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

                                    FORM 10-Q

            [X] QUARTER REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended September 30, 2002

                                       OR
            [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                   For the transition period from ___ to ____
                         Commission File Number 0-31014

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



<TABLE>
     <S>                                  <C>

               Delaware                             52-2181356
    -------------------------------      ---------------------------------------
    (State or other jurisdiction of      (I.R.S. Employer Identification Number)
    incorporation or organization)

</TABLE>


          2273 Research Boulevard, 2nd Floor, Rockville, Maryland 20850
          -------------------------------------------------------------
               (Address of principal executive offices, zip code)

                                 (301) 548-2900
                                 --------------
                (Registrant's phone number, including area code)

                                 Not Applicable
                                 --------------
              (Former name, former address and former fiscal year,
                          if changed since last report)


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  file (as
 defined in Rule 12b-2 of the Exchange Act).  Yes        No X
                                                            ----

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

The number of shares of common stock, par value $.01 per share, outstanding on
November 13, 2002 was 33,053,220.

<PAGE>

                            HEALTHEXTRAS, INC.

                          Third Quarter 2002 Form 10-Q

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                           Page
                                                                           ----
PART I   FINANCIAL INFORMATION

  Item 1.  Financial Statements

<S>                                                                         <C>
   Consolidated Balance Sheets as of December 31, 2001 and
     September 30, 2002 (Unaudited).........................................1

   Consolidated Statements of Operations for the Three and Nine Months Ended
     September 30, 2001 and 2002 (Unaudited)................................2

   Consolidated Statements of Cash Flows for the Nine Months Ended
     September 30, 2001 and 2002 (Unaudited)................................3

   Notes to Financial Statements............................................4

  Item 2.  Management's Discussion and Analysis of Financial Condition
             and Results of Operations.....................................10

  Item 3.  Quantitative and Qualitative Disclosures About Market Risk......13

  Item 4.  Controls and Procedures.........................................13

PART II  OTHER INFORMATION

SIGNATURES
CERTIFICATIONS
</TABLE>

<PAGE>


PART I.  FINANCIAL INFORMATION
ITEM 1.  Financial Statements

                               HEALTHEXTRAS, INC.
                          CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>


                                                         December 31,  September 30,
                                                            2001            2002
                                                       ------------    ------------
                                                                        (unaudited)
<S>                                                    <C>              <C>
ASSETS
Current assets:
  Cash and cash equivalents ........................   $ 33,009,143    $ 22,668,488
  Accounts receivable, net .........................     22,410,968      26,077,810
  Deferred charges:
    Direct .........................................      1,204,526       1,025,623
    Marketing and promotion ........................        881,832       1,511,047
  Other current assets .............................        653,627         923,321
                                                       ------------    ------------
      Total current assets .........................     58,160,096      52,206,289
Fixed assets, net ..................................      5,056,235       5,189,127
Intangible assets, net .............................      4,449,487       6,323,073
Goodwill ...........................................     17,566,866      20,758,074
Restricted cash ....................................      1,000,000       1,000,000
Other assets .......................................      1,920,651       1,820,445
                                                       ------------    ------------
      Total assets .................................   $ 88,153,335    $ 87,297,008
                                                       ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable .................................   $ 24,994,834    $ 22,206,604
  Accrued expenses and other current liabilities ...      3,985,101       2,698,204
  Notes payable ....................................      8,883,069       9,056,000
  Deferred revenue .................................      4,509,055       3,902,541
                                                       ------------    ------------
      Total liabilities ............................     42,372,059      37,863,349
                                                       ------------    ------------

Minority interest ..................................        543,800

Stockholders' equity:
  Preferred stock, $0.01 par value, 5,000,000 shares
    authorized, none issued ........................             --              --
                                                       ------------    ------------
  Common stock, $0.01 par value, 100,000,000 shares
    authorized, 31,868,012 and 32,278,120 shares
    issued and outstanding at December 31, 2001
    and September 30, 2002, respectively ...........        318,680         322,781
  Additional paid-in capital .......................     69,747,302      70,224,154
  Deferred compensation ............................       (107,665)        (19,995)
  Retained earnings (accumulated deficit) ..........    (24,720,841)    (21,093,281)
                                                       ------------    ------------
      Total stockholders' equity ...................     45,237,476      49,433,659
                                                       ------------    ------------
      Total liabilities and stockholders' equity ...   $ 88,153,335    $ 87,297,008
                                                       ============    ============
</TABLE>



   The accompanying notes are an integral part of these financial statements
                                       1
<PAGE>

                               HEALTHEXTRAS, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (unaudited)

<TABLE>
<CAPTION>





                                                           -------------    -------------    -------------    -------------
                                                                Three months ended                Three months ended
                                                                    September 30,                     September 30,
                                                                 2001           2002               2001             2002
                                                            -------------    -------------    -------------    -------------
<S>                                                        <C>              <C>              <C>              <C>
Revenue ................................................   $  28,403,303    $  63,906,765    $  72,229,524    $ 173,807,699

Expenses:
Direct .................................................      19,168,972       54,756,821       51,507,751      144,073,833
Selling, general and administrative ....................       9,459,381        7,609,837       28,386,720       26,034,646
                                                           -------------   --------------    -------------    -------------
   Total operating expenses ............................      28,628,353       62,366,658       79,894,471      170,108,479
                                                           -------------   --------------    -------------    -------------
   Operating income (loss) .............................        (225,050)       1,540,107       (7,664,947)   $   3,699,220
Interest income (expense), net .........................         259,652          (23,062)         983,680          (26,668)
                                                           -------------   --------------    -------------    -------------
   Net income (loss) before minority interest...........          34,602        1,517,045       (6,681,267)       3,672,552
                                                           -------------   --------------    -------------    -------------
Minority interest ......................................              --               --               --           44,992
                                                           -------------   --------------    -------------    -------------
   Net income (loss) ...................................   $      34,602   $    1,517,045    $  (6,681,267)   $   3,627,560
                                                           =============   ==============    =============    =============

Net income (loss) per share, basic .....................   $        0.00   $         0.05    $       (0.23)   $        0.11
Net income (loss) per share, diluted ...................   $        0.00   $         0.05    $       (0.23)   $        0.11
Weighted average shares of common stock
 outstanding (in thousands) - basic ....................          28,916           32,291           29,071           32,204
Weighted average shares of common stock
 outstanding (in thousands) - diluted...................          29,789           32,495           29,071           32,496
</TABLE>


   The accompanying notes are an integral part of these financial statements
                                       2

<PAGE>

                               HEALTHEXTRAS, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Unaudited)
<TABLE>
<CAPTION>



