United StatesSECURITIES AND EXCHANGE COMMISSION
  Washington, D.C. 20549

FORM 10-Q

|x | QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the
quarterly period ended ........................... June 30, 2006                                                               
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  | OR                                                                                                                                                                                                                            
|o | TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
from .................... to .................... Commission file number ........................... 0-13591

HEALTHAXIS
INC.(Exact name of registrant as specified in its charter)

|**Pennsylvania**
      (State or other jurisdiction of 
      incorporation or organization) | **23-2214195**
      (I.R.S. Employer 
      Identification No.)
|-------------------------------------------------------------------------------------------- | ----------------------------------------------------------------

7301 N. State Highway 161, Suite 300,
Irving, Texas 75039(Address of principal executive offices)(Zip Code)

Registrant's
telephone number, including area code: (972) 443-5000

Former name,
former address and former fiscal year, if changed since last report: N/A

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.    
x Yes   
o No

Indicate
by check mark whether the registrant is a large  accelerated  filer, an accelerated
filer,  or a  non-accelerated  filer.  See definition of  accelerated filer and
large accelerated filer in Rule 12b-2 of the Exchange Act.  (Check one):

|Large accelerated
filer o | Accelerated filer
o | Non-accelerated filer
x
|------------------------- | ------------------- | -----------------------

Indicate by
check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). o Yes    
x No

Indicate the
number of shares outstanding of each of the issuer's classes of common stock, as of the
latest practicable date: 8,133,112 shares of common stock,  par value $.10, outstanding
as of August 4, 2006.

Page 1 of 20



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Healthaxis
Inc.

Table of
Contents

|                    |                                                                       |  |  | Page |   
|------------------- | --------------------------------------------------------------------- |  |  | ---- | --
|                    |                                                                       |  |  |      |   
|PART
      I        | Financial
      Information                                           |  |  |      |   
|                    |                                                                       |  | 
|Item
      1.       | Financial
      Statements                                            |  |  |      | 3 
|                    | Consolidated
      Balance Sheets                                     |  |  |      | 3 
|                    | Consolidated
      Statements of Operations                           |  |  |      | 4 
|                    | Consolidated
      Statements of Cash Flows                           |  |  |      | 5 
|                    | Notes
      to Consolidated Financial Statements                      |  |  |      | 6 
|                    |                                                                       |  | 
|Item
      2.       | Managements
      Discussion and Analysis of Financial Condition and |  | 
|                    | Results
      of Operations                                           |  |  |      | 10
|                    |                                                                       |  |  |      |   
|Item
      3.       | Quantitative
      and Qualitative Disclosures About Market Risk      |  |  |      | 16
|                    |                                                                       |  |  |      |   
|Item
      4.       | Controls
      and Procedures                                         |  |  |      | 16
|                    |                                                                       |  | 
|PART
      II.      | Other
      Information                                               |  | 
|                    |                                                                       |  |  |      |   
|Item
      1-5      |                                                                       |  |  |      | 17
|                    |                                                                       |  |  |      |   
|Item
      6.       | Exhibits                                                              |  |  |      | 18
|                    |                                                                       |  |  |      |   
|Signatures          |                                                                       |  |  | 19   |   
|                    |                                                                       |  |  |      |   
|Exhibit
      Index |                                                                       |  |  | 20   |   

Page 2 of 20



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PART I.
FINANCIAL INFORMATION

Item 1.
Consolidated Financial Statements

Healthaxis
Inc. and SubsidiariesConsolidated Balance Sheets

(In thousands
except share and per share data) (Unaudited)

|                                                                                                          |  |  | June 30,
        2006 |          | December 31,
        2005 |  
|--------------------------------------------------------------------------------------------------------- |  |  | --------------------- | -------- | ------------------------- | -
|                                                                                                          |  |  |                       |          |                           |  
|Assets                                                                                                    |  |  |                       |          |                           |  
|Current
      assets:                                                                                     |  |  |                       |          |                           |  
|Cash
      and cash equivalents                                                                           |  |  | $                     | 2,843    |                           | $
|Accounts
      receivable, net of allowance for doubtful accounts of $7 each period                       |  |  |                       | 2,969    |                           |  
|Prepaid
      expenses                                                                                    |  |  |                       | 656      |                           |  
|                                                                                                          |  |  |                       |          |                           |  
|Total
      current assets                                                                                |  |  |                       | 6,468    |                           |  
|                                                                                                          |  |  |                       |          |                           |  
|Property,
      equipment and software, less accumulated depreciation and                                 |  |  |                       |          |                           |  
|amortization
      of $6,217 and $5,943, respectively                                                     |  |  |                       | 1,764    |                           |  
|Contract
      start-up costs, less accumulated amortization of $1,847 and $1,681, respectively           |  |  |                       | 1,043    |                           |  
|Goodwill                                                                                                  |  |  |                       | 11,276   |                           |  
|Other
      assets                                                                                        |  |  |                       | 213      |                           |  
|                                                                                                          |  |  |                       |          |                           |  
|Total
      assets                                                                                        |  |  | $                     | 20,764   |                           | $
|                                                                                                          |  |  |                       |          |                           |  
|                                                                                                          |  |  |                       |          |                           |  
|Liabilities
      and Stockholders Equity                                                                |  |  |                       |          |                           |  
|Current
      liabilities:                                                                                |  |  |                       |          |                           |  
|Accounts
      payable                                                                                    |  |  | $                     | 1,447    |                           | $
|Accrued
      liabilities                                                                                 |  |  |                       | 778      |                           |  
|Deferred
      revenues                                                                                   |  |  |                       | 1,273    |                           |  
|Note
      payable, current portion                                                                       |  |  |                       | 1,218    |                           |  
|Current
      portion, post retirement and employment liabilities                                         |  |  |                       | 106      |                           |  
|Current
      portion, capital lease obligations                                                          |  |  |                       | 169      |                           |  
|                                                                                                          |  |  |                       |          |                           |  
|Total
      current liabilities                                                                           |  |  |                       | 4,991    |                           |  
|                                                                                                          |  |  |                       |          |                           |  
|Post
      retirement and employment liabilities                                                          |  |  |                       | 789      |                           |  
|Note
      payable, net of current portion                                                                |  |  |                       | 477      |                           |  
|Capital
      lease obligations                                                                           |  |  |                       |         |                           |  
|Other
      liabilities                                                                                   |  |  |                       | 406      |                           |  
|                                                                                                          |  |  |                       |          |                           |  
|Total
      liabilities                                                                                   |  |  |                       | 6,663    |                           |  
|                                                                                                          |  |  |                       |          |                           |  
|Commitments
      and contingencies                                                                       |  |  |                       |          |                           |  
|                                                                                                          |  |  |                       |          |                           |  
|Stockholders
      Equity:                                                                               |  |  |                       |          |                           |  
|Preferred
      stock, par value $1.00: authorized 100,000,000 shares:                                    |  |  |                       |          |                           |  
|Series
      A Convertible, 2,151,658 and 2,751,658 shares issued and outstanding, respectively
      (no |  |  |                       |          |                           |  
|liquidation
      preference)                                                                             |  |  |                       | 2,152    |                           |  
|Common
      stock, par value $.10: authorized 1,900,000,000 shares,                                      |  | 
|issued
      and outstanding 6,721,855 and 6,088,855 shares, respectively                                 |  |  |                       | 672      |                           |  
|Note
      receivable from employees                                                                      |  |  |                       | (23      | )                         |  
|Additional
      paid-in capital                                                                          |  |  |                       | 449,130  |                           |  
|Accumulated
      deficit                                                                                 |  |  |                       | (437,830 | )                         |  
|                                                                                                          |  |  |                       |          |                           |  
|Total
      stockholders equity                                                                          |  |  |                       | 14,101   |                           |  
|                                                                                                          |  |  |                       |          |                           |  
|Total
      liabilities and stockholders equity                                                          |  |  | $                     | 20,764   |                           | $
|                                                                                                          |  |  |                       |          |                           |  

