Blue Shield policy holders facing cancellation of their plans have been given the option to extend their coverage another three months.
The company is canceling more than 100,000 policies because they do not conform to the federal Affordable Care Act.
Blue Shield originally was going to stop the policies at the end of next month, but company spokesman Steve Shivinsky said people can now choose to keep their coverage through the end of March.
"The Department of Insurance required that Blue Shield provide this option to subscribers and we were told that if we did not agree to this action, there was a possibility of legal action against us," Shivinsky said.
California's insurance commissioner Dave Jones said Blue Shield initially gave policyholders just 90 days notice about cancelled plans. The Department of Insurance said they are instead required to give six months notice if they stop selling new policies in a particular market. Blue Shield disagrees, saying it is required only to give three months notice.
The company said the affected policyholders must decide whether to extend their current health plan by December 6th. Otherwise, the company will transition them into a new plan that's compliant with the Affordable Care Act on January 1st.
This story has been updated with a response from Blue Shield noting that the company disagrees with the position of the Department of Insurance.