SECURITIES AND EXCHANGE COMMISSION
                                                 WASHINGTON, D.C. 20549

# FORM 10-Q

(Mark One)(X) QUARTERLY REPORT PURSUANT
TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For Quarterly Period Ended March 31, 2005OR
(  ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from _____ to____
 Commission File Number 1-8538

USHEALTH GROUP, INC.(Formerly, Ascent Assurance, Inc.)(Exact Name of Registrant as Specified in its Charter)

| | DELAWARE                                                         |  | 73-1165000                             
| | ---------------------------------------------------------------- |  | ---------------------------------------
| | (State or Other Jurisdiction of Incorporation or Organization)   |  | (I.R.S. Employer Identification Number)
| | 3100 Burnett Plaza, 801 Cherry Street,Unit 33, Fort Worth, Texas |  | 76102                                  
| | (Address of Principal Executive Offices)                         |  | (Zip Code)                             

(817) 878-3300Registrant's Telephone Number, including Area Code

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 check mark, whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of
the Act).

Yes                      No        X

Common Stock  Par value $0.01; 50,763,826 shares outstanding at May 3, 2005.



# USHEALTH GROUP, INCINDEX TO FORM 10-Q

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|PART I  FINANCIAL INFORMATION | Page No.
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|PART II  OTHER INFORMATION    |         
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# USHEALTH GROUP, INC. CONDENSED CONSOLIDATED
BALANCE SHEETS

|                                                                             |                                   | 
|---------------------------------------------------------------------------- | --------------------------------- | 
|                                                                             | March 31,2005(Unaudited)          | 
|                                                                             | (in thousands, except share data)
|Assets                                                                       |                                   | 
|Investments:                                                                 |                                   | 
|Fixed Maturities:                                                            |                                   | 
|Available-for-sale, at market value (amortized cost $97,454 and $96,940)     |                                   | 
|Short-term investments                                                       |                                   | 
|Other investments, at market value (cost $341 and $353)                      |                                   | 
|                                                                             |                                   | 
|Total Investments                                                            |                                   | 
|Cash                                                                         |                                   | 
|Accrued investment income                                                    |                                   | 
|Receivables from agents, net of allowance for doubtful accounts of           |                                   | 
|$3,630 and $3,601                                                            |                                   | 
|Deferred policy acquisition costs, net                                       |                                   | 
|Property and equipment, net of accumulated depreciation of $5,102 and $4,891 |                                   | 
|Other assets                                                                 |                                   | 
|                                                                             |                                   | 
|Total Assets                                                                 |                                   | 
|                                                                             |                                   | 
|Liabilities and Stockholders' Equity                                         |                                   | 
|Liabilities:                                                                 |                                   | 
|Policy liabilities and accruals:                                             |                                   | 
|Future policy benefits                                                       |                                   | 
|Claim reserves                                                               |                                   | 
|                                                                             |                                   | 
|Total Policy Liabilities and Accruals                                        |                                   | 
|Accounts payable and other liabilities                                       |                                   | 
|Notes payable to bank                                                        |                                   | 
|Note payable to related party                                                |                                   | 
|                                                                             |                                   | 
|Total Liabilities                                                            |                                   | 
|                                                                             |                                   | 
|Stockholders' Equity:                                                        |                                   | 
|Common stock ($.01 par value, 75,000,000 and 75,000,000 shares               |                                   | 
|authorized; 50,763,826 and 50,606,876 shares issued and                      |                                   | 
|outstanding)                                                                 |                                   | 
|Capital in excess of par value                                               |                                   | 
|Accumulated other comprehensive income                                       |                                   | 
|Retained deficit                                                             |                                   | 
|                                                                             |                                   | 
|Total Stockholders' Equity                                                   |                                   | 
|                                                                             |                                   | 
|Total Liabilities and Stockholders' Equity                                   |                                   | 
|                                                                             |                                   | 

See the Notes to the
Condensed Consolidated Financial Statements.



USHEALTH GROUP, INC. CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS(Unaudited)

# 

|                                                             |                             | 
|------------------------------------------------------------ | --------------------------- | 
|                                                             | Three Months EndedMarch 31,
|                                                             |                             | 
|                                                             |                             | 
|Revenues:                                                    |                             | 
|Premiums:                                                    |                             | 
|First-year                                                   |                             | 
|Renewal                                                      |                             | 
|                                                             |                             | 
|Total Premiums                                               |                             | 
|Net investment income                                        |                             | 
|Fee and service income                                       |                             | 
|Other insurance revenues                                     |                             | 
|Net realized loss on investments                             |                             | 
|                                                             |                             | 
|Total Revenues                                               |                             | 
|                                                             |                             | 
|Benefits, claims and expenses:                               |                             | 
|Benefits and claims                                          |                             | 
|Change in deferred policy acquisition costs                  |                             | 
|Commissions                                                  |                             | 
|General and administrative expenses                          |                             | 
|Fee and service operating expense                            |                             | 
|Taxes, license and fees                                      |                             | 
|Interest expense on notes payable                            |                             | 
|                                                             |                             | 
|Total expenses                                               |                             | 
|(Loss) income from continuing operations before income taxes |                             | 
|Federal income tax expense                                   |                             | 
|                                                             |                             | 
|Net (loss) income from continuing operations                 |                             | 
|                                                            
|Loss from discontinued operations before income taxes        |                             | 
|Federal income tax expense                                   |                             | 
|                                                             |                             | 
|Net loss from discontinued operations                        |                             | 
|                                                             |                             | 
|Net (loss) income                                            |                             | 
|Preferred stock dividends                                    |                             | 
|                                                             |                             | 
|Loss applicable to common stockholders                       |                             | 
|                                                             |                             | 
|Basic and diluted loss from continuing operations per        |                             | 
|common share                                                 |                             | 
|                                                             |                             | 
|Basic and diluted loss per common share                      |                             | 
|                                                             |                             | 
|Weighted average shares outstanding:                         |                             | 
|Basic and diluted                                            |                             | 
|                                                             |                             | 

See the Notes to the
Condensed Consolidated Financial Statements.



USHEALTH GROUP, INC. CONDENSED CONSOLIDATED
STATEMENTS OF COMPREHENSIVE (LOSS) INCOME(Unaudited)

# 

|                                                     |                             | 
|---------------------------------------------------- | --------------------------- | 
|                                                     | Three Months EndedMarch 31,
|                                                     |                             | 
|                                                     |                             | 
|                                                     |                             | 
|                                                     | (in thousands)             
|Net (loss) income                                    |                             | 
|Other comprehensive (loss) income:                   |                             | 
|Unrealized holding (loss) gain arising during period |                             | 
|Reclassification adjustment of loss on sales of      |                             | 
|investments included in net income                   |                             | 
|                                                     |                             | 
|Comprehensive (loss) income                          |                             | 
|                                                     |                             | 

See the Notes to the
Condensed Consolidated Financial Statements.



USHEALTH GROUP, INC. CONSOLIDATED STATEMENT
OF CHANGES IN STOCKHOLDERS EQUITY(Unaudited)(in thousands, except
share data)

|                              |              |                     |                        |            |                    |  
|----------------------------- | ------------ | ------------------- | ---------------------- | ---------- | ------------------ | -
|                              | Common Stock | Capital inExcess of | AccumulatedOther Comp. | Retained   | TotalStockholders'
|                              |              |                     |                        | Shares     |                    |  
|                              |              |                     |                        |            |                    |  
|                              |              |                     |                        |            |                    |  
|Balance at January 1, 2005    |              |                     |                        | 50,606,876 |                    | $
|Net loss                      |              |                     |                        |            | (750               | )
|Other comprehensive loss      |              |                     |                        |            | (1,867             | )
|Common stock issued and other |              |                     |                        | 156,950    |                    |  
|                              |              |                     |                        |            |                    |  
|Balance at March 31, 2005     |              |                     |                        | 50,763,826 |                    | $
|                              |              |                     |                        |            |                    |  

See the Notes to the
Condensed Consolidated Financial Statements.