See notes to
unaudited consolidated financial statements.

Page 3 of 20



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Healthaxis
Inc. and SubsidiariesConsolidated Statements of Operations

(In
thousands, except share and per share data) (Unaudited)

|                                                             |  |  | Three
        Months Ended June 30, |           | Six
        Months Ended June 30, |  
|------------------------------------------------------------ |  |  | ----------------------------------- | --------- | --------------------------------- | -
|                                                             |  |  |                                     |           |                                   |  
|                                                             |  |  | 2006                                |           | 2005                              |  
|                                                             |  |  |                                     |           |                                   |  
|Revenue                                                      |  |  | $                                   | 4,114     |                                   | $
|Expenses:                                                    |  |  |                                     |           |                                   |  
|Cost
      of revenues                                       |  |  |                                     | 3,409     |                                   |  
|Sales
      and marketing                                    |  |  |                                     | 319       |                                   |  
|General
      and administrative                             |  |  |                                     | 632       |                                   |  
|Reversal
      of contingent tax liability                   |  |  |                                     |          |                                   |  
|Lease
      abandonment charge                               |  |  |                                     |          |                                   |  
|Amortization
      of intangibles                            |  |  |                                     |          |                                   |  
|                                                             |  |  |                                     |           |                                   |  
|Total
      expenses                                         |  |  |                                     | 4,360     |                                   |  
|                                                             |  |  |                                     |           |                                   |  
|Operating
      loss                                         |  |  |                                     | (246      | )                                 |  
|                                                             |  |  |                                     |           |                                   |  
|Interest
      and other income, net                         |  |  |                                     | 27        |                                   |  
|Interest
      expense                                       |  |  |                                     | (47       | )                                 |  
|                                                             |  |  |                                     |           |                                   |  
|Net loss                                                     |  |  | $                                   | (266      | )                                 | $
|                                                             |  |  |                                     |           |                                   |  
|Net loss
      per share of common stock (basic and diluted) |  |  | $                                   | (0.04     | )                                 | $
|                                                             |  |  |                                     |           |                                   |  
|                                                             |  |  |                                     |           |                                   |  
|Weighted
      average common shares and equivalents used in |  |  |                                     | 6,123,833 |                                   |  
|computing
      basic and diluted loss per share             |  |  |                                     |           |                                   |  

See notes to
unaudited consolidated financial statements.

Page
  4 of 20



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Healthaxis
Inc. and Subsidiaries

Consolidated
Statements of Cash Flows

(In
thousands) (Unaudited)

|                                                                                  |  |  | Six
        Months Ended June 30, |       
|--------------------------------------------------------------------------------- |  |  | --------------------------------- | ------
|                                                                                  |  |  |                                   |       
|                                                                                  |  |  | 2006                              |       
|Cash
      flows from operating activities                                        |  |  |                                   |       
|Net
      loss                                                                    |  |  | $                                 | (728  
|Adjustments
      to reconcile net loss to net cash used in operating activities: |  |  |                                   |       
|Depreciation
      and amortization                                               |  |  |                                   | 535   
|Restricted
      stock compensation                                               |  |  |                                   | 41    
|Loss
      on disposition of assets                                               |  |  |                                   | 2     
|Reversal
      of tax accrual                                                     |  |  |                                   |      
|Change
      in:                                                                  |  |  |                                   |       
|Accounts
      receivable                                                         |  |  |                                   | (1,046
|Prepaid
      expenses and other current assets                                   |  |  |                                   | (28   
|Other
      assets                                                                |  |  |                                   | (133  
|Accounts
      payable and accrued liabilities                                    |  |  |                                   | 119   
|Accrued
      charge on lease abandonment                                         |  |  |                                   |      
|Deferred
      revenues                                                           |  |  |                                   | 647   
|Other
      liabilities                                                           |  |  |                                   | (109  
|                                                                                  |  |  |                                   |       
|Net
      cash used in operating activities                                       |  |  |                                   | (700  
|                                                                                  |  |  |                                   |       
|                                                                                  |  |  |                                   |       
|Cash
      flows from investing activities                                        |  |  |                                   |       
|Investment
      in capitalized software and contract start-up costs              |  |  |                                   | (758  
|Purchases
      of property, equipment and software                               |  |  |                                   | (409  
|Proceeds
      from sale of property, equipment, and software                     |  |  |                                   |      
|                                                                                  |  |  |                                   |       
|Net
      cash used in investing activities                                       |  |  |                                   | (1,167
|                                                                                  |  |  |                                   |       
|                                                                                  |  |  |                                   |       
|Cash
      flows from financing activities                                        |  |  |                                   |       
|Net
      (payments) proceeds from issuance of common stock                       |  |  |                                   | (19   
|                                                                                  |  |  |                                   |       
|Net
      cash (used) generated in financing activities                           |  |  |                                   | (19   
|                                                                                  |  |  |                                   |       
|(Decrease)
      increase in cash and cash equivalents                            |  |  |                                   | (1,886
|Cash
      and cash equivalents, beginning of period                              |  |  |                                   | 4,729 
|                                                                                  |  |  |                                   |       
|Cash
      and cash equivalents, end of period                                    |  |  | $                                 | 2,843 
|                                                                                  |  |  |                                   |       
|                                                                                  |  |  |                                   |       
|Non-cash
      financing activities                                               |  |  |                                   |       
|Accounts
      receivable applied to note and interest payable in                 |  |  | $                                 | 390   
|lieu
      of cash                                                                |  |  |                                   |       
|                                                                                  |  |  |                                   |       

See notes to
unaudited consolidated financial statements.

