MHN Brings Comfortto Military Families

We Live Here, TooHealth Net in the Community

Growing CommercialBusinessThe Advertising Blitz is On

NavigatingMedicare

Introducingthe premiere issueof Health Net’s new quarterlyassociate magazine

Inside:Cover Story:

Quarterly Magazine for Health Net Associates • Summer 2006

Inside this issue:

PERFORMANCEProgress and achievements thatsupport Health Net’s businessstrategy and financial goals.

GROWTHEfforts to expand and increasethe quality of Health Net’s

business.

GREAT PLACE TO WORKExamples of a high-performance

environment that supports associates and serves

customers well.

The Blitz Is On!HNNE and HNCA are on the advertising circuit to drive commercial growth.page 10

Cover Story: Navigating MedicareGuiding consumers through the changing tideswith simplicity.page 6

STORIES FROM THE TRENCHES

MHN behavioral health unit supports members of the military, giving them a soft place to land.page 2

We Live Here,TooMaking a name in the neighborhood through local sponsorships–first up: HNCA’s Kick It With Health Net.page 5

Published by: Health Net, Inc.Corporate Communications

21650 Oxnard StreetMail Code CA-102-22-07

Woodland Hills, CA 91367

We welcome your ideas and feedback. Contact Linda Lalande

or Margaret Longo at:Connections@healthnet.com.

For internal distribution only

Health Net, Inc. is among thenation’s largest publicly traded

managed health care companies. Its mission is to help people be

healthy, secure and comfortable. For more information, go to

www.healthnet.com.

Certain matters discussed in this publication 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 of1933, as amended, that involve a number of risks and

uncertainties. All statements, other than statements ofhistorical information provided herein, may be deemed

to be forward-looking statements. Readers are cautionednot to place undue reliance on these forward-looking

statements. The company undertakes no obligation topublicly revise these forward-looking statements to

reflect events or circumstances that arise after the date of this publication.

What’s the Magic to Saving?401(k) Savings Plan does the trick.page 13

Images of the Themes that Unite Us Look for these newly created icons to identify Health Net’s three important themes. The icons will be used in communications about what is going on in the company and how we are succeeding.

summer 2006 connections 1

Welcome to the premiere issue ofConnections–Health Net’s new all-

associate news magazine. Designed for you,it will provide analysis and perspective onthe many aspects of Health Net’s businesses–and the important roles you play. Each quarter, Connections will feature a variety of Health Net stories from across the country–stories to broaden your understanding ofwhat we do, how we do it and who is making it happen.

Connections will supplement our Intranet,HN Connect, by providing an additionalforum for the exciting things we’re doing at both the local and national level. HNConnect will continue to be the place tocatch current news and updates to ongoingdevelopments. Together, these communicationswill provide a more complete picture of theentire enterprise. We especially want toshowcase how you are making our businessessuccessful–by increasing our capabilities,establishing best practices and building a culture of performance.

As with HN Connect, we intend this publication to be a partnership: we’ll be asking you what you’ve learned from it and what you’d like to see in future issues.With your participation, we look forward tomaking the connections you need to createthe kind of place–a great place–for us towork and serve our customers.

Health Net’s business is helping people with one of themost important aspects of their lives–their health. Our

customers look to us to help them navigate the best, mostappropriate paths to get the health care they need. It’s not an easy task, but it needs to be a purposeful one. And webelieve that by sharing our experiences, our insights and our accomplishments, we all can do better.

Therefore, we are pleased to see the launch of Connectionsand the broad communications venue it provides. For just as we on the Executive Operating Team (EOT) are charged withproviding review and oversight for Health Net’s “greater good,”we see Connections extending that effort by increasing our collective understanding to support growth and enhance performance across the enterprise.

From immunizations to intensive care, from HMOs to PPOs,from newborns to Medicare-eligibles, from phone calls to claimsprocessing, from complex contracts to federal, state and localcompliance standards–helping people to be healthy, secure and comfortable requires knowledge and know-how.

That’s why understanding and appreciating the many jobs we all do–and how we do them–is vital. Building thatunderstanding is what Connections is all about.

Thanks in advance for your readership and your willingness to forge a more complete and informed connection with HealthNet’s businesses. We believe that your increased understandingwill benefit our customers and make us a better company.

