The HSE has published its National Service Plan for 2013 explaining how it will spend its budget of €13.4 billion and make savings of over €721m.
It said that hospitals are facing an incoming projected deficit of €271m as the year starts.
The HSE said that 40,000 people will lose their medical cards, due to new income eligibility changes announced in the Budget.
The HSE Board has also decided to seek extra cost cuts in primary care of €60m, more than those announced on Budget day.
This will result in further products no longer being provided free to patients and greater scrutiny of medical card eligibility.
The plan also warns that a waiting list is likely to be set up for nursing-home care, as no extra money was provided this year for the Nursing Homes Support Scheme.
It reveals that voluntary hospitals and related sectors have bank overdraft levels of €152m.
It warns of the risk that if savings are not achieved, especially in primary care costs, and pay and new costs are incurred, there will be a growing deficit.
The plan provides for 3,400 full-time staff leaving, 4% of the workforce, generating savings of €286m, but says it is hard to assess how many may leave given the large number of departures in recent years.
Around 1,500 staff are expected to leave through "natural attrition". Provision is also made for 1,025 key posts to be filled.
For the first time, the budget allocations are based on the projected spend rather than on historic budgets.
No manager will be allowed to plan for a deficit.
The HSE said this is to try to ensure sustainable budgets, especially in the hospital sector, which has struggled in recent years.
The plan says that this year, no adult will wait more than eight months for a planned procedure and no child more than 20 weeks.
It is also promising that no patient will wait longer than a year for an outpatient appointment.
It provides for up to 100,000 more medical cards and 130,000 GP visit cards.
Minister for Health James Reilly has approved the plan.
The plan says that the HSE will deliver the maximum level of safe services possible for the reduced funding and employment levels, which means prioritising some services to meet the most urgent needs.
An extra €17m has been made available for the extra cost of cancer drugs.
HSE Director General-designate Tony O'Brien said that he was not expecting the HSE to be seeking a supplementary budget this year.
He said that the HSE has dealt with deficits in hospitals and that the €152m maximum overdraft level for voluntary hospitals had not been reached.