Health Net, Inc. 21650 Oxnard Street Woodland Hills, CA 91367 818.676.6000 800.291.6911 www.healthnet.com

Contacts: David Olson

818.676.6978

david.w.olson@healthnet.com

Michael Engelhard

818.676.7620

michael.engelhard@healthnet.com

HEALTH NET REPORTS NET INCOME

OF $78 MILLION OR $.67 PER DILUTED SHARE

Significant Sequential Increase in Pretax Margin Drives Improved Performance

LOS ANGELES, November 1, 2005 – Health Net, Inc. (NYSE: HNT) today announced 2005 third quarter net income per diluted share of $.67 compared with net income per diluted share of $.64 in the third quarter of 2004.

Health Net reported net income of $78,205,000 in the third quarter of 2005 compared to net income of $71,855,000 in the third quarter of 2004. The third quarter of 2004 included the full effect of a $5,172,000, or $.03 per diluted share, pretax charge for severance and related benefits for a workforce reduction announced in May 2004, and a $0.4 million pretax charge for the loss on the sale of a business.

Positive developments for the third quarter of 2005 included:

• Pretax margin was 4.2 percent, a 130 basis point sequential improvement compared to the 2.9 percent reported in the second quarter of 2005;

• Commercial gross margin per member per month (PMPM) rose by more than $6, climbing above $42 on a PMPM basis;

• Commercial PMPM yield increases were more than 11 percent in the third quarter of 2005 compared to the third quarter of 2004;

• Health Net’s Health Plan Medical Care Ratio (MCR) was 83.4 percent, a 110 basis point improvement compared to the 84.5 percent reported in the third quarter of 2004, and a 120 basis point improvement compared to the 84.6 percent reported in the second quarter of 2005. The sequential improvement is better than historical performance; and

• The company’s debt-to-total capital ratio was 20.7 percent, a 220 basis point improvement compared to the 22.9 percent reported in the third quarter of 2004, another sign of a stronger balance sheet, a key Health Net goal for 2005.

“The significant sequential improvement in our pretax margin was driven by growth in our commercial gross margin. While we did see a decline in commercial enrollment, we exceeded expectations because of our discipline and focus,” said Jay Gellert, president and chief executive officer of Health Net.

2

Revenues

Health Net’s total revenues increased 4.2 percent in the third quarter of 2005 to $3,058,773,000 from $2,935,233,000 in the third quarter of 2004. Health plan services premiums increased 0.2 percent to $2,398,100,000 in the third quarter of 2005 compared to $2,393,160,000 in the third quarter of 2004. In the third quarter of 2005, Health Net’s Government contracts revenue rose 21.7 percent from the third quarter of 2004, increasing by $113,843,000 to $639,626,000.

“This increase reflects higher revenues for the second option period of our five-year TRICARE contract for the North Region, continuing a trend driven by increased military activity,” said Buddy Piszel, executive vice president and chief financial officer of Health Net.

In the third quarter of 2005, the overall health plan revenue PMPM, including commercial, Medicare and Medicaid enrollment, rose 9.6 percent compared to the same period in 2004. Commercial premium yields climbed 11.3 percent compared to the third quarter of 2004.

“The premium yields we achieved in the third quarter of 2005 resulted from focused pricing actions,” noted Piszel.

Total health plan enrollment fell by approximately 66,000 members, or 1.9 percent, in the third quarter of 2005 compared to the second quarter of 2005. Medicare enrollment rose by approximately 1,000 members while Medicaid enrollment decreased by approximately 3,000 members. Commercial enrollment, including both at-risk and Administrative Services Only (ASO) membership, declined by approximately 65,000 members, or 2.6 percent, in the third quarter of 2005 compared to the second quarter of 2005. Year-over-year, total health plan enrollment declined by approximately 269,000 members, or 7.3 percent.

3

“Even though our commercial enrollment trails expectations, we are encouraged by improving retention rates and expanding margins,” Piszel said.

Health Care Costs

The health plan MCR improved to 83.4 percent in the third quarter of 2005 from 84.5 percent in the third quarter of 2004. This decrease in the health plan MCR reflects the impact of disciplined pricing and improved hospital cost experience.