GREAT PLACE TO WORK

MakingCONNECTIONS

by David Olson, SVP, CorporateCommunications

for You

A message from the Executive Operating Team: (L to R) Steve Nelson, president,HNNE; Jim Woys, president,Government & SpecialtyServices (EOT chairman);Buddy Piszel, CFO, Health Net, Inc. and Stephen Lynch,president, Western RegionalHealth Plans.

We Invite You to Be Part

of CONNECTIONS

STORIES

“For some military personnel and their families, emotional wounds can be as harmful as physical

ones,” says Stu Murphy, VP, Account Management &Sales, for Health Net’s Managed Health NetworkGovernment Services (MHNGS), New York City, N.Y. To address the emotional needs of people in the military,MHN launched an intervention initiative in May 2004.“As we’ve proven our effectiveness, the demand for ourservices is increasing rapidly. We’ve touched over 100,000lives of service personnel and their families, in the U.S.and abroad, since we began,” he notes. “Because it nowtouches service personnel and their families across thefour service branches, we refer to the initiative asMilitary and Family Life Consulting (MFLC), the sameacronym we use for the consultants themselves.”

MFLC assists in the military’s readiness efforts to helpthe families and the war fighters be ready to do theirjobs. The consultants provide counseling and support toaugment the many programs and services the militaryalready has in place. “It’s not about therapy– it’s aboutskills,” explains Dr. Ian Shaffer, chief medical officer,MHN, Pt. Richmond, Calif. “Through MFLC, we provide a wealth of communication skill-building to help createrealistic expectations and give military and family members the tools to help reestablish their relationships,”he explains.

“Isolation is common for both those left behind andthose coming and going from active duty,” says RonnieWeiner, director, Clinical Programs, MHNGS, New York

City, who also spends timeas a counselor on the militarybases. “We help service peopleto unburden, to share their combatexperiences in a way that helps themget to a more positive place aboutthese events, realizing they’re not alonewith their experience. We give them toolsand resources to help them manage theimpact on their lives and the lives of their families.Parenting skills become vital, as children begin toact out, don’t relate to returning parents and addtremendous strain to an already isolated spouse.”

According to Jerry Coil, president, MHN, PointRichmond, “We send out consultants on a rotationalbasis, from one to three months. So at any giventime we have about 100 consultants in the field.We have over 50 in Europe right now.” Jerry and Ian travel to the bases across Europe andthe U.S. periodically to oversee the programs.“We are in many European countries and the Pacific Rim,” Jerry notes. Consultants also visit small units of NATO personnelscattered all over Europe including Norway,Great Britain, the Netherlands, Belgium,Luxembourg, Germany, Portugal, Spain andItaly. “It’s a very meaningful effort that weare proud to be a part of.”

FROM THe TRENCHES

Health Net’s behavioral health unit, MHN (Managed Health Network), supports members of theArmy, Marines, Navy and Air Force, as well as Guard and Reserve personnel and their families.

connections summer 20062

PERFORMANCE

MHN’s Military Support ProgramsAddress Unique Stressors

IN an elementary school classroom in WesternEurope, several children ask an MHN Military and

Family Life Consultant (MFLC) if they can talk about “Mike”whose father was killed “down range” in active combat.After the MFLC asks who wants to start the discussion,one child blurts out, “I don’t want to talk about thisbecause...” A torrent of words pours forth, and suddenlythe other children join in, expressing fear, worry and loss of control. Some begin to cry. As the class draws to an end, the MFLC says, “You may notice that I haven’t said very much. What you say as a kid can be much more important than what I as an adult may have to say.” The kids sit silently, but now they are smiling and rubbing their tear-streaked faces.

Being of serviceThis MFLC is part of a team of more than 100

temporarily assigned to military installations statesideand overseas by Health Net’s behavioral health unit,MHN. MHN supports members of the Army, Marines,Navy and Air Force as well as Guard and Reserve personnel and their families.

Consultants make contact during pre- and post-deployment training. They sometimes “shadow” unitsduring reintegration to assure continuity of support overtime. “For example, there is typically a need to check in at the six-month mark to determine if returning militaryare adjusting,” says Terry Fullerton, director, ClinicalServices, MHNGS, Arlington, Va. “MFLCs also approach

military personnel and their families on and around thebases in locations like libraries, bowling alleys or evenlong lines. Local restaurants are a favorite spot.”

“It can happen anytime, anywhere,” explains a consultant.“There are countless opportunities to be of service.” After introducing the program, consultants may informallychat with someone, schedule a follow-up consultation,or refer someone to a range of resources.

