The White House on the evening of July 2, in a blog posting from Valerie Jarrett, senior advisor to the President, announced it will suspend for one year reporting requirements in 2014 for larger employers to demonstrate compliance with a mandate to offer employees health insurance coverage, and not enforce financial penalties for larger employers that fail to comply until 2015, one year later than authorized in the Affordable Care Act.

“As we implement this law, we have and will continue to make changes as needed,” Jarrett announced. “In our ongoing discussions with businesses we have heard that you need the time to get this right. We are listening. So in response to your concerns, we are making two changes.  

“First, we are 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. Some of this detailed reporting may be unnecessary for businesses that more than meet the minimum standards in the law. We will convene employers, insurers, and experts to propose a smarter system and, in the interim, suspend reporting for 2014.

“Second, we are giving businesses more time to comply. As we make these changes, we believe we need to give employers more time to comply with the new rules. Since employer responsibility payments can only be assessed based on this new reporting, payments won’t be collected for 2014. This allows employers the time to test the new reporting systems and make any necessary adaptations to their health benefits while staying the course toward making health coverage more affordable and accessible for their workers.

“Just like our effort to turn the 21 page application for health insurance into a 3 page application, we are working hard to adapt and to be flexible in employer and insurer reporting as we implement the law.”

Jarrett also asserted that the Administration is “full steam ahead” for state health insurance exchanges to open on October 1, 2013. The complete announcement is available here.

Timothy J. Finnell, founder of Group Benefitys LLC in Memphis called the news “unexpected” and said in a statement that it “calls into question what will happen to all of the other pieces of Obamacare that are set to go into effect. We are now waiting for the other shoe to drop.”

But Paul Hamburger, co-chair, employee benefits, executive compensation & ERISA litigation practice center with Proskauer, said the news wasn’t entirely unexpected, “given the complexity of the rules and short compliance time frame.”

Hamburger’s colleague at Proskauer, James Napoli, leads the firm’s health care reform task force. He said the administration’s “decision to delay imposition of the penalties will certainly be welcomed news for employers who have been forced to make 100% decisions on ACA implementation with less than 100% information. The delay will also allow time for the rule makers to provide guidance on various notice and reporting requirements under ACA, and employers in turn will have additional time to implement the administrative infrastructure to meet those requirements.”

Consulting firm WorldatWork, meanwhile, applauded the Obama administration’s move. “The administration’s announcement recognizes the array of challenges employers are facing as they attempt to understand and comply with rules that have yet to be finalized,” said Cara Woodson Welch, vice president of public policy, news and publications at Worldat Work. “WorldatWork commends the administration for giving employers and HR professionals needed time to digest the new regulations, amend their plans and policies, and ensure that their organizations make the most educated decisions possible in respect to their benefits plan design. We continue to advocate that employers acting in good faith to comply with the law should not be penalized for their efforts.”

Joseph Goedert, reporter with Health Data Management, contributed to this report.

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