USHEALTH GROUP, INC. ONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS(Unaudited)

|                                                            |                             | 
|----------------------------------------------------------- | --------------------------- | 
|                                                            | Three Months EndedMarch 31,
|                                                            |                             | 
|                                                            |                             | 
|                                                            | (in thousands)             
|Cash Flows From Operating Activities:                       |                             | 
|Net (loss) income                                           |                             | 
|Adjustments to reconcile net (loss) income to cash          |                             | 
|provided by operating activities:                           |                             | 
|Decrease (increase) in accrued investment income            |                             | 
|Decrease in deferred policy acquisition costs               |                             | 
|Decrease in receivables from agents                         |                             | 
|Provision for uncollectible agent receivables               |                             | 
|Decrease in other assets                                    |                             | 
|Increase in policy liabilities and accruals                 |                             | 
|Decrease in accounts payable and other liabilities          |                             | 
|Interest expense on note payable to related party           |                             | 
|Other, net                                                  |                             | 
|                                                            |                             | 
|Net Cash Provided by Operating Activities                   |                             | 
|                                                           
|Cash Flows From Investing Activities:                       |                             | 
|Purchases of fixed maturity investments                     |                             | 
|Sales of fixed maturity investments                         |                             | 
|Maturities and calls of fixed maturity investments          |                             | 
|Net (increase) decrease in short term and other investments |                             | 
|Property and equipment purchased                            |                             | 
|                                                            |                             | 
|Net Cash Used For Investing Activities                      |                             | 
|                                                           
|Cash Flows From Financing Activities:                       |                             | 
|Repayment of notes payable                                  |                             | 
|                                                            |                             | 
|Net Cash Used For Financing Activities                      |                             | 
|                                                           
|Increase (Decrease) In Cash During Period                   |                             | 
|Cash At Beginning Of Period                                 |                             | 
|                                                            |                             | 
|Cash At End Of Period                                       |                             | 
|                                                            |                             | 

See the Notes to the
Condensed Consolidated Financial Statements.



USHEALTH GROUP, INC. NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTSMarch 31, 2005(Unaudited)

# NOTE 1 
DESCRIPTION OF BUSINESS

USHEALTH Group, Inc.
(USHEALTH), formerly Ascent Assurance, Inc., is the successor to a Delaware
company originally incorporated in 1982 as an insurance holding company. USHEALTH, through
its applicable subsidiaries, is engaged in the development, marketing, underwriting and
administration of medical expense and supplemental health insurance products, primarily to
self-employed individuals and small business owners.

The Companys revenues result
primarily from premiums and fees from the insurance products sold by its wholly-owned
subsidiaries National Foundation Life Insurance Company (NFL), Freedom Life
Insurance Company of America (FLICA), National Financial Insurance Company
(NFIC) and American Insurance Company of Texas (AICT), and
together with NFL, NFIC and FLICA, collectively, the Insurance Subsidiaries,
and marketed by NationalCare® Marketing, Inc. (NCM) and
AmeriCare Benefits, Inc. (ACB), also wholly-owned subsidiaries. The Company,
through applicable subsidiaries, also derives fee and service revenue from (i)
telemarketing services, (ii) renewal commissions for prior year sales of both affiliated
and unaffiliated insurance products, and (iii) commissions on the sale of the benefits of
unaffiliated membership benefit programs.

# NOTE 2  SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES

Basis of
Presentation.   
The accompanying unaudited condensed consolidated financial
statements of the Company are prepared in accordance with the instructions to Form 10-Q
and Rule 10-01 of Regulation S-X, and do not include all of the information and footnotes
required by accounting principles generally accepted in the United States
(GAAP) for complete financial statements. The preparation of financial
statements in conformity with GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. The Companys
significant accounting estimates relate to investments, agent receivables, deferred policy
acquisition costs, deferred tax assets, claim reserves, future policy benefit reserves,
reinsurance and statutory accounting practices. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Certain reclassifications of prior years amounts
have been made to conform to the 2005 financial statement presentation. The financial
statements should be read in conjunction with the consolidated financial statements and
notes thereto included in USHEALTHs Annual Report on Form 10-K for the year ended
December 31, 2004.

Cash
Equivalents.   
Cash equivalents consist of highly liquid instruments with
maturities at the time of acquisition of three months or less. Cash equivalents are stated
at cost, which approximates market.

Short-Term
Investments.   
Short-term investments are stated at cost, which approximates
market.

Investments.   
          The Companys fixed maturity portfolio is classified as available-for-sale
          and is carried at estimated market value. Equity securities consisting of common
          stocks, which are included in other investments, are also carried at estimated
          market value. Changes in aggregate unrealized appreciation or depreciation on
          fixed maturity and equity securities are reported directly in stockholders
          equity and, accordingly, will have no effect on current operations.

Deferred Policy Acquisition
Costs (DPAC).   
Policy acquisition costs consisting of
commissions and other policy issue costs, which vary with and are primarily related to the
production of new business, are deferred and amortized over periods not to exceed the
estimated premium-paying periods of the related policies. Also included in Other Assets is
the value of business acquired. The amortization of these costs is based on actuarially
estimated future premium revenues, and the amortization rate is adjusted periodically to
reflect actual experience. Projected future levels of premium revenue are estimated using
assumptions as to interest, mortality, morbidity and withdrawals consistent with those
used in calculating liabilities for future policy benefits.

Agent
Receivables.   
In the ordinary course of business, a subsidiary of USHEALTH
advances commissions on policies written by its general agencies and their agents. Net
agent receivables were approximately $3.0 million and $3.5 million at March 31, 2005 and
December 31, 2004, respectively. Such subsidiary is reimbursed for these advances from the
commissions earned over the respective policys life. In the event that policies
lapse prior to the time the subsidiary has been fully reimbursed, the general agencies or
the individual agents, as the case may be, are responsible for reimbursing the subsidiary
for the outstanding balance of the commission advances. A reserve for uncollectible
agents balances is routinely established based upon historical experience and
projected commission earnings. As of March 31, 2005 and December 31, 2004, the
Companys allowances for uncollectible commission advances were approximately $3.6
million.

Property and Equipment.   
Property and equipment is stated on the basis of cost and consists
primarily of furniture, fixtures, leasehold improvements and software. Depreciation is
computed principally by the straight-line method for financial reporting purposes using
estimated useful lives of 3 to 10 years.

Future Policy Benefits.   
Liabilities for future policy benefits not yet incurred are computed
primarily using the net level premium method including actuarial assumptions as to
investment yield, mortality, morbidity, withdrawals, persistency and other assumptions,
which were appropriate at the time the policies were issued. Assumptions used are based on
the experience of each of the Insurance Subsidiaries, as adjusted to provide for possible
adverse deviation. Generally, these actuarial assumptions are fixed and, absent material
adverse benefit experience, are not adjusted.

Claim Reserves.   
Claim reserves represent the estimated liabilities on claims reported plus claims incurred
but not yet reported. The process of estimating claim reserves involves the active
participation of experienced actuaries with input from the underwriting, claims, and
finance departments. The inherent uncertainty in estimating claim reserves is increased
when significant changes occur. Changes impacting the Insurance Subsidiaries include: (1)
changes in economic conditions; (2) changes in state or federal laws and regulations,
particularly insurance reform measures; (3) writings of significant blocks of new business
and (4) significant changes in claims payment patterns. Because claim reserves are
estimates, management monitors reserve adequacy over time, evaluating new information as
it becomes available and adjusting claim reserves as necessary. Such adjustments are
reflected in current operations.

Notes Payable.   
Notes payable are stated at cost, which approximates market.

Federal Income Taxes.   
The Company records income taxes based on the asset and liability approach,
which requires the recognition of deferred tax liabilities and assets for the expected
future tax consequence of temporary differences between the carrying amounts and the tax
basis of assets and liabilities. The tax effect of future taxable temporary differences
(liabilities) and future deductible temporary differences (assets) are separately
calculated and recorded when such differences arise. A valuation allowance, reducing any
recognized deferred tax asset, must be recorded if it is determined that it is more likely
than not that such deferred tax asset will not be realized. Net deferred tax assets of
$17.9 million and $17.8 million at March 31, 2005 and December 31, 2004, respectively,
were fully reserved.

Recognition of Revenue.   
Premium revenues from insurance contracts are recognized when due from
policyholders. Fee and service income is recognized when earned, the services have been
provided and collection is reasonably assured.

Earnings Per Share.   
Under GAAP, there are two measures of earnings per share: basic
earnings per share and diluted earnings per share. Basic earnings per
share are computed by dividing income available to common stockholders by the weighted
average number of common shares outstanding during the period. Diluted earnings per share
reflect the potential dilution that could occur if securities or other contracts to issue
common stock were converted or exercised. For the three months ended March 31, 2005, stock
options of 5,386,219 were anti-dilutive and were not included in the computation of
diluted earnings per share because to do so would have been anti-dilutive. For the three
months ended March 31, 2004, stock options of 877,550 and the conversion of the preferred
stock were not included in the computation of diluted earnings per share because to do so
would have been anti-dilutive. For the three months ended March 31, 2004, 43,995,026 of
common shares attributable to the conversion of USHEALTHs Series B convertible
participating preferred stock (see the Notes to the Condensed Consolidated Financial
Statements  Note 4  Conversion of Redeemable Convertible Preferred Stock) were
included in the computation of basic and diluted earnings per share as of March 15, 2004.
To include the common shares attributable to the conversion of USHEALTHs preferred
stock in the computation of diluted earnings per share from the beginning of 2004 would
have been anti-dilutive.

