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In a surprising move yesterday, the Obama administration announced on the U.S. Department of the Treasury’s website that it is delaying the implementation of the Affordable Care Act’s (ACA) employer responsibility provision. Now employers won’t have to worry about compliance with the provision, commonly referred to as the “play or pay” provision, until 2015.

The play or pay provision has been one of the most publicized provisions impacting employers, and many employers have been concerned about the 2014 effective date. Under this particular part of the ACA, employers with 50 or more employees face penalties if they don’t offer health insurance coverage or if the coverage offered is insufficient.

According to the announcement, the delay in implementing the play or pay provision is mainly due to the administration’s decision to postpone implementation of the new employer and insurer reporting requirements. The administration states that the transition relief would make it “impractical to determine which employers owe shared responsibility payments for 2014.”

The announcement noted that the administration has been engaging in a dialogue with businesses and has heard concerns about the complexity of the mandatory employer and insurance reporting requirements and the need for more time for proper implementation. Additionally, the administration revealed that the delay in the reporting requirements is designed to:

  • Allow them to consider ways to simplify the new reporting requirements consistent with the law; and
  • Provide “time to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible for their employees.”

The administration is supposed to publish formal guidance describing the transition relief for these provisions within the next week.

Note that there has been no delay or change in the “individual mandate” provisions of the ACA – meaning that individuals who do not have health insurance in 2014 may still be subject to IRS penalty. Guidance on this issue, given the majority of Americans obtain their health insurance through their employment may also be forthcoming.