WASHINGTON - The Obama administration announced Tuesday it is delaying until 2015 the requirement that businesses with more than 50 employees provide health insurance to their workers or pay a penalty.
The announcement by the Internal Revenue Service comes after numerous complaints from businesses that the requirements were too complicated and difficult to implement in time.
Business groups, such as the National Retail Federation, praised the delay, while congressional Republicans jumped on the move to reiterate their opposition to the 2010 health care law.
Other key parts of the law, including the health exchanges where individuals can buy insurance, are on schedule. The exchanges will open on Oct. 1, wrote Valerie Jarrett, a senior adviser to President Obama, in a White House blog released Tuesday.
The delay also does not change the individual mandate, which requires most Americans to purchase insurance. Some consumers may receive subsidies to help them pay for the insurance depending o their incomes.
Jarrett said the move is a sign the White House is paying attention to the concerns of business.
"As we make these changes, we believe we need to give employers more time to comply with the new rules," Jarrett wrote. "Since employer responsibility payments can only be assessed based on this new reporting, payments won't be collected for 2014."
"We have heard concerns about the complexity of the requirements and the need for more time to implement them effectively," wrote Mark Mazur, assistant Treasury secretary for tax policy, in an IRS blog.
"We recognize that the vast majority of businesses that will need to do this reporting already provide health insurance to their workers, and we want to make sure it is easy for others to do so," Mazur said.
The delay gives the IRS more time to simplify reporting requirements, as well as for businesses to get up to speed with reporting systems. The government still encourages businesses to voluntarily begin reporting in 2014 so they will be ready for 2015.
Business groups had argued for months that the law created an administrative burden for businesses as they tried to update technology and plan to offer health coverage to their employees without knowing how much the coverage would cost.
Businesses with more than 50 employees would have paid a fee of $2,000 per uninsured employees after the first 30 employees. The Congressional Budget Office expected those penalties to bring in $4 billion in 2014.
"We commend the administration's wise move to delay the employer reporting and penalty obligations under the Affordable Care Act," said National Retail Federation President Neil Trautwein in a statement. "This one-year delay will provide employers and businesses more time to update their health care coverage without threat of arbitrary punishment."
This does not affect businesses with fewer than 50 workers, who were already exempt from that rule. Most large businesses already offer coverage to their employees.
Senate Minority Leader Mitch McConnell, R-Ky., said the "White House seems to slowly be admitting what Americans already know ... that Obamacare needs to be repealed."
House Republicans, who have tried to repeal the Affordable Care Act 37 times, echoed McConnell.
"The best delay for ObamaCare is a permanent one," said House Majority Leader Eric Cantor, R-Va.
Various parts of the law have taken effect since its passage in 2010, including allowing children up to age 26 to remain on their parents' insurance plans and discounts for prescription drugs for Medicare patients. More young Americans have health insurance than before the law, because of that change, and the discounts have saved Medicare recipients billions of dollars.
However, the more complicated parts of the law, such as the exchanges and the individual mandates, are set to take effect Jan. 1, and many of the businesses and groups affected have worried about their ability to meet the deadlines.
Kelly Kennedy, USA TODAY
Gannett / USA Today