The following table reflects the
calculation of basic and diluted EPS (in thousands, except for per share data):



|                                         |                             | 
|---------------------------------------- | --------------------------- | 
|                                         | Three Months EndedMarch 31,
|                                         |                             | 
|                                         |                             | 
|(Loss) income from continuing operations |                             | 
|Loss from discontinued operations        |                             | 
|                                         |                             | 
|Net (loss) income                        |                             | 
|Preferred stock dividends                |                             | 
|                                         |                             | 
|Loss applicable to common shareholders   |                             | 
|                                         |                             | 
|Weighted average shares outstanding:     |                             | 
|Basic and diluted                        |                             | 
|                                         |                             | 
|Basic and diluted loss per share from    |                             | 
|continuing operations                    |                             | 
|                                         |                             | 
|Basic and diluted loss per share from    |                             | 
|discontinued operations                  |                             | 
|                                         |                             | 
|Basic and diluted loss per common share  |                             | 
|                                         |                             | 

Recently Issued Accounting Pronouncements.   
In December 2004, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standards No. 123 (revised
2004) (FAS 123R), Share-Based Payment. FAS123R eliminates the
alternative to use APB No. 25s , Accounting for Stock Issued to
Employees, intrinsic value method of accounting that was provided in Statement 123
as originally issued. This statement establishes standards for accounting for transactions
in which an entity exchanges its equity instruments for goods or services. It requires a
public entity to measure the cost of employee services received in exchange for an award
of equity instruments based on the grant-date fair value of the award (with limited
exceptions). That cost will be recognized over the period during which an employee is
required to provide service, usually the vesting period, in exchange for the award.
FAS123R is effective as of the beginning of the first interim period or annual reporting
period that begins after June 15, 2005. Disclosed at Note 6  Employee Benefit Plans
is the effect on net loss and loss per share for the years presented if the Company had
applied the fair value recognition provisions of FASB Statement No. 123, Accounting for
Stock-Based Compensation, to stock-based employee compensation which the Company does
not believe will significantly differ from the effects of adopting FAS123R.

# NOTE 3 
DISCONTINUED OPERATIONS

On October 29, 2004, USHEALTH sold
its printing subsidiary, Westbridge Printing Services, Inc. (WPS), to an
unrelated party and exited the printing business. In accordance with Statement of
Financial Accounting Standard No. 144 Accounting for the Impairment or Disposal of
Long-Lived Assets, the Companys printing subsidiary is reported as
discontinued operations in the accompanying consolidated financial statements. The
operating loss of WPS for the three months ended March 31, 2004 is reflected in
discontinued operations. Revenues from the discontinued operations of WPS for the three
months ended March 31, 2004 were approximately $1.0 million.

# NOTE 4  CONVERSION
OF REDEEMABLE CONVERTIBLE PREFERRED STOCK

On March 15, 2004, USHEALTHs
common shareholders approved an amendment to the Companys Certificate of
Incorporation to increase the authorized number of shares of common stock to 75 million
shares from 30 million shares. The approval of this amendment resulted in the automatic
conversion of all 37,504 outstanding shares of the Companys Series B convertible
participating preferred stock (Series B Preferred Stock) into 43,995,026
shares of common stock. Preferred stock dividends of $430,000 accrued through March 15,
2004, were forgiven by preferred stockholders and, as a result, were credited to capital
in excess of par value, and had no impact on total stockholders equity. All
outstanding shares of the Series B Preferred Stock were held by Special Situations
Holdings, Inc.  Westbridge (SSHW), the Companys largest
shareholder. The conversion of the Series B Preferred Stock increased the ownership
percentage of SSHW in the Companys common stock to approximately 93% from 49%.



# NOTE 5  FINANCING
ACTIVITIES

CSFB Financing.   
USHEALTH received debt financing to fund an $11 million capital
contribution to FLICA in April 2001 from Credit Suisse First Boston Management LLC
(CSFBM), which is an affiliate of SSHW (USHEALTHs largest stockholder.)
The credit agreement relating to that loan (CSFBM Credit Agreement) provided
USHEALTH with total loan commitments of $11 million, all of which were drawn in April
2001. Under reconstructed terms effective December 31, 2003, the loan bears interest at a
rate of 6% per annum and matures in March 2010.

Absent any acceleration following an
event of default, the Company may elect to pay interest in kind by issuance of additional
notes. During the three months ended March 31, 2005, USHEALTH issued $245,000 in
additional notes for payment of interest in kind, which increased the note payable balance
at March 31, 2005 to approximately $16.5 million.

USHEALTHs obligations to CSFBM
are secured, pursuant to a guarantee and security agreement and pledge agreements, by
substantially all of the assets of USHEALTH and its subsidiaries (excluding the capital
stock and the assets of AICT, FLICA, NFL, NFIC, NCM, USHEALTH Funding, Inc. (formerly
Ascent Funding, Inc.) and Ascent Management, Inc., some or all of which is pledged as
collateral for bank financing described below). USHEALTHs subsidiaries (other than
those listed above) have also guaranteed USHEALTHs obligations under the CSFBM
Credit Agreement. Under this agreement, the Company is required to meet certain
restrictive requirements including minimum statutory capital and surplus, and RBC ratios
for its Insurance Subsidiaries, minimum net worth and other customary covenants. At March
31, 2005, there were no events of default.

Bank Financing.   
The majority of commission advances to NCMs and ACBs agents are
financed through USHEALTH Funding, Inc. (UFI) (formerly Ascent Funding, Inc.),
an indirect wholly owned subsidiary of USHEALTH. On December 31, 2003, UFI entered into a
Credit Agreement (the Credit Agreement) with Frost National Bank
(Frost) that provides UFI with a $3.0 million revolving loan facility, the
proceeds of which are used to purchase agent advance receivables from NCM and ACB. The
amount outstanding under the Credit Agreement as of March 31, 2005 and December 31, 2004
was $250,000. The Credit Agreement as amended matures on January 15, 2007, at which time
the outstanding principal and interest will be due and payable.

UFIs obligations under the
Credit Agreement are secured by liens upon substantially all of UFIs assets.
UFIs principal assets at March 31, 2005 are net agent receivables of $3.3 million.
In addition, NCM, ACB and USHEALTH have guaranteed UFIs obligation under the Credit
Agreement, and have pledged all of the issued and outstanding shares of the capital stock
of UFI, NFL, and FLICA as collateral for those guaranties (the Guaranty
Agreements). USHEALTH, certain of its subsidiaries, CSFBM and Frost have entered
into an Intercreditor and Subordination Agreement dated as of December 31, 2003 to give
effect to a subordination of the notes payable to CSFBM to up to $10 million in borrowings
under the Credit Agreement. As of March 31, 2005, there were no events of default under
the Credit or Guaranty Agreements.

# NOTE 6  EMPLOYEE
BENEFIT PLANS

USHEALTH applies the intrinsic value
method, in accordance with APB 25, in accounting for its stock options issued to employees
of one of its subsidiaries and non-employee directors. Accordingly, no compensation
expense has been recognized for options granted with an exercise price equal to market
value at the date of grant. USHEALTH applies the fair value method in accounting for stock
options issued to consultants (including marketing agents).

Compensation cost recognized in the
income statement for stock-based employee and consultants (including marketing agents)
compensation awards was approximately $104 and $619 for the three months ended March 31,
2005 and 2004, respectively.

The following table illustrates the
effect on loss applicable to common stockholders and loss per share if USHEALTH had
applied the fair value recognition provisions of FASB Statement No. 123, Accounting for
Stock-Based Compensation, to stock-based employee compensation.



|                                                  |                             | 
|------------------------------------------------- | --------------------------- | 
|                                                  | Three Months Ended March 31
|                                                  |                             | 
|                                                  |                             | 
|(Loss) income from continuing operations          |                             | 
|Total stock-based employee compensation expense   |                             | 
|determined under fair value based method for all  |                             | 
|awards, net of related tax effects                |                             | 
|                                                  |                             | 
|Proforma (loss) income from continuing operations |                             | 
|Loss from discontinued operations                 |                             | 
|                                                  |                             | 
|Net (loss) income                                 |                             | 
|Preferred stock dividends                         |                             | 
|                                                  |                             | 
|Pro forma loss applicable to common stockholders  |                             | 
|                                                  |                             | 
|Loss per share from continuing operations:        |                             | 
|Basic and diluted - as reported                   |                             | 
|Basic and diluted - pro forma                     |                             | 
|                                                 
|Loss per share from discontinued operations:      |                             | 
|Diluted - as reported                             |                             | 
|Diluted - pro forma                               |                             | 
|                                                  |                             | 
|Loss per share:                                   |                             | 
|Diluted - as reported                             |                             | 
|Diluted - pro forma                               |                             | 

For purposes of pro forma disclosure,
the estimated fair value of the stock compensation is amortized to expense over the
stocks vesting period. The effect on net loss of the stock compensation amortization
for the year presented above is not likely to be representative of the effects on reported
income for future years.