Overall PMPM health plan health care costs rose by 8.2 percent in the third quarter of 2005 compared to the third quarter of 2004. Commercial health care costs PMPM rose by 8.6 percent over the same period.

The Government contracts cost ratio decreased by 70 basis points to 96.1 percent for the third quarter of 2005 compared to the third quarter of 2004 and by 100 basis points compared to the second quarter of 2005. “We expect this margin to fluctuate somewhat from quarter to quarter due to the higher levels of private sector utilization,” Piszel noted.

Medicare

The company is the fifth largest Medicare Advantage contractor in the United States based on enrollment, with approximately 172,000 members in its Medicare Advantage plans at the end of the third quarter of 2005. In the third quarter of 2005, Health Net unveiled an expansion of the company’s Medicare health plans. The company will offer 98 new health plans, including participation in the new Part D stand-alone drug benefit that includes entry in five new states. The premiums for the company’s Part D bids in all six regions (10 states) in which it bid were below the national benchmark, making it eligible for the auto-assignment of dual-eligible Medicare members by the Centers for Medicare & Medicaid Services (CMS).

4

“We are pleased by the results of our Part D bids,” Gellert added, “and we expect to enroll in excess of 200,000 dual-eligible members beginning November 15. We’ll have more to say about our 2006 outlook for Medicare at our annual Investor Conference on November 11.”

Administrative Expenses

In the third quarter of 2005, total general, administrative and depreciation expenses increased by $28,180,000 to $245,854,000 compared to expenses of $217,674,000 in the third quarter of 2004. “Our administrative ratio remains steady, as expected, even though we’ve seen increased Medicare and commercial marketing expenses and expect they will continue in the fourth quarter of 2005,” commented Piszel.

Depreciation expense decreased by $6,460,000 in the third quarter of 2005 compared to the second quarter of 2005, reflecting the impact of the sale-leaseback transaction the company completed on June 30, 2005. The decrease in depreciation was partially offset by a $4.0 million increase in general and administrative expenses for lease payments associated with the transaction.

Health Net’s selling expenses decreased by $5,410,000 to $55,000,000 in the third quarter of 2005 compared with $60,410,000 in the same period in 2004, consistent with the decline in Small Group and Individual enrollment over the same periods. The selling costs ratio was 2.3 percent for the third quarter of 2005, compared with 2.5 percent in the same period last year.

Balance Sheet Highlights

Cash and investments as of September 30, 2005 were $2,178,586,000 compared with $1,999,993,000 as of June 30, 2005.

5

“We are very pleased that our reserve position continues to strengthen as we move through 2005. Days claims payable and favorable development in the roll-forward table both demonstrate that we have adequate reserve strength,” Piszel added.

Reserves for claims and other settlements decreased by $7,617,000 to $1,057,848,000 at September 30, 2005 from $1,065,465,000 at June 30, 2005. This includes a $37 million reduction for provider settlements paid during the third quarter of 2005.

Days claims payable (DCP), excluding provider settlement reserves related to the charge taken in the fourth quarter of 2004 and capitation expenses, increased by 0.8 day for the third quarter of 2005 to 61.1 days compared to 60.3 days for the second quarter of 2005. On a reported basis, DCP were 48.8 days for the third quarter of 2005 compared to 46.2 days in the third quarter of 2004. A table reconciling the calculation of DCP is attached to this release.

The company’s debt-to-total capital ratio was 20.7 percent as of September 30, 2005 compared to 22.3 percent as of June 30, 2005.

Interest expense was $1,246,000 higher in the third quarter of 2005 compared with the second quarter of 2005 due to higher market interest rates. Compared with the third quarter of 2004, interest expense was $3,745,000 higher resulting primarily from rating agency downgrades on the company’s senior unsecured debt rating in the third quarter of 2004.

Cash Flow

Operating cash flow was $174,771,000 in the third quarter of 2005 compared to operating cash flow of $84,552,000 in the third quarter of 2004. The company received an early payment from CMS in the third quarter of 2005 of approximately of $120 million. Excluding the early CMS payment, operating cash flow in the third quarter of 2005 would have been approximately $55 million.