Someone to talk to As they listen to stories that pour in from

the “trenches,” MFLCs often become the starting point for subtle and not so subtle transformations. One consultantremembers meeting a young soldiertwo months into a newassignment. The soldierhad recently returnedfrom a dangerous, year-long deployment. Ashis eyes welled upwith tears, he told the consultant howhe had “seen some stuff over there.” (Continued on next page.)

MHN brings comfort to service families

Did you know?• 1.4 million U.S. military personnel are on activeduty.• Just over half of activeduty personnel are married. • Approximately 73% of married service membershave children.

• Both spouses are servicemembers in about 12% ofmilitary marriages (77,000).

Photo Credit: Master Sgt. Rob Trubia, U.S. Air Force.

summer 2006 connections 3

“When things get hard, we’re a soft spot to land on.” –MHN Military and Family Life Consultant

A soldier returning from Iraq finds another

soldier has moved in with her boyfriend.

Complicating matters, she has served with

and is friends with the interloper. Realizing

she does not want to ruin her career over

this, she sits down with a Military and

Family Life Consultant and comes up

with a plan to cope and move on.

In a family left behind, the young children

share their mom’s bed. When dad comes

home from assignment, the displacement is

felt on all sides. A Military and Family Life

Consultant works with the family on skills to

help bridge the tension and pave the way to

making room for everyone’s needs.

The wife of a soldier who is facing multipledeployments is having a hard time relating to her husband. “I’m not ever going to getconnected to him again,” she admits tearfully.“It was so painful the first time he left.”Through talking about this with a Militaryand Family Life Consultant, she finds ways toaccept the love AND the pain of separation.

up close andpersonal:

While stationed in Germany, a serviceman

falls in love with a local young woman. When

he leaves for Iraq, she becomes isolated and

depressed. During a visit to the base for a

hamburger, she meets a Military and Family

Life Consultant and is introduced to and readily

embraced by a “Hearts Apart” support group

where she finds welcome solace.

Photo Credit: Senior Master Sgt. David H. Lipp, U.S. Air Force.

Photo Credit: Joe Kane, Chief Journalist, U.S. Navy

He also remembered being back from duty and spotting a woman in a bar wearing a belt that resembledammunition. “It wasn’t real, but I couldn’t stop looking at it,” the soldier confided. “All of a sudden, I felt like Iwas back there. I had to leave the place.” Then he askedthe consultant sheepishly, “Is that crazy?” They talkedabout the reintegration process and prolonged stressresponse. At the end of their meeting, the soldier said,“You have no idea how good it feels to have someone to talk to.”

Offering comfort and healing From helping children process their feelings to reassuring

a troubled soldier, MFLCs are indeed creating a soft spotfor many to fall on–and making a remarkable differencedoing so.

Article courtesy of MHN’s HN Connect site, May 22, 2006,MHN Marketing & Communications; Pt. Richmond, Calif.

connections summer 20064

How MHN Military and familylife consultants help

Not just another corporate sponsorship. Not yourordinary arms-length big check. Health Net wants

to make an important difference for society–startingwith children, the most vulnerable, and those most readyto embrace life and new ideas.

“We don’t want to be one of a crowd of companies–we want our contribution to be distinct and significantwhile still supporting Health Net’s business,” saysJay Gellert, Health Net, Inc. president and CEO. “We also want our image to reflect our ongoing ‘go local’ strategies for meeting customer needs in the communities where we work.”

Our intention is to: • Establish goodwill and demonstrate that we are

part of the communities we serve.

• Spread the good word about Health Net and build brandawareness by putting a human face on the company.

• Energize Health Net associates to get involved.

Health Net, Inc. and its regional plans consistentlycontribute to national and local charitable organizationsand activities, encouraging and supporting associates’involvement. Here’s just one example from our Californiateam.

In the Neighborhood: HNCA’s Kick It With Health Net

Encouraging people to make better health choicesrequires many different approaches. Recognizing this,Health Net of California (HNCA) began a grassroots sponsorship program in mid-2005 to help parents andchildren further their own goals for healthy living.

“The sponsorship program is about building healthawareness in our communities while strengtheningHealth Net’s brand and involving associates,” explainsTiffany Kobashigawa, manager, HNCA Marketing.