# NOTE 7 
COMMITMENTS AND CONTINGENCIES

In the normal course of its business
operations, the Company is involved in various claims, other business related suits
(alleging actual as well as substantial exemplary damages) and regulatory matters. In the
opinion of management, the Company is not a party to any pending litigation which is
reasonable likely to have an adverse result or disposition that would have a material
adverse effect on the Companys business, consolidated financial position or
consolidated results of operations.

The Companys Insurance
Subsidiaries are subject to extensive governmental regulation and supervision at both
federal and state levels. Such regulation includes premium rate levels, premium rate
increases, policy forms, minimum loss ratios, dividend payments, claims settlement,
licensing of insurers and their agents, capital adequacy, transfer of control, and amount
and type of investments. Additionally, there are numerous health care reform proposals and
regulatory initiatives under consideration, which, if enacted, could have significant
impact on the Companys results of operations.

# NOTE 8  SUBSEQUENT
EVENTS

On April 18, 2005, SSHW
(USHEALTHs largest stockholder) announced that it intends to take USHEALTH private
through a
short-form merger on or about May 16, 2005. SSHW currently owns
approximately 93% of USHEALTH outstanding common stock which, under Delaware law, is
sufficient to effectuate the merger without necessity of seeking approval by either the
USHEALTH board of directors or its common stockholders. Common stockholders as of the
effective date of the merger will receive $.31 in cash for each share of USHEALTH common
stock held.



# ITEM 2 
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

# GENERAL

USHEALTH Group, Inc.
(USHEALTH), formerly Ascent Assurance, Inc., is the successor to a Delaware
company incorporated in 1982 as an insurance holding company. USHEALTH, through its
applicable subsidiaries, is engaged in the development, marketing, underwriting and
administration of medical expense and supplemental health insurance products, primarily to
self-employed individuals and small business owners.

The following discussion provides
managements assessment of financial condition at March 31, 2005 as compared to
December 31, 2004 and results of operations for the three months ended March 31, 2005 as
compared to the comparable 2004 period for the Company. This discussion updates the
Managements Discussion and Analysis of Financial Condition and Results of
Operations in the Companys 2004 Report on Form 10-K and should be read in
conjunction therewith.

Business Overview.   
The Companys revenues result primarily from premiums and fees from
the insurance products sold by its wholly owned subsidiaries National Foundation Life
Insurance Company (NFL), Freedom Life Insurance Company of America
(FLICA), National Financial Insurance Company (NFIC) and American
Insurance Company of Texas (AICT), and together with NFL, NFIC and FLICA,
collectively, the Insurance Subsidiaries and marketed by
NationalCare® Marketing, Inc. (NCM) and AmeriCare Benefits,
Inc. (ACB), also wholly owned subsidiaries. The Company, through applicable
subsidiaries, also derives fee and service revenue from (i) telemarketing services, (ii)
renewal commissions for prior year sales of both affiliated and unaffiliated insurance
products, and (iii) commissions on the sale of benefits of unaffiliated membership benefit
programs.

The Companys operations are
comprised of one segment, Accident and Health insurance. The principal products currently
marketed by NCM and ACB and underwritten by NFL and FLICA are medical expense
reimbursement policies. These products are designed with flexibility as to benefits,
deductibles, coinsurance and premium payments, which can be adapted to meet regional sales
or competitive needs, as well as those of the individual policyholders. The principal
product groups currently underwritten by NFL and FLICA are comprehensive major medical
products, hospital/surgical medical expense products and supplemental specified disease
products:

| |  |  | Comprehensive major medical products are generally designed to reimburse insureds for
eligible expenses incurred for hospital confinement, surgical expenses, physician
services, outpatient services and the cost of inpatient medicines.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Hospital/surgical medical expense products are similar to comprehensive major medical
products except that benefits are generally limited to medical and surgical services
received in a hospital either as an inpatient or outpatient (services such as outpatient
physician office visits and outpatient prescription drugs are excluded) and deductibles
and coinsurance provisions are generally higher.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Supplemental specified disease products include blanket group accident coverages, blanket
group hospital daily indemnity coverages, as well as individual indemnity policies for
hospital confinement and convalescent care for treatment of specified diseases and
event specific individual policies, which provide fixed benefits or lump sum
payments directly to the insured upon diagnosis of certain types of internal cancer or
heart disease.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Prior to 1998, some of the Insurance
Subsidiaries also actively underwrote Medicare Supplement products designed to provide
reimbursement for certain expenses not covered by the Medicare program. Such Insurance
Subsidiaries continue to receive renewal premiums on Medicare Supplement policies sold
prior to that date.

Forward-Looking Statements.   
Statements contained in this analysis and elsewhere in this
document that are not based on historical information are forward-looking statements and
are based on managements projections, estimates and assumptions. In particular,
forward-looking statements can be identified by the use of words such as may,
will, should, expect, anticipate,
estimate,
continue, or similar words. Management cautions readers
regarding its forward-looking statements. The Private Securities Litigation Reform Act of
1995 provides a safe harbor for forward-looking statements. Various statements
contained in the Managements Discussion and Analysis of Results of Operation and
Financial Condition, are forward-looking statements. These forward-looking statements are
based on the intent, belief or current expectations of USHEALTH and members of its senior
management team. While USHEALTHs management believes that its expectations are based
on reasonable assumptions within the bounds of its knowledge of its business and
operations, prospective investors are cautioned that any such forward-looking statements
are not guarantees of future performance, and involve risks and uncertainties, and that
actual results may differ materially from those contemplated by such forward-looking
statements.

Important factors known to management
that could cause actual results to differ materially from those contemplated by the
forward-looking statements in this Report include, but are not limited to:

| |  |  | any limitation imposed on the Insurance Subsidiaries ability to control the impact
of rising health care costs, especially prescription drugs, and rising medical service
utilization rates through product and benefit design, underwriting criteria, premium rate
increases, utilization management and negotiation of favorable provider contracts;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | the impact of changing health care trends on the Insurance Subsidiaries ability to
accurately estimate claim and settlement expense reserves;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | the ability of the Company to fund competitive commission advances to its agents from
internally generated cash flow or external financing;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | developments in health care reform and other regulatory issues, including the Health
Insurance Portability and Accountability Act of 1996 and increased privacy regulation, and
changes in laws and regulations in key states where the Company operates;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | USHEALTHs ability to make additional investment in its Insurance Subsidiaries in the
form of capital contributions, if needed, in order for such subsidiary to comply with
regulatory capital or debt covenant requirements;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | default by issuers of fixed maturity investments owned by the Insurance Subsidiaries; and
| | - |  | -----------------------------------------------------------------------------------------

| |  |  | the loss of key management personnel.
| | - |  | -------------------------------------

Subsequent written or oral statements
attributable to USHEALTH or persons acting on its behalf are expressly qualified in their
entirety by the cautionary statements in this Report and those in USHEALTHs reports
previously filed with the SEC. Copies of these filings may be obtained by contacting
USHEALTH or the SEC.



