DEFERRED COMPENSATION PLAN FOR DIRECTORS

EXHIBIT 10.19

HEALTH NET, INC.

DEFERRED COMPENSATION PLAN

FOR DIRECTORS

(effective January 1, 2004)

I. INTRODUCTION

The purpose of the Health Net, Inc. Deferred Compensation Plan for Directors (the “Plan”) is to permit members of the board of directors of Health Net, Inc., a Delaware corporation (the “Company”), who are not employees of the Company to defer the receipt of certain meeting fees and other cash remuneration payable by the Company, until such times as set forth herein. Prior to January 1, 2004, such directors were eligible to participate in the Health Net, Inc. Deferred Compensation Plan, on substantially the same terms and conditions that they are eligible to participate in this Plan.

II. DEFINITIONS

For purposes of the Plan, the following capitalized terms shall have the meanings set forth in this Article.

2.1 “Account” shall mean the account kept on the books and records of the Company established on behalf of a Participant in the Plan to which amounts deferred by such Participant (and deemed earnings and losses thereon), other than amounts credited to the Participant’s In-Service Withdrawal Account, are credited.

2.2 “Beneficiary” shall mean the beneficiary or beneficiaries (including any contingent beneficiary) designated pursuant to Section 4.5.

2.3 “Board” shall mean the Board of Directors of the Company.

2.4 “Code” shall mean the Internal Revenue Code of 1986, as amended.

2.5 “Committee” shall mean the Compensation and Stock Option Committee of the Board.

2.6 “Common Stock” shall mean the Class A Common Stock, $.001 par value, of the Company.

2.7 “Company” shall mean Health Net, Inc. (formerly known as Foundation Health Systems, Inc.), a Delaware corporation, or any successor thereto.

2.8 “Compensation” shall mean the fees and other cash remuneration payable to a Director during a Deferral Year.

2.9 “Deferral Year” shall mean the twelve-month period beginning each July 1, except that the first Deferral Year shall be the six-month period beginning on January 1, 2004.

2.10 “Director” shall mean a member of the Board.

2.11 “Disability” shall mean a physical or mental disability which, in the judgment of the Committee, prevents a Participant from performing substantially such Participant’s duties and responsibilities to the Company for a continuous period of at least six months.

2.12 “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

2.13 “Effective Date” shall mean January 1, 2004.

2.14 “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

2.15 “In-Service Withdrawal Account” shall mean the account kept on the books and records of the Company established on behalf of a Participant to which amounts deferred by such Participant pursuant to Section 3.2(f) shall be paid in a lump sum at the time described in Section 4.1(b).

2.16 “In-Service Withdrawal Year” shall mean the calendar year designated by a Participant on his or her deferral election form filed pursuant to Section 3.2(f), which year begins at least three years after the year in respect of which the Participant has filed such election form.

2.17 “Investment Fund” shall mean an “open-end,” “closed-end” or other collective investment fund selected by the Company from time to time as a measure for allocating deemed investment gains and losses to Participants’ accounts.

2.18 “Merger” shall mean any merger of the Company in which the holders of the Class A common stock, $.001 par value, of the Company immediately prior to the merger have the same proportionate ownership of common stock of the surviving or resulting parent corporation immediately after the merger.

2.19 “Participant” shall mean a Director who has elected to defer, pursuant to the terms of the Plan, an amount that would otherwise be payable as Compensation in a Deferral Year.

2.20 “Payment Date” shall mean the date chosen by the Company, in its sole discretion, that occurs within the 90-day period beginning immediately after the last day of a Deferral Year.

III. PARTICIPATION AND DEFERRALS

3.1 Participation .

(a) In General . Each Director may participate in the Plan in a Deferral Year by specifying on an election form filed with the Company prior to the beginning of such Deferral Year the percentage(s) of the Compensation otherwise payable to him or her by the Company

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during the Deferral Year to be deducted from such Compensation and deferred for payment at a later date pursuant to the Plan. The Company shall establish rules and procedures prescribing the time and manner in which election forms shall be filed with the Company.

