Key Health Care Provision Delayed Until 2015

The Obama administration will not require employers with 50 or more full-time workers to provide health insurance for those workers on January 1, 2014.

This key and important provision of the Affordable Care Act, aka Obamacare, has been delayed until 2015, according to Reuters.

The move is largely in response to complaints from businesses and lobbyists who said the complex reporting requirements for this provision would be a hardship, something about which the Obama administration apparently agrees.

Mark Mazur, Assistant Secretary for tax policy with the Treasury Department said in a government blog post, "This is designed to meet two goals. It will allow us to consider ways to simplify the new reporting requirements consistent with the law. Second, it will provide time to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible."

Mazur indicated that formal guidance describing the changes would be published within a week. Under this original provision, companies who failed to provide health care coverage would have to pay the Internal Revenue Service $2000 for each full-time employee not covered.

Republican lawmakers reacted by saying this move by the Obama administration is more evidence that the Affordable Care Act represents flawed policy. Senator Orrin Hatch said, "A delay - conveniently past the 2014 election - only adds to the uncertainty these job creators face because of Obamacare," adding that the only reasonable thing to do would be to repeal the entire law.

There have been other problems with implementation of the ACA. Insurance offerings through online exchanges especially for small business have been delayed and the Government Accountability Office questioned whether the new mandated insurance marketplaces could be up and running by the enrollment deadline of October 1, 2014.

The National Retail Federation was among those urging for the delay. It said the decision Tuesday "will provide employers and businesses more time to update their health care coverage without threat of arbitrary punishment."

The National Federation of Independent Business released a statement saying, “This is simply the latest evidence that implementation of this terrible law is going to be difficult if not impossible, and the burden is going to fall on the people who create American jobs. Temporary relief is small consolation. We need a permanent fix to this provision to provide long term relief for small employers.”

Related: Obamacare May Cost Far Less than Businesses Thought

Meanwhile, according to Business Insider, Raymond James strategist, Jeff Saut, sent an email saying, "This is a big deal. A major 2H risk off the table..."

Leading up to Tuesday’s announcement, CNBC reported June 19 that a new Gallup Poll, commissioned by the Littler Mendelson law firm indicated 41 percent of businesses surveyed said they had frozen hiring because of the new health care law. In addition, 19 percent answered yes to a question asking if they had "reduced the number of employees you have in your business as a specific result of the Affordable Care Act."

While Wall Street reaction to this latest news is not yet known, Forbes pointed out that even if the delay lasts for only one year, it will give companies time to restructure to avoid offering expensive health care coverage, ultimately leading to an expansion of the individual insurance market.