Kick ItWith HealthNet fosters activities and programs to help youthstay fit. Last year, Kick It providedathletic scholarships and soccer equipment to more than 15,000 school-age athletes and volunteers in fiveSouthern California community soccer leagues. “Aided byassociate volunteers, HNCA also sponsored customizedskills and drills clinics for the more than 17,000 children,”says Tiffany. “Participants have a strong, favorable andlasting impression of Health Net.”

Kick It With Health Net expanded in 2006 to include 12leagues, with five in Northern California and seven thatspan the Los Angeles, San Diego and San Francisco metroareas. “These locations have a combined population ofmore than 12 million and provide access to very culturallydiverse markets where we want people to recognize ourbrand and are likely to see us as a choice when selectinghealth coverage,” says Mark Morgan, chief commercialofficer, HNCA.

“I’m there to help fight obesity by getting kids active,”says Tim Louie, manager, HNCA Marketing, who was oneof several volunteers at a skills clinic. Another volunteer,Delcia Witty, HNCA wellness coordinator, attended several events to hand out wellness information and got involved helping the kids with their drills. “Because the kids were so excited, I joined in the fun and created a contest to see who could win the most Health Netstickers.”

We Live Here,Too Improving Health Isn’t Just

About Selling Insurance

summer 2006 connections

GREAT PLACE TO WORK

Sponsorships with a wellness purpose

To find out more, go to www.kickitwithhealthnet.com

5

GROWTH

connections summer 20066

At84, Health Net member YolandaBrach of Queens, N.Y., says, “I

don’t take any prescription medicine so I wasn’toverly concerned about choosing a Medicare

Part D plan. After talking with family and friends,I realized that whether I needed it or not, choosinga plan was important.”

Brach says that, “As a Health Net member, Itrusted the company to enroll me in a plan thatworks for me.” She may not need a prescriptiondrug plan right now–but she feels comfortablethat she has the right coverage at the right price if and when she does.

Her positive experience as a Health Netmember prompted her to recommend

Health Net to her friends.Showing customers like Brach why her

Medicare decision DOES matter is the way Health Net is carving a niche

for itself in the complex and oftenconfusing world of Medicare. This

world was altered dramaticallywhen changes authorized by

the Medicare Prescription Drug

Health Net simplifies the way for consumers

Total MedicareEnrollment Growth

summer 2006 connections 7

Improvement and Modernization Act of 2003 (MMA)went into full effect on January 1, 2006, and seniors felt the direct impact.

These changes, the most sweeping since the Medicareprogram began in 1965, allow private health plans to offerprescription drug coverage (Medicare Part D) directly to Medicare-eligible beneficiaries–more than 43 million individuals.

However, unlike Medicare Parts A and B which areautomatically provided to eligible seniors by the federalgovernment, seniors can only access government-sponsored Part D benefits by signing up through a qualified plan sponsor like Health Net.

Largest product launch in company’s historyUndaunted by the complexity of the MMA legislation

and spurred by the opportunity to address the needs ofthe senior population, Health Net seized the MedicarePart D opportunity.

Embracing the double-digit revenue and enrollmentgrowth potential it represented for the company, withrecord speed Health Net hit the market with 98 newplans during the first open enrollment season. This madeit the single largest product launch in Health Net’s history.

The company’s course was clear and direct. “It wasparamount for us to distinguish ourselves at the outset,so we built Health Net’s Medicare Part D strategy on thebelief that we could make Medicare simple, and in sodoing, engender trust,” Sam Srivastava, chief seniorproducts officer, Medicare, tells us. “Simplicity is thepathway to trust” became our guiding principle.

“I’ve had my share of medical problems and I am legallyblind. I was concerned about the changes in Medicare. Ididn’t really understand how it worked. Thankfully, HealthNet helped me enroll in the Part D for my area. Because ofmy medical issues I have a personal relationship with mypharmacist–he is happy with the plan selected for me,too–my medications are all covered and that means Idon’t have think about it.”

Theresa Napolitano, Queens, N.Y. Health Net member for five years

Standing on firm ground Health Net banked on its long-standing tradition

and deep-seated experience serving seniors to take aim at the new Part D market. Even before the Part Denrollment season opened last fall, Health Net wasalready the nation’s fourth-largest Medicare Advantagecontractor with a 6 percent market share based onapproximately 171,000 members in five states.

Health Net’s core markets represent one-third of the total Part D opportunity, which is 43 million eligibles.

