While most of us were enjoying the 4th of July holiday, the Obama administration was busy announcing the delay of a key component of the Affordable Care Act (“ACA”). Following complaints about reporting requirements, the Obama administration delayed implementation of the employer mandate, which penalizes employers with more than 50 employees if they fail to provide a minimum standard of affordable health care coverage. The employer mandate was originally set to begin in 2014, but will now take effect on January 1, 2015. The announcement does not provide specific details other than announcing the delay.

The delay in reporting requirements means that the government will not be able to determine compliance with employers’ obligations to provide affordable coverage of minimum value. Because of that, the shared responsibility payments (excise taxes) imposed on non-complying employers has also been delayed until 2015.

In the White House Blog post, Valerie Jarrett, a senior advisor to President Obama, wrote: “We believe we need to give employers more time to comply with the new rules…This allows employers the time to test the new reporting systems and make any necessary adaptations to their health benefits while staying course toward making health coverage more affordable and accessible for their workers.”

In addition, Jarrett describes the change as a response to ongoing discussions with employers concerning cutting red tape and simplifying the reporting process. “We have heard the concern that the reporting called for under the law about each worker’s access to and enrollment in health insurance requires new data collection systems and coordination. So we plan to re-vamp and simplify the reporting process.”

The business community immediately welcomed the announcement. “The administration has finally recognized the obvious – employers need more time and clarification of the rules of the road before implementing the employer mandate,” said Randy Johnson, U.S. Chamber of Commerce senior vice president.

With respect to the employer mandate, the ACA generally requires every health insurance issuer, sponsor of a self-insured health plan, government agency that administers government-sponsored health insurance programs and every other entity that provides minimum essential health coverage to file annual returns. The annual returns contain information for each individual for whom minimum essential coverage is provided. An entity filing a return reporting minimum essential coverage must furnish a written statement to each individual listed on the return that shows the information reported about them to the IRS.

The ACA also requires information reporting by certain employers regarding the health coverage offered to their full-time employees. Every applicable large employer that must meet the shared employer responsibility requirements will be required to file an information return that reports the terms and conditions of the health care coverage provided to the employer’s full-time employees for the year. These requirements were originally slated to have commenced beginning after December 31, 2013.

With an additional year before the mandatory employer and insurer reporting requirements begin, the Treasury Department has time to (1) develop ways to simplify the new reporting requirements consistent with the law, and (2) adapt health coverage and reporting systems. The Treasury Assistant Secretary for Tax Policy, Mark J. Mazur, announced that the Treasury expects to publish proposed rules for implementing these provisions sometime this summer after a dialogue with stakeholders (including those responsible employers that already provide their full-time work force with coverage far exceeding the minimum requirement) in an effort to minimize the reporting, while allowing it to be consistent with effective implementation of the law.

It is widely believed that the delay in the employer mandate will not affect other aspects of the ACA, such as the implementation of health insurance exchanges and the individual mandate. As Jarrett wrote, “we are on target to open the Health Insurance Marketplace on October 1 where small businesses and ordinary Americans will be able to go to one place to learn about their coverage options and make side-by-side comparisons of each plan’s price and benefits before they make their decision.”