Health insurer Humana Inc forecast profit to fall next year due in part to pressure on margins as it sees lower government reimbursement for its Medicare plans for the elderly.

Humana, which also posted a 65 percent jump in third-quarter profit on Monday, is one of the largest providers of Medicare plans so investors have been concerned about the hit to earnings as the government squeezes rates.

Humana shares fell 1.1 percent. Its 2010 forecast largely came in line with Wall Street expectations, when excluding for asset write-downs related to the end of a military contract, said Stifel Nicolaus analyst Thomas Carroll.

They put it at a level in line with current expectations, Carroll said. They talk about decent enrollment and revenue growth but also feeling some margin pain.

Humana forecast a big jump in Medicare Advantage enrollment -- adding as many as 240,000 members -- countered by a decline of about 140,000 members in its commercial plans serving employers, as the weak economy leads to fewer workers with coverage.

Humana expects an operating Medicare profit margin of about 5 percent next year, down from about 6.5 percent this year.

They really managed to mitigate the margin hit a lot, said Sanford Bernstein analyst Ana Gupte. And they're really dramatically increasingly Medicare enrollment.

Third-quarter net income was $301.5 million, or $1.78 per share, compared with $183 million, or $1.09 per share, a year earlier, when the company was hit by investment losses.

Analysts on average expected $1.77 per share, according to Thomson Reuters I/B/E/S.

Revenue rose 8 percent to $7.72 billion. Analysts expected $7.82 billion.

Humana is the first large health insurer to provide detailed 2010 forecasts, although it follows larger rival UnitedHealth Group in expecting lower earnings per share next year.

WellPoint and Aetna deferred giving a 2010 forecast until gaining more clarity on factors such as the state of the economy, the severity of the flu season and the outcome of health reform legislation.

Humana's forecast excluded any potential impact from the reform legislation under debate in Congress, such as an industry tax being considered.

Investor concern that reform will dramatically hurt future profits has pressured health insurer shares to rock-bottom valuations. Humana shares have underperformed rivals this year and trade at among the lowest price-to-earnings ratios as Wall Street worries over the future of the private sector in administering Medicare.

Quarterly pretax income in Humana's government segment that includes its Medicare business soared 75 percent to $474.5 million. Membership in its Medicare Advantage plans stood at 1.51 million on September 30, up 11 percent from a year ago.

Humana posted a pretax loss of $5.2 million for its commercial segment including health plans serving employers, as Americans losing their jobs also lost health coverage. Higher costs from the H1N1 flu also hurt results.

The company forecast 2009 earnings of about $6.15 per share, in line with its prior projected range of $6.10 to $6.20 per share. Analysts expect $6.14.

For 2010, Humana expects earnings of $5.05 to $5.25 per share. Analysts were looking for $5.36.

Humana's forecast included asset write-downs and charges tied to its exit of the military Tricare contract -- which amounts to about 25 cents per share, Stifel's Carroll said. Excluding the charge, Carroll said Humana's forecast equated to a range of $5.30 to $5.50 per share.

Humana shares fell 43 cents to $37.15 in morning trading on the New York Stock Exchange. Through Friday, Humana shares had risen about 1 percent this year, underperforming a 5 percent rise for the S&P Managed Health Care index <.GSPHMO>.

(Reporting by Lewis Krauskopf; Editing by Derek Caney, Maureen Bavdek, Dave Zimmerman)