6

Outlook

Health Net believes its earnings per diluted share for the full year 2005 will be between $1.93 and $1.98, including the effect of charges per diluted share of $.44 recorded in the first and second quarters of 2005. Excluding these charges, the 2005 full year earnings per diluted share range is between $2.37 and $2.42. Attached to this press release is a Consolidated Statement of Operations. It provides specific detail on the impact of these charges to net income in the first two quarters of 2005.

Earnings for the fourth quarter of 2005 are expected to range between $.60 and $.65 per diluted share.

The company believes its earnings per diluted share for the full year 2006 will be at least $2.90. Included in this is the anticipated cost of between $.10 and $.12 per diluted share for expensing stock options. The company will discuss its 2006 outlook in more detail at its annual Investor Conference on November 11, 2005, in New York City.

The company’s effective tax rate in the third quarter of 2005 was 39.8 percent and the company expects its effective tax rate for the full year of 2005 to be 39.0 percent.

The company’s diluted shares outstanding have increased to over 116,543,000 shares as of the third quarter of 2005 and the company expects diluted shares outstanding of approximately 118 million shares by the fourth quarter of 2005.

Conference Call

As previously announced, Health Net will discuss the company’s third quarter 2005 results during a conference call with investors on Tuesday, November 1, 2005, at approximately 11:00 a.m. EST. To listen to the call, please dial 800.310.1961, code 4584273. A live webcast and replay of the conference call also will be available at www.healthnet.com. The conference

7

call webcast is open to all interested parties. A replay of the conference call will be available following the call on Tuesday, November 1, 2005 through November 5, 2005, by dialing 888.203.1112, code 4584273. Anyone listening to the company’s conference call will be presumed to have read Health Net’s Annual Report on Form 10-K for the year ended December 31, 2004 and Quarterly Reports on Form 10-Q for the first and second quarters of 2005, and other reports filed by the company from time to time with the Securities and Exchange Commission.

Investor Conference

Health Net will host its annual Investor Conference on Friday, November 11, 2005, at the Millennium Broadway Hotel, 145 West 44th Street, New York, New York. The conference will begin at approximately 8:00 a.m. EST and conclude no later than 2:00 p.m. EST. For those unable to attend in person, the conference also will be accessible via Internet webcast and telephone conference call. To join the conference call, dial 800.262.1292 and enter the confirmation code 4998796. For the webcast, please go to the Investor Relations section of www.healthnet.com and click on the Investor Conference link. Anyone listening to the company’s Investor Conference webcast or conference call will be presumed to have read Health Net’s Annual Report on Form 10-K for the year ended December 31, 2004, Quarterly Reports on Form 10-Q for the first, second and third quarters ended March 31, 2005, June 30, 2005, and September 30, 2005, respectively, and other reports filed by the company from time to time with the Securities and Exchange Commission.

About Health Net

Health Net, Inc. is among the nation’s largest publicly traded managed health care companies. Its mission is to help people be healthy, secure and comfortable. The company’s

8

HMO, POS, insured PPO and government contracts subsidiaries provide health benefits to approximately 6.4 million individuals in 27 states and the District of Columbia through group, individual, Medicare, Medicaid and TRICARE programs. Health Net’s behavioral health subsidiary, MHN, provides mental health benefits to approximately 7.3 million individuals in all 50 states. The company’s subsidiaries also offer managed health care products related to prescription drugs, and offer managed health care product coordination for multi-region employers and administrative services for medical groups and self-funded benefits programs.

For more information on Health Net, Inc., please visit the company’s Web site at www.healthnet.com.

Cautionary Statements

Certain matters discussed in this release contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, that involve a number of risks and uncertainties. All statements, other than statements of historical information provided herein, may be deemed to be forward-looking statements. These statements are based on management’s analysis, judgment, belief and expectation only as of the date hereof, and are subject to uncertainty and changes in circumstances. Without limiting the foregoing, the words “believes,” “anticipates,” “plans,” “expects,” “may,” “should,” “could,” “estimate,” “intend” and other similar expressions are intended to identify forward-looking statements. Actual results could differ materially due to, among other things, rising health care costs, negative prior period claims reserve developments, trends in medical care ratios, issues relating to provider contracts, litigation costs, operational issues, health care reform and general business conditions. Additional factors that could cause actual results to differ materially from those reflected in the forward-looking statements include,

9

but are not limited to, the risks discussed in the “Risk Factors” section included within the company’s most recent Annual Report on Form 10-K filed with the SEC and the risks discussed in the company’s other periodic filings with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements. The company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date of this release.