Page 5 of 20



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Healthaxis
Inc. and SubsidiariesNotes to Unaudited Consolidated Financial StatementsJune 30, 2006

Note A  Description
of business and basis of presentation

Unaudited
Financial Information

The
unaudited consolidated financial statements have been prepared by Healthaxis Inc. and its
subsidiaries  (Healthaxis or the "Company"),  pursuant  to the
rules and regulations of the Securities and Exchange Commission and reflect all
adjustments  consisting of normal recurring entries,  which, in the opinion  of the
Company,  are necessary to present fairly the results for the interim periods.  The
interim financial statements do not include all disclosures provided in  fiscal year end
financial statements prepared in accordance with accounting  principles  generally
accepted in the United States of America,  although the Company  believes that the
accompanying  disclosures  are adequate to make the  information  presented not
misleading.  Results of operations for the three and six-month  periods ended June 30,
2006, are not necessarily indicative of the results that may be expected for the year
ending December 31, 2006.

These
financial  statements should be read in conjunction with the financial  statements and
notes thereto contained in the Company's Annual Report on  Form 10-K for the year ended
December 31, 2005

Earnings Per
Share

Basic
loss per share is  computed  using only the  weighted  average  number of common  shares
outstanding  during the  respective  periods.  Diluted  earnings per share is computed to
show the dilutive effect,  if any, of convertible  preferred  stock,  stock options and
warrants using the treasury stock method  based on the average  market price of the stock
during the  respective  periods.  The effect of including  the  convertible  preferred
stock,  stock  options and  warrants in the computation of diluted earnings per share
would be  anti-dilutive  for each of the periods  presented,  thus these items have not
been included in  the computation.  Following is a summary of these potentially dilutive
securities:

|                                       |  |  |  | As
        of June 30, | 
|-------------------------------------- |  |  |  | ---------------------- | 
|                                       |  |  |  |                        | 
|                                       |  |  |  | 2006                   | 
|                                       |  |  |  |                        | 
|Options                                |  |  |  | 1,299,328              | 
|Restricted
      stock                 |  |  |  | 201,000                | 
|Warrants                               |  |  |  | 7,229,186              | 
|Preferred
      stock                  |  |  |  | 2,151,658              | 
|                                       |  |  |  |                        | 
|Total
      common shares if converted |  |  |  | 10,881,172             | 

In
June 2006, 600,000 shares of Series A Convertible Preferred Stock were converted into
600,000 shares of Common Stock at the holders request.  On  May 10, 2006, the
Company granted 234,000 shares of restricted stock to its directors, officers, and key
employees. The restricted stock has been valued at  $292,500, which represents the
trading value of the stock as quoted on NASDAQ May 10, 2006.  The shares of
restricted stock granted to directors vest over the  calendar year of service and the
shares of restricted stock granted to officers and key employees vest according to
performance criteria related to Company  objectives.  The value of directors shares
that have vested has been reflected as common stock issued and outstanding and recorded
as compensation expense in  general and administrative expenses with an offsetting amount
as deferred stock compensation, which is a component of additional paid in capital.  The
deferred  stock compensation amount related to officers and key employees shares
is recognized when it is deemed probable that the performance criteria will be  achieved.
Non-cash stock based compensation in the accompanying statement of operations for the
three and six months ended June 30, 2006 was $41,000 related to  these grants.

Page 6 of 20



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Note B  Recently
Adopted Accounting Pronouncements

In
December  2004,  the FASB issued a revision of  Statement of Financial  Accounting
Standards  No. 123 (SFAS  123R),  Accounting  for  Stock-Based  Compensation which
requires  companies to use SFAS 123R instead of Accounting  Principles  Board Opinion No.
25 Accounting  for Stock Issued to Employees (APB  25) which  allowed
companies  to measure and record the cost of employee  services  received in exchange
for an award of equity  instruments  based on intrinsic  value. SFAS 123R requires
companies to measure the cost of employee services  received in exchange for an award of
equity  instruments  (typically stock options)  based on grant-date fair value of the
award.  The fair value is estimated  using  option-pricing  models.  The resulting cost
is recognized over the period during  which an employee is required to provide  service
in exchange  for the award,  usually the vesting  period.  Prior to the adoption of SFAS
123R,  this  accounting  treatment was optional with pro forma disclosures required.

We
adopted SFAS 123R effective  January 1, 2006 using the modified  prospective  transition
method.  SFAS 123R is effective for all stock options and  other awards we grant
beginning  January 1, 2006 and any stock  options or other awards  previously  granted
but that vest in 2006 or in the future.  In November  2005, the Compensation  Committee
of the Board of Directors  approved the acceleration of vesting of all unvested  options,
the exercise price for which exceeded  the then current  stock price,  thus there is no
compensation  expense  required  related to prior stock option  grants and no new option
grants were made in the  first six months of 2006.

The
table below summarizes stock option activity pursuant to our plans for the six months
ended June 30, 2006:

|                                         |  |  |  | Number
        of
        Shares |   |   | Weighted
        Average
        Exercise Price | 
|---------------------------------------- |  |  |  | -------------------------------- | - | - | ----------------------------------------------- | 
|                                         |  |  |  |                                  |  
|Outstanding
      at beginning of period |  |  |  | 1,366,843                        |   | $ | 7.95                                            | 
|Granted                                  |  |  |  |                                 |   |   |                                                | 
|Exercised                                |  |  |  |                                 |   |   |                                                | 
|Forfeited                                |  |  |  | (67,515                          | ) |   | 2.33                                            | 
|Expired                                  |  |  |  |                                 |   |   |                                                | 
|                                         |  |  |  |                                  |  
|Outstanding
      at end of period       |  |  |  | 1,299,328                        |   | $ | 8.24                                            | 
|                                         |  |  |  |                                  |  
|Exercisable
      at end of period       |  |  |  | 1,299,328                        |   | $ | 8.24                                            | 

Shares
available for future stock grants to employees and directors under existing plans were
828,483 at June 30, 2006.  At June 30, 2006, the  exercise price of all outstanding
options exceeded the current market price thus there was no intrinsic value of options
outstanding or exercisable.