                                                        For the nine months ended
                                                                September 30,
                                                             2001            2002
                                                       -------------   -------------
<S>                                                    <C>             <C>
Cash flows from operating activities:
 Net loss ..........................................   $ (6,681,267)   $  3,627,560
 Depreciation expense ..............................      1,118,521         944,925
 Non-cash charges (credits) ........................      5,692,461        (920,846)
 Loss on disposal of fixed assets ..................           --           115,821
 Amortization of goodwill ..........................        461,129            --
 Amortization of intangible and other assets .......           --           327,769
 Minority interest .................................           --            44,992
 Changes in assets and liabilities:
  Accounts receivable, net .........................     (2,448,067)     (3,666,842)
  Other assets .....................................       (122,468)       (420,843)
  Deferred charges .................................       (782,677)       (450,312)
  Accounts payable and accrued expenses ............        279,135      (4,052,593)
  Deferred revenue .................................       (972,432)       (606,514)
                                                       ------------    ------------
   Net cash used in operating activities ...........     (3,455,665)     (5,056,883)
                                                       ------------    ------------


Cash flows from investing activities:
 Capital expenditures ..............................     (1,148,542)     (1,193,638)
 Return of deposit .................................           --           600,000
 Purchase of intangible assets .....................           --          (450,000)
 Business acquisitions and related costs ...........       (608,225)    (12,273,603)
                                                       ------------    ------------
   Net cash used in investing activities ...........     (1,756,767)    (13,317,241)
                                                       ------------    ------------
Cash flows from financing activities:
 Proceeds received from exercise of stock options ..           --            33,469
 Proceeds from new common shares issued ............     12,601,202            --
 Repurchase and retirement of common stock .........     (4,305,000)           --
 Proceeds from borrowings ..........................           --        12,500,000
 Repayment of borrowings ...........................           --        (4,500,000)
                                                       ------------    ------------
   Net cash provided by financing activities .......      8,296,202       8,033,469
                                                       ------------    ------------

Net increase (decrease) in cash and cash equivalents      3,083,770     (10,340,655)
Cash and cash equivalents at the beginning
 of period .........................................     28,921,312      33,009,143
                                                       ------------    ------------
Cash and cash equivalents at the end of period .....   $ 32,005,082    $ 22,668,488
                                                       ============    ============
</TABLE>

   The accompanying notes are an integral part of these financial statements
                                       3

<PAGE>


                               HEALTHEXTRAS, INC.

                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)

1.       BASIS OF PRESENTATION

    The  accompanying  consolidated  financial  statements have been prepared by
HealthExtras,  Inc. (the "Company") pursuant to the rules and regulations of the
Securities and Exchange Commission (the "SEC") for interim financial  reporting.
These  consolidated  financial  statements  are unaudited and, in the opinion of
management, include all adjustments,  consisting of normal recurring adjustments
and accruals,  necessary for a fair  presentation  of the  consolidated  balance
sheets,  operating results and cash flows for the periods  presented.  Operating
results  for the nine months  ended  September  30,  2002,  are not  necessarily
indicative  of the result that may be expected for the year ending  December 31,
2002.  Certain  information and footnote  disclosures  normally  included in the
financial statements prepared in accordance with accounting principles generally
accepted in the United States have been omitted in accordance with the rules and
regulations of the SEC. These consolidated  financial  statements should be read
in  conjunction  with  the  audited   consolidated   financial   statements  and
accompanying notes, included in the Company's Annual Report on Form 10-K for the
year ended  December 31, 2001, as filed with the SEC on March 29, 2002.  Certain
prior period  amounts have been  reclassified  to conform to the current  period
presentation.

2.       ACCOUNTING CHANGES


    EITF 01-9
    ---------

    Effective January 1, 2002, the Company adopted "Accounting for Consideration
Given by a Vendor to a Customer or a Reseller of the Vendor's Products",  ("EITF
01-9"),  which was issued in November 2001. The Company's  adoption of EITF 01-9
resulted in changing the way the Company  recognizes  the cost of  consideration
provided to a marketing partner under a warrant agreement.  Effective January 1,
2002,  the charge for this  consideration  is to be recorded  as a reduction  to
revenue from the marketing partner rather than as a charge to direct expense, as
reflected  in prior  periods.  During  the three and nine  month  periods  ended
September 30, 2001, the Company  recorded  non-cash  direct expenses of $488,000
and $5.6 million, respectively, related to the warrant agreement. To comply with
EITF 01-9,  such amounts have been  reclassified  as a reduction to revenue from
the marketing partners for the three and nine month periods, respectively, ended
September 30, 2001.


    From July 1, 2001  through  December  31, 2001,  the Company  recorded  $1.0
million in non-cash direct expense related to common stock warrants  expected to
be issued to a marketing partner contingent on the marketing partner exceeding a
specific annualized revenue threshold. Due to the lower fair market value of the
warrants at March 31, 2002, the Company recognized a non-cash credit of $477,000
in the  period  ended  March 31,  2002.  In the second  quarter of 2002,  it was
determined  that the  marketing  partner did not exceed the specific  annualized
revenue thresholds;  thus, the Company reversed the remaining charge of $531,000
for the warrant  agreement.  To comply with EITF 01-9, the $1.0 million of total
non-cash  credits  was  recorded  as  revenue  in the nine  month  period  ended
September  30, 2002.  Because the balance of the warrant  charge was reversed in
the second quarter and coincided with the end of the second warrant  measurement
period,   no  other  non-cash  charges  or  credits  relating  to  this  warrant
measurement   period  will  be  reflected  in  the  Company's  future  financial
statements.  The final  measurement  period is for the twelve months ending June
30,  2003 and the  Company  does not  expect to record  any  additional  charges
relating to such measurement period based upon the marketing  partners' expected
performance  and the  higher  thresholds  applicable  to the  final  measurement
period.

