Health Net is leaving California’s commercial group market entirely by February 28, 2027. All small-group and large-group medical, dental, and vision plans through Health Net of California, Inc. and Health Net Life Insurance Company will terminate on that date, including groups that renew before then. If your business currently carries Health Net coverage, you have a firm deadline and a real transition to manage.
Notices began arriving September 1, 2026, so many California employers are already in the middle of this. This guide lays out the timeline, your replacement options, and the steps to take so your employees do not experience a gap in coverage or lose access to their current providers.
What Does Health Net Leaving California Mean for Your Group Plan?
Health Net’s exit means every California commercial group policy it currently carries — medical, dental, and vision — ends on February 28, 2027, with no renewal path on the same carrier. This is a forced move, not an optional one. Groups that renew before the deadline will still be terminated at February 28, 2027, so an early renewal does not extend coverage beyond that date.
Health Net of California, Inc. and Health Net Life Insurance Company are both included in the exit, so there is no sister entity to roll into. The exit covers the small-group market (1–100 employees) and large-group accounts alike. Your broker or benefits administrator should have received formal notice beginning September 1, 2026, per Health Net’s exit communications and reporting by Venbrook on September 10, 2026.
The practical implication: every affected employer needs a replacement carrier bound and effective no later than March 1, 2027. Given open enrollment cycles, underwriting timelines, and the volume of groups simultaneously shopping the California market, most advisors are recommending employers begin comparing options by Q4 2026 at the latest.
Run the numbers on better benefits for your team. The PEO Calculator shows what companies your size are paying.
What Is the Hard Deadline and Key Timeline?
February 28, 2027 is the last day Health Net group coverage is active in California. No exceptions have been announced for any group size or plan type.
- September 1, 2026: Health Net begins issuing termination notices to groups and brokers (Health Net exit page; Venbrook, Sept 10, 2026).
- Q4 2026: Recommended window to begin formal carrier comparisons and collect employee census data for quoting.
- January–February 2027: Target window for binding new coverage so ID cards and network access are in place before March 1.
- February 28, 2027: All Health Net of California commercial group medical, dental, and vision coverage terminates.
- March 1, 2027: New coverage must be active to avoid any lapse.
One timing risk worth flagging: California’s group market will see an unusually high volume of employers shopping simultaneously. Carriers and underwriters may slow down. Starting early gives you leverage and options; waiting until January 2027 may limit both.
What Replacement Options Should California Employers Compare?
California employers moving off Health Net have several credible paths, and the right one depends on your group size, budget, provider preferences, and risk tolerance. Here is a structured comparison of the main alternatives.
Fully Insured Group Plans Through a New Carrier
This is the most direct replacement path. California carriers in the small-group and large-group space include Anthem Blue Cross, Blue Shield of California, Kaiser Permanente, Cigna, and UnitedHealthcare, among others. Each maintains distinct provider networks, so network overlap with your employees’ current physicians is the first filter to apply.
Key considerations:
- Confirm whether current specialists and hospitals are in-network under the new carrier’s California HMO or PPO plans.
- Compare out-of-pocket maximums for 2027. The IRS has published HSA-compatible HDHP out-of-pocket limits for 2027; confirm current figures at IRS.gov as 2027 figures are released.
- Ask about continuity-of-care provisions if an employee is mid-treatment — California law provides some protections, but the specifics depend on the new carrier’s policy.
Level-Funded Plans
Level-funded plans sit between fully insured and self-funded arrangements. Your company pays a fixed monthly amount that covers expected claims, stop-loss insurance, and administration. If claims come in lower than projected, you may receive a refund of the surplus. For groups of 10–100 employees with generally healthy workforces, level-funded plans can deliver meaningful cost advantages and richer plan designs compared to standard fully insured small-group options.
Carriers offering level-funded products in California include Blue Shield of California, Cigna, and several regional carriers. Because underwriting is more individualized, your group’s claims history matters.
ICHRA (Individual Coverage HRA)
An Individual Coverage Health Reimbursement Arrangement allows employers to reimburse employees tax-advantaged for individual market premiums instead of providing a group plan. ICHRA was established under IRS and DOL guidance and allows employers to set a defined monthly reimbursement amount per employee class. Employees then purchase their own coverage through Covered California or directly from a carrier.
ICHRA works well for employers with geographically dispersed employees or those who want cost predictability. For detailed IRS guidance on ICHRA rules, see IRS Notice 2019-45 and subsequent guidance at IRS.gov.
PEO Master Health Plans
A Professional Employer Organization (PEO) co-employs your workforce and pools your employees into a large-group master health plan. Because PEOs aggregate thousands of employees across many client companies, they can access plan designs and carrier pricing that most small and mid-size employers cannot reach on their own. According to NAPEO, businesses that use a PEO grow 7–9% faster and have 10–14% lower employee turnover than non-PEO companies.
For California employers leaving Health Net, a PEO transition accomplishes two things simultaneously: it replaces the health plan and it bundles payroll, HR administration, and workers’ compensation under one platform. Businesses working with PEOs typically save 20–40% on operation and benefit costs compared to managing HR and benefits independently.