# OPERATING RESULTS

Consolidated results of operations
for USHEALTH are reported for the three months ended March 31, 2005 and 2004. (In
thousands except insurance operating ratios.)

|                                                             |                              | 
|------------------------------------------------------------ | ---------------------------- | 
|                                                             | Three Months Ended March 31,
|                                                             |                              | 
|                                                             |                              | 
|Premiums                                                     |                              | 
|Other insurance revenue                                      |                              | 
|Net investment income                                        |                              | 
|Net realized loss on investments                             |                              | 
|                                                             |                              | 
|Total insurance revenues                                     |                              | 
|Benefits and claims                                          |                              | 
|Commissions                                                  |                              | 
|Change in deferred policy acquisition costs                  |                              | 
|General and administrative expense                           |                              | 
|Taxes, license and fees                                      |                              | 
|Interest expense on bank facilities                          |                              | 
|Interest expense on note payable to related party            |                              | 
|                                                             |                              | 
|Total insurance operating expenses                           |                              | 
|                                                             |                              | 
|Insurance operating results                                  |                              | 
|                                                             |                              | 
|Fee and service income                                       |                              | 
|Fee and service expenses                                     |                              | 
|                                                             |                              | 
|Fee and service results                                      |                              | 
|                                                             |                              | 
|(Loss) income from continuing operations before income taxes |                              | 
|Federal income tax expense                                   |                              | 
|                                                             |                              | 
|(Loss) income from continuing operations                     |                              | 
|                                                            
|Loss from discontinued operations before income taxes (1)    |                              | 
|Federal income tax expense                                   |                              | 
|                                                             |                              | 
|Loss from discontinued operations                            |                              | 
|                                                             |                              | 
|Net (loss) income                                            |                              | 
|Preferred stock dividends                                    |                              | 
|                                                             |                              | 
|Loss applicable to common stockholders                       |                              | 
|                                                             |                              | 
|Insurance operating ratios*                                  |                              | 
|Benefits and claims                                          |                              | 
|Commissions                                                  |                              | 
|Change in deferred policy acquisition costs                  |                              | 
|General and administrative expenses                          |                              | 
|Taxes, licenses and fees                                     |                              | 

---

(1)
          In October 2004, the Company sold its printing subsidiary, Westbridge Printing
          Services, Inc. (WPS). The operating results of WPS are presented as
          loss from discontinued operations.


*Ratios
are calculated as a percent of premium with the exception of the general and
administrative expense ratio, which is calculated   as a percent of premiums plus other
insurance revenue.

Overview.   
          For the first quarter of 2005, net loss was $(750,000) compared to net income of
          $71,000 for the corresponding period in 2004. The ($821,000) decrease in net
          income was principally due to a ($940,000) decrease in insurance operating
          results and an ($81,000) decrease in fee and service results partially offset by
          a $200,000 decrease in loss from discontinued operations.

Insurance operating results declined
for the first quarter of 2005 as compared to the first quarter of 2004 principally due to
an increase in general expenses attributable to investment in marketing and infrastructure
initiatives. Fee and service results decreased for first quarter 2005 compared to first
quarter 2004 principally due to the run-off status of fee and service programs.

On October 29, 2004, the Company sold
its printing subsidiary and exited the printing business. The loss from discontinued
operations for the three months ended March 31, 2004 was comprised of ($200,000) of
operating loss.

On March 15, 2004, USHEALTHs
shareholders approved an amendment to the Companys Certificate of Incorporation to
increase the authorized number of shares of common stock to 75 million shares from 30
million shares. The approval of this amendment resulted in the automatic conversion of all
37,504 outstanding shares of the Companys convertible participating Series B
preferred stock into 43,995,026 shares of common stock. As a result, preferred stock
dividends of $430,000 accrued through March 15, 2004 were credited to capital in excess of
par value and had no impact on total stockholders equity.

On April 18, 2005, Special Situations
Holdings, Inc.  Westbridge (SSHW) (USHEALTHs largest stockholder)
announced that it intends to take USHEALTH private through a short-form merger
on or about May 16, 2005. SSHW currently owns approximately 93% of USHEALTH outstanding
common stock which, under Delaware law, is sufficient to effectuate the merger without
necessity of seeking approval by either the USHEALTH board of directors or its common
stockholders. Common stockholders as of the effective date of the merger will receive $.31
in cash for each share of USHEALTH common stock held.

The following narratives discuss the
principal components of insurance operating results.

Premiums.   
          The Insurance Subsidiaries premium revenue is derived principally from the
          following medical expense reimbursement products: comprehensive major medical,
          hospital/surgical medical expense, supplemental products including specified
          disease coverage and Medicare supplement. Comprehensive major medical products
          are generally designed to reimburse insureds for eligible expenses incurred for
          hospital confinement, surgical expenses, physician services, outpatient
          services, and the cost of laboratory and diagnostic services, as well as
          inpatient medicines. Hospital surgical medical expense products are similar to
          comprehensive major medical products with respect to benefits for inpatient
          services, except that deductibles and coinsurance provisions are generally
          higher. However, benefits for outpatient services are generally more limited
          under hospital/surgical medical expense coverage than comprehensive major
          medical coverage. Supplemental products include blanket group accident
          coverages, blanket group hospital daily indemnity coverages, as well as
          individual indemnity policies for hospital confinement and convalescent care for
          treatment of specified diseases and event specific individual
          policies, which provide fixed benefits or lump sum payments directly to the
          insured upon diagnosis of certain types of internal cancer or heart disease.
          Prior to 1998, the Insurance Subsidiaries also underwrote Medicare supplement
          products and continue to receive renewal premiums from such policies.



Premium revenue, in thousands, for
each major product line is set forth below:

|                                |                              | 
|------------------------------- | ---------------------------- | 
|                                | Three Months Ended March 31,
|                                |                              | 
|                                |                              | 
|Major medical:                  |                              | 
|First-year                      |                              | 
|Renewal                         |                              | 
|                                |                              | 
|Subtotal                        |                              | 
|                                |                              | 
|Supplemental specified disease: |                              | 
|First-year                      |                              | 
|Renewal                         |                              | 
|                                |                              | 
|Subtotal                        |                              | 
|                                |                              | 
|Medicare supplement:            |                              | 
|Renewal                         |                              | 
|                                |                              | 
|                               
|Other                           |                              | 
|                                |                              | 
|Consolidated Premium Revenue    |                              | 
|                                |                              | 

Total premiums decreased
approximately $2.5 million, or 10.4%, for the first quarter of 2005 as compared to the
first quarter of 2004. Major medical premiums declined due to lower new business sales and
a disciplined pricing philosophy focused upon profitability. In addition, supplemental
specified disease and Medicare supplement premiums declined due to normal lapsing of
policies.

Benefits and Claims.   
Benefits and claims are comprised of (1) claims paid, (2) changes in claim reserves
for claims incurred (whether or not reported), and (3) changes in future policy benefit
reserves (see Financial Condition  Claims Reserves and Future
Policy Benefit Reserves). The Companys benefits and claims ratios of 68.5% and
68.2% for the first quarters of 2005 and 2004, respectively, were comparable. For the past
several years, the costs of medical services covered by the Companys major medical
insurance policies has increased significantly, with medical inflation averaging 15% to
20% annually in comparison to an average increase in the consumer price index of 3%. To
maintain the ratio of claims and benefits to premium into future periods, the Company must
accurately estimate future medical inflation and implement timely premium rate increases
for both new major medical product sales and the majority of its in force insurance
policies, including supplemental specified disease and Medicare supplement policies.

Commissions.   
          The commissions to premiums ratio decreased by 0.4 percentage points in first
          quarter 2005 as compared to the first quarter 2004 as a result of the decrease
          in first year major medical premiums. Commission rates on first year premiums
          are significantly higher than those for renewal premiums.



# FINANCIAL CONDITION

Investments.   
          The following table summarizes the Companys fixed maturity securities,
          excluding short-term investments. All of the Companys fixed maturity
          securities are classified as available-for-sale and are carried at market value.
          Investments in the debt securities of corporations are principally in publicly
          traded bonds.

|                                                  |                |  |                   |            
|------------------------------------------------- | -------------- |  | ----------------- | -----------
|                                                  | March 31, 2005 |  | December 31, 2004
|Fixed Maturity Securities                         |                |  |                   | MarketValue
|                                                  |                |  |                   |            
|                                                  | (in 000s)     |  |                   | (in 000s) 
|U.S. Government and governmental agencies         |                | 
|and authorities (except mortgage backed)          |                |  | $                 | 10,223     
|Finance companies                                 |                |  |                   | 22,538     
|Public utilities                                  |                |  |                   | 9,967      
|Mortgage-backed securities                        |                |  |                   | 21,965     
|States, municipalities and political subdivisions |                |  |                   | 2,281      
|All other corporate bonds                         |                |  |                   | 31,437     
|                                                  |                |  |                   |            
|Total fixed maturity securities                   |                |  | $                 | 98,411     
|                                                  |                |  |                   |            

The following table indicates by
rating the composition of the Companys fixed maturity securities portfolio,
excluding short-term investments.

|                                                   |                |  |                   |            
|-------------------------------------------------- | -------------- |  | ----------------- | -----------
|                                                   | March 31, 2005 |  | December 31, 2004
|Composition of Fixed Maturity Securities by Rating |                |  |                   | MarketValue
|                                                   |                |  |                   |            
|                                                   | (in 000s)     |  |                   | (in 000s) 
|Ratings                                            |                | 
|Investment grade:                                  |                | 
|U.S. Government and agencies                       |                |  | $                 | 21,262     
|AAA                                                |                |  |                   | 11,868     
|AA                                                 |                |  |                   | 3,972      
|A                                                  |                |  |                   | 30,879     
|BBB                                                |                |  |                   | 28,219     
|Non-Investment grade:                              |                | 
|BB                                                 |                |  |                   | 1,669      
|B and below                                        |                |  |                   | 542        
|                                                   |                |  |                   |            
|Total fixed maturity securities                    |                |  | $                 | 98,411     
|                                                   |                |  |                   |            

The Company monitors the financial
condition and operations of securities rated below investment grade and of certain
investment grade securities on which there are concerns regarding credit quality. In
evaluating fixed maturities to determine whether any of the unrealized losses are other
than temporary, managements assessments as to the nature of declines in fair values
are based upon historical operating trends, business prospects, status of the industry in
which the company operates, analyst ratings on the issuer and sector, the quality of the
investments, the severity and duration of the unrealized losses and the Companys
ability or intent to hold the investments. If fair value is less than the carrying value
and the decline is determined to be other than temporary, an appropriate write-down is
recorded.

