The Obama administration delayed for one year a provision, commonly known as the employer mandate for one year, that calls for businesses with 50 or more workers to provide affordable health insurance to workers or pay a $2,000 fine per employee. The employer mandate will now go into effect on January 1, 2015.

This delay is not expected to have much of an impact on the majority of large employers as most provide health benefits now. It will give those with a large number of part-time and low-wage employees more time to get their ducks in a row.

Creates New Subsidy Grey Area

However, Tuesday’s ruling does create a grey area for individuals. According to a recent IRS ruling, only those people not offered affordable coverage at work will qualify for subsidies through the Exchange, but since employers won’t be required to offer it, or report who they are covering, it is unclear how Covered California or the IRS will know who is eligible.

If fewer employers offer coverage, and more workers go through Covered California in the first year, and employers see their workers the employees are more or less happy with the arrangement, more businesses might simply decide to pay the penalty in 2015 rather than the substantially higher cost of covering their workers.

Official Response

State Insurance Commissioner Dave Jones said that the Obama administration’s decision “will not have a long-lasting effect, nor does it undermine the overall effectiveness” of the ACA. Anne Gonzales — spokesperson for Covered California — said that the decision will not affect the timing or the content of policies offered through the exchange.