(b) Initial Participation . An individual may participate in the Plan during the first Deferral Year in which the individual becomes a Director. To participate in the Plan for such Deferral Year, such individual must file a deferral election form with the Company within 30 days of his or her becoming a Director.

(a) In General . Except as provided in Section 3.1(b), a deferral election form must be filed in accordance with rules and procedures prescribed by the Company prior to the Deferral Year for which the election is to be effective. A Participant may not revoke or change a deferral election for a Deferral Year after the beginning of such year. A Participant must file a new election form with the Company prior to each Deferral Year for which the election is to be effective. In no event shall an election under the Plan apply to Compensation earned prior to the date on which the election to participate in the Plan for a Deferral Year is received by the Company.

(b) Deferral Amount . A Director may elect on the election form designated by the Company to defer the receipt of any or all of the amount otherwise payable as Compensation to such Director during the Deferral Year.

(c) Deemed Investment Election . Upon the commencement of participation in the Plan, each Participant shall specify on his or her election form any one or more of the Investment Funds in which all of the Participant’s accounts under the Plan are to be deemed invested.

(d) Change of Deemed Investment Election . A Participant may elect to change his or her deemed investment election as frequently as may be designated by the Company. Any such change shall specify the whole percentages (or amounts if so permitted by the Company) to be deemed invested in one or more of the then available Investment Funds. A Participant may change his or her election (i) with respect to the balance of his or her account(s) as of the effective date of the Participant’s new investment election, (ii) with respect to future amounts credited to the Participant’s account(s) under Section 3.3(a) and (b) or (iii) both. A Participant’s change of a deemed investment election must be made in accordance with the written rules and conditions provided by the Company to the Participants.

(e) Payment Election . Except as provided in subsection (f) of this Section 3.2, a Director must designate on each deferral election form filed with the Company (i) a manner of payment in which his or her Account shall be paid, provided that such manner of payment is permitted under Section 4.2, and (ii) whether the Account is to be paid on the Payment Date occurring immediately after (x) the Deferral Year in which the Director terminates service as a Director, or (y) the Deferral Year immediately following the Deferral Year in which such service terminates. The Participant’s election on the deferral election form most recently filed with the Company shall supercede the Participant’s election on all previously filed deferral election forms with respect to the payment of the Participant’s Account, provided that the most recent election form has been on file with the Company for at least twelve (12) months.

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(f) In-Service Withdrawals . A Participant may elect for any Deferral Year on a deferral election form filed with the Company (i) to designate any percentage of the amount to be deferred to be credited to an In-Service Withdrawal Account established on behalf of the Participant and (ii) to receive payment of the balance of such In-Service Withdrawal Account in a lump-sum within 90 days after the last day of the In-Service Withdrawal Year so designated by the Participant.

(a) Crediting Deferred Compensation . Any amount otherwise payable as Compensation that is deferred by a Participant shall be credited to the applicable account of the Participant as of the date on which, absent such election, such amount would have been payable to the Participant as Compensation.

(b) Earnings . Each Participant’s account(s) under the Plan shall be credited with deemed earnings, or reduced by deemed losses, equal to the earnings or losses that would have been realized or paid if assets in an amount equal to the balance of such account(s) were actually invested among the Investment Funds selected by the Participant in accordance with Section 3.2(c) and (d). Although the Company might actually invest assets of the Company according to the Participant’s election, it is not required to do so nor to set aside any assets to provide for payments hereunder. The Company may promulgate separate accounting and administrative rules to facilitate the deemed investment in an Investment Fund.

(c) Notices . Each Participant shall receive written notice of the balance of his or her account(s) as soon as practicable following the last day of each calendar quarter.

IV. PAYMENTS OF DEFERRED COMPENSATION

(a) In General . The balance of a Participant’s Account shall be paid or shall commence to be paid on the Payment Date occurring immediately after (i) the Deferral Year in which the Participant terminates service as Director, or (ii) the Deferral Year immediately following the Deferral Year in which such service terminates, as elected by the Participant on the election form the Participant most recently filed with the Company, provided that the election form has been on file for at least twelve (12) months.

(b) In-Service Withdrawals . A Participant may elect to receive any percentage of an amount deferred for