The California Department of Insurance pointed people toward the state-operated health insurance exchange, expected to go into operation Jan. 1, 2014.

“Employees whose employers do not provide health insurance will be able to purchase health insurance in California's new health benefit exchange.” stated Commissioner Dave Jones. He noted that many will be eligible for a premium subsidy if they make less than 400 percent of the federal poverty level, which in California is about $94,000 for a family of four.

Jones also urged the Administration to “make sure that this provision can be implemented in 2015.”

Brokers say this delay will have tremendous consequences for the private marketplace.

“No doubt this is a huge capitulation by the Administration, consistent with getting ahead of the potential politics of a messy implementation,” stated Joel Wood of the Council of Insurance Agents & Brokers.

“Our members have mixed emotions about this. They've invested an astonishing amount of resources in running the pay-or-play scenarios for their clients and preparing for January. Those who haven't prepared their clients will revel in the news, and conservatives will sense blood in the water. On the other hand, the mandate drives up the cost of labor; perhaps this is a modest mitigation,” Wood stated.

Health insurance representatives shook their collective heads, and wondered if another shoe would drop in the ACA implementation.

On June 19, the Government Accountability Office (GAO) issued a report entitled “Status of CMS Efforts to Establish Federally Facilitated Health Insurance Exchanges.

“The detailed 50-page report raises a red flag about whether the health insurance exchanges established by the Patient Protection and Affordable Care Act (PPACA) will be open for business on October 1, as the Act contemplates,” stated a July 2 email alert from the American Health Lawyers Association.

The Report notes that many states, with both future federal partnership and state-operated exchanges, have not demonstrated that they will be able to carry out the necessary functions to run the exchanges or are behind on the timetables required to do so in a timely manner.

“Because the Act effectively requires the federal government to undertake whatever exchange functions states fail to carry out, the precise scope of what the federal government will need to accomplish in order to ensure that the exchanges are up and running is not yet clear and likely will remain something of a moving target until (and perhaps even after) the exchanges go live,” the AHLA stated.

For its part, the Administration is perhaps hearing from employee benefit groups that the paperwork is too complex and employers are not ready.

It said that said the delay is designed to meet two goals.

“First, it will allow us to consider ways to simplify the new reporting requirements consistent with the law,” said Mark J. Mazur, assistant secretary for tax policy at the U.S. Department of the Treasury, who first unveiled the new from he administration on a blog post on the Treasury site.

The Treasury's IRS would levy the tax penalty for companies that did not comply with the mandate, when it goes into effect. IRS officials have suggested that employers and their advisors should avoid using complicated strategies to try to minimize the number of workers who are eligible for group health benefits under PPACA. It did so back in late December in the preamble to draft regulations for implementing the “shared responsibility” parts of PPACA.

PPACA calls for employers with more than 50 full-time equivalent employees to provide a minimum level of health benefits for year-round employees who work more than 30 hours per week. Workers who do not offer the minimum level of coverage, or fail to ensure that the coverage meets affordability requirements, are supposed to pay penalties.

“Second, it will provide time to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible for their employees,” Mazur wrote.

Within the next week, the Administration is expected to publish formal guidance on its decision.

For more on the PPACA delay, see:

Employer mandate delayed until 2015