Health Net is eliminating the assisted living benefit it provides to roughly 3,500 low-income Medi-Cal members at the end of this year, a decision that has left families of residents with dementia scrambling to find care they cannot pay for on their own.
The reporting is based on documents obtained by CalMatters and interviews with providers. Health Net is one of the largest Medi-Cal insurers in the country and operates Medi-Cal plans in 10 California counties: Amador, Calaveras, Fresno, Inyo, Los Angeles, Mono, Sacramento, San Joaquin, Stanislaus, and Tulare. Two smaller plans that contract with it, CalViva Health and the Community Health Plan of Imperial Valley, have also told the state they intend to end the benefit.
Most of the affected residents are elderly, and many have cognitive conditions, according to senior advocacy organizations. Assisted living facilities of this kind run between $5,000 and $7,000 a month, a figure well beyond what these households can afford.
What Is Ending, and What It Is Not
This distinction matters and is easy to get wrong. California operates two separate routes to Medi-Cal assisted living, and only one of them is being cut here.
The Assisted Living Waiver is a program run directly by the state Department of Health Care Services. It is capped at 18,000 participants and carries a waitlist of three to four years, and the state created the managed care benefit partly to relieve pressure on it.
What Health Net is terminating is the separate assisted living support that Medi-Cal managed care plans may offer as an optional service under CalAIM, the state's broad effort to improve Medi-Cal and reduce costs by stabilizing high-need patients. Plans choose whether to provide it and decide annually whether to continue. The program covers most of the 24-hour service costs at board-and-care homes, memory care facilities, and larger group settings, while residents pay room and board out of pocket. Advocates refer to it as Assisted Living Facility Transitions.
That optional status is central to the dispute, because it means a plan can stop offering the benefit without the state blocking the decision. Senior advocates say California did not build in enough protection to keep people housed when a plan walks away. State regulators dispute this, telling CalMatters that Medi-Cal members have strong protections and that its notification requirements are adequate. The department declined an interview request.
The Notice Problem Families Are Describing
The mechanics of how this was communicated are as consequential as the decision itself, and two different dates are in play.
Health Net told some major contractors that services would be terminated on October 7, according to providers interviewed for the report. But the plan is obligated to continue services through December 31, and state regulators say members are entitled to services until then as long as it remains clinically appropriate. If an authorization expires before the end of the year, members should request an extension. Many facility contracts end in October, which leaves an open question about how Health Net will pay facilities it no longer contracts with.
Health Net must notify members 30 days before the end date of their service. Providers do not know whether notices will go out at the end of September or the beginning of December. Pauline Shatara, deputy director of California Advocates for Nursing Home Reform, said some notices may reach members after they have already been evicted, and described the situation bluntly: "This is going to be a disaster."
Families describe learning about the change from facilities or third-party providers rather than from the insurer. One woman said she spent days moving between customer service representatives and supervisors who had never heard of the program. She later received a letter stating that approval for her mother-in-law's memory care facility would be revoked a month early at the provider's request. The provider told her it had made no such request and had instead asked how to accommodate patients entitled to services through year's end. CalMatters independently confirmed that account.
Shatara has said a few facilities have already told her organization that residents were dropped off at emergency rooms. Her organization has warned that thousands of medically frail beneficiaries could end up in hospitals, nursing homes, or shelters.
The Company's Position and What It Rests On
Health Net disputes the characterization that members will be left without services or become unhoused. In an unsigned statement, a spokesperson said affected members will receive care through their individual authorization date and could be transitioned to nursing homes, back home with in-home supportive services, or into other programs.
The company said it is working with members, providers, and care management teams to develop individualized transition plans based on clinical needs and eligibility. It also said internal data showed the assisted living program had not led to better care as measured by fewer emergency room visits or hospital days.
Health Net separately told state regulators that the decision was driven partly by an increase in members entering assisted living from home rather than by transfers out of nursing homes, a pattern the plan says costs money rather than generates savings. The termination notice also blames regulators for changing guidelines that had previously let Health Net limit community transitions, saying the guidance raises concerns about program integrity and long-term viability. Regulators were told the decision was made in part to cut costs.
None of the company's internal analyses have been published, and the emergency room and hospitalization metrics it cites have not been made available for external review. Hagar Dickman, who directs long-term services and supports at Justice in Aging, summarized the plan's reasoning as a judgment that "it's less costly to offer no services than some services."
The Households with the Most at Stake
Risk here is concentrated and identifiable. The people most exposed are Medi-Cal members currently living in licensed residential care facilities under Health Net, CalViva Health, or the Community Health Plan of Imperial Valley, particularly those with dementia or Alzheimer's disease who require supervision that family members cannot safely provide at home.
Advocates say home is not a realistic option for most of them. Many live on fixed Social Security incomes and have given up their primary residence to pay the room-and-board fees that Medi-Cal does not cover. Adult children acting as caregivers form a second exposed group, often unable to afford private-pay rates and unable, because of their own health or work situations, to take a parent home.
Families in this position have several concrete steps they can take now. Request a written notice of action from the plan, since a formal denial or termination notice is what starts an appeal clock. Medi-Cal members have a right to file a grievance with their plan and to request a state fair hearing, and continuity-of-care requirements apply. If an authorization is set to lapse before December 31, ask for an extension in writing. The state's Medi-Cal Managed Care Ombudsman handles complaints about plan conduct, and county long-term care ombudsman programs advocate for residents of licensed facilities.
Anyone told to leave a facility should ask for written notice of the eviction and the legal basis for it, since residential care evictions in California carry their own notice requirements independent of what an insurer decides about payment. Some families are exploring a switch to another Medi-Cal plan that still offers the benefit, though advocates report that other plans have been reluctant to approve these services for new members. For context on why alternatives are limited, the cost of nursing home care exceeds $10,000 per month.
What remains unresolved is substantial. Exactly when notices will be sent has not been confirmed; how many members will find placements elsewhere is unknown; whether state regulators will impose additional transition requirements has not been announced; and whether other Medi-Cal plans will follow is unclear. MedicalDaily will report on any state action.
Key Questions Answered
What exactly is being cut? Health Net is ending the optional assisted living benefit it offers through Medi-Cal managed care under CalAIM, which will affect roughly 3,500 members at the end of this year.
Is this the Assisted Living Waiver? No. The waiver is a separate state-run program capped at 18,000 participants with a three- to four-year waitlist. What is ending is the optional benefit that managed care plans may choose to offer.
Are other plans doing the same? CalViva Health and the Community Health Plan of Imperial Valley, which contracts with Health Net, have told the state they also intend to end the benefit.
When do services actually stop? Health Net told some contractors that services end October 7, but state regulators say members are entitled to services through December 31 when clinically appropriate. Members whose authorization expires earlier should request an extension.
What does Health Net say will happen to members? The company says members will receive care through their individual authorization date and could move to nursing homes, in-home supportive services, or other programs, with individualized transition plans.
What can an affected family do now? Request a written notice of action, file a grievance with the plan, and consider a state fair hearing. The Medi-Cal Managed Care Ombudsman and county long-term care ombudsman programs can assist.
Does losing coverage automatically mean eviction? No. Residential care facilities in California have their own eviction notice requirements. Ask the facility for written notice and the legal basis for it.
