By Elise Viebeck - 03/12/14 04:25 PM EDT
The Obama administration is allowing some people with canceled health plans to avoid penalties under the individual mandate for an additional two years.
The little noticed change, first reported by The Wall Street Journal, came as part of the administration's decision last week to extend its "keep your plan" fix through 2016.
As part of their decision, federal health officials also lengthened the amount of time that people with canceled plans can now be exempt from the individual mandate.
Those consumers had received a one-year reprieve under rules announced in December. Now, under the latest guidance, people with canceled plans can avoid the mandate until Oct. 1, 2016, provided they meet certain qualifications and fill out the correct paperwork.
The delay is the latest example of the Obama administration making changes to ease problems and political pressure related to the healthcare law.
It applies to the estimated millions who saw their individual plans canceled last fall as a result of the Affordable Care Act.
But the administration expects the number who make use of the delay to be much smaller, as most people with canceled plans are expected to want new coverage as soon as possible.
"This is a common sense clarification of the law that we made clear last December," said Department of Health and Human Services spokeswoman Joanne Peters. "For the limited number of consumers whose plans have been canceled and are seeking coverage, this is one more option."
The exemption allows those consumers to purchase cheaper, bare-bones plans that were originally intended primarily for younger people.
The administration noted that many with canceled plans would also be eligible for tax credits on the new marketplaces to make coverage more affordable.
In response to the regulations, America's Health Insurance Plans (AHIP) suggested that lengthening exemptions to the individual mandate could mean higher premiums overall.
"That is why it is crucial that sufficient steps be taken to stabilize the market," said AHIP President Karen Ignagni in a statement, referring to policies like risk corridor payments.
"We are currently reviewing the new changes to the premium stabilization programs to assess their impact on affordability for consumers."
The individual mandate requires most people to carry health insurance starting April 1 or pay a fine next tax season.
For 2014, the fine equals $95 or 1 percent of household income, whichever is greater. It rises to $325 or 2 percent of income in 2015, and $695 or 2.5 percent of income in 2016, to induce more people without insurance to purchase plans.
To receive a hardship exemption, people with canceled plans must submit an application and a copy of their cancellation notice. Those who do not will still be responsible for fines.