Carpe Diem! New markets, new products, new members

With the first open enrollment season behind us,Health Net’s Medicare growth is encouraging. MedicarePart D membership at the end of the first quarter of2006 was 255,000. Medicare Advantage membership rose by 9 percent, or approximately 16,000 members, to 190,000 at the end of the first quarter of 2006. Thelargest Medicare Advantage gains occurred in Californiaand the Northeast.(Continued on next page.)

Total MedicareRevenue Growth

Geographic Growth• We currently sell Medicare Advantage (MA)

in five states: Arizona, California, Connecticut,Oregon and New York. Health Net sells the stand-alone PDP in 10 states, the five states where we currently sell MA (listedabove), plus: Massachusetts, New Jersey, Rhode Island, Vermont and Washington.

• Effective in 2007, Health Net is approved to sell the PDP in all 50 states.

Q4 2005 to Q1 2006:Enrollment increased156%– from 174,000

to 445,000 in MedicareAdvantage and PDP.

Q4 2005 to Q1 2006:Revenue increased

47%–from $391 millionto $576 million.

Across the nation, the Part D program is doing quitewell, despite some initial bumps in the road. Enrollmentamong all U.S. beneficiaries reached 90 percent as of theMay 15 deadline–and enrollees are now saving an averageof $1,500 annually on their prescription medications.

“While positioning ourselves was vital to launch ourPart D effort, delivering was what we had to do,” continuesSam. “We had to be prepared to support sales in currentmarkets, stage to enter new markets, design new productofferings, negotiate with providers and rapidly expandour infrastructure. These were the logistical ‘Everests’ we had to surmount–and did.”

Health Net showcased its abilities with an advance onthe market that included a “call to action” advertisingblitz with well-known actor and retired TennesseeSenator Fred Thompson, who gave voice to the solutionsHealth Net offered. Creative events proliferated–such as“senior proms” to entertain and educate Medicare-eligibles,as well as a storefront in a popular mall in Tempe, Ariz.,where seniors could walk in and sign up.

As the second enrollment season in November getscloser, hopes are high that we will continue to growsteadily as we perfect our strategies. We also will beexpanding to additional geographic markets.

Taking expansion in stride So how did Health Net move so quickly to pull off

our single largest product launch in company history? It required drawing on the established expertise in several areas–and the dedicated teamwork of these associates–to make things happen.

Notably, to expand so rapidly and keepadministrative costs low, Health Net’sSenior Products Division (SPD)built upon the existing HealthNet Pharmaceutical Services(HNPS) infrastructure andbenefit managementcapability to launchand support theMedicare Part Ddrug benefit.

“HNPS’s bench strength gave us the leadership weneeded for the heavy lifting,” notes Linda Brisbane, VP,Senior Products Division Operations. “This allowed us to focus on the design and pricing of our new MA andMAPD products to keep them relevant and affordable for the older American audience.”

Doing our part: associates bring the message home “Health Net associates are our most important brand

ambassadors,” says Gail Watts, VP, OrganizationEffectiveness. “Medicare Part D offered an unprecedentedopportunity to demonstrate that belief.”

That’s why, as Part D enrollment approached, HealthNet associates were tapped as Medicare navigators notonly at work, but at home too. According to John Sivori,president, HNPS, “As sons and daughters, nieces,nephews and grandchildren of members and potentialmembers, associates could take a very personal role incommunicating the importance of signing up for aMedicare Part D plan.”

To arm them with what they needed to reach out toloved ones, Medicare Marketing prepared training andcommunications. “This included a dedicated phone numberfamily and friends could call for preferred handling,” says John.“So far, we’ve received more than 350 associate referrals.”

“Never before has Health Net launched a productoffering where associates played such a strategic role,”Gail explains. “We encourage associates to stay engaged

during this fall’s open enrollment season, and tocontinue communicating our message of ‘simplicity’

to family members and friends who are newly eligible.”

Where are we now?“Medicare Part D is a great success story,” says Sam.

“It didn’t go off without a hitch, but we’ve proven howvery good we are at troubleshooting and making thingsright for the customer. And we’ve kept our promise tokeep things simple.”

8 connections summer 2006

summer 2006 connections 9

Simplicity Health Net offers consumers the right coverage through easy-to-understand and easy-to-use plans in two basic categories: MedicareAdvantage with prescription drug coverage and astand-alone prescription drug plan.

Broad networks Our vast networks of contractedphysicians, hospitals, pharmacies and medical professionals provide care that is comprehensive and accessible.