                                       4
<PAGE>

    FAS 142
    -------

    In July 2001,  the  Financial  Accounting  Standards  Board  issued FAS 142,
"Goodwill  and Other  Intangible  Assets"  ("FAS 142").  FAS 142  addresses  the
accounting for goodwill and intangible assets  subsequent to their  acquisition.
FAS 142 provides  that  goodwill and  indefinite-lived  assets will no longer be
amortized and that these assets must be tested at least  annually for impairment
beginning in the year of adoption.  FAS 142 also provides that the  amortization
of intangible  assets with finite lives is not limited to 40 years.  The Company
adopted the  provisions  of FAS 142 effective  January 1, 2002.  The Company has
completed its impairment testing of goodwill and concluded that no impairment of
goodwill exists. The following table reflects  consolidated  results adjusted as
though the adoption of FAS 142 occurred as of January 1, 2001:

<TABLE>
<CAPTION>

                                                    Three Months Ended                     Nine Months Ended
                                                         September                             September
                                           -----------------------------------   -----------------------------------
                                                 2001              2002                2001              2002
                                           ----------------- -----------------   -----------------  ----------------
<S>                                        <C>                <C>                 <C>                <C>
Net income (loss), as reported .........   $   34,602         $ 1,517,045         $ (6,681,267)      $ 3,627,560

Goodwill amortization ..................      153,710                  --              461,129                --
                                           ----------         -----------         ------------       -----------

Net income (loss), as adjusted .........   $  188,312         $ 1,517,045         $ (6,220,138)      $ 3,627,560
                                           ==========         ===========         ============       ===========

Net income (loss) per share, basic, as
reported ...............................   $       --         $      0.05         $      (0.23)      $      0.11

Goodwill amortization ..................         0.01                  --                 0.01                --
                                           ----------         -----------         ------------       -----------

Net income (loss) per share basic, as
     adjusted ..........................   $     0.01         $      0.05         $      (0.22)      $      0.11
                                           ==========         ===========         ============       ===========

Net income (loss) per share, diluted, as
   reported ............................   $       --         $      0.05         $      (0.23)      $      0.11

Goodwill amortization ..................         0.01                  --                 0.01                --
                                           ----------         -----------         ------------       -----------

Net income (loss) per share, diluted, as
   adjusted ............................   $     0.01         $      0.05         $      (0.22)      $      0.11
                                           ==========         ===========         ============       ===========
</TABLE>


3.       ACQUISITION

    During the first quarter of 2002, the Company  purchased the outstanding 20%
minority interest in Catalyst,  Inc. and Catalyst  Consultants  ("Catalyst") for
319,033  shares of the Company's  stock valued at $1.1 million and notes payable
of $4.2 million. At the time of the minority interest  acquisition,  the Company
estimated  and recorded  $3.9 million of goodwill and $1.0 million of intangible
assets.  For  additional  information  concerning  the 2001  purchase of the 80%
ownership of Catalyst, refer to the Company's Annual Report on Form 10-K for the
year ended December 31, 2001, as filed with the SEC on March 29, 2002.

    During the second quarter of 2002,  the Company  finalized its allocation of
the  purchase  price  (including  the  acquisition  of  the  remaining  minority
interest) of the Catalyst  acquisition  resulting in the increase in  intangible
assets and the decrease in goodwill of $700,000.  All intangible assets relating
to the Catalyst acquisition are being amortized over a twenty-year period.

                                       5

<PAGE>

    The changes in the carrying amount of goodwill for three month periods ended
March 31, 2002, June 30, 2002, and September 30, 2002 are as follows:

<TABLE>

<S>                                                               <C>
         Balance as of January 1, 2002                            $   17,566,866

         Goodwill acquired during the three
              month period ended March 31, 2002                        3,891,208

         Reduction of Goodwill recorded during
               the three month period ended June 30, 2002              (700,000)
                                                                  --------------
         Balance as of September 30, 2002                         $   20,758,074
                                                                  ==============
</TABLE>


    As of September 30, 2002, intangible assets consisted of the following:

<TABLE>
<CAPTION>

                                               As of September 30, 2002
                                               ------------------------

                                          Gross Earnings         Accumulated
                                              Amount            Amortization
                                          --------------        ------------

<S>                                       <C>                   <C>
    Customer contracts and relationships  $   5,700,000         $   (242,249)
    Other PBM contracts                         945,200              (79,878)
                                             ----------         -------------
                                          $   6,645,200         $   (322,127)
                                          =============         =============
</TABLE>


    Amortization  expense for the three and nine month periods  ended  September
30, 2002, was approximately $107,000 and $276,000, respectively.

<TABLE>
<CAPTION>

    Estimated Amortization Expense
    ------------------------------

    For year ending December 31,        Amount
<S>               <C>                <C>
                  2002               $ 380,000
                  2003                 416,000
                  2004                 416,000
                  2005                 416,000
                  2006                 416,000
</TABLE>


    The following  table sets forth certain  unaudited  proforma  financial data
assuming that the  acquisition of 100% of Catalyst  occurred on January 1, 2001,
after giving effect to purchase accounting adjustments.

<TABLE>
<CAPTION>
                                           Three Months Ended                     Nine Months Ended
                                                September                             September
                                    ----------------------------------   -----------------------------------
                                         2001              2002                2001              2002
                                    ---------------- -----------------   -----------------  ----------------
                                      (proforma)         (actual)          (proforma)           (actual)

<S>                                 <C>               <C>                <C>                 <C>
Revenue .........................   $ 44,193,268      $ 63,906,765       $ 120,048,823       $ 173,807,699

Net income ......................   $    735,920      $  1,517,045       $  (4,173,478)      $   3,627,560

Net income per share, basic .....   $       0.02      $       0.05       $       (0.14)      $        0.11

Net income per share, diluted ...   $       0.02      $       0.05       $       (0.14)      $        0.11

Weighted average shares of common
   stock, basic (in thousands) ..         29,586            32,291              29,752              32,204

Weighted average shares of common
   stock, diluted (in thousands)          30,460            32,495              29,752              32,496

</TABLE>

                                       6
<PAGE>

4.       DEFERRED CHARGES

    On April 1, 2002,  the Company  issued common stock  warrants to Health Care
Horizons,  Inc. d/b/a Cimarron Heath Plan  ("Cimarron")  that gives Cimarron the
right to purchase  250,000  shares of the  Company's  common stock for $5.22 per
share.  The warrants are  exercisable at any time after the grant date, with the
condition  that the Company must be the exclusive  provider of Pharmacy  Benefit
Management ("PBM") services to Cimarron on the date of the exercise. The term of
the PBM contract is from July 1, 2002, to September 30, 2009. In accordance with
EITF  96-18  "Accounting  for  Equity  Instrument  that Are Issued to Other Than
Employees for Acquiring or in Conjunction With Selling,  Goods or Services," the
measurement  date was determined to be the grant date,  April 1, 2002.  Using an
equity-pricing  model,  the value of the 250,000  warrants  was  estimated to be
$400,000 and was recorded as a deferred  charge at April 1, 2002.  This deferred
charge is being  recognized over the life of the seven-year  contract  beginning
July 2002, on a straight-line basis.

5.       NOTES PAYABLE

    On January 22, 2002, the Company  arranged a line of credit for $5.0 million
to support the working  capital  requirements  of the Company's  acquisition  of
Catalyst. The line of credit was collateralized by a certificate of deposit with
an  approximate   balance  of  $5.6  million  held  by  the  lending   financial
institution.  Under the terms of the agreement,  all  outstanding  principal and
accrued  interest  were to be paid on or before July 22,  2002.  The note bore a
rate of 4.59%  per  annum,  which  was paid  monthly.  The  Company  repaid  the
outstanding principal of $4.5 million in April 2002.

