Exhibit 10.6

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MANAGEMENT INCENTIVE COMPENSATION PLAN
FY 2005

You have been selected to participate in the Sierra Health Services, Inc.
(hereafter referred to as "the Company") Management Incentive Compensation Plan.
The Management Incentive Compensation Plan is intended to reward key employee
performance for assisting the Company in achieving financial success and
maximizing shareholder value. Your participation in the Plan is subject to the
Terms and Conditions, contained herein, and being employed in an eligible
position as determined annually by the Company. The Plan is designed to reward
Participants for meeting specific individual and Company objectives, and for
assisting the Company in achieving specific financial objectives.

TARGET PAYOUT:

Participants will be eligible for an incentive payout expressed as a percent of
base annual salary. If 100% of all objectives are achieved, Participants will be
eligible for the following awards as a percent of the Participant's base annual
salary:

Corporate Staff

 

Subsidiary/Division Staff

CEO/Chief of Staff

100%

 

President, Subsidiary
Subsidiary COO

40% - 50%

Vice President

50% - 90%

 

Vice President

25% - 50%

Assistant Vice President

35% - 40%

 

Director, AVP

15% - 35%

Director

25% - 35%

     

PLAN DESIGN

*Corporate Staff

 

MHD

         

SHS Financial Performance

65%

 

SHS Financial Performance

20%

Corp Personnel Financial Performance

20%

 

MHD Financial Performance

65%

Quality Objectives

10%

 

Quality Objectives

10%

Turnover Objectives

5%

 

Turnover Objectives

5%

Total

100%

 

Total

100%

 

*See page 3 for former W/C employee bonus Calculations.

 

CEO'S CHALLENGE

This year, the President of the MHD Division and the Corporate staff will have a
special objective added to the Management Incentive Compensation Plan. The
successful achievement of this challenge objective will result in that
subsidiary or division becoming eligible for an extra 10% payment pool for
selected Participants after all other calculations have been finalized.

INDIVIDUAL PERFORMANCE/CONTRIBUTION

The Individual Performance Objective/Contribution will be a multiplier times the
sum of the above criteria. The total of the above criteria will be multiplied by
0% to a maximum of 125%.

Example:

Director at $100,000 salary, eligible for 25% Incentive

SHS Performance

98%

Times 20% weight

=

.196

Subsidiary Performance

95%

Times 65% weight

=

.618

Quality Objective

100%

Times 10% weight

=

.100

Turnover Objective

100%

Times 5.0% weight

=

.05

       

.964

Individual Performance/Contribution

   

*1.05

   

= 1.01 X $100,000 X 25%

   

  = $25,250.00

 

There will be a required distribution of individual performance/contribution
results in FY 2005. No greater than the following percentages of the Corporate
group's or Division's Participant's ratings for individual objectives may be
achieved:

                    Rating

Maximum Percent

 * 115% -125%

10% of eligible Participants

 * 105% -114%

20% of eligible Participants

 * 95% -104%

40% of eligible Participants

 * 85% - 94%

20% of eligible Participants

 * 75% - 84%

7%-10% of eligible Participants

 * 50% - 74%

Up to 3% of eligible Participants

 * < 50% will be considered unsatisfactory performance such that Participants
   may be ineligible for a MIP Incentive as determined in its sole discretion,
   by the Incentive Plan Compensation Committee.

 Notes:

The bonus of certain employees who were previously employed with the Workers
Compensation Division will be subject to such additional performance or
financial factors as determined by the Chief Executive Officer of Sierra Health
Services and/or the Incentive Plan Compensation Committee. The quality
objectives for these individuals are that there will be no material breach of
contractual obligations by Sierra either due to Sierra's actions or inaction on
the part of Sierra with respect to the contract with Folksamerica (5%) or GAB
Robins (5%).
 * Subsidiary Financial Performance is defined as Operating Income, before
   management fees and including eligible bonus expense, expressed as a percent
   of targeted Operating Income. Subsidiaries' financial Cash Flow will be
   expressed as a percent of Target Cash Flow. The Company's financial objective
   is actual consolidated Net Income compared to Net Income target. Corporate
   personnel will be measured on both NIAT vs. Plan and Corporate Expenses vs.
   Plan. All figures are expressed as actual results divided by planned
   financial results, expressed as a percent. The Company's Chief Financial
   Officer will determine the interpretation of Operating Income, Taxes,
   Depreciation Expense, and Cash Flow. Disputes regarding Plan definitions will
   be resolved as determined by the Incentive Plan Compensation Committee in
   their sole discretion.