#         #         #

[Six pages of tables follow]

10

Health Net, Inc.

Condensed Consolidated Statements of Operations

(Amounts in thousands, except per share and ratio data)

	Third Quarter Ended September 30, 2004			Fourth Quarter Ended December 31, 2004			First Quarter Ended March 31, 2005			Second Quarter Ended June 30, 2005			Third Quarter Ended September 30, 2005
REVENUES:
Health plan services premiums	$	2,393,160		$	2,363,786		$	2,397,689		$	2,390,679		$	2,398,100
Government contracts		525,783			487,823			496,710			610,656			639,626
Net investment income		14,750			14,378			15,763			17,213			19,536
Other income		1,540			1,606			1,583			1,309			1,511
Total revenues		2,935,233			2,867,593			2,911,745			3,019,857			3,058,773
EXPENSES:
Health plan services		2,022,870			2,221,404	(e)		2,036,873			2,023,174			2,000,661
Government contracts		501,628			466,138			479,974			580,685			614,794
General and administrative		207,187			235,564	(e)		215,227			233,723			241,847
Selling		60,410			56,137			57,273			56,082			55,000
Depreciation		10,487			10,532			11,556			10,467			4,007
Amortization		789			861			861			861			861
Interest		8,044			9,347			10,609			10,543			11,789
		2,811,415			2,999,983			2,812,373			2,915,535			2,928,959
Litigation, asset impairments and restructuring charges		5,172	(a)		10,319	(d)		67,042	(f)		16,237	(h)		—
Loss on sale of businesses		400	(b)		305	(c)		—			—			—
Total expenses		2,816,987			3,010,607			2,879,415			2,931,772			2,928,959
Income (loss) from continuing operations before income taxes		118,246			(143,014	)		32,330			88,085			129,814
Income tax provision (benefit)		46,391			(57,385	)		10,982	(g)		34,522			51,609
Net income (loss)	$	71,855		$	(85,629	)		21,348			53,563			78,205
Basic earnings (loss) per share	$	0.64		$	(0.77	)	$	0.19		$	0.48		$	0.69
Diluted earnings (loss) per share	$	0.64		$	(0.77	)	$	0.19		$	0.47		$	0.67
Weighted average shares outstanding:
Basic		111,440			110,844			111,544			112,451			113,371
Diluted		112,397			110,844			113,235			114,851			116,543
Pretax margin		4.0	%		N/A			1.1	%		2.9	%		4.2	%
Health plan services MCR		84.5	%		94.0	%		85.0	%		84.6	%		83.4	%
Government contracts cost ratio		95.4	%		95.6	%		96.6	%		95.1	%		96.1	%
Administrative ratio ((G&A+Dep) / (HP serv rev + Other income))		9.1	%		10.4	%		9.5	%		10.2	%		10.2	%
Selling costs ratio (Selling costs / HP serv rev)		2.5	%		2.4	%		2.4	%		2.3	%		2.3	%
Days claims payable (i)		46.2			44.7			51.4			49.9			48.8
Days claims payable (excluding capitation and provider settlements) (i)		62.5			59.2			59.9			60.3			61.1
Effective tax rate		39.23	%		40.13	%		33.97	%		39.19	%		39.76	%
Health plan services premiums PMPM	$	219.09		$	222.30		$	231.84		$	235.03		$	240.10
Health plan services costs PMPM	$	185.19		$	208.91		$	196.96		$	198.90		$	200.31

11

Health Net, Inc.

