~the~~to ~~Participating~~be ~~Regulators~~paid ~~collectively)~~to Mr. Donovan ~~releases~~as ~~and~~soon ~~forever~~as ~~discharges~~practicable following the ~~Insurance~~effectiveness ~~Companies~~of ~~and~~the ~~all~~Employment ~~officers,~~Agreement. ~~directors,~~In ~~agents~~the ~~and~~event ~~representatives~~that ~~from~~Mr. Donovan’s ~~all~~employment ~~civil~~is orterminated ~~administrative~~by ~~causes,~~the ~~actions,~~Company ~~claims,~~for ~~damages,~~“Cause” ~~fines,~~(as ~~sanctions,~~defined ~~losses,~~in ~~demands or other liabilities that~~ the ~~Signatory~~Employment ~~Regulators~~Agreement) ~~could pursue~~ or ~~seek~~he resigns ~~for~~without ~~matters~~“Good ~~set~~Reason” ~~forth~~(as defined in the ~~RSA,~~Employment Agreement) during the ~~Scope~~12-month ofperiod ~~Examination~~following ~~set~~the ~~forth~~start indate, ~~the~~Mr. Donovan ~~Second~~will ~~Examination~~be ~~Report,~~required ~~and~~to ~~the~~repay ~~findings~~a ~~contained~~pro-rated inportion ~~the~~of ~~Second~~his ~~Examination~~sign-on ~~Report~~bonus.

~~The~~During ~~foregoing~~the ~~summary~~term isof ~~qualified in its entirety by reference to~~ the ~~RSA~~Employment Agreement, aMr. Donovan ~~copy~~will ofalso ~~which~~be ~~was~~eligible ~~filed~~to asparticipate ~~Exhibit~~in ~~10.1 to~~ the Company’s ~~Current~~equity ~~Report~~plan onand ~~Form~~any ~~10-Q for the quarterly period ended~~other ~~June 30,~~incentive ~~2008, File No. 001-14953,~~ and ~~the~~deferred ~~Agreement,~~compensation aplans ~~copy~~and ofprograms ~~which~~as iswell ~~attached hereto~~ as ~~Exhibit 10.1,~~any ~~each~~employee ofbenefit ~~which~~plans ~~are~~and ~~incorporated~~perquisite ~~herein by reference~~programs.

If Mr. Donovan’s employment is terminated by the Company without Cause, by Mr. Donovan for Good Reason or due to Mr. Donovan’s death or “Disability” (as defined in the Employment Agreement), Mr. Donovan will be entitled to the following payments and benefits:

•

an amount equal to the sum of (i) one years’ base salary and (ii) one times Mr. Donovan’s target bonus for the year of termination of employment, payable in equal installments, in accordance with the Company’s payroll schedule, for the duration of the payment period (or in a lump sum on the 65^th day following the date of his termination of employment if the termination of employment occurs within one year following a Change of Control);

•

if the termination occurs after the last day of the first quarter of any fiscal year, a pro-rata bonus, based upon the achievement of the applicable performance goals and the number of days Mr. Donovan was employed in the applicable performance period;

•

12 months of continued health and life insurance benefits; and

•

the portion of any outstanding equity award which vests solely based on time/service that would have vested if Mr. Donovan had remained employed through the first anniversary of the date of termination will vest on the date of termination and all vested options will remain exercisable until the earlier of the expiration of the original term or the first anniversary of the date of termination.

In the event that Mr. Donovan becomes subject to any golden parachute excise taxes under Section 4999 of the Internal Revenue Code, he will be entitled to additional payments such that he is placed in the same after tax position as if no excise tax had been imposed, except that he will not receive the gross-up payment and the payments under the Employment Agreement will be reduced if the aggregate payments that Mr. Donovan is entitled to receive exceed by 10 percent or less the maximum amount he could receive without being subject to the excise tax.

While employed by the Company and for one year following his termination of employment, Mr. Donovan will be subject to certain non-competition and non-solicitation restrictions and will be subject to ongoing confidentiality restrictions. If Mr. Donovan breaches the non-compete, the non-solicitation or confidentiality covenants in the Employment Agreement, the Company will not be obligated to make additional payments of the cash severance or the pro-rata bonus and will not be obligated to provide Mr. Donovan and his eligible dependents with any continued health and life insurance benefits. Mr. Donovan will also be required to repay the Company any cash severance amounts or pro-rata bonus amounts previously paid to him.

The foregoing summary is qualified in its entirety by reference to the Employment Agreement, a copy of which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.

Item 9.01

Financial Statements and Exhibits

(d)

Exhibits

10.1 Agreement Completing and Closing Multistate Examination.


Exhibit Number		Exhibit Description

10.1		Employment Agreement, effective as of November 1, 2012, between HealthMarkets, Inc. and R. Scott Donovan.

99.1		Press release issued by HealthMarkets, Inc. on November 5, 2012

SIGNATURE

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

HEALTHMARKETS, INC. By: /sS/ ~~Kenneth~~KENNETH J. ~~Fasola~~FASOLA Name: Kenneth J. Fasola Title: President & Chief Executive Officer

Dated: ~~June~~November 295, 2012

~~Exhibit Index~~EXHIBIT INDEX

Exhibit No.		Exhibit
Exhibit Number		Exhibit Description
10.1		Employment Agreement, ~~Completing~~effective as of November 1, 2012, between HealthMarkets, Inc. and ~~Closing~~R. ~~Multistate~~Scott ~~Examination~~Donovan.
99.1		Press release issued by HealthMarkets, Inc. on November 5, 2012

Filing Compare · HealthMarkets, Inc.