In our experience matching hundreds of businesses across our network of 40+ vetted PEOs, California employers in the 5–100 employee range often find PEO master plans competitive with or better than what they were paying through Health Net — with broader carrier options and more plan tiers to offer employees. See our guide to best PEO options for small businesses for a deeper look at how these plans work.
| Option | Best For | Key Advantage | Main Consideration |
|---|---|---|---|
| Fully Insured Group Plan | Groups wanting a direct swap | Familiar structure, broad carrier choice | Network match varies by carrier |
| Level-Funded Plan | 10–100 employees, healthy group | Potential surplus refund, richer plan design | Claims history used in underwriting |
| ICHRA | Dispersed teams, cost predictability | Defined employer cost, employee choice | Employees manage own enrollment |
| PEO Master Plan | 5–100 employees seeking bundled HR + benefits | Large-group pricing, multiple carrier tiers | Requires PEO co-employment agreement |
How Does Continuity of Care Work When a Carrier Exits?
Continuity of care is the right for employees who are mid-treatment to continue seeing their current provider temporarily, even if that provider is out-of-network with the new carrier. California law provides some continuity protections, but the scope depends on the new plan type and the carrier’s specific policies.
When evaluating replacement carriers, ask the following questions directly:
- Does the new carrier’s California network include my employees’ current primary care physicians and specialists?
- What is the carrier’s written policy on continuity of care for ongoing treatment (e.g., pregnancy, cancer treatment, post-surgical follow-up)?
- How long does continuity coverage last under California Insurance Code requirements?
- What is the process for a provider to join the network, and can we facilitate that for key employees?
Employer tip: collect a brief anonymous survey of your employees’ current providers before you finalize a carrier. Network access is the number one source of employee dissatisfaction in plan transitions, and catching mismatches before you bind coverage is far easier than resolving them afterward.
What Steps Should Employers Take Right Now?
Acting in a structured sequence reduces the risk of a coverage gap and gives your team time to absorb the transition without disruption.
Step 1: Confirm Your Current Plan Details
Pull your current Health Net group agreement and confirm the plan type, renewal date, and whether dental and vision are on the same contract. All three lines of coverage end February 28, 2027, but knowing your renewal cycle helps you sequence replacement enrollment correctly.
Step 2: Gather Your Census and Claims Data
Carriers and PEOs will ask for an employee census (name, date of birth, zip code, dependent count) and, for level-funded or self-funded options, up to 24 months of claims history. Assembling this in advance speeds up quoting significantly.
Step 3: Compare at Least Three Options Side by Side
Looking at a single replacement carrier is the most common mistake employers make in a forced transition. Seeing options side by side — fully insured, level-funded, and a PEO master plan quote — gives you a real benchmark. Our Benefits Benchmark tool shows what companies your size in California are paying for health, dental, vision, and workers’ comp.
Step 4: Evaluate Total Cost, Not Just Premium
Premium is one line item. Employer contributions, employee out-of-pocket exposure, and the administrative cost of managing open enrollment internally are all part of the total cost of a benefits program. According to the Bureau of Labor Statistics Employer Costs for Employee Compensation, health insurance represents the largest share of employer benefit costs for private-sector workers. A side-by-side view that includes administration and HR overhead often changes the ranking of options.
Step 5: Communicate Early and Clearly with Employees
Employees who hear about a carrier change from their doctor’s office before they hear it from HR lose confidence in their employer’s benefits program. Send a brief notice as soon as you know you are transitioning, explain the timeline, and commit to a date when new plan details will be available. For a broader view of how other small employers structure their benefits programs, see our small business benefits guide.
Frequently Asked Questions
Is Health Net leaving all of California or just certain regions?
Health Net of California, Inc. and Health Net Life Insurance Company are exiting California’s commercial group market statewide. The exit covers small-group and large-group medical, dental, and vision plans, with all coverage terminating February 28, 2027, per Health Net’s official exit communications and broker notices beginning September 1, 2026.
Will employees lose their doctors when Health Net exits?
Whether employees retain access to their current providers depends entirely on which replacement carrier and network you choose. Before binding a new plan, employers should run a provider directory check for each carrier under consideration and ask about California’s continuity-of-care protections for employees currently in active treatment.
Can a PEO replace Health Net group coverage for a small business?
A PEO co-employs your workforce and enrolls your employees in its master group health plan, which typically offers multiple carrier options and large-group pricing regardless of your company’s size. Based on our analysis of 40+ vetted PEOs, California employers in the 5–100 employee range frequently find PEO master plans competitive in both cost and plan design compared to standalone small-group options.
What happens if we do not replace Health Net coverage before February 28, 2027?
If no replacement coverage is bound before the termination date, your employees will be uninsured starting March 1, 2027. Employees may qualify for a Special Enrollment Period through Covered California due to loss of coverage, but employer-sponsored group coverage would no longer be in place, which creates ACA compliance exposure for applicable large employers. The IRS publishes ACA employer shared responsibility guidance at IRS.gov.
Is this a good time to renegotiate benefits or switch to a different structure?
A forced carrier transition is one of the cleaner windows to evaluate whether your current benefits structure — fully insured group, level-funded, ICHRA, or PEO master plan — is the right fit for your business size and budget. Comparing structures side by side during this transition costs no more than a direct carrier swap and often surfaces options that deliver better value for both employer and employee.
Talk through your options before the February 28, 2027 deadline.
Schedule a no-pressure consultation with the PEO Marketplace team. We will show you what fully insured, level-funded, and PEO master plan options look like for your group size and California zip code — all in one conversation.
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