Condensed Consolidated Balance Sheets

(Amounts in thousands, except ratio data)

	September 30, 2004			December 31, 2004			March 31, 2005			June 30, 2005			September 30, 2005
ASSETS
Current Assets
Cash and cash equivalents	$	622,903		$	722,102		$	765,842		$	939,057		$	1,027,848
Investments - available for sale		1,082,969			1,060,000			1,129,760			1,060,936			1,150,738
Premiums receivable, net		118,201			118,521			124,041			119,776			127,020
Amounts receivable under government contracts		136,335			129,483			134,447			139,540			122,295
Incurred but not reported (IBNR) health care costs receivable under TRICARE North contract		114,618			173,951			216,740			184,214			263,329
Other receivables		102,494			92,435			82,401			89,437			85,873
Deferred taxes		41,162			98,659			106,150			100,277			110,445
Other assets		99,578			97,163			112,044			118,904			107,618
Total current assets		2,318,260			2,492,314			2,671,425			2,752,141			2,995,166
Property and equipment, net		185,291			184,643			183,176			103,314			112,218
Goodwill, net		723,595			723,595			723,595			723,595			723,595
Other intangible assets, net		22,716			21,855			20,993			20,132			19,271
Deferred taxes		18,327			23,737			24,917			26,941			29,527
Other noncurrent assets		249,912			207,050			163,732			148,647			143,555
Total Assets	$	3,518,101		$	3,653,194		$	3,787,838		$	3,774,770		$	4,023,332
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Reserves for claims and other settlements	$	990,240		$	1,169,297		$	1,155,291		$	1,065,465		$	1,057,848
Health care and other costs payable under government contracts		201,494			119,219			128,570			131,909			62,778
IBNR health care costs payable under TRICARE North contract		114,618			173,951			216,740			184,214			263,329
Unearned premiums		78,832			139,766			115,859			97,038			218,527
Accounts payable and other liabilities		296,782			258,923			348,068			385,995			404,362
Total current liabilities		1,681,966			1,861,156			1,964,528			1,864,621			2,006,844
Senior notes payable		401,750			397,760			388,981			400,659			391,106
Other noncurrent liabilities		81,657			121,398			126,471			116,824			123,376
Total Liabilities		2,165,373			2,380,314			2,479,980			2,382,104			2,521,326
Stockholders’ Equity
Common stock and additional paid-in capital		805,426			811,426			834,412			857,513			894,984
Restricted common stock		6,483			7,188			7,859			7,505			7,164
Unearned compensation		(3,999	)		(4,110	)		(4,095	)		(3,423	)		(2,748	)
Treasury common stock, at cost		(632,926	)		(632,926	)		(632,926	)		(632,926	)		(633,153	)
Retained earnings		1,180,009			1,094,380			1,115,728			1,169,291			1,247,496
Accumulated other comprehensive loss		(2,265	)		(3,078	)		(13,120	)		(5,294	)		(11,737	)
Total Stockholders’ Equity		1,352,728			1,272,880			1,307,858			1,392,666			1,502,006
Total Liabilities and Stockholders’ Equity	$	3,518,101		$	3,653,194		$	3,787,838		$	3,774,770		$	4,023,332
Debt-to-Total Capital Ratio		22.9	%		23.8	%		22.9	%		22.3	%		20.7	%

12

Health Net, Inc.

Condensed Consolidated Statements of Cash Flows

(Amounts in thousands)

	Third Quarter Ended September 30, 2004			Fourth Quarter Ended December 31, 2004			First Quarter Ended March 31, 2005			Second Quarter Ended June 30, 2005			Third Quarter Ended September 30, 2005
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	71,855		$	(85,629	)	$	21,348		$	53,563		$	78,205
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Amortization and depreciation		11,276			11,393			12,417			11,328			4,868
Loss on sale of businesses		400			305			—			—			—
Asset impairments		—			5,916			—			—			—
Other changes		546			2,803			3,189			3,100			3,229
Changes in assets and liabilities, net of the effects of dispositions:
Premiums receivable and unearned premiums		26,356			60,614			(29,427	)		(14,556	)		114,245
Other receivables, deferred taxes and other assets		5,140			(96,872	)		(6,685	)		(14,336	)		4,901
Amounts receivable/payable under government contracts		(22,697	)		(75,423	)		4,387			(1,754	)		(51,886	)
Reserves for claims and other settlements		(52,591	)		179,057			(14,006	)		(89,826	)		(7,617	)
Accounts payable and other liabilities		44,267			433			103,928			41,761			28,826
Net cash provided by (used in) operating activities		84,552			2,597			95,151			(10,720	)		174,771
CASH FLOWS FROM INVESTING ACTIVITIES:
Sales of investments		79,438			12,751			23,090			184,483			13,283
Maturities of investments		30,632			47,171			13,777			38,653			20,215
Purchases of investments		(22,774	)		(4,846	)		(125,650	)		(143,776	)		(126,917	)
Purchases / sales of property and equipment		(9,178	)		(12,870	)		(10,392	)		71,954			(12,825	)
Cash received (paid) from the sale of businesses		(400	)		486			1,949			—			—
Sales and purchases of restricted investments and other		39,307			48,697			29,246			13,460			(8,840	)
Net cash (used in) provided by investing activities		117,025			91,389			(67,980	)		164,774			(115,084	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options and employee stock purchases		6,053			5,213			16,569			19,161			29,331
Repurchases of common stock		(52,292	)		—			—			—			(227	)
Net cash (used in) provided by financing activities		(46,239	)		5,213			16,569			19,161			29,104
Net (decrease) increase in cash and cash equivalents		155,338			99,199			43,740			173,215			88,791
Cash and cash equivalents, beginning of period		467,565			622,903			722,102			765,842			939,057
Cash and cash equivalents, end of period	$	622,903		$	722,102		$	765,842		$	939,057		$	1,027,848

