Health Net has announced it is discontinuing its commercial group health business in California, meaning small and large group employer-sponsored plans through Health Net will come to an end. If your company currently offers Health Net medical, dental, or vision coverage, this is worth understanding now, well before your renewal date, because the transition touches almost every part of your benefits program: your carrier, your plan documents, your employees’ deductibles, and in some cases their ongoing care.
What Exactly Is Changing
According to Health Net’s own broker guidance, the company is exiting the traditional commercial group line of business in California to focus on its government-sponsored lines, namely Medi-Cal, Medicare, and Covered California marketplace plans. Those three lines are unaffected. What is going away is employer group coverage: small group medical plans, large group medical plans, standalone dental, standalone vision, and Employer Group Waiver Plans (EGWP). Health Net’s separate life insurance products are not part of this exit, and groups can still make changes to those policies directly with Health Net.
Existing commercial group policies are expected to end February 28, 2027, or on an earlier date permitted by the applicable contract and regulatory requirements. Each affected group will receive its own specific sunset date directly from Health Net. Formal written notices to employer groups and members began going out in September, so if you haven’t received anything yet, expect it soon. Health Net has also confirmed it will no longer write new commercial group business in California, aside from limited exceptions tied to pre-existing agreements already in motion.
Renewals and Early Terminations
One detail that surprises a lot of groups: renewing your policy before the exit doesn’t buy you extra time. Health Net has confirmed that even groups who renew in the interim will still see their coverage end on February 28, 2027, regardless of when their normal renewal date would have fallen. On the flip side, if you’d rather not wait it out, employer groups may elect to terminate their contract earlier than the sunset date to facilitate a smoother transition to a new carrier, as long as timely notice is provided in accordance with the group’s existing Health Net agreement.
For groups that recently purchased a Health Net plan that hasn’t taken effect yet, the same early-termination option applies. It’s worth talking to your broker promptly if you’re in that position, since starting a plan you know is being phased out midyear adds an unnecessary layer of complexity to next year’s transition.
What This Means for Your Employees
The practical impact on employees falls into a few categories, and it’s worth getting ahead of each one rather than waiting for questions to come in after the fact.
Provider access is probably the biggest concern for most people. Because network composition varies by carrier, there’s no guarantee that a replacement plan will include the same doctors, specialists, or hospitals your employees currently use. Once a new carrier is selected, employees should check that plan’s provider directory directly, or call the carrier, to confirm their current providers are in network. For anyone in the middle of an active treatment course, California’s continuity-of-care protections under Health and Safety Code Section 1373.96 may allow a limited period of continued care with a non-participating provider under certain conditions, such as an ongoing acute condition, pregnancy, or a surgery already scheduled within a defined window. Eligibility depends on the specific situation and the new plan’s rules, so affected employees should raise this with the new carrier as soon as coverage is selected, not after the transition happens.
Prior authorizations and prescriptions need similar advance attention. Authorizations issued by Health Net are not guaranteed to transfer to a new carrier, so employees with standing authorizations should keep copies of that paperwork and share it with their new plan right away. Employees on maintenance medications should talk to their prescribing provider and pharmacy before Health Net coverage ends, and where the plan and pharmacy rules allow it, consider requesting the longest refill available before the cutover. Once new coverage is in place, checking the new plan’s formulary, prior authorization rules, step therapy requirements, and refill timing early can prevent a gap in a medication that shouldn’t have one.
There’s also a less obvious issue worth flagging to employees: deductibles, out-of-pocket maximums, and other plan accumulators generally do not carry over automatically to a new carrier, which matters most if the transition happens midyear rather than at a normal plan renewal. Employees who’ve made meaningful progress toward their deductible under Health Net could effectively restart that count with a new carrier, so this is worth factoring into the timing conversation with your broker.
COBRA and Cal-COBRA Participants
If your group currently has employees or former employees on COBRA or Cal-COBRA continuation coverage through Health Net, they should also review whatever transition information comes from the employer or the COBRA administrator. In general, when an employer group moves to a new carrier, COBRA and Cal-COBRA participants may be offered continuation coverage under the replacement plan, subject to the applicable COBRA and Cal-COBRA rules. Separately, anyone who loses qualifying employer-sponsored coverage as a result of this transition may become eligible for a Special Enrollment Period to enroll in individual coverage through Covered California, which is worth knowing about for any employee who might otherwise fall through the cracks during the switch.
What Employers Should Do Now
The most useful thing you can do right now is not wait for your renewal date to start shopping. Review whatever notice you receive from Health Net closely, note your group’s specific sunset date, and start the replacement carrier evaluation with your broker well ahead of that deadline, particularly if your renewal would otherwise fall close to the February 28, 2027 cutoff. Health Net has indicated broker commissions are not expected to change for active policies before termination, so there’s no reason to delay engaging your broker on next steps.
Beyond selecting a new carrier, plan on distributing clear communications to your employees about the transition timeline, what to check in the new plan’s provider directory, and what steps to take on prior authorizations, prescriptions, and continuity of care if applicable. Health Net has indicated it will provide a communication template employer groups can use consistent with their existing contract terms, which is a reasonable starting point, but your employees will likely have follow-up questions specific to your workforce that are worth anticipating.
This post is provided for general informational purposes only and does not constitute legal, tax, or insurance advice. Details of Health Net’s exit, including specific sunset dates, continuity-of-care eligibility, and COBRA transition options, vary by group and individual circumstance. Employers and employees should review their own plan documents and official Health Net notices, and consult a licensed insurance broker or advisor for guidance specific to their situation.
Sources
- Health Net, “CA Commercial Group – External (Broker) FAQ,” internal broker notice, September 2026
- California Health and Safety Code Section 1373.96 — Continuity of Care