Access to a wide range of commonly prescribed generic and brand-name drugs.

Plans with no deductibles and coinsuranceFor many common services, we have a feature thateliminates deductible and coinsurance requirements,and Heath Net covers members from their very first claim.

Look for past coverage and ongoing communications about Medicare. • On HN Connect: Medicare ad roundup on

Jay’s Corner… 5/1/06.

• HNAZ’s Medicare storefront on Latest News… 3/17/06

• On www.healthnet.com > Medicareenrollment information for family and friends.

A look ahead– What’s next for Health Net and Medicare Part D

“Our Medicare strategy for 2007 and beyond includesproduct enhancements and geographic expansion of ourmarkets. We’ll also build on our best practices, includingour Medicare retail store piloted in Arizona. A resoundingsuccess, the storefront demonstrates our understandingof the customer and a respect for diverse needs,” explainsMike Clark, VP, National Medicare Sales. “Health Net’sMedicare officers are developing outlets in California,Oregon, New York and Connecticut.”

A new Fall advertising campaign is in the creative stages,as are new online distribution tools for members and brokers,provider kits, and additional color-coded product collateral.

Reality checkIndividuals who enrolled in the sign-up-now-or-pay-more-

later rush to beat the first May 15 deadline took advantage ofthe grace period allowed to scrutinize their choices. Theyhad until June 30, 2006, to make a switch. Health Netfocused on assisting enrollees during this last-chance phase.

“We’ve learned important lessons from our first Part Dexperience, all of which will contribute to improvementsthat will directly benefit our customers and our business,”Sam concludes. “It’s a very exciting time for us. Our

strategy for success going forward is to diversify our Senior Products portfolio and expand geographically tofulfill the needs of all seniors. That’s our next wave.”

“By putting our customers’ needs and expectationsfirst, we will be able to constantly improve products andservices in a way that matters–and that is what we plan to do,” says Jim Woys, president, Government andSpecialty Services (including Medicare). “Senior Products is akey growth engine of Health Net. The Part D opportunityallows us to fulfill our long-term commitment to offersolutions to seniors that will improve their health andwell-being.”

The look and feel of our 2006 Medicare campaign.

connections summer 200610

Better relationships withdoctors, pricing thatfits consumer demand

and getting a handle on costtrends add up to a healthier bottomline for Health Net. Add to the mix improved products and newofferings to enrich our growthand we have a winning formulafor Health Net’s product, salesand marketing teams.

Capture the public eye with creative advertising in strategic locations and voila! Our reputationgrows and our commercialenrollment begins to increase.This strategy’s proving true this year for commercial business and bodes well for the future.

Focus on California and theNortheast

First, “What’s New?”Building on existing product lines,

California has revamped and expandedmany of its products and introducedgroundbreaking additions to its Saludcon Health Net product aimed at the state’s rapidly expanding Latinopopulation.

For example, the Individual &Family Plans (IFP) group launchedthree new “Simple Value” zero-deductible plans with flexible pharmacyoptions that have quickly becomebest sellers. Small Business Group(SBG) added four new plans in Mayto fill gaps in an already robust port-folio that includes the XtraValue andSilver Network options. XtraValueplans are SBG’s lowest cost, full-network option, while Silver Networkoffers affordability with a smaller

network in select counties inSouthern California. XtraValue andSilver Network also are available to Mid-Market employers and areattracting keen attention.

Finally, California is doing the network expansion, contracting and operations work necessary toenhance its PPO offering. By offeringa stronger PPO option, we can betterserve our California customers.

The Northeast made waves withthe launch of an integrated healthsavings account (HSA) product onJanuary 1, 2006, with Wells Fargoserving as its financial partner.(California also will be bringing WellsFargo to its HSA offering in the thirdquarter of 2006.) In New York andNew Jersey, a new suite of moreaffordable plans for our OutlookSM

product portfolio inspired significantgrowth in the self-insured market.

Product innovation and advertising aim to spur HealthNet’s commercial growth

The AdBlitz Is On!

Our Commercial Business:

GROWTH

Sample of HNCA's “Health Nut” billboard campaign.

summer 2006 connections 11

So How Big Is Health Net’s Commercial Business?

Our commercial franchises–HNCA,

HNOR, HNAZ, HNNE-NY, NJ, CT–are the

largest segment of our company with:

• More than 2 million members.

• Boasting about 53 percentof total Health Net revenues.