 * No payments will be made under the Plan to the extent that such payments
   would place the Company in violation of any laws, regulations or bank
   covenants under its credit facility.

POOL THRESHOLD & SIZE

An incentive pool will be established and used as the basis for payouts under
the Plan based upon the degree to which SHS achieves specific financial
objectives. The following charts summarize the 'Company' and 'Subsidiary or
Division' payout levels when the specified level of financial performance has
been achieved. If a Division or subsidiary achieves Plan, but the Company fails
to achieve the minimum Threshold, the region or subsidiary's financial payout
will be placed at 25% of the level for which the region or subsidiary would have
been eligible. The Company's Chief Executive Officer has the discretion to
review and alter the threshold based on specific business circumstances and
conditions. For the SHS Company and individual Subsidiary/Division payout
schedules, refer to the appropriate financial matrices.

 COMPANY/SUBSIDIARY ACHIEVEMENT

Financial thresholds, targets and high achievement levels (achievement over
100%) for payouts will be determined for the Corporation, and
divisions/subsidiaries based upon annual financial results as determined by the
Incentive Plan Compensation Committee and the Chairman & CEO. Payouts in the
Matrices are based on the achievement of sample financial results. Actual Plan
payments will be interpolated for actual results.

COMPANY OBJECTIVES

The Chairman & CEO and the Chief of Staff will establish Company-wide objectives
and the appropriate weight that each Participant is responsible for assisting
the Company to achieve. Categories may include, but are not limited to: quality
of care, quality of service, turnover rates, growth objectives, expense
management, specific management objectives, community or public relations, or
specific individual competency development objectives.

Accomplishment of Operating Segment Objectives

Accomplishment of Operating Segment (MHD) objectives may range from 0% to 100%
of the Participant's target. Payouts for Company objectives will be uniform in
size for each Operating Segment objective. This means that all Participants of a
particular Operating Segment are eligible for the same percentage payout based
upon the accomplishment of each of their objectives. The Incentive Plan
Compensation Committee, in its sole discretion, will determine the extent to
which the Operating Segment objectives have been achieved.

The FY 2005 Targeted Operating Segment Objectives are:

    Quality of Service & Quality of Care
    
    Managed Care Division
    
    :
    
    
    
    The criteria for this objective are the sum of the Quality Standards score
    (75 points possible) plus the HEDIS score (12.5 points possible) and the
    customer satisfaction score (12.5 points possible).
    
    
    
    Percent of Bonus Achieved
    
    
    
    Range of HEDIS/CAHPS
    + Standard Score
    
    
    
    Percent Increase
    
    
    
    150%
    
    86.1-100.0
    
    Achieve "Excellent" Status
    
    125%
    
    85.9+86.0
    
    Achieve "Commendable" Status
    
    120%
    
    85.7-85.8
    
    Achieve "Commendable" Status
    
    115%
    
    85.5-85.6
    
    Achieve "Commendable" Status
    
    110%
    
    85.3-85.4
    
    Achieve "Commendable" Status
    
    105%
    
    85.1-85.2
    
    Achieve "Commendable" Status
    
    100%
    
    80.0-85.0
    
    Achieve "Commendable" Status
    
    50%
    
    65.0-79.99
    
    "Accredited" Status
    
    0%
    
    <65.0
    
    Falls Below "Accredited" Status
    
    Employee Turnover

    Each Business Unit (e.g. BHO, FHH, SMA) will use their actual FY 2004
    voluntary turnover as the baselines from which the objectives will be
    determined.

    Business Unit
    
    
    
    2005 Objective
    
    
    
    2004 Actual
    
    Voluntary
    
    
    
    BHO
    
    13.4%
    
    14.1%
    
    FHH
    
    33.1%
    
    36.8%
    
    FHS
    
    12.2%
    
    12.8%
    
    THC
    
    13.6%
    
    15.1%
    
    HPN
    
    15.4%
    
    16.2%
    
    SHL
    
    9.3%
    
    9.8%
    
    SHO
    
    11.9%
    
    12.5%
    
    SMA
    
    19.0%
    
    21.1%
    
    SNA
    
    22.5%
    
    25.0%
    
    SHS
    
    12.3%
    
    12.9%
    
    MHD
    
    16.6%
    
    18.4%

    Turnover: If the turnover objective is achieved, the Business Unit will
    receive 5%. If the turnover objective is exceeded by greater than five
    percent, the Business Unit will receive an additional 5%.