The scheduled contractual maturities
of the Companys fixed maturity securities, excluding short-term investments, at
March 31, 2005 and December 31, 2004 are shown in the table below. Expected maturities may
differ from contractual maturities because borrowers may have the right to call or prepay
obligations with or without penalties.



|                                                     |                |  |                   |            
|---------------------------------------------------- | -------------- |  | ----------------- | -----------
|                                                     | March 31, 2005 |  | December 31, 2004
|Composition of Fixed Maturity Securities by Maturity |                |  |                   | MarketValue
|                                                     |                |  |                   |            
|                                                     | (in 000s)     |  |                   | (in 000s) 
|Scheduled Maturity                                   |                | 
|Due in one year or less                              |                |  | $                 | 3,486      
|Due after one year through five years                |                |  |                   | 27,534     
|Due after five years through ten years               |                |  |                   | 30,889     
|Due after ten years                                  |                |  |                   | 14,537     
|Mortgage-backed and asset-backed securities          |                |  |                   | 21,965     
|                                                     |                |  |                   |            
|Total fixed maturity securities                      |                |  | $                 | 98,411     
|                                                     |                |  |                   |            

Claim Reserves.   
Claim reserves are established by the Insurance Subsidiaries for benefit payments which
have already been incurred by the policyholder but which have not been paid by the
applicable Insurance Subsidiary. Claim reserves totaled $25.4 million at March 31, 2005 as
compared to $24.6 million at December 31, 2004. The process of estimating claim reserves
involves the active participation of experienced actuaries with input from the
underwriting, claims, and finance departments. The inherent uncertainty in estimating
claim reserves is increased when significant changes occur. Changes impacting the
Insurance Subsidiaries include: (1) changes in economic conditions; (2) changes in state
or federal laws and regulations, particularly insurance reform measures; (3) writings of
significant blocks of new business and (4) significant changes in claims payment patterns.
Because claim reserves are estimates, management monitors reserve adequacy over time,
evaluating new information as it becomes available and adjusting claim reserves as
necessary. Such adjustments are reflected in current operations.

Management considers many factors
when setting reserves including: (1) historical trends; (2) current legal interpretations
of coverage and liability; (3) loss payments and pending levels of unpaid claims; and (4)
product mix. Based on these considerations, management believes that adequate provision
has been made for the claim reserves of the Insurance Subsidiaries. Actual claims paid may
deviate, perhaps substantially, from such reserves.

Future Policy Benefit Reserves.   
Policy benefit reserves are established by each applicable
Insurance Subsidiary for benefit payments that have not been incurred, but are estimated
to be incurred, in the future. Policy benefit reserves totaled $53.6 million at March 31,
2005 as compared to $53.5 million at December 31, 2004. Policy benefit reserves are
calculated according to the net level premium reserve method and are equal to the
discounted present value of the applicable Insurance Subsidiarys expected future
policyholder benefits minus the discounted present value of its expected future net
premiums.

These present value determinations
are based upon assumed fixed investment yields, the age of the insured(s) at the time of
policy issuance, expected morbidity and persistency rates, and expected future
policyholder benefits. In determining the morbidity, persistency rate, claim cost and
other assumptions used in determining the Insurance Subsidiaries future policy
benefit reserves, each Insurance Subsidiary relies primarily upon its own benefit payment
history and upon information developed in conjunction with actuaries and industry data.
Persistency rates have a direct impact upon their policy benefit reserves because the
determinations for these reserves are, in part, a function of the number of policies in
force and expected to remain in force to maturity. If persistency is higher or lower than
expected, future policyholder benefits will also be higher or lower because of the
different than expected number of policies in force, and the policy benefit reserves will
be increased or decreased accordingly.

In accordance with GAAP, actuarial
assumptions of each of the Insurance Subsidiaries are generally fixed, and absent
materially adverse benefit experience, are not generally adjusted. The Insurance
Subsidiaries each monitor the adequacy of their policy benefit reserves on an ongoing
basis by periodically analyzing the accuracy of their actuarial assumptions. The adequacy
of policy benefit reserves may also be impacted by the development of new medicines and
treatment procedures which may alter the incidence rates of illness and the treatment
methods for illness and accident (such as out-patient versus in-patient care) or prolong
life expectancy. Changes in coverage provided by major medical insurers or government
plans may also affect the adequacy of reserves if, for example, such developments had the
effect of increasing or decreasing the incidence rate and per claim costs of occurrences
against which the applicable Insurance Subsidiary insures. An increase in either the
incidence rate or the per claim costs of such occurrences could result in the need for the
Insurance Subsidiaries to post additional reserves, which could have a material adverse
effect upon USHEALTHs liquidity, capital resources and results of operations.



# LIQUIDITY, CAPITAL
RESOURCES AND STATUTORY CAPITAL AND SURPLUS

General.   
          The primary sources of cash for the Companys consolidated operations are
          premiums and fees from insurance policies, sales and maturity of invested assets
          and investment income while the primary uses of cash are payments of insurance
          policy benefits, claims and commissions, and general operating expenses. Net
          cash provided by operations totaled $2.4 million and $1.2 million for the first
          quarter of 2005 and 2004, respectively.

USHEALTH is a holding company, the
principal assets of which consist of the capital stock of its subsidiaries and invested
assets. USHEALTHs principal sources of funds are comprised of dividends from its
non-insurance subsidiaries. The Insurance Subsidiaries are precluded from paying dividends
without prior approval of the Texas Insurance Commissioner, as the Insurance
Subsidiaires earned surplus is negative due to statutory losses incurred prior to
2003. USHEALTHs principal uses of cash are for general and administrative expenses
and to make discretionary additional investments in its Insurance Subsidiaries in the form
of capital contributions to maintain desired statutory capital and surplus levels.
USHEALTH made no capital contributions to the Insurance Subsidiaries during the first
quarter of 2005. As of March 31, 2005, USHEALTH had approximately $3.3 million in
unrestricted cash and invested assets.

Related Party Financing.   
USHEALTH received debt financing to fund an $11 million capital
contribution to FLICA in April 2001 from Credit Suisse First Boston Management LLC,
(CSFBM), which is an affiliate of SSHW (USHEALTHs largest common
stockholder), and a subsidiary of Credit Suisse First Boston LLC (CSFB). The
Credit Agreement relating to that loan (CSFBM Credit Agreement) provided
USHEALTH with total loan commitments of $11 million, all of which were drawn in April
2001. Under restructured terms effective December 31, 2003, the loan bears interest at a
rate of 6% per annum and matures in March 2010. Absent any acceleration following an event
of default, USHEALTH may elect to pay interest in kind by issuance of additional notes.
During the three months ended March 31, 2005, USHEALTH issued $245,000 in additional notes
for payment of interest in kind which increased the notes payable balance to CSFBM at
March 31, 2005 to approximately $16.5 million. USHEALTHs obligations to CSFBM are
secured, pursuant to a guaranty and security agreement and pledge agreements, by
substantially all of the assets of USHEALTH and its subsidiaries (excluding the capital
stock and the assets of AICT, FLICA, NFL, NFIC, NCM, USHEALTH Funding, Inc. (formerly
Ascent Funding, Inc.) and Ascent Management, Inc., some or all of which is pledged as
collateral for bank financing described below). USHEALTHs subsidiaries (other than
those listed above) have also guaranteed USHEALTHs obligations under the CSFBM
Credit Agreement. At March 31, 2005, there were no events of default.