Getting the word out: Advertising takes off

The following illustrates how HealthNet’s advertising and outreach aredeveloping as we continue defining what it means to be a “customer intimate” company. (See side bar.)

California breaks out of the quiet mode

A common question among Californiaassociates used to be, “Why don’t weadvertise?” Now, you’d be hard pressedto find many Californians who haven’theard or seen some type of ad forHealth Net of California (HNCA).

The first campaign began last fall andanswered the question, “Why is HealthNet a better decision?”

“One of the key messages emphasizedHealth Net’s stability–25 years of experience, 6 million members and thestaying power of a $12 billion company,”states Mark Morgan, HNCA chief commercial officer. “Another messagereassured members that they cancount on us to be available when theyneed us–whether they’re ready tobegin a fitness program, or they have a serious health condition and need

to make an informed decision abouttreatment.” Decision PowerSM is one ofthe tools we offer to assist them withadvice and the best course of treatment.

According to Mark, “Small businessesare the backbone of California’s econo-my. Our 2006 blitz lets people knowabout our Enhanced Choice for smallbusinesses–which includes moreaffordable plans for this market thanany other carrier in California. We areseeing encouraging signs that HNCACommercial is back on a growth trajectory.”

California advertising includes TVspots, billboards and prints ads in localand national publications. See samplesin this story and on HN Connect.

Investing in the Latino marketGreat fanfare accompanied the

announcement of enhancements toHNCA’s Salud con Health Net productsuite at an event at the MexicanConsulate in Los Angeles. Saludenhancements include two new products–Mexi-Plan and Health Net Cross-BorderIndividual and Family Plan–the firstever cross-border health care plansavailable to individual consumers whopurchase benefits directly from insurers.

Sample of HNCA’s East Los Angeles andState Health Programs ad campaign.

It’s about the customer“With Health Net’s new company-wide focus on ‘customer intimacy’as its value proposition, we’re looking to develop and present ourproducts–nationally and locally–to better meet our customers’needs,” says Kathleen Richard,Health Net’s Enterprise officer.Kathleen leads our value propositiondevelopment to help drive salesand support growth within andacross our markets.

“That means building on our ‘go local’ business strategies to systematically get even closer toour customers,” she explains, “tounderstand what our membersneed and how best to deliver it tothem. As we move along this path,our products, marketing and advertising will play a critical role–reflecting how we are becomingthe health care company thatuniquely understands and servesits customers with the solutionsthey need.”

(Continued on next page.)

connections summer 200612

Fifteen media outlets wereattracted to the festivities–print,radio and television–resulting inextensive coverage and giving enrollment a major boost–withnearly 1,000 calls coming in on thefirst day of offering Mexi-Plan.

California associates cultivateSalud enrollment

Keeping the momentum going, 20 associates manned the phonebanks and answered consumer calls on health insurance during aninformation special on the popularLatino-focused Los Angeles-basedUnivision television station.

Throughout the program, HealthNet’s Ana Andrade, VP, LatinoPrograms, discussed HNCA’s role in creating more affordable accessto care for Latinos. For customerservice representative Isela Torres,the experience was very rewarding.“Participating in this event gave usall a great opportunity to providethe community with importantinformation,” says Isela.

Another brainchild of associateorigin is the storefront concept.Maria Lugo, director of Sales, cameup with the idea to bring informationand enrollment opportunities toLatinos in the way they are mostcomfortable: face-to-face. To thatend, a sales storefront for all HNCA

products opened in East Los Angelesin June.

HNAZ has its own storefront in a mall in Mesa, Ariz., launched toencourage Medicare Part D enroll-ment. (See mention in story onMedicare, page 8). The storefrontconcept is an example of a “customerintimate” approach to recognizingunique and diverse needs.

The Northeast goes grassrootswith MyTown

In response to feedback fromHNNE associates, NortheastMarketing is playing up the unique-ness of the small town flavor of theregion with MyTown, an extremelylocal marketing campaign basedaround selected Connecticut communities.

“MyTown positions Health Net as a local plan of choice, uniquelyconnected to what makes eachcommunity a one-of-a-kind place,”says Paul Lambdin, HNNE chiefcommercial officer. “The MyTowncampaign targets decision makers,brokers, CEOs and others wherethey live.”

Besides its myriad programs,social events and sporting eventsponsorships, MyTown includes anewspaper advertising campaign for each community. The ads are as local as local gets– in many cases,only those from within the neighborhood targeted actually “get it.”