13

Health Net, Inc.

Notes to Condensed Consolidated Statements of Operations

Notes:

(a) Pretax severance and related benefit costs related to our workforce reduction announced in May 2004.

(b) Pretax $0.4 million additional loss on the sale of our Florida health plan resulting from the stock purchase and reinsurance settlement agreements dated September 30, 2004.

(c) Pretax $0.3 million additional loss on the sale of Denticare and Vision subsidiaries.

(d) Pretax $10.3 million asset impairments and restructuring charges due to the following:

$5.9 million asset impairment charge taken on certain investments and fixed assets

$2.7 million for severance and related benefit costs related to our workforce reduction announced in May 2004

$1.7 million for lease termination costs

(e) Pretax $158 million provider dispute charge and related legal costs of $11 million.

(f) Pretax $67.0 million litigation settlement and restructuring charges due to the following:

$65.6 million related to settlement of MDL physician-class lawsuit

$1.4 million for severance and related benefit costs related to our workforce reduction announced in May 2004

(g) Includes $2.2 million of income tax benefit related to the sale of a small subsidiary.

(h) Pretax $15.9 million charge representing total estimated legal defense costs associated with the AmCareco case $0.3 million for severance and related benefit costs related to our workforce reduction announced in May 2004

(i)	Health Net, Inc.
	Calculation of Days Claims Payable (Excluding Capitation and Provider Settlements)
	Dollars in Thousands

	Q3 2004			Q4 2004			Q1 2005			Q2 2005			Q3 2005
Reserve for Claims and Other Settlements	$	990,240		$	1,169,297		$	1,155,291		$	1,065,465		$	1,057,848
Less: Capitation Payable and Provider Settlements		(72,968	)		(203,753	)		(169,733	)		(132,795	)		(105,154	)
Adjusted Reserve for Claims and Other Settlements	$	917,272		$	965,544		$	985,558		$	932,670		$	952,694
(1) Average Reserve for Claims and Other Settlements	$	1,016,536		$	1,079,769		$	1,162,294		$	1,110,378		$	1,061,657
(2) Average Adjusted Reserve for Claims and Other Settlements	$	949,000		$	941,408		$	975,551		$	959,114		$	942,682
(3) Health Plan Services Cost		2,022,870			2,221,404			2,036,873			2,023,174			2,000,661
Less: Capitation Expense and Provider Settlements		(626,795	)		(757,496	)		(571,593	)		(576,367	)		(580,791	)
(4) Adjusted Health Plan Services Cost	$	1,396,075		$	1,463,908		$	1,465,280		$	1,446,807		$	1,419,870
(5) Number of Days in Period		92			92			90			91			92
= (1) / (3) * (5) Days Claims Payable		46.2			44.7			51.4			49.9			48.8
= (2) / (4) * (5) Days Claims Payable (Excl. Capitation & Provider Settlements)		62.5			59.2			59.9			60.3			61.1

14

HEALTH NET, INC.

