Bending to criticism that requirements were burdensome and complex, the Obama Administration announced late Tuesday it would delay until 2015 a key provision in the healthcare reform law – the requirement that businesses with more than 50 employees must offer them insurance.

Large employers will have an additional year before the employer insurance reporting requirements and penalties take effect under the Affordable Care Act, a senior official at the Department of Treasury said. 

“We have heard concerns about the complexity of the requirements and the need for more time to implement them effectively," Mark Mazur, assistant secretary for tax policy at the Department of the Treasury, explained in a 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.”

[See also: More docs questioning benefits of ACA, EHRs.]

As required by the Affordable Care Act, beginning Jan. 1, employers faced a $2,000 penalty for each full-time employee who did not get health coverage. Some critics of the ACA had predicted that employers would cut hours or employees to avoid the requirement.

“This one-year delay will provide employers and businesses more time to update their health care coverage without threat of arbitrary punishment,” said Neil Trautwein, vice president and employee benefits policy counsel of the National Retail Federation, in a statement responding to the administration’s announcement.

While many organizations, like the U.S. Chamber of Commerce, praised the decision to delay enforcement of the mandate, the American Hospital Association criticized the delay as an erosion of the ACA’s coverage goals.

The administration's decision “is troubling for those individuals who will not gain coverage through their employer," said Rich Umbdenstock, AHA president and CEO, in a statement. "The goal of the ACA was to extend coverage to the uninsured, which required a shared responsibility from all stakeholders.”

[See also: Insurance exchanges running late.]

The delay will provide the time for the federal government to consider ways to simplify the new reporting requirements and to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible for their employees.

Mazur said the administration will publish formal guidance describing this transition within the next week.

The administration is also working on rules detailing how the ACA’s information reporting provisions will be implemented. Mazur said in his blog that those proposed rules should be released this summer.  Once those rules are issued, Mazur said, the administration will work with the affected employers, insurers and others in an effort to get voluntary reporting in 2014 rather than waiting until 2015.

“Real-world testing of reporting systems in 2014 will contribute to a smoother transition to full implementation in 2015,” he said.

The delay to 2015 is also being extended to shared-responsibility payments because it would be difficult to determine which employers were owed those payments, Mazur said. These actions also do not affect employees’ access to the premium tax credits available under the ACA.