Bank Financing.   
The majority of commission advances to NCMs agents are financed through USHEALTH
Funding, Inc. (UFI) (formerly Ascent Funding, Inc.), an indirect wholly owned
subsidiary of USHEALTH. On December 31, 2003, UFI entered into a Credit Agreement (the
Credit Agreement) with Frost National Bank (Frost) that provides
UFI with a $3.0 million revolving loan facility, the proceeds of which are used to
purchase agent advance receivables from NCM and ACB. $250,000 was outstanding under the
Credit Agreement as of March 31, 2005 and December 31, 2004. The Credit Agreement as
amended matures on January 15, 2007, at which time the outstanding principal and interest
will be due and payable. The Company maintains an agent receivable financing arrangement
to facilitate growth in new business sales.

UFIs obligations under the
Credit Agreement are secured by liens upon substantially all of UFIs assets.
UFIs principal assets at March 31, 2005 are net agent receivables of $3.3 million.
In addition, NCM, ACB and USHEALTH have guaranteed UFIs obligation under the Credit
Agreement, and have pledged all of the issued and outstanding shares of the capital stock
of UFI, NFL, and FLICA as collateral for those guaranties (the Guaranty
Agreements). As of March 31, 2005, there were no events of default under the Credit
or Guaranty Agreements.

Inflation.   
          Inflation impacts claim costs and overall operating costs and, although
          inflation has been lower the last few years, hospital and medical costs have
          still increased at a higher rate than general inflation, especially prescription
          drug costs. New, more expensive and wider use of pharmaceuticals is inflating
          health care costs. The Insurance Subsidiaries will continue to establish premium
          rates in accordance with trends in hospital and medical costs along with
          concentrated efforts in various cost containment programs. However, there can be
          no assurance that these efforts will fully offset the impact of inflation or
          that increases in premium rates will equal or exceed increasing health care
          costs.

# ITEM 3 
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

USHEALTH has no material changes to
the disclosure concerning market risk made in its Annual Report on Form 10-K for the year
ended December 31, 2004.



# ITEM 4  CONTROLS
AND PROCEDURES

Evaluation of disclosure controls and procedures.   
Under the supervision and with the participation of
USHEALTHs management, including the Chief Executive Officer and Chief Financial
Officer, the Company has evaluated the effectiveness of its disclosure controls and
procedures as of March 31, 2005, the end of the period covered by this report. Based on
such evaluation, USHEALTHs Chief Executive Officer and Chief Financial Officer have
concluded that, as of March 31, 2005, the end of the period covered by this report, the
Companys disclosure controls and procedures were effective to ensure that
information required to be disclosed by USHEALTH in the reports that it files or submits
under the Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the rules and forms of the Securities and Exchange Commission.

Changes in internal controls.   
There were no changes in the Companys internal controls over
financial reporting that have materially affected, or, are reasonably likely to material
affect, these controls during the period covered by this quarterly report.



PART II





# ITEM 6  EXHIBITS

(a) Exhibits:

The following exhibits are filed
herewith. Exhibits incorporated by reference are indicated in the parentheses following
the description.

|3.1 |  | Second Amended and Restated Certificate of Incorporation of the Company filed with the
Secretary of State of Delaware on March 24, 1999 (incorporated by reference to Exhibit 3.1
to the Ascents Form 8-A filed on March 25, 1999).
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.2 |  | Amended and Restated By-Laws of Ascent, effective as of March 24, 1999 (incorporated by
reference to Exhibit 3.2 to Ascents Form 8-A filed on March 25, 1999).
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.3 |  | Amendment to the By-Laws of Ascent, effective as of April 5, 2000 (incorporated by
reference to Exhibit 3.3 to Ascents Quarterly Report on Form 10-Q for the quarter
ended June 30, 2000)
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.4 |  | Certificate of Elimination of Series A Preferred  Stock of Ascent  Assurance,  Inc. dated December 31, 2003  (incorporated  by
         reference to Exhibit 3.1 to Ascent's 8-K filed on January 6, 2004).
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.5 |  | Certificate of Designation for Series B Convertible  Participating  Preferred Stock of Ascent  Assurance,  Inc. dated December
         31, 2003 (incorporated by reference to Exhibit 3.2 to Ascent's 8-K filed on January 6, 2004).
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.6 |  | Certificate of Amendment of the Second Amended and Restated Certificate of Incorporation dated March 3, 2005.
(Incorporated by reference to Exhibit 3.6 to USHEALTHs 10-K for the year ended December 31, 2004.)
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.1 |  | Form of Common Stock Certificate
(incorporated by reference to Exhibit 4.1 to Ascents Form 8-A filed on March 25,
1999).
|--- |  | -------------------------------------------------------------------------------------------------------------------------

|4.2 |  | Form of Warrant Certificate, included in the Form of Warrant Agreement (incorporated by
reference to Exhibit 4.2 to Ascents Form 8-A filed on March 25, 1999).
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.3 |  | Form of Warrant Agreement dated as of March 24, 1999, between Ascent and LaSalle National
Bank, as warrant agent (incorporated by reference to Exhibit 4.3 to Ascents Form 8-A
filed on March 25, 1999).
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.4 |  | Form of Preferred Stock Certificate (incorporated by reference to Exhibit 4.4 to
Ascents Annual Report on Form 10-K for the year ended December 31, 1998).
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------

|10.1 |  | Second Amended and Restated Receivables Purchase and Sale Agreement, dated as of June 6,
1997 between National Foundation Life Insurance Company, National Financial Insurance
Company, American Insurance Company of Texas, Freedom Life Insurance Company of America,
and Westbridge Funding Corporation (incorporated by reference to Exhibit 10.5 to the
Companys Quarterly Report on Form 10-Q for the quarter ended June 30, 1997).
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.2 |  | Amended and Restated Non-Insurance Company Sellers Receivables Purchase and Sale
Agreement, dated as of June 6, 1997 between American Senior Security Plans, L.L.C.,
Freedom Marketing, Inc., Health Care-One Insurance Agency, Health Care-One Marketing
Group, Inc., LSMG, Inc., Senior Benefits of Texas, Inc., and Westbridge Marketing
Corporation (incorporated by reference to Exhibit 10.6 to the Companys Quarterly
Report on Form 10-Q for the quarter ended June 30, 1997).
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.3 |  | Lock-Up Agreement, dated as of September 16, 1998, by and among the Company and Credit
Suisse First Boston Corporation (incorporated by reference to Exhibit 10.1 to the
Companys Form 8-K filed on September 21, 1998).
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.4 |  | Stock Purchase Agreement, dated as of September 16, 1998, between the Company and Credit
Suisse First Boston Corporation (incorporated by reference to Exhibit 10.2 to the
Companys Form 8-K filed on September 21, 1998).
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.5 |  | Registration Rights Agreement dated as of March 24, 1999 between Ascent and Special
Situations Holdings, Inc.  Westbridge (incorporated by reference to Exhibit 10.13 to
the Companys Annual Report on Form 10-K for the year ended December 31, 1998).
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.6 |  | 1999 Stock Option Plan dated as of March 24, 1999 (incorporated by reference to
Ascents Schedule 14A filed with the Commission on April 30, 1999).
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------

