Announcement is a welcome—though temporary—reprieve.

Allowing employers additional time to prepare, the Obama administration will delay by one year the requirement that businesses with more than 50 employees* provide health insurance. Now to commence in 2015, the “Employer Mandate” is part of the Patient Protection & Affordable Care Act (PPACA).

The delay may signal the Treasury Department’s recognition that the initial reporting requirements were too complex and needed to be simplified/streamlined prior to implementation. It’s no secret that this particular provision (also called Employer Shared Responsibility or Play-or-Pay) is deemed by many to be among the most complex parts of the law. Indeed, firms of all sizes had been scrambling for answers and guidance to deal with the red tape, potential costs, and tax implications. Of greatest concern—and subject to considerable debate and analysis—are rules determining applicable companies and workers, the definition of what constitutes a 50-employee firm, and which employees qualify as full-time staff (and therefore merit coverage).

While not immediately clear just how much the decision will cost the government, most certainly it will mean less revenue due to the loss of anticipated penalty dollars. The Congressional Budget Office (CBO) recently projected that the mandate would generate $10 billion in revenue in fiscal year 2015, presumably from employers who chose not to offer coverage in 2014.

Other key 2014 PPACA requirements remain unchanged, including the individual mandate** and the Patient Centered Outcomes Research Institute (PCORI) fee.*** Also unchanged are the state-based/federally-facilitated health insurance marketplaces, which face difficulty in determining who is entitled to subsidies…especially if employers fail to report the coverage they provide (if offering insurance at all).

Treasury is expected to issue transitional guidance in the very near future, with proposed rules to follow later this summer or early fall. We will provide additional updates as they become available.

* Small businesses (those with fewer than 50 workers) are exempt from the Employer Mandate.

**The requirement that individuals obtain health insurance coverage or pay a penalty of $95 or 1% of household income (whichever is higher).

***The Institute is charged with examining the “relative health outcomes, clinical effectiveness, and appropriateness” of different medical treatments. This mandate also includes a new fee imposed on employers and insurance carriers. Due annually each July, this fee affects Clients with Plan years ending 2012 through 2019.