Page 7 of 20



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The
following table summarizes the range of exercise prices and weighted average remaining
contractual life of the options  outstanding and the range  of exercise prices for the
options exercisable at June 30, 2006:

|Outstanding
        Options   |  |  | Exercisable
        Options |        
|----------------------------- |  |  | --------------------------- | -------
|                              |  |  |                             |        
|Exercise 
        Price Range |  |  |                             | Number 
|                              |  |  |                             |        
|$
      1.72  2.25           |  |  |                             | 401,750
|$
      2.26  5.00           |  |  |                             | 395,283
|$
      5.01  10.00          |  |  |                             | 234,310
|$
      10.00  87.50         |  |  |                             | 267,985

The
following  table  illustrates the pro forma effect on net loss and loss per share for the
three and six months ended June 30, 2005, had we applied  the fair value recognition
provisions of SFAS No. 123, Accounting for Stock-based Compensation (table in
thousands, except per share data):

|                                                          |  |  | 2005                 |      
|--------------------------------------------------------- |  |  | -------------------- | -----
|                                                          |  |  |                      |      
|                                                          |  |  | Three
        Months |      
|                                                          |  |  |                      |      
|Net loss,
      as reported                               |  |  | $                    | (325 
|Pro forma
      stock based compensation expense computed |  |  |                      |      
|under
      the fair value method                         |  |  |                      | (168 
|                                                          |  |  |                      |      
|Pro forma
      net loss                                  |  |  | $                    | (493 
|                                                          |  |  |                      |      
|Loss
      per share of common stock, basic and diluted   |  |  |                      |      
|as
      reported                                         |  |  | $                    | (0.07
|                                                          |  |  |                      |      
|Pro
      forma                                           |  |  | $                    | (0.10
|                                                          |  |  |                      |      

The
Company  granted  329,000  options in the second quarter of 2005.  The fair value of the
options  granted are estimated on the date of grant using  the  Black-Scholes  option
pricing model. The major  assumptions  used include no dividends paid, a weighted
average  expected life of 2.8 years,  expected stock  volatility of 69% and risk free
interest rates of 3.71%. The weighted-average grant-date fair value of options granted
during 2005 was $0.80.

Note C  Post
Retirement Benefits

Healthaxis
has an obligation to provide certain post retirement benefits,  primarily lifetime
health,  dental and life insurance coverage,  to a group  of individuals  consisting of
three former executives and 17 retired employees of Provident American  Corporation,
which became  Healthaxis.  The following table  sets forth the components of net
post-retirement benefit expense for all plans:

|                                         |  |  | (Table
        in $000s)            |   
|---------------------------------------- |  |  | ----------------------------------- | --
|                                         |  |  | Three
        Months Ended June 30, |   
|                                         |  |  |                                     |   
|                                         |  |  | 2006                                |   
|                                         |  |  |                                     |   
|Interest
      cost                      |  |  | $                                   | 13
|Transition
      obligation amortization |  |  |                                     | 15
|                                         |  |  |                                     |   
|Net post
      retirement expense        |  |  | $                                   | 28
|                                         |  |  |                                     |   

Note D  Significant
Customer Concentrations

Page 8 of 20



---

For
the three months ended June 30, 2006 and 2005,  four  customers  accounted for $2.9
million  (71%) and $2.8 million  (69%),  respectively,  of the  Companys  total
revenues.  For the six months  ended June 30, 2006 and 2005,  these four  customers
accounted  for $5.6 million  (70%) and $5.5 million  (67%),  respectively,  of the Companys
total revenues.  At June 30, 2006 and December 31, 2005, two customers  individually
accounted for more than 10% of the Companys  accounts receivable:

|                 |  |  | June
        30, 2006 |         | December
        31, 2005 | 
|---------------- |  |  | --------------------- | ------- | ------------------------- | 
|                 |  |  |                       |         |                           | 
|                 |  |  | Amount                |         | %
        of total        | 
|                 |  |  |                       |         |                           | 
|Customer
      A |  |  | $                     | 887,000 |                           | 
|Customer
      B |  |  | $                     | 572,000 |                           | 

These customers
are making payments in accordance with the terms of their contracts.

Note E  Other
Liabilities and Contingencies

Other
liabilities include $324,000 of contingent tax liabilities at June 30, 2006 and December
31, 2005.

Note  F
 Related Party Transactions

As
described in our 2005 Form 10-K, the Company  entered into a five year Remote  Resourcing
Agreement  with  Healthcare BPO Partners L.P., a company  affiliated with Tak Investments
and owned by Mr. Tak.  Healthcare BPO Partners,  based in Jaipur,  India,  provides
personnel and infrastructure  that is utilized  by the Company to provide  business
process  outsourcing  services  and other  software  development  and  technical  support
services to support the  Companys  operations.  The resources provided by
Healthcare BPO Partners  supplement the Companys existing  wholly-owned  operations
in Utah, Texas and Jamaica.  As a part  of the Resourcing  Agreement,  Healthcare BPO
Partners also provides data center hosting  services,  at a Vienna  Virginia  facility,
to Healthaxis.  For the six  months ended June 30, 2006,  the Company  incurred  costs of
approximately  $512,000  related to the  Resourcing  Agreement and at June 30, 2006, the
Company had  accounts payable to Healthcare BPO Partners of approximately $95,000.

Note G  Subsequent
Event

Effective
July 31, 2006, the Company entered into a renewal  promissory note with  HealthMarkets, Inc.,
formerly known as UICI.  Under the prior promissory  note, a balance of  approximately
$1.5 million would have been due at its maturity date of September 30, 2006. Under the
renewal  promissory  note,  Healthaxis  will pay  HealthMarkets  $500,000 by August 31,
2006 and continue to make  monthly payments equal to the greater of $65,000 or one-half of the monthly invoice amount for services rendered to an affliate of HealthMarkets. A final  installment in the amount of all  outstanding
principal  plus accrued interest is due and payable February 1, 2008.

Page 9 of 20



---

Item 2.
Managements Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking
Statements

All
statements other than statements of historical fact contained in this report,  including
statements in this Managements  Discussion and Analysis  of Financial Condition
and Results of Operations concerning the Company's financial position and
liquidity,  results of operations,  prospects for future growth,  and other matters are
forward-looking  statements.  These statements may be identified with words such as
anticipate,  believe, plan, estimate,
expect,  intend,  should,  could,
goal,  target,  designed,  on track,
comfortable  with,  "optimistic  and other similar  expressions,
and  constitute  forward-looking  statements within the meaning of Section 27A of the
Securities Act of 1933, as amended,  and Section 21E of the Securities  Exchange Act of
1934,  as amended.  These  forward-looking  statements are subject to known and unknown
risks,  uncertainties  and other  factors,  which may cause actual results to be
materially  different from those  contemplated  by the  forward-looking  statements.
Such factors  include the risks and  uncertainties  identified in Healthaxis  documents
filed with, or furnished to, the Securities and Exchange  Commission,  including without
limitation those identified under the caption Risk Factors in  the Companys
Form 10-K for the year ended December 31, 2005. The Company  undertakes no obligation to
publicly update or revise any  forward-looking  statements,  whether as a result of new
information, future events or otherwise.  Readers are cautioned not to place undue
reliance on forward-looking statements.

