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WASHINGTON—Hundreds of thousands of consumers whose health insurance plans are being discontinued for 2017 will get some flexibility when signing up for a new plan during the Affordable Care Act's open enrollment, a sign of continued turmoil in the exchange markets.

In addition, the Obama administration on Monday acknowledged that monthly premiums on the exchange's benchmark silver plans will rise on average 25% before subsidies are factored in. Consumers in many areas will also have fewer plans to pick from.

Open enrollment for 2017 begins Nov. 1. The Obama administration wants consumers with discontinued plans on the health law's exchanges to select a new plan by Dec. 15. That is the main deadline most will have to abide by to get health coverage starting Jan. 1.

But for those who realize the deadline too late, there is some breathing room. Individuals whose plans are being discontinued next year because their insurer is leaving the exchange will be eligible for a special enrollment period, according to officials with the Centers for Medicare and Medicaid Services. That means later deadlines and the ability to sign up for coverage outside the regular sign up season that runs from Nov. 1 through Jan. 31.

Individuals who lost coverage can attest to their situation and sign up as late as Dec. 31 and request coverage to begin on Jan. 1. If they miss that deadline, they may be able to wait until as late as March 1 to sign up for 2017 coverage under the special enrollment rules—although that would mean a lapse in coverage.

The flexibility is necessary because of the unprecedented number of consumers who are seeing their current health plans canceled as insurers curtail their exchange participation. It means many returning consumers could conceivably wait until the last minute to sign up—a scenario the Obama administration is trying to avoid—or even enroll weeks after the official end of the open enrollment season. The flexibility may delay ability to assess the success of sign-ups for 2017, and could create headaches for some insurers if they have to process an influx of applications just before the start of the year.

Major insurers such as United Health Group Inc., Humana Inc., and Aetna Inc. are withdrawing from some exchanges, and scores of consumers have gotten notices informing them their policies will be discontinued as a result. Premiums are also rising in many states by double digits, and other consumers are losing their coverage because smaller insurers have shut down.

Despite the challenges, the Obama administration expects 13.8 million people to select a health plan on the exchanges by the end of open enrollment—an increase of 1.1 million over the end of 2016's sign up season.

Consumers will see other changes this year. People with discontinued coverage who don't pick a new plan by Dec. 15 will get assigned to a new plan that most closely matches their old policy. They will be informed of the new plan by the administration. Their new insurers will then send them a letter that includes the estimated amount of subsidy they are eligible for.

These consumers are under no obligation and still have to pay their premiums to be enrolled in the new plan.

"This year for the first time there will be a process where the marketplace will try to match them to the most similar plan," said Karen Pollitz, a senior fellow at the Kaiser Family Foundation. "It may or may not be the one you want."

Insurers are staffing up for the extra work it will take to process the new applications from people in discontinued plans because of concerns the influx could pose customer-service challenges. Hiccups are more likely in areas with only one or two insurers to pick from because other carriers are leaving the exchange.

More than 70% of consumers in states using the federal exchange will be able to find a premium that is less than $75 a month once financial assistance is factored in, according to Health and Human Services. About 20% of consumers on HealthCare.gov will only have one issuer to choose from, they said.

Consumers had the ability starting Monday Oct. 24 to begin browsing plans and policies on the federal site. All but 12 states now use the federal exchange.

"Our nation has made historic progress under the ACA, and now we want to build on that progress to further improve affordability, access, and quality," said HHS Secretary Sylvia Mathews Burwell.

The higher premiums brought a rebuke from Republicans, however.

"When the president's allies in Washington will try to spin the numbers, families across the country will be forced to figure out how to pay for such unaffordable insurance," said Sen. Orrin Hatch, (R., Utah).

Write to Stephanie Armour at stephanie.armour@wsj.com

(END) Dow Jones Newswires

October 25, 2016 08:25 ET (12:25 GMT)

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