“We’ve run at least four distinctiveads for each town,” says JenniferRavalli, regional marketing coordinator, Shelton, Conn. (Seesamples, next page.) “Health Netassociates living in these communitieshelp us choose which events to feature in the ads. In someinstances, we cleverly include a reference to a Health Net associatewho lives in the community.”

Northeast Marketing will expandMyTown to other parts of HNNE. “So associates should keep that localinformation coming,” Jennifer adds.

New Jersey: Health Net’s back!With the launch of the new

OutlookSM suite of products in NewJersey, the Marketing team took anintegrated approach to get the wordout and help reinvigorate the HealthNet brand. The June kick-off featurescollateral, targeted direct mail tocompany decision-makers, e-mailblasts to brokers, and a New Jerseyprint media plan including all themajor newspapers in Northern New Jersey.

There’s no doubt about it: Health Net Commercial is on the move–and advertising andHealth Net associates are organic to the effort.

HNNE New Jersey direct mail campaign sample.

You’ve probablyheard the saying

“a penny saved is a pennyearned”–and putting away

a little money on a regularbasis is certainly the first step

toward saving. But Health Net’s401(k) Savings Plan can transform

your pennies saved into much more–and it’s no hocus-pocus. Here’s how.

Health Net contributes, tooFor every dollar you save in the 401(k) Savings Plan, Health Net puts

in a dollar, too, up to 3 percent of your eligible compensation. If yousave even more, Health Net will match 50 percent of the next 2 percentyou contribute. It’s an amazing return on your money and makesyour savings grow quickly. You’ll want to contribute enough to getthe free match money, but you also can save and invest even more.

Pretax saving = $$$401(k) contributions are not taxed until you withdraw them later.

The money you would pay in taxes is instead available to help yoursavings grow through potential investment earnings.

Beginning to see how 401(k) savings benefits are no illusion? To learn more, go to HN Connect > HR Link > My Knowledge Link >401(k). Or, contact the Associate Service Center (ASC) at 1-877-HR-HELPS (1-877-474-3577).

For associates, it’s Health Net’s401(k) Savings Plan

What’s the

Magic to Saving?

GREAT PLACE TO WORK

“There’s nodoubt about it:Health Net Commercialis on the move–andadvertising and HealthNet associates areorganic to the effort.”

summer 2006 connections 13

Samples from HNNE MyTown ad campaign inConnecticut. Top: Refers to Kendle Klein, Manager,Sales Administration, Shelton, involved in localtheater. Bottom: Refers to the Garden Club ofWoodbridge’s Notable Tree Project.

Health Net at a glance …

• Provides health benefits to approximately6.6 million individuals.

• Employs approximately 9,800 associates.

• Reported revenues of $11.9 billion for 2005.

• Among Fortune 200 companies, is rankedseventh in profit improvement and 15thin total shareholder return for 2005.

• Is #191 on the Fortune 500 in 2006among all industries and #7 in the health care industry. Revenues compareto CBS (Fortune #149), Eastman Kodak(#155), Apple Computer (#159), Nike(#163) and Pepsi Bottling (#192).

Simply e-mail answers to the followingthree questions by August 15, 2006: 1. Did you enjoy reading Connections?

Why or why not?

2. Did this magazine help you become better informed about Health Net? Why or why not?

3. What stories or types of stories would you like to see featured in future issues of Connections?

How to Reply and Enter:• Put your answers to the three questions

in an e-mail.

• Type Connections Feedback in the “Subject” box of your e-mail.

• Type Connections@healthnet.com in the “To” box of your e-mail and send it by August 15, 2006.

Winners will be randomly selected and notified viae-mail. Winners names will appear on HN Connect.Thank you in advance for your comments.

Fifty bucks says “we really want to hear from you.”To be entered in a random drawing to win one of five $50 SuperCertificates®

to shop at GiftCertificates.com, send us your feedback to help make Connections a magazine that gives you a better understanding of Health Net.

So What Do YOU Think?

HN Connect is your resource for the latest Health Net news and information. Check out thehome page and your business unit or departmentpage for the most up-to-date information onwhat's happening in our company.

• For an online version of this magazine with live links to related stories, go to HN Connect > Find It Fast >Newsletters > Connections.

• We want to hear from you about Connections on an ongoing basis. To provide feedback and idea submissions, goto HN Connect > Find It Fast > Newsletters > Connections >Feedback.

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