In a surprise move Thursday night the Obama administration announced they are temporarily exempting people from the individual mandate if their old policy was cancelled.

If you your old policy was cancelled and you can’t renew it, you’re eligible for a “hardship exemption” from the individual mandate. This means you will not be fined if you are uninsured. It also means you will have the option to buy a “catastrophic plan” if you want, but these plans don’t qualify for exchange tax credits. These limited plans were mainly intended for people under the age of 30 and are about 20 percent cheaper than the regular exchange plans.

This is a smart political move in the administration’s continuing damage control. The individual mandate remains one of the most unpopular provisions in the law and Obama is still criticized for breaking his promise about being able to keep your insurance if you like it.. The policy impact should be small given that the qualifications for the exemption are narrow and the penalty in the first year is small.

Still, the move is sure to upset the insurance industry which has to deal with the Obama team repeatedly changing the rules at the last minute.

Photo by Ben Schumin, used under Creative Commons license