    In March 2002, the Company arranged an $8 million revolving credit facility.
Borrowings on the credit facility are collateralized by substantially all of the
Company's  trade  receivables.  The credit  agreement  contains  affirmative and
negative   covenants  related  to  indebtedness,   capital   expenditures,   and
consolidated net worth.

    The facility bears interest at LIBOR plus 2.25%. The effective interest rate
at September  30, 2002,  was 4.06%.  Interest is payable in arrears on the fifth
day of each month.  Interest  expense for the three month and nine month periods
ended September 30, 2002 was $84,000 and $167,000 respectively.  The outstanding
balance on the credit  facility at September  30, 2002,  was $8.0  million.  All
principal and accrued interest is due to the bank on May 31, 2003, however,  the
facility  must be fully  repaid  for at least 30  consecutive  days prior to the
expiration date.

    The remaining $1,056,000 notes payable balance, due to the Catalyst minority
acquistion  as  explained in Note 3 of the Notes to the  Consolidated  Financial
Statements, is to be settled by March 1, 2003.

6.       CONSOLIDATION EXPENSES

    In accordance with EITF 94-3,  "Liability  Recognition for Certain  Employee
Termination  Benefits and the Costs to Exit an Activity," the Company recognized
a non-recurring charge of approximately $672,000 in the three month period ended
March 31, 2002 associated  with the  consolidation  of its  Birmingham,  Alabama
operations.  The charge primarily  consisted of a write-down of fixed assets and
inventory,  severance  payments,  and the balance due on the office.  A total of
$589,000 has been paid or written off by the Company,  and the remaining $83,000
is  recorded  in accrued  liabilities.  The  liabilities  will be paid  within a
twelve-month  period beginning March 31, 2002. The facility was closed effective
February 28, 2002, and the  operations  were  consolidated  within the Company's
Rockville, MD and Las Vegas, NV offices.

7.       SEGMENT REPORTING

    The Company operates in two market segments as a provider of PBM services to
plan sponsors and as a provider of  supplemental  health programs and disability
to individuals. The following table represents financial data by segment for the
three months and nine months ended September 30, 2002, and September 30, 2001.

                                       7
<PAGE>



    For the three months ended September 30, 2002:

<TABLE>
<CAPTION>

                                               Supplemental
                                                  Health &
                              PBM               Disability        Total
                        -------------       --------------    -------------

<S>                     <C>                <C>               <C>
Revenue                 $  48,836,612      $   15,070,153    $   63,906,765
Operating expenses         46,825,858          15,540,800        62,366,658
Net income (loss)           2,018,425           (501,380)         1,517,045
Total assets               53,957,755          33,339,253        87,297,008
Accounts receivable        24,206,114           1,871,696        26,077,810
Accounts payable           21,675,657             530,947        22,206,604
</TABLE>

    For the three months ended September 30, 2001:
<TABLE>
<CAPTION>

                                               Supplemental
                                                  Health &
                              PBM              Disability         Total
                        -------------       --------------    -------------

<S>                     <C>                <C>               <C>
Revenue                 $   7,563,360      $   20,839,943    $   28,403,303
Operating expenses          7,649,807          20,978,546        28,628,353
Net income (loss)             (73,608)            108,210            34,602
Total assets                5,053,057          52,996,924        58,049,981
</TABLE>

    For the nine months ended September 30, 2002:
<TABLE>
<CAPTION>

                                               Supplemental
                                                  Health &
                              PBM              Disability         Total
                        -------------       --------------    -------------

<S>                     <C>                <C>               <C>
Revenue                 $ 120,922,210      $   52,885,489    $  173,807,699
Operating expenses        117,338,776          52,769,703       170,108,479
Net income (loss)           3,633,718              (6,158)        3,627,560

</TABLE>

    For the nine months ended September 30, 2001:
<TABLE>
<CAPTION>

                                               Supplemental
                                                  Health &
                              PBM              Disability         Total
                        -------------       --------------    -------------

<S>                     <C>                <C>               <C>
Revenue                 $  22,883,696      $   49,345,828    $   72,229,524
Operating expenses         23,132,044          56,762,427        79,894,471
Net loss                    (201,823)         (6,479,444)       (6,681,267)
Total assets                5,053,057          52,996,924        58,049,981
</TABLE>

                                       8
<PAGE>

8.       NET INCOME (LOSS) PER SHARE

    Basic income (loss) per common share is computed using the weighted  average
number of common shares outstanding during the period. Diluted income per common
share is computed using the combination of dilutive common share equivalents and
the weighted average number of common shares outstanding during the period.

    For the three and nine month periods ended  September 30, 2001,  the diluted
net loss per  share was  equal to basic  net loss per  share  since the  Company
operated at a loss  position.  For the three month  period ended  September  30,
2002, the dilutive effect (203,000  shares  determined  using the treasury stock
method) of stock options to purchase 810,000 shares of common stock was included
in the  computation  of diluted  earnings  per common  share  because the option
exercise  price was less than the  average  market  price of the  common  shares
during the three month period.  The dilutive  effect of 5.3 million  outstanding
common stock options and warrants for the three month period ended September 30,
2002, has been excluded from the  computation of diluted net income per share as
the effect would be antidilutive.

    For the nine month period ended  September  30,  2002,  the dilutive  effect
(238,000 shares  determined using the treasury stock method) of stock options to
purchase  810,000  shares of common  stock was  included in the  computation  of
diluted  earnings per common share because the option  exercise  prices was less
than the average market price of the common shares during the nine month period.
The dilutive effect of 5.3 million outstanding common stock options and warrants
for the nine month period ended  September 30, 2002,  has been excluded from the
computation   of  dilutive   net  income  per  share  as  the  effect  would  be
antidilutive.

                                       9
<PAGE>



ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

    The  following  discussion  should be read in  conjunction  with the interim
consolidated  financial  statements  presented  in  Item 1.  Certain  statements
contained herein may constitute forward-looking statements (see "Certain Factors
That May Affect Future Operating Results or Stock Prices") within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended.  Forward-looking
statements  may  be  identified  by  words  including  "anticipate",  "believe",
"estimate",  "expect" and similar expressions.  These forward-looking statements
involve a number of risks and  uncertainties.  We  undertake  no  obligation  to
revise  any   forward-looking   statements   in  order  to  reflect   events  or
circumstances that may arise after the date of this report. Readers are urged to
carefully review and consider the various disclosures made in this report and in
our other filings with the  Securities and Exchange  Commission  that attempt to
advise interested parties of the risks and factors that may affect our business.