Overview

Healthaxis
Inc. is a Pennsylvania  corporation,  which was organized in 1982.  Healthaxis common
stock trades on the NASDAQ Capital Market under the  symbol  HAXS. The
operations of Healthaxis are conducted  through its  subsidiary,  Healthaxis,  Ltd.
Unless  otherwise  indicated,  or the context  otherwise  requires,  all references in
this document to the Company,  Healthaxis,  we,
our or us include  Healthaxis Inc. and all of its subsidiaries.
Healthaxis  maintains a website at  www.healthaxis.com.  The Healthaxis Code of Conduct
can be found on the Healthaxis  website.  Information found on the Healthaxis  website
is not a part of this report.

The
Company  reported  revenue of $4.1 million and an operating loss of $246,000 in the
second  quarter of 2006.  Revenue was  approximately  $103,000  more than the second
quarter of 2005, and more importantly,  it showed sequential  improvement of
approximately $196,000 as compared the first quarter of 2006 and  improvement of
approximately  $389,000 from the fourth quarter of 2005.  The operating  loss for the
second  quarter of 2006 improved  approximately  $194,000 as  compared to the first
quarter of 2006.  Management  believes that because the Company  provides an ASP service
which generates  revenue based on a subscription of  per-employee-per-month  charges,
these  sequential  comparisons are as meaningful as comparisons to the prior year.
Comparisons  between the current and prior  years  operating loss  understate the
magnitude of the  improvement in the financial  condition of the Company  because
financial  results for the three and six  months  ended June 30,  2005  include the net
$479,000  benefit of two  non-recurring  events:  a) the  Company was able to gain from
the  reversal of a $979,000  contingent  tax  liability  and b) the Company  recorded a
$500,000  lease  abandonment  charge  related to moving the  headquarters  office.  As
evidenced by the  financial results for the second quarter of 2006, the Company is closer
to completing its profitability objective.

Other
important points  include:

| | o | The
Company  continues  its  large-scale  customer  implementation  that has already  added a
significant  number of  revenue-generating  lives to our  systems.  In  addition,  we
have added new  customers  and we have  renewed  contracts  with a number of  existing
customers.  Due to the  subscription  nature of our business,  these customer wins do not
immediately  impact the operating  results,  but are expected to provide  additional
revenue in future periods.  Due to the sensitive  nature of system changes within our
customers client bases,  new customers  often  request  that we do not  announce
the change.  There is a  perception  in our  industry  that any  significant
implementation  or  conversion  might result in significant  disruption to the customer
and the clients it serves,  thus many new Healthaxis  customers do not  want us to
announce that they are migrating systems.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Page 10 of 20



---

| | o | In
July 2006, we announced the expansion of our Ultimate TPA(TM)  Solution.  The Ultimate TPA
Solution is Healthaxis unique  combination of technology  and BPO services that
help TPAs gain  operational  efficiency and reduce costs.  The packaged suite of
technology and services is offered  as a turnkey solution that benefits  smaller to
midsize  organizations  the most. The Ultimate TPA enables growth minded  organizations
to  pursue their expansion objectives with both minimal capital and infrastructure
investment, and affordable ongoing costs.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | During
June and July of 2006,  two of our  preferred  shareholders  converted  approximately  2
million  shares of their  preferred  stock into common  stock.  Some of these shares were
immediately sold in privately  negotiated  transactions at a price less than the exchange
quoted market  price. As a result, as of August 4, 2006, we had outstanding 8,133,112 shares of common stock and 740,401 shares of preferred stock.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | Effective
July 31, 2006,  the Company  extended its note payable to  HealthMarkets  (formerly
known as UICI).  Under the prior  promissory  note, a  balance of  approximately  $1.5
million  would have been due at its  maturity  date of September  30, 2006.  Under the
renewal  promissory  note,  Healthaxis  will pay  HealthMarkets  $500,000 by August 31,
2006 and  continue  to make monthly payments equal to the greater of $65,000 or one-half of the monthly invoice amount for services rendered to an affliate of HealthMarkets. A final installment in the amount of
all outstanding principal plus accrued interest is due and payable February 1, 2008.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | The
Company is in the late stages of securing  working capital and equipment  lines of credit
that will expand our available  liquidity and strengthen  our financial  condition to
support  continuing  growth.  We are confident that we will complete the working capital
financing,  however,  until such financing is in place, there is always the possibility
that it will not be completed.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Critical
Accounting Policies

Critical
accounting  policies are those which are most  important  to the  financial  statement
presentation  and that  require the most  difficult,  subjective  complex  judgments.  As
described in Note B to the financial  statements,  the Company adopted SFAS 123R in the
first quarter of 2006. There have been  no other changes in the Companys critical
accounting policies as described in the Companys Form 10-K for the year ended
December 31, 2005.

Results of
Operations

Three
months ended June 30, 2006 compared to three months ended June 30, 2005

|                       |  |  | (Table
        in thousands)        |       |      |  
|---------------------- |  |  | ----------------------------------- | ----- | ---- | -
|                       |  |  | Three
        Months Ended June 30, |       |      |  
|                       |  |  | 2006                                |       | 2005 |  
|                       |  |  |                                     |       |      |  
|Revenues               |  |  | $                                   | 4,114 |      | $
|Cost
      of revenues |  |  |                                     | 3,409 |      |  
|                       |  |  |                                     |       |      |  
|Gross
      profit     |  |  | $                                   | 705   |      | $
|                       |  |  |                                     |       |      |  
|%
      of revenue     |  |  |                                     | 17    | %    |  

Page 11 of 20



---

Revenues
were approximately $103,000 (3%) higher in the three months ended June 30, 2006 compared
to the same period in 2005. Professional Services revenue declined $128,000 because
significant work performed in the current period was focused on a significant
implementation, and thus the related revenue is deferred. Deferred revenues
increased $278,000 during the second quarter of 2006. In the prior year, we worked
on several projects that were billable and could be recognized as revenue as services
were performed. Transaction fees were up approximately 8% and license fees were up
approximately 4% due to increases in lives and transactions, primarily from the
ongoing implementation. Data Capture revenue was up approximately 9% as volume from
new customers and groups offset a) a decrease in transactions from existing customers
and b) the continuing trend towards a higher volume of electronic claims.