|10.7 |  | Credit Agreement dated April 17, 2001 between Ascent Assurance, Inc. and Credit Suisse
First Boston Management Corporation (incorporated by reference to Exhibit 10.1 to
Ascents Form 8-K filed April 25, 2001).
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.8 |  | Guaranty and Security  Agreement dated April 17, 2001 among Foundation  Financial  Services,  Inc.,  NationalCare(R)Marketing,
         Inc.,  LifeStyles  Marketing Group,  Inc.,  Precision Dialing Services,  Inc., Senior Benefits L.L.C. and Westbridge  Printing
         Services,  Inc., and Credit Suisse First Boston Management Corporation  (incorporated by reference to Exhibit 10.2 to Ascent's
         Form 8-K filed April 25, 2001).
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.9 |  | Pledge Agreement dated April 17, 2001 between Ascent  Assurance,  Inc. and Credit Suisse First Boston  Management  Corporation
         (incorporated by reference to Exhibit 10.3 to Ascent's Form 8-K filed April 25, 2001).
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.10 |  | Employment Agreement dated as of December 18, 2002, by and between Ascent, Ascent
Management, Inc. and Mr. Patrick J. Mitchell (incorporated by reference to Exhibit 10.36
to Ascents Annual Report on Form 10-K for the year ended December 31, 2002).
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.11 |  | Employment Agreement dated as of December 18, 2002, by and between Ascent, Ascent
Management, Inc. and Mr. Patrick H. ONeill (incorporated by reference to Exhibit
10.37 to Ascents Annual Report on Form 10-K for the year ended December 31, 2002).
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.12 |  | Employment Agreement dated as of January 10, 2003, by and between Ascent, Ascent
Management, Inc. and Mr. Konrad H. Kober (incorporated by reference to Exhibit 10.38 to
Ascents Annual Report on Form 10-K for the year ended December 31, 2002).
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.13 |  | Employment Agreement dated as of January 10, 2003, by and between Ascent, Ascent
Management, Inc. and Ms. Cynthia B. Koenig (incorporated by reference to Exhibit 10.39 to
Ascents Annual Report on Form 10-K for the year ended December 31, 2002).
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.14 |  | First Amendment to Credit Agreement dated February 26, 2003 between Ascent and Credit
Suisse First Boston Management Corporation (incorporated by reference to Exhibit 10.45 to
Ascents Annual Report on Form 10-K for the year ended December 31, 2002).
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.15 |  | Exchange Agreement Among Ascent Assurance, Inc., Credit Suisse First Boston Management,
LLC, and Special Situations Holdings, Inc.  Westbridge dated December 31, 2003
(incorporated by reference to Exhibit 10.1 to Ascents 8-K filed on January 6, 2004).
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.16 |  | First Amendment to Registration Rights Agreement between Ascent Assurance, Inc. and
Special Situations Holdings, Inc.  Westbridge dated December 31, 2003 (incorporated
by reference to Exhibit 10.2 to Ascents 8-K filed on January 6, 2004).
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.17 |  | Second Amendment to Credit Agreement dated December 31, 2003 between Ascent Assurance,
Inc. and Credit Suisse First Boston Management, LLC (incorporated by reference to Exhibit
10.3 to Ascents 8-K filed on January 6, 2004).
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.18 |  | First Amendment and Waiver to Guaranty and Security Agreement dated December 31, 2003 between Foundation  Financial  Services,
         Inc.,  NationalCare(R)Marketing,  Inc.,  Lifestyles Marketing Group, Inc., Precision Dialing Services,  Inc., Senior Benefits,
         LLC, and Westbridge  Printing  Services,  Inc. and Credit Suisse First Boston  Management,  LLC  (incorporated by reference to
         Exhibit 10.4 to Ascent's 8-K filed on January 6, 2004).
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.19 |  | Intercreditor and Subordination Agreement among the Frost National Bank, Credit Suisse
First Boston Management, LLC, and Ascent Assurance, Inc. and named subsidiaries dated
December 31, 2003 (incorporated by reference to Exhibit 10.5 to Ascents 8-K filed on
January 6, 2004).
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.20 |  | Credit Agreement dated as of December 31, 2003 among Ascent Funding, Inc., Ascent
Assurance, Inc., NationalCare®Marketing, Inc. and the Frost National Bank
including exhibits to such agreement, Pledge and Security Agreement dated December 31,
2003 between NationalCare® Marketing, Inc. and Frost National Bank, Pledge
and Security Agreement dated December 31, 2003 between Ascent Assurance, Inc. and Frost
National Bank, Revolving Promissory Note dated December 31, 2003 between Ascent Funding,
Inc. and Frost National Bank, Security Agreement dated December 31, 2003 between Ascent
Funding, Inc. and Frost National Bank, Waiver of Jury Trial and Notice of Final Agreement
dated December 31, 2003 between Ascent Funding, Inc. and Frost National Bank and
Intercreditor and Subordination Agreement among Frost National Bank, Credit Suisse First
Boston Management, LLC and Ascent Assurance, Inc. and named subsidiaries dated December
31, 2003. (Incorporated by reference to Exhibit 10.49 to Ascents 10-K for the year
ended December 31, 2003.)
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.21 |  | Extension of Employment Agreement dated as of March 16, 2004 by and between Ascent, Ascent
Management, Inc. and Mr. Patrick J. Mitchell. (Incorporated by reference to Exhibit 10.39
to Ascents 10-Q for the quarter ended March 31, 2004.)
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.22 |  | Extension of Employment Agreement dated as of March 16, 2004 by and between Ascent, Ascent
Management, Inc. and Mr. Patrick H. ONeill. (Incorporated by reference to Exhibit
10.40 to Ascents 10-Q for the quarter ended March 31, 2004.)
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.23 |  | First Amendment To Credit Agreement And Security Agreement dated as of July 6, 2004
between Ascent Funding, Inc., Ascent Assurance, Inc., NationalCare® Marketing, Inc.,
AmeriCare Benefits, Inc. and Frost National Bank including exhibits to such agreement,
Guaranty Agreement between AmeriCare Benefits, Inc. and Frost National Bank; First
Restated Guaranty Agreement between NationalCare® Marketing, Inc. and Frost National
Bank dated July 6, 2004; First Amendment to Intercreditor and Subordination Agreement
among Frost National Bank, Credit Suisse First Boston Management, LLC and Ascent
Assurance, Inc. and named subsidiaries dated as of July 6, 2004 (Incorporated by reference
to Exhibit 10.41 to Ascents 10-Q for the quarter ended September 30, 2004.)
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.24 |  | Employment Agreement dated as of September 1, 2004 by and between Ascent Assurance, Inc.
and Mr. Benjamin M. Cutler. (Incorporated by reference to Exhibit 10.42 to Ascents
10-Q for the quarter ended September 30, 2004.)
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.25 |  | Third Amendment to Credit Agreement dated September 1, 2004 between Ascent Assurance, Inc.
and Credit Suisse First Boston Management, LLC. (Incorporated by reference to Exhibit
10.43 to Ascents 10-Q for the quarter ended September 30, 2004.)
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.26 |  | First Amendment to Pledge Agreement dated October 28, 2004 between Ascent Assurance, Inc.
and Credit Suisse First Boston Management, LLC. (Incorporated by reference to Exhibit
10.44 to Ascents 10-Q for the quarter ended September 30, 2004.)
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.27 |  | Second  Amendment  and Consent to Guaranty  and  Security  Agreement  dated  October 28,  2004  between  Foundation  Financial
         Services,  Inc.,  NationalCare(R)Marketing,  Inc., Lifestyles Marketing Group, Inc., Precision Dialing Services,  Inc., Senior
         Benefits  LLC, and  Westbridge  Printing  Services,  Inc. and Credit  Suisse First Boston  Management  LLC.  (Incorporated  by reference
to Exhibit 10.45 to Ascents 10-Q for the quarter ended September 30, 2004.)
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.28 |  | Sale and Purchase Agreement dated October 29, 2004 between Ascent Assurance,  Inc. and Printers Alliance,  Inc.  (Incorporated
         by reference to Exhibit 10.46 to Ascent's 10-Q for the quarter ended September 30, 2004.)
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.29 |  | Second Amendment to Credit  Agreement,  dated as of December 29, 2004, among Ascent Funding,  Inc.,  Ascent  Assurance,  Inc.,
         NationalCare(C)Marketing,  Inc.,  AmeriCare  Benefits,  Inc. and the Frost National  Bank;  Waiver of Jury Trial and Notice of
         Final Agreement  between Ascent Funding Inc. and The Frost National Bank dated December 29, 2004.  (Incorporated  by reference
         to Exhibit 10.29 to USHEALTHs 10-K for the year ended December 31, 2004.)
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.30 |  | Consent Related to Intercreditor and Subordination Agreement among the Frost National
Bank, Credit Suisse First Boston Management, LLC, and Ascent Assurance, Inc. and named
subsidiaries dated December 29, 2004. (Incorporated by reference to Exhibit 10.30 to
USHEALTHs 10-K for the year ended December 31, 2004.)
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|31.1* |  | Certification  of  Benjamin  M.  Cutler,  Chairman  and Chief  Executive  Officer of the  Company  pursuant to Section 302 of the
         Sarbanes-Oxley Act of 2002.
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|31.2* |  | Certification  of Cynthia B.  Koenig,  Chief  Financial  Officer  and  Treasurer  of the  Company  pursuant to Section 302 of the
         Sarbanes-Oxley Act of 2002.
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|32.1* |  | Certification of Benjamin M. Cutler, Chairman and Chief Executive Officer and Cynthia B.
Koenig, Senior Vice President, Chief Financial Officer and Treasurer of the Company
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# (b) Reports on Form 8-K

The registrant filed a Report on Form
8-K dated March 4, 2005 under Item 9. Regulation FD Disclosure and also under
Item 12. Results of Operations and Financial Condition attaching a copy of the
registrants press release reporting the registrants financial results for the fourth
quarter of 2004.




*Filed Herewith.




Form 10-Q

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 thereunto duly authorized.

| | USHEALTH GROUP, INC.                                                                                                                               
| | ---------------------------------------------------------------------------------------------------------------------------------------------------
|
|
| | /s/ Cynthia B. Koenig
     Cynthia B. KoenigSenior Vice President,Chief Financial Officer and Treasurer(Principal Financial and Accounting Officer)

Dated at Fort Worth, TexaMay
4, 2005