     INDIVIDUAL OBJECTIVES

    Payment of individual objectives may range from 0% to 125% of the
    Participant's Individual Objective target. This number will be used as a
    multiplier based upon the sum of the financial and other company objectives
    have been achieved versus planned goals. Any individual rating less than 50%
    will be considered unsatisfactory performance, and the Participant may be
    ineligible for any incentive payment. The Division senior executive or
    corporate Vice President will recommend a percentage to the Incentive Plan
    Compensation Committee (whose membership is defined in the Plan document).
    However, the Incentive Plan Compensation Committee will, in its sole
    discretion, determine the percentage award for the Participant. Individual
    objectives may include, but are not limited to: meeting specified revenue,
    market penetration, geographic business expansion goals, cost targets and
    goals relating to acquisitions or divestitures.

     MINIMUM PERFORMANCE

    To be eligible, a participant must have achieved at least a 'successful'
    performance review in his/her most recent formal or informal review and may
    not be on any Performance Improvement Plan on the date of the payout. A
    Participant who has successfully completed a Performance Improvement Plan
    shall have his/her incentive plan payout prorated by the length of time on
    the Performance Improvement Plan.

     
    
    PLAN DOCUMENT FOR
    
    THE FY 2005 MANAGEMENT INCENTIVE COMPENSATION PLAN
    
    

    TERMS & CONDITIONS

     1. The Plan shall be known as "The FY 2005 Sierra Health Services Inc.
        (hereafter known as the "Company") Management Incentive Compensation
        Plan".
        
        
    
     2. Plan Year will be January 1, 2005 - December 31, 2005.
        
        
    
     3. Participants are defined as active eligible employees as defined by the
        Compensation Committee, Sierra Health Services, Inc. The Incentive Plan
        Compensation Committee is comprised of the Chief of Staff, SHS, the Vice
        President of Human Resources, the Senior Vice President Legal and
        Administration for Sierra Health Services, the Chief Financial Officer
        for Sierra Health Services and the President of the Managed Healthcare
        Division.
        
        
        
        A. The participant must be employed at Sierra Health Services or one of
           its Subsidiaries.
           
           
        
        B. If the employee is no longer employed by or has given notice of
           intent to terminate from Sierra Health Services on the date of the
           Payout, he/she will be ineligible for a bonus payout unless otherwise
           recommended by the Incentive Plan Compensation Committee.
           
           
        
        C. Participants who are not in an eligible position for the full plan
           year may receive a prorated bonus, at the Incentive Plan Compensation
           committee's discretion, if all other eligibility and performance
           requirements are otherwise satisfied.
           
           
        
        D. The participant's performance appraisal rating for the plan year must
           be at least a "Successful" to be eligible for a payout under the
           Plan.

     

    PLAN DOCUMENT FOR
    THE 2005 MANAGEMENT INCENTIVE COMPENSATION PLAN
    TERMS & CONDITIONS - CONTINUED

    
 1. Payment under this plan, if any, shall be based on the employee's
    accomplishment of the specified objectives, subject to the approval of the
    Incentive Plan Compensation Committee and the Compensation Committee of the
    Sierra Health Services' Board of Directors. Accomplishment of individual
    objectives shall fall within the attached bonus range and may exceed or may
    be less than 100% of target and shall be determined by Incentive Plan
    Compensation Committee. The Incentive Plan Compensation Committee reserves
    the right to offer Sierra Health Services stock options or other equity to
    Participants up to 50% of value of their incentive payment.
    
    

 2. All payouts under this Plan, including those for 16(b) employees, are
    subject to prior approval by the Compensation Committee of the Company's
    Board of Directors.
    
    

 3. Participant's rights under the Plan may not be assigned or transferred in
    any way.
    
    

 4. The Management Incentive Compensation Plan may be amended, modified,
    suspended or terminated by the Company at any time without prior consent by
    or notice to employees. The Company at its sole discretion without prior
    consent or notice may change objectives at any time for eligible
    participants.
    
    

 5. The Plan shall be unfunded. The Company shall not be required to establish
    any special or separate fund or to make any other segregation of assets to
    assure the payment of the amounts under the Plan. Rights to the payment of
    amounts under the Plan shall be no greater than the rights of the Company's
    general creditors.
    
    

 6. Nevada State law governs the validity, construction, interpretation,
    administration and effect of the Plan, and the substantive laws, except for
    the choice of law, and rules of the State of Nevada shall govern rights
    relating to the Plan. If any part of this Plan is ruled to be invalid by any
    judicial body, the remainder of the document shall continue to be in force.
    
