Editors Note:  With the Obama administration’s recent surprise delay regarding the enforcement of the employer mandate under the Affordable Care Act, our colleagues at Employee Benefits Law Report have written this summary below.

In a surprising but generally welcome move, the Obama administration has moved to delay the enforcement of the employer mandate to provide health care coverage under the Affordable Care Act (the “ACA”), which otherwise was scheduled to go into effect in 2014. This delay in enforcement formally was announced in a statement released July 2, 2013 by Mark J. Mazur, Assistant Secretary for Tax Policy at the Department of the Treasury.

As background for this action, the administration cites a series of meetings it has been having with businesses from throughout the country relating to the new employer and insurer reporting requirements imposed under the ACA. The ACA mandates information reporting under Section 6055 of the Internal Revenue Code (the “Code”) by employers and insurers. It also requires information reporting under Code Section 6056 by employers regarding the health coverage offered to their full-time employees. This one year delay of the reporting obligations is a recognition by the administration that there is a need to reduce the complexity of the reporting obligations so they can be implemented efficiently—and with less administrative pain. It also reflects a realization that without this reporting it would be difficult for the government to determine which employers owe the shared responsibility payments related to the employer mandate under Code Section 4980H with respect to 2014. Accordingly, the one year delay was extended to the enforcement of the shared responsibility payments, which now will not apply until 2015.

In the announcement, Mazur states that this delay allows time to devise ways to simplify the new reporting requirements and to provide time for employers to adapt health coverage and reporting systems. Mazur indicates that the administration, within the next week, will publish formal guidance relating to these delays.

Employer groups, such as the United States Chamber of Commerce, and employee benefits associations have applauded the administration’s decision. Predictably, the political reaction here in Washington, D.C. is split along partisan lines. Democrats generally support the move as a necessary act of prudence, while Republicans initially have labeled the act as proof that the ACA is doomed to failure. In politics, beauty is in the eye of the beholder. Quite possibly the vision of some Republicans on this matter might be affected by the somewhat convenient fact that the announcement was released while Congress is on recess for the Fourth of July holiday and the fact that this announcement effectively delays the employer mandate until after the 2014 congressional elections.

It is worthwhile to note what this announcement does not do. This announcement does not affect the effective date of the individual mandate under the ACA, which of course becomes effective in 2014. The delay also does not affect the availability of premium tax credits for eligible employees under the ACA. Finally, the announcement does not affect plans for the exchanges created by the ACA to take effect Jan. 1, 2014. However, a delay of this sort inevitably leads to conjecture that other delays may be forthcoming, although there is no clear evidence to support such conjecture. This delay also has potential to fuel bi-partisan legislative efforts to revise the standards for full-time status (e.g., by raising the standard from 30 hours per week to 40 hours per week) for the purpose of determining which employees will be covered by the employer mandate.

The announcement almost certainly will encourage some employers, especially smaller employers, to delay providing coverage to workers that are not currently covered. The administration, apparently aware of this likelihood, states in the announcement that it strongly encourages employers to “maintain or expand health coverage." Only time will tell.

We will keep our readers apprised of future developments.