Tuesday's action is sure to anger liberals and labor groups, but it could provide cover for Democratic candidates in next year's congressional elections.
The move undercuts Republican efforts to make the overhaul and the costs associated with new requirements a major issue in congressional races. Democrats are defending 21 Senate seats to the Republicans' 14, and the GOP had already started to excoriate Senate Democrats who had voted for the health law in 2009.
Senior White House adviser Valerie Jarrett cast the decision as part of an effort to simplify data reporting requirements.
She said since enforcing the coverage mandate is dependent on businesses reporting about their workers' access to insurance, the administration decided to postpone the reporting requirement, and with it, the mandate to provide coverage.
"We have and will continue to make changes as needed," Jarrett wrote in a White House blog post. "In our ongoing discussions with businesses we have heard that you need the time to get this right. We are listening."
Republicans called it a validation of their belief that the law is unworkable and should be repealed.
"Obamacare costs too much and it isn't working the way the administration promised," said Senate Republican leader Mitch McConnell of Kentucky. "The White House seems to slowly be admitting what Americans already know ... that Obamacare needs to be repealed and replaced with common-sense reforms that actually lower costs for Americans."