    

 7. All applicable employment, benefit and tax deductions will be withheld from
    the incentive payout.

PLAN DOCUMENT FOR
THE 2005 MANAGEMENT INCENTIVE COMPENSATION PLAN

TERMS & CONDITIONS - CONTINUED

 11. Participant - A Participant in the Plan is an employee of Sierra Health
     Services Inc., or its subsidiaries who has been: (a) selected by the
     Company to participate for the Plan Year; (b) who executes this agreement
     to participate in the Plan for the Plan Year; and (c) who is employed by
     the Company on the date of the payout. No employee of the Company has the
     right or is guaranteed the right to participate in the Plan by virtue of
     being an employee of the Company or fulfilling any specific position with
     the Company. Selection for participation in the Plan is solely within the
     discretion of the Company. Sierra Health Services, Inc. may offer
     participation in the Plan to additional employees or terminate the
     participation of any Participant in the Plan any time during the Plan Year.
     
     

 12. Transfer/Promotion within the Business Unit Organization - Plan
     Participants who are transferred or promoted during the Plan Year to
     another job within Sierra Health Services, Inc. or its subsidiaries, not
     covered by the Plan will receive, subject to approvals, a prorated payment
     following year-end based on their achievement of specified objectives
     during eligible month(s) as determined by Company. Similarly, an employee
     who becomes an eligible Participant in the Plan Year, with at least 3
     months service as an eligible Participant, may receive, subject to
     approvals, a prorated payment following year-end based on their achievement
     of specified objectives during eligible month(s) as determined by Company
     in its sole discretion.
     
     

 13. Termination of Employment - Participants, who terminate their employment
     voluntarily or involuntarily from the Company or who have given notice of
     intent to terminate from the Company during the Plan Year and until the
     Plan date of payout, will not be eligible for any bonus payment under the
     Plan. Any exceptions will be determined on an individual basis at the sole
     discretion of the Incentive Plan Compensation Committee.
     
     

 14. Retirement/Death/Disability - Termination of employment during the Plan
     Year and until the Plan date of payout as a result of retirement, death, or
     disability may constitute eligibility for a prorated payment as determined
     by the Company in their sole discretion.

PLAN DOCUMENT FOR
THE 2005 MANAGEMENT INCENTIVE COMPENSATION PLAN
TERMS & CONDITIONS - CONTINUED

 15. Windfalls/Business Losses - Revenues classified as "windfalls" or business
     losses or charges against net income may or may not be excluded in whole or
     in part from the calculation of revenue or profit objectives at the sole
     discretion of the Chief Executive Officer. Similarly, significant declines
     in revenue volume will be reviewed prior to any bonus award. Examples of
     such circumstances include, but are not limited to: excluding
     acquisition-related and FY 2005 charges and non operating unusual charges,
     windfalls or business losses resulting from any acquisition or disposition
     by the corporation as determined by the Compensation Committee of Sierra
     Health Services Board of Directors or the absence of cash flow through the
     majority of the fiscal year and the subsequent receipt of a large cash
     receivable in the last quarter of the fiscal year when evaluating the
     achievement of cash flow objectives.
     
     

 16. Company Rights - Notice of participation in the Plan shall not impair or
     limit the Company's right to transfer, promote, or demote plan participants
     to other jobs or to terminate their employment. Nor shall the Plan create
     either claim or right to receive any payment under the Plan or any right to
     be retained in the employment of the Company or its affiliates.
     
     

 17. Non-Continuation - The Plan is established for the current fiscal year.
     There shall be no obligation on the part of the Company to continue the
     Plan in the same or a modified form for any future years.
     
     

 18. Resolution of Disputes - In the event that a Participant has a dispute
     concerning the administration of this Plan, it should first be submitted in
     writing to the Vice President, Human Resources. In the event that the Vice
     President does not provide a response satisfactory to the participant with
     fifteen (15) days, the Participant may submit the dispute in writing,
     within five (5) working days thereafter, to the Incentive Plan Compensation
     Committee - Sierra Health Services, Inc., whose decision regarding the
     dispute shall be final and binding on each Participant or person making a
     claim under the Plan.
     
     

 19. Effect on Previous Plans - The Plan is effective January 1, 2005, and
     supersedes and replaces all previous management bonus plans. All such
     previous Plans, unless earlier terminated, are terminated effective at
     midnight, December 31, 2004. If not renewed by the Company or its
     designated representative(s), the Plan will automatically terminate on
     December 31 of each year. Any changes in the Plan will constitute a new
     Plan for the next Plan year.
     
     

 20. Achievement Beyond Payout Grids- Sierra Health Services reserves the right
     to increase the level of individual payouts up to 3 Times the 100% payout
     level, based upon improved profitability and or other performance measures
     as determined by the Incentive Compensation Committee.