Tuesday, July 2, the Treasury Department announced that it will postpone implementing a key provision of the Affordable Care Act requiring large employers with 50 or more full-time employees to offer them health insurance. Citing the need to give employers more time to adjust to the law’s reporting requirements, officials suggested that the delay would contribute to a smoother transition to full implementation in 2015.

The employer mandate requires companies with 50 or more full-time employees to offer health insurance coverage to all full-time employees. The large employer must not only offer coverage but the coverage must meet certain federal standards. An employer who fails to comply with the employer mandate may face penalties if at least one full-time employee receives a premium subsidy and obtains coverage through a newly created state or federally-administered public health insurance exchange, which are slated to have open enrollment as early as October 1, 2013.

Following the release of regulations interpreting the employer mandate earlier this year, many employers were left scratching their heads as they struggled to understand the onerous obligations related to, among other things, calculating the overall numbers of full-time equivalent employees, the nature of the coverage offered, the costs to employees for the coverage, and how to report all this information to the Internal Revenue Service (IRS). The IRS is charged with compiling the data to help verify whether consumers qualify for government subsidies to purchase health insurance through a public exchange or market place and to determine which employers must pay a penalty for failing to comply with the employer mandate.

According to U.S. census data, more than half of Americans are covered by employer-sponsored health insurance. Of companies with at least 50 workers full-time workers, nearly 94% already offer health benefits. Most experts believe that the new January 1, 2015 implementation date will not have a meaningful impact on those employers already offering coverage. However, the delay, and subsequent regulations that are expected from the Treasury Department before the end of the summer, will likely simplify the new reporting requirements surrounding the types of coverage offered by large employers. For instance, regulators and Congress might raise the definition of full-time employee and stipulate that only workers putting in at least 40 hours per week are entitled to medical benefits, as opposed to the current 30 hour standard.

Though employers will not be required to report the number of workers receiving affordable and adequate health insurance until 2015, administration officials hope that employers will voluntarily provide the information in 2014. In its announcement, the Treasury Department encouraged employers “to voluntarily implement” the reporting requirements in 2014 “in preparation for the full application of the provisions in 2015.” Because the remainder of the Affordable Care Act remains intact for now, both individuals and employers should remain aware of their obligations under the law.

A copy of the Treasury Department’s announcement can be viewed here.