The Health Service Executive is to cease funding nursing home care at the Saint Clair's private nursing home in Ballinderry, Mullingar, Co Westmeath from next month.
The executive said the issue is not related to patient care.
It said it is due to the fact that the home no longer meets the legal criteria for funding as an approved home under the Fair Deal scheme.
Saint Clair's can accommodate 37 residents.
The current residents will have to move to another nursing home if they wish to have their care covered under the scheme.
If they decide to stay, they will get no financial support from the HSE.
The HSE said it regretted that the course of action was necessary, particularly with regard to the inconvenience for the patients and their families.
It said the proprietor had received formal notification and is working with the HSE to facilitate an orderly and planned transition period for residents with effect from 30 September.
The HSE said there were around 16 beds available within a 24km radius of St Clair's.
In a statement on its website, St Clair's said it will continue to operate as a nursing home and is keen that as many residents as possible remain.
It said it is no longer participating in the Fair Deal scheme as of last Friday.
An approved nursing home must be registered and subject to inspection by the Health Information and Quality Authority (HIQA).
It must have agreed a price for the purposes of the Fair Deal scheme with the National Treatment Purchase Fund (NTPF).
It must also have a valid tax clearance certificate.