OVERVIEW
--------

         HealthExtras  is  a  diversified  provider  of  pharmacy,   health  and
disability benefits. The Company currently provides benefits to over 1.5 million
members and the Company's  clients  include  managed care  organizations,  large
employer  groups,   unions  and  government  agencies,  as  well  as  individual
customers. The acquisitions of International Pharmacy Management,  Inc. ("IPM"),
now operating as  HealthExtrasRx,  and Catalyst have created a strong foundation
for the Pharmacy Benefit  Management  ("PBM")  business of the Company.  The PBM
segment is the largest  revenue  generating  segment and the Company expects the
PBM  business to be the  primary  source of growth and profit  potential  in the
years ahead.

    PHARMACY BENEFIT MANAGEMENT

         Our primary PBM services consist of the automated online  processing of
prescription claims on behalf of our employer and managed care customers. When a
member of one of our customer  accounts  presents a prescription  or health plan
identification  card to a retail pharmacist in our network,  our system provides
the  pharmacist  with  accesses  to online  information  regarding  eligibility,
patient history,  health plan formulary listings, and contractual  reimbursement
rates.  The  member  generally  pays a co-pay  to the  retail  pharmacy  and the
pharmacist  fills  the  prescription.  On behalf of our  customer  accounts,  we
electronically  aggregate  pharmacy benefit claims,  which include  prescription
costs plus our claims processing fees, for consolidated  billing and payment. We
receive payments from customer accounts and remit the amounts owed to the retail
pharmacies pursuant to our negotiated rates and retain the difference, including
claims processing fees.

         We  have  established  a  nationwide  network  of  over  50,000  retail
pharmacies.  In general,  self-insured  employers and managed care organizations
contract with us to benefit from our negotiated  retail pharmacy  network rates,
participate in certain rebate arrangements with manufacturers based on formulary
design and to access the other care enhancement  protocols in our system.  Under
these  contracts,  we have  an  independent  obligation  to pay  network  retail
pharmacies  for the drugs  dispensed  and  accordingly  have  assumed  that risk
independent  of our customers.  Pharmacy  benefit claim payments from our health
plan sponsors are recorded as revenues,  and  prescription  costs paid to retail
pharmacies are recorded in direct expenses.  Member payments are not recorded as
revenue.

     SUPPLEMENTAL HEALTH AND DISABILITY PROGRAMS

         The Company's  secondary  segment,  supplemental  health and disability
programs,  generates revenue from the sale of membership  programs which provide
disability  insurance benefits.  We focus on the distribution of our programs to
customers of our financial institution  partners.  Christopher Reeve is featured
prominently in our marketing campaigns for these programs.

         Revenue is generated by payments for program benefits and payments from
certain business  partners.  In general,  program revenue is recognized based on
the  number of members  enrolled  in each  reporting  period  multiplied  by the
applicable  fee collected  from the member or paid by the marketing  partner for
their  specific   membership   program.   The  program  revenue   recognized  by
HealthExtras includes the cost of the membership benefits, which are supplied by
others,  including the  insurance  components.  Payments from business  partners
related  to new  member  enrollments  are  recorded  as revenue to the extent of
related  direct  expenses,  which to date have  exceeded  payments from business
partners.

         Direct expenses consist principally of the cost of benefits provided to
program members, business partner cash compensation,  and transaction processing
fees.  Direct  expenses  are a function  of the level of  membership  during the

                                       10
<PAGE>


period and the  specific  set of  program  features  selected  by  members.  The
coverage  obligations  of our  benefit  suppliers  and the  related  expense are
determined monthly, as are the remaining direct expenses.

         Revenue from program  payments  received,  and related direct expenses,
are deferred to the extent that they are  applicable to future periods or to any
refund guarantee we offer. HealthExtras has committed to minimum premium volumes
with respect to the insurance  features of its programs  supplied by others.  In
the event that there were  insufficient  members to utilize the minimum  premium
commitment,  the  differential  would be  expensed by  HealthExtras  without any
related revenue. HealthExtras believes that current enrollment trends will allow
the minimum  future  commitments  at September 30, 2002, to be fully utilized by
current enrollment levels.

         The  preparation  of financial  statements in  conformity  with general
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect  the  reported  amount of assets and  liabilities  and
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. For more information about the Company's  accounting  policies
and  estimates,  refer to "Critical  Accounting  Policies and  Estimates" in the
Company's  Annual  Report on Form 10-K for the year ended  December 31, 2001, as
filed with the SEC on March 29, 2002.

RESULTS OF OPERATIONS
---------------------

THREE MONTHS ENDED SEPTEMBER 30, 2002, COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 2001

         REVENUE.  Revenue  from  operations  for the third  quarter of 2002 was
$63.9  million,  compared to $28.4  million for the third  quarter of 2001.  The
pharmacy benefit management  services segment revenue  contributed $41.3 million
of  the  revenue  increase,  while  revenue  for  the  supplemental  health  and
disability  segment decreased by $5.8 million.  Total revenue in the three month
period  increased  546% and  decreased  28% in the pharmacy  benefit  management
services   segment  and  the   supplemental   health  and  disability   segment,
respectively.  The PBM  increase  was  due to the  Catalyst  acquisition  and an
approximate  165,000  increase in lives added during the third  quarter of 2002.
The  reduction of revenue for the  supplemental  health and  disability  segment
reflects an ongoing  reduction in payments from business partners for new member
enrollments.

         DIRECT  EXPENSES.  Direct  expenses for the period ended  September 30,
2002 of $54.8 million consisted of $45.2 million in direct costs associated with
the pharmacy benefit management  services segment and $9.6 million  attributable
to benefit costs and compensation to our distribution  partners for supplemental
health and disability products. Direct expenses for the same period in 2001 were
$19.2  million,  consisting  of  approximately  $7.0  million and $12.2  million
attributable to the pharmacy benefit management services and supplemental health
and disability segments,  respectively.  The PBM increase is due to the Catalyst
acquisition and an approximate  165,000 increase in lives added during the third
quarter of 2002. The 21% decrease in direct expenses for the supplemental health
and disability segment is commensurate to the decrease in this segment's revenue
as described  above.  The direct expenses of $54.8 million and $19.2 million for
the three month  periods  ended  September  30, 2002,  and  September  30, 2001,
represented 88% and 67% of operating expenses for the respective periods.

         SELLING,    GENERAL   AND   ADMINISTRATIVE.    Selling,   general   and
administrative  expenses for the three month period  ended  September  30, 2002,
totaled $7.6 million or 12% of total operating  expenses,  $1.6 million of which
related to the Company's pharmacy benefit management services segment, while the
remaining $6.0 million related to the management of the supplemental  health and
disability segment.  These expenses included $848,000 for creative  development,
product endorsements and market research, $2.7 million in direct marketing, $2.0
million  in  compensation  and  benefits,  $1.1  million in  professional  fees,
insurance and taxes, $366,000 in facility costs, $244,000 in travel expenses and
$396,000 in depreciation and amortization.