Cost
of revenues includes all expenses directly associated with the production of revenue,
and consists primarily of salaries and related benefits, rent, amortization and
depreciation, system expenses such as maintenance and repair, as well as other related
consumables. Cost of revenues declined $287,000 (8%) in the three months ended June
30, 2006 compared to the same period in 2005. Cost of revenues was 83% of revenues in
the 2006 period compared to 92% in the 2005 period. The decrease in cost consisted of
approximately a) $140,000 reduction related to facilities costs from the June 2005
headquarters office move, b) $271,000 in increased capitalizable costs due to 2006
implementation and development projects, and c) $92,000 in lower depreciation and
amortization expense as equipment and prior capitalized costs became fully
amortized, partially offset by d) $126,000 higher personnel and contractor costs
resulting from implementation costs of the significant new customer and e) $80,000
increased fees to an outside third party related to processing transactions and
directly attributable to the increase in transaction fee revenue.

|                                           |  |  | (Table
        in thousands)        |     |      |  
|------------------------------------------ |  |  | ----------------------------------- | --- | ---- | -
|                                           |  |  | Three
        Months Ended June 30, |     |      |  
|                                           |  |  | 2006                                |     | 2005 |  
|                                           |  |  |                                     |     |      |  
|Sales
      and marketing expense          |  |  | $                                   | 319 |      | $
|General
      and administrative expense   |  |  |                                     | 632 |      |  
|Reversal
      of contingent tax liability |  |  |                                     |    |      |  
|Lease
      abandonment charge             |  |  |                                     |    |      |  
|Interest
      and other income, net       |  |  |                                     | 27  |      |  
|Interest
      expense                     |  |  |                                     | (47 | )    |  

Sales
and marketing expenses consist primarily of employee salaries and related benefits,
as well as promotional costs such as direct mailing campaigns, trade shows and media
advertising. Sales and marketing expenses increased $65,000 (26%) in the three
months ended June 30, 2006 compared to the same quarter of 2005. This increase was
due to higher personnel costs and the related increase in benefits and travel
related to changes in the sales and marketing team over the past year.

General
and administrative expenses include executive management, accounting, legal and human
resources compensation and related benefits, as well as expenditures for applicable
overhead costs. These expenses decreased $181,000 (22%) in the three months ended June
30, 2006 compared to the same quarter of 2005. The majority of the decrease is
attributable to the reduction in facilities costs and related property taxes as
described above partially offset by a non-cash equity compensation charge of $41,000
resulting from the vesting of restricted stock granted to members of the board of
directors.

Reversal
of contingent tax liability of $979,000 was recorded as a credit to the Statement of
Operations in the three months ended June 30, 2005. This was a result of the expiration
of the applicable statute of limitations period in the second quarter 2005. There was no
such credit for 2006.

Page 12 of 20



---

Lease
abandonment charge consists of expenses related to the Companys former
headquarters, which was abandoned in favor of a new office lease in June 2005. The
$500,000 charge in the three months ended June 30, 2005 includes relocation costs
incurred to that point and the write-off of certain assets abandoned in the move,
plus an accrual for the future rent and certain rent related obligations of the former
headquarters. There was no such charge in 2006.

Interest
and other income, net increased $7,000 (35%) in the three months ended June 30, 2006
compared to the same quarter of 2005 due primarily to higher balances of cash resulting
from the 2005 sale of common stock and an increase in interest rates.

Interest
expense decreased $25,000 (35%) in the three months ended June 30, 2006 compared to the
same quarter of 2005. Interest accrued on the note payable to UICI was lower due to the
declining principal balance.

Six
months ended June 30, 2006 compared to six months ended June 30, 2005

|                       |  |  | (Table
        in thousands)      |       |      |  
|---------------------- |  |  | --------------------------------- | ----- | ---- | -
|                       |  |  | Six
        Months Ended June 30, |       |      |  
|                       |  |  | 2006                              |       | 2005 |  
|                       |  |  |                                   |       |      |  
|Revenues               |  |  | $                                 | 8,032 |      | $
|Cost
      of revenues |  |  |                                   | 6,785 |      |  
|                       |  |  |                                   |       |      |  
|Gross
      profit     |  |  | $                                 | 1,247 |      | $
|                       |  |  |                                   |       |      |  
|%
      of revenue     |  |  |                                   | 16    | %    |  

Revenues
were approximately $105,000 (1%) lower in the six months ended June 30, 2006 compared
to the same period in 2005. Professional Services revenue declined $311,000 because
significant work performed in the current period was focused on a significant
implementation, and thus the related revenue is deferred. Deferred revenues
increased $647,000 during the first six months of 2006. In the prior year, we worked
on several projects that were billable and could be recognized as revenue as services
were performed. Transaction fees and license fees were each up slightly due to
increases in lives and transactions, primarily due to the ongoing implementation but
partially offset by existing customers that have lost business. Data Capture revenue
was up slightly as volume from new customers and groups offset a) a decrease in
transactions from existing customers and b) the continuing trend towards a higher
volume of electronic claims.

Cost
of revenues declined $1.0 million (13%) in the six months ended June 30, 2006 compared
to the same period in 2005. Cost of revenues was 84% of revenues in the 2006 period
compared to 96% in the 2005 period. The decrease in cost consisted of approximately a)
$311,000 related to facilities costs from the June 2005 headquarters office move, b)
$566,000 in increased capitalizable costs due to 2006 implementation projects, and c)
$212,000 in lower depreciation and amortization expense as equipment and prior
capitalized costs became fully amortized, partially offset by $90,000 increased fees to
an outside third party related to processing transactions and directly attributable to
the increase in transaction fee revenue.

Page 13 of 20



---

|                                           |  |  | (Table
        in thousands)      |       |      |  
|------------------------------------------ |  |  | --------------------------------- | ----- | ---- | -
|                                           |  |  | Six
        Months Ended June 30, |       |      |  
|                                           |  |  | 2006                              |       | 2005 |  
|                                           |  |  |                                   |       |      |  
|Sales
      and marketing expense          |  |  | $                                 | 693   |      | $
|General
      and administrative expense   |  |  |                                   | 1,240 |      |  
|Reversal
      of contingent tax liability |  |  |                                   |      |      |  
|Lease
      abandonment charge             |  |  |                                   |      |      |  
|Amortization
      of intangibles          |  |  |                                   |      |      |  
|Interest
      and other income, net       |  |  |                                   | 55    |      |  
|Interest
      expense                     |  |  |                                   | (97   | )    |  

Sales
and marketing expenses increased $226,000 (48%) in the six months ended June 30, 2006
compared to the same period of 2005. This increase was due to higher personnel costs
and the related increase in benefits and travel related to the changes in the sales and
marketing team over the past year.