Medical Covered Lives at September 30, 2005

(in Thousands)

	Commercial - Large Group*				Commercial - Small Group & Individual
	09/05	06/05		09/04	09/05	06/05		09/04
Arizona	69	66		74	50	52		55
California	1,088	1,104		1,130	391	413		489
Connecticut	177	181		194	32	35		43
New Jersey	61	67		109	83	90		123
New York	116	121		153	103	104		110
Oregon	102	102		100	36	35		33
Total	1,612	1,642		1,760	695	729		853
Year over Year		(8	)%			(19	)%
Sequential		(2	)%			(5	)%
	Commercial Risk Subtotal				ASO
	09/05	06/05		09/04	09/05	06/05		09/04
Arizona	119	119		129	—	—		—
California	1,478	1,517		1,619	7	7		3
Connecticut	209	216		238	69	69		51
New Jersey	145	157		232	18	18		18
New York	218	224		262	20	21		7
Oregon	138	138		133	—	1		1
Total	2,307	2,371		2,613	115	116		80
Year over Year		(12	)%			43	%
Sequential		(3	)%			(1	)%
	Commercial Subtotal				Medicare Risk
	09/05	06/05		09/04	09/05	06/05		09/04
Arizona	119	119		129	31	31		36
California	1,485	1,524		1,622	94	93		97
Connecticut	278	285		289	26	27		27
New Jersey	163	176		250	—	—		—
New York	239	245		269	6	6		6
Oregon	138	138		134	15	14		6
Total	2,422	2,487		2,693	172	171		171
Year over Year		(10	)%			1	%
Sequential		(3	)%			1	%
	Medicaid				Health Plan Total
	09/05	06/05		09/04	09/05	06/05		09/04
Arizona	—	—		—	149	150		164
California	703	700		695	2,282	2,316		2,414
Connecticut	90	94		95	394	406		411
New Jersey	40	42		43	203	217		293
New York	—	—		—	245	251		275
Oregon	—	—		—	154	153		140
Total	833	836		833	3,427	3,493		3,696
Year over Year		0	%			(7	)%
Sequential		(0	)%			(2	)%

	09/05	06/05	09/04
TRICARE
Previous TRICARE Contracts **	—	—	642
North Contract ***	2,962	2,946	2,929
Total TRICARE	2,962	2,946	3,571

* Commercial Large Group includes Medicare Supplement

** Includes only Tricare eligible for which we have health care risk

*** Includes Tricare eligible for which we have health care risk, and those for which we provide Administrative Services Only (ASO), primarily active duty

15

Health Net, Inc.

Reconciliation of Reserves for Claims and Other Settlements

(In thousands)

	Health Plan Services
	Nine-Month Ended Sept. 30, 2005			Year 2004		Year 2003
Reserve for claims (a), beginning of period	$	794,614		$	777,059	$	787,317
Divested health plans (b)		—			—		(5,119	)
Incurred claims related to:
Current Year		3,911,986			5,048,289		4,487,698
Prior Years (d)		(102,554	)		8,769		(33,812	)
Total Incurred (c )		3,809,432			5,057,058		4,453,886
Paid claims related to:
Current Year		3,203,765			4,286,929		3,738,599
Prior Years		619,264			752,574		720,426
Total Paid (c )		3,823,029			5,039,503		4,459,025
Reserve for claims (a), end of period		781,017			794,614		777,059
Add:
Claims Payable		191,682			288,331		167,361
Other (e)		85,149			86,352		80,130
Reserves for claims and other settlements, end of period	$	1,057,848		$	1,169,297	$	1,024,550

(a) Consists of incurred but not reported claims and received but unprocessed claims and reserves for loss adjustment expenses.

(b) Adjustment for 2003 consists primarily of reductions in reserves for claims resulting from the sales of our dental and vision plans.

(c) Includes medical claims only. Capitation, pharmacy and other payments including provider settlements are not included.

(d) Our liabilities are estimated within a confidence level required under actuarial standards of practice. As such, a change in “incurred claims related to prior years” will be offset by maintaining a consistent level of confidence within the estimate of “incurred claims related to current years.” Therefore, a change, which is offset in this manner, would not indicate that health care services were lower than previously estimated.

(e) Includes accrued capitation, shared risk settlements, provider incentives and other reserve items.

16