         Selling,  general and  administrative  expenses  for the same period in
2001  were  approximately  $9.5  million  or 32% of  total  operating  expenses,
$792,000 of which related to the Company's pharmacy benefit management  services
segment,  while $8.7 million related to the  supplemental  health and disability
segment.  These  expenses  include  $690,000 for creative  development,  product
endorsements and market research, $6.3 million in direct marketing, $1.5 million
in compensation and benefits, $64,000 in professional fees, insurance and taxes,
$261,000  in  facility  costs,  $194,000  in travel  expenses,  and  $511,000 in
depreciation and amortization.

         The  decrease in  deprecation  and  amortization  expense is  primarily
attributable  to the Company ceasing  amortization of goodwill,  pursuant to the
adoption of FAS 142.  For more  information  about the  adoption of FAS 142, see
Note 2 of the Notes to the Consolidated Financial Statements.

                                       11
<PAGE>


         INTEREST INCOME (EXPENSE),  NET. Interest income (expense), net for the
third quarter 2002 was  ($23,062),  compared to $259,652 in the third quarter of
2001,  a  decrease  of  $283,000  principally  attributable  to  lower  invested
balances, interest rates, and interest of $84,000 on the borrowings initiated in
2002.

         NET INCOME.  Net income for the third  quarter of 2002 was $1.5 million
compared to a $35,000 net income for the third  quarter of 2001,  an increase of
$1.5 million.  As a percentage  of revenue,  net income  increased  from .12% to
2.37%.

NINE MONTHS ENDED SEPTEMBER 30, 2002, COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 2001

         REVENUE.  Revenue  from  operations  for the nine  month  period  ended
September 30, 2002, was $173.8  million,  compared to $72.2 million for the nine
month period ended September 30, 2001. The pharmacy benefit management  services
segment revenue contributed $98.0 million of the revenue increase, while revenue
for the supplemental  health and disability  segment  increased by $3.5 million.
Total  revenue in the nine month  period  increased  428% and 7% in the pharmacy
benefit management  services segment and the supplemental  health and disability
segment,  respectively. The PBM increase was due to the Catalyst acquisition and
the new PBM business contracts resulting in an addition of approximately 260,000
lives during the nine months ended  September  30,  2002.  Due to the  Company's
adoption of EITF 01-9,  revenue for 2001 has been reduced by $5.6 million in the
comparative  financial  statements.  For more information  about the adoption of
EITF 01-9, see Note 2 of the Notes to the Consolidated Financial Statements.

         DIRECT  EXPENSES.  Direct  expenses  for the nine  month  period  ended
September 30, 2002 of $144.0 million consisted of $112.2 million in direct costs
associated  with the  pharmacy  benefit  management  services  segment and $31.8
million  attributable  to benefit  costs and  compensation  to our  distribution
partners for supplemental  health and disability  products.  Direct expenses for
the same period in 2001 were $51.5 million,  consisting of  approximately  $21.2
million  and $30.3  million  attributable  to the  pharmacy  benefit  management
services and supplemental health and disability segments,  respectively. The PBM
increase is due to the Catalyst  acquisition and the new PBM business  contracts
resulting in an addition of  approximately  260,000 lives during the nine months
ended  September  30,  2002.  The direct  expenses  of $144.0  million and $51.5
million for the nine month  periods  ended  September 30, 2002 and September 30,
2001, represented 85% and 65% of operating expenses for the respective periods.

         SELLING,    GENERAL   AND   ADMINISTRATIVE.    Selling,   general   and
administrative  expenses for the nine month period ended September 2002, totaled
$26.0  million or 15% of total  operating  expenses,  $5.0  million of which was
related to the Company's pharmacy benefit management services segment, while the
remaining  $21.0 million  related to the management of  supplemental  health and
disability   segment.   These   expenses   include  $3.2  million  for  creative
development,  product  endorsement and market research,  $11.1 million in direct
marketing,   $5.8  million  in  compensation  and  benefits,   $3.0  million  in
professional fees, insurance and taxes, $1.0 million in facility costs, $596,000
in travel expenses and $1.2 million in depreciation and amortization.

         Selling,  general and  administrative  expenses  for the same period in
2001, were  approximately  $28.4 million or 35.3% of total  operating  expenses,
$2.1  million of which  related to the  Company's  pharmacy  benefit  management
services  segment,  while $26.3 million related to the  supplemental  health and
disability   segment.   These  expenses   included  $3.1  million  for  creative
development,  product  endorsements,  market  research,  $17.3 million in direct
marketing,  $4.2 million in compensation and benefits,  $644,000 in professional
fees,  insurance  and taxes,  $731,000  in  facility  costs,  $521,000 in travel
expenses and $1.6 million in depreciation and amortization.

         The  decrease in  deprecation  and  amortization  expense is  primarily
attributable  to the Company ceasing  amortization of goodwill,  pursuant to the
adoption of FAS 142.  For more  information  about the  adoption of FAS 142, see
Note 2 of the Notes to the Consolidated Financial Statements.

         INTEREST INCOME (EXPENSE), NET. Interest (expense), net for nine months
ended September 30, 2002 was ($26,668) compared to $983,680 in the third quarter
of 2001, a decrease of $1.0 million or 103%  principally  attributable  to lower
invested  balances,  interest rates,  and $167,000 of interest on the borrowings
initiated in 2002.

         MINORITY  INTEREST.  Minority  interest for the nine month period ended
September 30, 2002, was approximately $45,000; there was no minority interest at
September 30, 2001. This charge  represents the net income  attributable  due to
the 20%  minority  interest  holder of  Catalyst  for the months of January  and
February 2002. As the Company purchased the remaining minority interest on March
1, 2002, no additional  minority interest charge for Catalyst will appear on the
Company's future financial statements.

                                       12
<PAGE>


         NET  INCOME,  (LOSS).  Net  income  for the  nine  month  period  ended
September  30, 2002 was $3.6  million  compared to $6.7 million net loss for the
comparable  period in of 2001, an increase of $10.3 million.  As a percentage of
revenue, net income increased from (9)% to 2%.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

         Cash and cash equivalents at September 30, 2002,  totaled $22.7 million
compared to $33.0 million at December 31, 2001.  During the first nine months of
2002, the Company  received $8.0 million in cash from  financing  activities and
paid $12.0 million for business acquisitions and related costs.