General
and administrative expenses decreased $217,000 (15%) in the six months ended June
30, 2006 compared to the same period of 2005. The majority of the decrease is also
attributable to the reduction in facilities costs and related property taxes,
partially offset by a non-cash equity compensation charge of $41,000 resulting from
the vesting of restricted stock granted to members of the board of directors.

Reversal
of contingent tax liability of $979,000 was recorded as a credit to the Statement of
Operations in the six months ended June 30, 2005. This was a result of the expiration
of the applicable statute of limitations period in the second quarter 2005. There was no
such credit for 2006.

Lease
abandonment charge consists of expenses related to the Companys former
headquarters, which was abandoned in favor of a new office lease in June 2005. The
$500,000 charge in the six months ended June 30, 2005 includes relocation costs
incurred to that point and the write-off of certain assets abandoned in the move,
plus an accrual for the future rent and certain rent related obligations of the former
headquarters. There was no such charge in 2006.

Amortization
of intangibles declined $84,000 in the six months ended June 30, 2006 compared to the
same period of 2005, as these intangible assets were fully amortized in January 2005.

Interest
and other income, net increased $27,000 (96%) in the six months ended June 30, 2006
compared to the same period of 2005 due primarily to higher balances of cash resulting
from the 2005 sale of common stock and higher interest rates.

Interest
expense decreased $30,000 (24%) in the six months ended June 30, 2006 compared to the
same period of 2005. Interest accrued on the note payable to UICI was lower due to the
declining principal balance.

Liquidity
and Capital Resources

Overview of
Cash Resources

At
June 30,  2006,  our cash and cash  equivalents  amounted to $2.8 million  compared to
$4.7  million at December 31, 2005.  The sources and uses of  cash during the first half
of 2006 are described  more fully in Analysis of Cash Flows below.  We
believe that the Company will  maintain  sufficient  liquidity  to fund  operations  for
at least the next 12 months.  As  discussed  in our 2005 Form 10-K,  the  Company  has a
note  payable

Page 14 of 20



---

to UICI,  the
balance of which is  approximately $1.7 million as of June  30, 2006.  Effective July 31,
2006, the Company successfully  extended the note payable  to HealthMarkets  (formerly
known as  UICI).  Under the prior  promissory  note,  a  balance of  approximately
$1.5 million would have been due at its maturity date of  September 30, 2006.  Under the
renewal  promissory  note,  Healthaxis  will pay  HealthMarkets  $500,000 by August 31,
2006 and continue to make monthly payments equal to the greater of $65,000 or one-half of the monthly invoice amount for services rendered to an affliate of HealthMarkets. A final  installment in the  amount of all
outstanding  principal plus accrued  interest is due  and payable  February 1, 2008. The
Company is in the late stages of securing  working  capital  and equipment  lines of
credit that will expand our available  liquidity and  strengthen our financial  condition
to support  continuing  growth.  We are confident  that we will complete the working
capital financing, however, until such financing is in  place, there is always the
possibility that it will not be completed.

As
part of a contract executed in the fourth quarter of 2005, the Company is expending
substantial  resources,  in the form of both human and capital  expenditures,  during the
implementation  phase of a significant  customer  contract which is expected to continue
for as long as the next 9 months. As a result,  the Company expects a continued negative
short-term impact on cash flow until deferred collection  provisions present in the
contract are fulfilled.  The Company  has already  realized  additional  revenue and
margin from the portion of the  business  that has been  implemented  and expects the
revenue and margin  impact to  further  increase as the  implementation  continues.  The
Company  does not believe that the  short-term  impact of this  project  implementation
will impact the  Companys ability to maintain sufficient  liquidity to fund
operations for at least the next 12 months. The implementation  effort and terms of this
agreement are  typical for Healthaxis contracts of this scope and nature.

Analysis of
Cash Flows

Cash
used in operating activities for the six months ended June 30, 2006 was approximately
$700,000 as compared to $1.4 million for the same period in 2005. The improvement was
primarily the result of the reduced net loss in 2006 and the aforementioned 2005 reversal of contingent tax
liability partially offset by a net negative change in various working capital
accounts, primarily accounts receivable and deferred revenues. Changes in working
capital accounted for a $550,000 use of cash in the 2006 period as opposed to a $18,000
source of cash for the comparable period in 2005. Though it creates a short-term
negative impact on cash flows from operations, we view the increase in accounts
receivable and deferred revenues as a positive leading indicator since the increase in
accounts receivable results from the increase in revenue and the increase in deferred
revenues will result in higher recognized revenue in future periods.

Cash
used in investing activities for the six months ended June 30, 2006 was $1.2 million
as compared to $357,000 for the same period in 2005. The Companys investing
activities continue to be primarily in the areas of developing software enhancements,
contract start-up activities and acquisition of property, equipment and software,
with most of the increase resulting from capitalized start up costs tied to the largest
of the ongoing implementations.

Cash
used in financing activities for the six months ended June 30, 2006 was $19,000 related
to the cost to register shares previously sold to Tak Investments, while cash from
financing activities for the six months ended June 30, 2005 was $4.3 million as a
result of proceeds from the Tak financing transaction.

Recently
Adopted Accounting Pronouncements

See
Note B to the Consolidated  Financial  Statements  herein for a discussion of the impact
on the Companys  financial  statements of new accounting  standards.

Page 15 of 20



---

Item 3.
Quantitative and Qualitative Disclosures About Market Risk

Exposure
to market risk for changes in interest  rates relate  primarily to short-term
investments.  The Company does not use  derivative  financial  instruments.  The primary
objective of its investment  activities is to preserve principal while maximizing yields
without  significantly  increasing risk. Due to  the nature of the Companys
investments, we believe that there is no material risk exposure.

Our
cash  equivalents and other  investment  instruments are exposed to financial  market
risk due to fluctuation in interest rates,  which may affect  our interest income.  These
instruments are not entered into for trading purposes.  We do not expect our interest
income to be significantly  affected by a sudden  change in market interest rates.

The
dividend  rate on our  preferred  stock is fixed at a  nominal  rate of  $0.0001  per
share of the new  preferred  stock,  payable  semi-annually  (aggregating  less than
$1,000 in dividend  payments to all  preferred  shareholders  annually).  The  interest
rate on our note payable is fixed at 6%. The fair  value of these instruments is
therefore subject to market fluctuation as interest rates change.

