President Barack Obama's administration announced late Tuesday it will delay by one year enforcement of a part of the federal health care law that penalizes employers for not providing health insurance.
Employers with more than 50 workers were required to provide coverage to their employees from 2014, but the government was now pushing that back to 2015 to give them time to adjust.
"We have heard concerns about the complexity of the requirements and the need for more time to implement them effectively," said the Treasury Department, which oversees implementation of the Affordable Care Act (ACA).
"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," Mark Mazur, Treasury's assistant secretary for tax policy, said in a blog post.
The landmark but controversial law, passed by Congress in 2010, aims to provide affordable health care for everyone, and enshrines certain protections including a ban on denying coverage to children with pre-existing conditions.
But it has suffered severe criticism, especially from Republicans in Congress who view it as overburdensome and unconstitutional.
Some lawmakers warned that the policy would prompt companies to downsize their workforce or slash employee hours as a way to circumvent the new mandate.
Mazur acknowledged that the move would allow Treasury to come up with "ways to simplify the new reporting requirements," adding that the department will publish formal guidance "within the next week."
Treasury's announcement prompted cheers from some quarters in the business community and Congress.
The Senate's top Republican Mitch McConnell said that while "the White House seems to slowly be admitting what Americans already know," repeal of the employer mandate should be just the first step.
"The fact remains that Obamacare needs to be repealed and replaced with common-sense reforms that actually lower costs for Americans."
The National Retail Federation commended what it called the administration's "wise move" -- a delay the group had long called for.
"This one-year delay will provide employers and businesses more time to update their health care coverage without threat of arbitrary punishment," NRF Vice President Neil Trautwein said in a statement.