         CASH USED IN OPERATING,  ACTIVITIES. Cash used for operating activities
during the first nine months of 2002 was $5.1 million  compared to the cash used
for operating  activities of $3.5 million  during the first nine months of 2001.
The  outflow  is due to a  large  reduction  in  accounts  payable  (principally
attributable  to  Catalyst),  accrued  expenses,  and an  increase  in  deferred
charges.

         CASH USED IN INVESTING  ACTIVITIES.  Cash used in investing  activities
for the first nine months of 2002 was $13.3 million compared to $1.8 million for
the first nine months of 2001.  The  increase  is  primarily  attributed  to the
payments totaling $12.3 million to satisfy the Catalyst  acquisition  promissory
notes.

         CASH FROM FINANCING  ACTIVITIES.  Cash provided by financing activities
for the first nine months of 2002 was $8.0 million  compared to $8.3 million for
the first nine months of 2001. In January 2002,  the Company  arranged a line of
credit for $5.0  million to support  the  working  capital  requirements  of the
Company's acquisition of Catalyst.  The Company repaid the outstanding principal
of $4.5 million in April 2002.  In March 31, 2002,  the Company also arranged an
$8.0 million revolving credit facility.  The amount was fully drawn at September
2002. All principal and accrued interest is due to the bank on May 31, 2003.

         By managing accounts  receivable to conform more closely to our payment
obligations  to  suppliers,  the  Company  should be able to  generate  positive
operating  cash flow which combined with  available  cash  resources,  including
amounts in the revolving credit facility, will be sufficient to meet our planned
working  capital,   capital  expenditures  and  business  expense  requirements.
However,  there can be no assurance that we will not require additional capital.
Even if such  funds  are not  required,  we may seek  additional  equity or debt
financing.  We cannot  be  assured  that such  financing  will be  available  on
acceptable  terms, if at all, or that such financing will not be dilutive to our
stockholders.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
         (Included in Management's Discussion and Analysis of Financial
          Condition and Results of Operations)


ITEM 4.  CONTROLS AND PROCEDURES

    Management is responsible for the preparation,  integrity and objectivity of
the Consolidated Financial Statements and the other information included in this
report.  The  financial   statements  have  been  prepared  in  conformity  with
accounting  principles  generally  accepted in the United  States of America and
accordingly  include certain amounts that represent  management's best estimates
and judgments. Actual amounts could differ from those estimates.

    Within the 90 days prior to the date of this report the Company  carried out
an evaluation under the supervision and with the  participation of the Company's
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 Rule 13a-14 under the Securities
Exchange Act of 1934, as amended. Based upon the evaluation, the Chief Executive
Officer and Chief  Financial  Officer  concluded  that the Company's  disclosure
controls  and  procedures  are  effective  in timely  alerting  them to material
information  relating  to the Company  required to be included in the  Company's
reports filed with the SEC.

    The Company's Audit Committee of the Board of Directors,  which is comprised
solely of independent directors, meets regularly with senior financial personnel
and independent  accountants to review the Consolidated Financial Statements and
financial information.

    There have been no significant changes in the Company's internal controls or
in  the  other  factors  which  could  significantly  affect  internal  controls
subsequent to the date the Company carried out its evaluation.

                                       13
<PAGE>



PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS
-------  -----------------

    The Company is not aware of any material  pending legal  proceedings,  other
than ordinary routine litigation  incidental to its business.  In addition,  the
Company is not aware of any routine legal  proceedings  which, in the opinion of
management, will have a material affect on the financial condition or results of
operations of the Company.

ITEM 2   CHANGES IN SECURITIES (Not Applicable)
------   ----------------------

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES  (Not Applicable)
-------  -------------------------------

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS   (Not Applicable)
-------  ----------------------------------------------------


ITEM 5.  OTHER INFORMATION
-------  -----------------

    The Company has submitted, via correspondence to the Securities and Exchange
Commission,  the certifications  required by Section 906 of the recently enacted
Sarbanes Oxley Act.


                                       14
<PAGE>



ITEM 6.  EXHIBITS AND REPORTS ON FORMS 8-K
-------  ---------------------------------


1.  The following exhibits are filed as part of this report unless noted
    otherwise:

<TABLE>
<CAPTION>


     Exhibit No.                                          Description
     -----------------------------------------------------------------
<S> <C>
    2.1    Form of Reorganization Agreement by and among HealthExtras, Inc.,
           HealthExtras, LLC and Capital Z Healthcare Holding Corp (1)
    2.2    CatalystRx, Inc. Securities Purchase Agreement Dated as of November
           14, 2001 by and among HealthExtras, Inc. as the Purchaser, Catalyst
           Rx, Inc. and Kevin C. Hooks as the Seller (2)
    2.3    Catalyst Consultants, Inc. Securities Purchase Agreement Dated as of
           November 14, 2001 by and among HealthExtras, Inc. as the purchaser,
           Catalyst Consultants, Inc. and Kevin C. Hooks as the Seller (2)
    3.1(a) Certificate of Incorporation of HealthExtras, Inc( 1)
    3.1(b) Form of Amended and Restated Certificate of Incorporation (1)
    3.2    Bylaws of HealthExtras, Inc. (1)
    4.1    Specimen Stock Certificate of HealthExtras, Inc.
    4.2    Form of Stockholders' Agreement (1)
   10.1    Form of Employment Agreement between HealthExtras, Inc. and David T.
           Blair (1)
   10.2    Form of Employment Agreement between HealthExtras, Inc. and certain
           Executive Officers (1)
   10.3    Reserved
   10.4    Reserved
   10.5    Reserved
   10.6    Agreement by and between Cambria Productions, Inc. f/s/o Christopher
           Reeve and HealthExtras, Inc. (1) (3)
   10.7    Indemnification Agreement (1)
   10.8    Sublease Agreement by and between United Payors & United Providers,
           Inc. and HealthExtras, Inc. (5)
   10.9    Form of HealthExtras, Inc. 1999 Stock Option Plan (1)
   10.10   Form of Registration Rights Agreement (1)
   10.11   Securities Purchase Agreement by and among HealthExtras, Inc., as the
           Purchaser, and TD Javelin Capital Fund, L.P., (4)
   10.12   Form of HealthExtras, Inc. 2000 Stock Option Plan (6)
   10.13   Form of HealthExtras, Inc. 2000 Directors' Stock Option Plan (6)
   10.14   Warrant Agreement by and among HealthExtras, Inc. and J.C. Penney
           Life Insurance Company (6)
   10.15   Amended Agreement by and between Cambria Productions, Inc. f/s/o
           Christopher Reeve and HealthExtras, Inc.(6)
   21.1    Subsidiaries of Registrant (7)
</TABLE>

------------------
(1)      Incorporated  herein  by  reference  into this  document  from the
         Exhibits  to  the  Form  S-1   Registration   Statement,   as  amended,
         Registration  No.   333-83761,   initially  filed  on  July  26,  1999.
(2)      Incorporated  herein  by  reference  into  this  document  from  the
         Exhibits to the Form 8-K  initially  filed on November  29,  2001.
(3)      Confidential  treatment  requested for portion of agreement pursuant to
         Section 406 of Regulation C.  promulgated  under the  Securities Act of
         1933,  as  amended.
(4)      Incorporated  herein by  reference  into this document from the
         Exhibits to the Form 8-K initially  filed on November
         21, 2000.
(5)      Incorporated herein by reference into this document from the Exhibits
         to the Form 10-K for the year ended December 31, 1999.
(6)      Incorporated herein by reference into this document from the Exhibits
         to the Form 10-K for the year ended December 31, 2000.
(7)      Incorporated herein by reference into this document from the Exhibits
         to the Form 10-K for the year ended December 31, 2001.