Item 4.
Controls and Procedures

As
of the end of the  period  covered  by this  quarterly  report,  the  Company  carried
out an  evaluation,  under  the  supervision  and  with the  participation of the Company
management,  including the Companys Chief Executive  Officer and Chief Financial
Officer,  of the  effectiveness of the design and  operation of the Companys
disclosure  controls and procedures  pursuant to Securities  Exchange Act Rule 13a-15.
Based on that evaluation,  the Chief Executive  Officer and the Chief  Financial  Officer
have concluded that these  disclosure  controls and procedures are effective as of the
end of the period covered by this  report.  There has been no change in the Companys
internal  control over  financial  reporting  that occurred  during the period covered by
this report that has  materially affected, or is reasonably likely to materially affect,
the Companys internal control over financial reporting.

Page 16 of 20



---

PART II.
OTHER INFORMATION

|Item 1. | Legal Proceedings.
|------- | ------------------

The Company
is involved in litigation arising in the ordinary course of its business. Management is
of the opinion that no currently pending litigation will have a material adverse effect
on the Companys results of operations or financial position.

|Item 1A. | Risk Factors
|-------- | ------------

We
face a number of significant risks and  uncertainties in our business,  which are
detailed under Risk Factors in our Annual Report on  Form 10-K for the year
ended December 31, 2005.  These risks and  uncertainties  may affect our current
position and future  prospects,  and should be considered  carefully in evaluating us and
an investment in our common stock.  We have not  identified  any material  changes to the
Risk Factors  detailed in our most recent  Annual Report on Form 10-K.

|Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds.
|------- | ------------------------------------------------------------

| | None.
| | -----

|Item 3. | Defaults Upon Senior Securities.
|------- | --------------------------------

| | None.
| | -----

|Item 4. | Submission of Matters to a Vote of Security Holders.
|------- | ----------------------------------------------------

The
Annual Meeting of the Common Shareholders of Healthaxis Inc. was held on May 10, 2006, in
Irving, Texas for the purpose of  considering and acting upon the following:

|                                                                    |  |  |  |                          |  |                              |   |  |  |                                      |  |                          |  | 
|------------------------------------------------------------------- |  |  |  | ------------------------ |  | ---------------------------- | - |  |  | ------------------------------------ |  | ------------------------ |  | 
|Proposal                                                            |  |  |  | Shares
        Voted For |  | Percentage
        Voted For |   |  |  | Shares
        Voted
        Against |  | Shares
        Abstained |  | 
|                                                                    |  |  |  |                          |  |                              |   |  |  |                                      |  |                          |  | 
|#1 Election
      of Directors:                                     |  |  |  |                          |  |                              |   |  |  |                                      |  |                          |  | 
|James
      J. Byrne                                                |  |  |  | 5,724,359                |  | 99.1                         | % |  |  | 54,253                               |  | --                       |  | 
|John
      M. Carradine                                             |  |  |  | 5,756,712                |  | 99.6                         | % |  |  | 21,900                               |  | --                       |  | 
|John
      W. Coyle                                                 |  |  |  | 5,725,399                |  | 99.1                         | % |  |  | 53,213                               |  | --                       |  | 
|Thomas
      L. Cunningham                                          |  |  |  | 5,725,379                |  | 99.1                         | % |  |  | 53,233                               |  | --                       |  | 
|Adam
      J. Gutstein                                              |  |  |  | 5,755,672                |  | 99.6                         | % |  |  | 22,940                               |  | --                       |  | 
|Kevin
      F. Hickey                                               |  |  |  | 5,755,692                |  | 99.6                         | % |  |  | 22,920                               |  | --                       |  | 
|James
      W. McLane                                               |  |  |  | 4,925,863                |  | 85.2                         | % |  |  | 852,749                              |  | --                       |  | 
|Barry
      Reisig                                                  |  |  |  | 5,762,732                |  | 99.7                         | % |  |  | 15,880                               |  | --                       |  | 
|#2
      Ratification of McGladrey and Pullen, LLP as the Companys |  |  |  | 5,067,518                |  | 87.7                         | % |  |  | 37,843                               |  | 673,251                  |  | 
|independent
      public accountants                                |  |  |  |                          |  |                              |   |  |  |                                      |  |                          |  | 

|Item 5. | Other Information.
|------- | ------------------

| | None.
| | -----

Page 17 of 20



---

|Item 6. | Exhibits
|------- | --------

| | (10.1) | First
Amendment to the Healthaxis Inc. 2005 Stock Incentive Plan, filed herewith.
| | ------ | ---------------------------------------------------------------------------------

| | (31.1) | Certification
of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,
filed herewith.
| | ------ | -------------------------------------------------------------------------------------------------------------------

| | (31.2) | Certification
of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,
filed herewith.
| | ------ | -------------------------------------------------------------------------------------------------------------------

| | (32.1) | Certifications
of Chief Executive Officer and Chief Financial  Officer Pursuant to Section 906 of the
Sarbanes-Oxley  Act of  2002, furnished herewith.
| | ------ | -------------------------------------------------------------------------------------------------------------------------------------------------------

Page
  18 of 20



---

Signature

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

|                      |  | Healthaxis
      Inc.                                                                              
|--------------------- |  | ---------------------------------------------------------------------------------------------------
|                      |  |                                                                                                    
|                      |  |                                                                                                    
|Date: August 11, 2006 |  | By: /s/ John M. Carradine                                                                          
|                      |  |                                                                                                    
|                      |  | John M. Carradine,
      President and Chief Executive Officer 
      (Principal Executive Officer)
|                      |  |                                                                                                    
|                      |  |                                                                                                    
|                      |  | By: /s/ Ronald K.
      Herbert                                                                    
|                      |  |                                                                                                    
|                      |  | Ronald K. Herbert,
      Chief Financial Officer 
      (Principal Financial Officer)              

Page 19 of 20



---

Exhibit
Index

|(10.1) | First
Amendment to the Healthaxis Inc. 2005 Stock Incentive Plan, filed herewith.
|------ | ---------------------------------------------------------------------------------

|(31.1) | Certification
of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,
filed herewith.
|------ | -------------------------------------------------------------------------------------------------------------------

|(31.2) | Certification
of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,
filed herewith.
|------ | -------------------------------------------------------------------------------------------------------------------

|(32.1) | Certifications
of Chief Executive Officer and Chief Financial  Officer Pursuant to Section 906 of the
Sarbanes-Oxley  Act  of 2002, furnished herewith.
|------ | -------------------------------------------------------------------------------------------------------------------------------------------------------

Page 20 of 20

---