2.       Reports on Form 8-K
         None

                                       15

<PAGE>


                                   SIGNATURES

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



                                   HealthExtras, Inc.




Date:  November 14, 2002           By:  /s/ David T. Blair
                                   -------------------------------------
                                   David T. Blair
                                   Chief Executive Officer and Director


Date:  November 14, 2002           By:  /s/ Michael P. Donovan
                                   -------------------------------------
                                   Michael P. Donovan
                                   Chief Financial Officer and
                                   Chief Accounting Officer

                                       16
<PAGE>

                 CERTIFICATIONS UNDER RULES 13a-14 AND 15d-14 OF
                       THE SECURITIES EXCHANGE ACT OF 1934

I, David T. Blair certify that:

 1.      I have reviewed  this  quarterly  report on Form 10-Q of  HealthExtras,
         Inc.

 2.      Based on my  knowledge,  this  quarterly  report  does not  contain any
         untrue  statement of a material  fact or omit to state a material  fact
         necessary to make the  statements  made, in light of the  circumstances
         under which such  statements  were made, not misleading with respect to
         the period covered by this quarterly report.

 3.      Based on my knowledge,  the financial  statements,  and other financial
         information  included in this quarterly  report,  fairly present in all
         material  respects the financial  condition,  results of operations and
         cash flows of the  registrant as of, and for, the periods  presented in
         this quarterly report.

 4.      The registrant's  other  certifying  officers and I are responsible for
         establishing  and  maintaining  disclosure  controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         we have:

         a.  Designed  such  disclosure  controls and  procedures to ensure that
             material  information  relating to the  registrant,  including  its
             consolidated  subsidiaries,  is made  known to us by others  within
             those  entities,  particularly  during  the  period  in which  this
             quarterly report is being prepared;

         b.  Evaluated the effectiveness of the registrant's disclosure controls
             and procedures as of a date within 90 days prior to the filing date
             of this quarterly report (the "Evaluation Date"); and

         c.  Presented  in  this  quarterly  report  or  conclusions  about  the
             effectiveness  of the disclosure  controls and procedures  based on
             our evaluation as of the Evaluation Date;

 5.      The registrant's other certifying officers and I have disclosed,  based
         on our most recent  evaluation,  to the  registrant's  auditors and the
         audit  committee  of  registrant's   board  of  directors  (or  persons
         performing the equivalent function):

         a.  All significant deficiencies in the design or operation of internal
             controls which could aversely  affect the  registrant's  ability to
             record,  process,  summarize  and  report  financial  data and have
             identified for the registrant's auditors any material weaknesses in
             internal controls; and

         b.  Any fraud,  whether or not material,  that  involves  management or
             other  employees  who have a significant  role in the  registrant's
             internal controls; and

 6.      The registrant's other certifying officers and I have indicated in this
         quarterly  report  whether  or not there  were  significant  changes in
         internal controls or in other factors that could  significantly  affect
         internal controls subsequent to the date of our most recent evaluation,
         including   any   corrective   actions   with  regard  to   significant
         deficiencies and material weaknesses.

Date:    November 14, 2002                   /s/ David T. Blair
                                            ------------------------
                                                 David T. Blair
                                                 Chief Executive Officer



<PAGE>


                 CERTIFICATIONS UNDER RULES 13a-14 AND 15d-14 OF
                       THE SECURITIES EXCHANGE ACT OF 1934

I, Michel P. Donovan, certify that:

 1.      I have reviewed this quarterly report on Form 10-Q of HealthExtras,
         Inc.

 2.      Based on my  knowledge,  this  quarterly  report  does not  contain any
         untrue  statement of a material  fact or omit to state a material  fact
         necessary to make the  statements  made, in light of the  circumstances
         under which such  statements  were made, not misleading with respect to
         the period covered by this quarterly report.

 3.      Based on my knowledge,  the financial  statements,  and other financial
         information  included in this quarterly  report,  fairly present in all
         material  respects the financial  condition,  results of operations and
         cash flows of the  registrant as of, and for, the periods  presented in
         this quarterly report;

 4.      The registrant's  other  certifying  officers and I are responsible for
         establishing  and  maintaining  disclosure  controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         we have:

         a.  Designed  such  disclosure  controls and  procedures to ensure that
             material  information  relating to the  registrant,  including  its
             consolidated  subsidiaries,  is made  known to us by others  within
             those  entities,  particularly  during  the  period  in which  this
             quarterly report is being prepared;

         b.  Evaluated the effectiveness of the registrant's disclosure controls
             and procedures as of a date within 90 days prior to the filing date
             of this quarterly report (the "Evaluation Date"); and

         c.  Presented  in this  quarterly  report  our  conclusions  about  the
             effectiveness of the discourse controls and procedures based on our
             evaluation as of the Evaluation Date;

 5.      The registrant's other certifying officers and I have disclosed,  based
         on our most recent  evaluation,  to the  registrant's  auditors and the
         audit  committee  of  registrant's   board  of  directors  (or  persons
         performing the equivalent function):

         a.  All significant deficiencies in the design or operation of internal
             controls which could adversely affect the  registrant's  ability to
             record,  process,  summarize  and  report  financial  data and have
             identified for the registrant's auditors any material weaknesses in
             internal controls; and

         b.  Any fraud,  whether or not material,  that  involves  management or
             other  employees  who have a significant  role in the  registrant's
             internal controls; and

 6.      The registrant's other certifying officers and I have indicated in this
         quarterly  report  whether  or not there  were  significant  changes in
         internal controls or in other factors that could  significantly  affect
         internal controls subsequent to the date of our most recent evaluation,
         including   any   corrective   actions   with  regard  to   significant
         deficiencies and material weaknesses.

Date:    November 14, 2002                   /s/ Michael P. Donovan
                                             -----------------------
                                                 Michael P. Donovan
                                                 Chief Financial Officer