5 Things You Need to Know If the Affordable Care Act Is Repealed

Last week, Congress set the stage for a repeal of the Affordable Care Act — a law that has helped nearly 20 million Americans gain health coverage by barring insurance companies from denying plans due to pre-existing illnesses and by providing subsidies to the poor to purchase coverage.

It’s less clear what comes next. Trump told a news conference last week that he wants to replace the ACA with something “far less expensive and far better,” but said he won’t put forward a plan until Tom Price, his pick for Health and Human Service, is confirmed.

Both Price (R.-Ga.), and Speaker of the House Paul Ryan (R.-Wis.) have proposed plans that would get rid of the mandates for individuals and businesses with 50 or more full-time workers to purchase health insurance. In their place, the federal government would offer tax credits to buy insurance, associated with tax-exempt health savings accounts to pay for care.

But these are far from comprehensive replacements, and the changeover is likely to be a many- year process that will cause considerable confusion both for providers and purchasers of health care, health insurance market experts said. Underscoring the difficulties, on Tuesday, the Congressional Budget Office and the Joint Committee on Taxation released a report that said repealing parts of the ACA would increase by 18 million the number of uninsured people, during the first year new health care plans are enacted under the bill. That number would increase to 32 million by 2026, as subsidies and expansion of Medicaid under the ACA are done away with. Individual premiums are also likely to go up, as participation declines, the report says.

For small-business owners, generally defined as companies with 50 to 99 workers, there will be a two to three year window where some provisions of the law remain, while others disappear, experts predict. These changes are likely to lead to considerable confusion and uncertainty.

Here are five things for businesses to keep in mind:

1. Reporting requirements aren’t going anywhere, at least for the time being

Congress plans to use the budget reconciliation process to gut the ACA’s money-raising provisions, including the taxes it levies on individuals who don’t purchase care, or businesses that don’t provide plans for their employees. But it needs a filibuster-proof majority to repeal items that don’t directly affect the budget.

So even though small businesses with 50 or more full-time workers will no longer be required to offer their employees health insurance or face a tax, they’ll still have to report the value of health insurance on employee W2-forms, and they’ll also have to file the appropriate forms with the IRS providing details regarding the cost and types of insurance plans they offer their employees, says Garrett Fenton, a member at Miller & Chevalier, a Washington, D.C.-based law firm, and an expert on employee benefits.

The Trump administration could issue an executive decision to suspend reporting requirements, but Fenton recommends that businesses continue filing relevant paperwork until Congress or the administration issues a clear directive.

2. A return to pre-2010 insurance limits and restrictions

As part of the compromise engineered by the ACA, health insurance companies agreed to do away with exclusions for pre-existing conditions because the law guaranteed them a large pool of new customers. Once these individual and business mandates are repealed, however, universal coverage becomes far less financially feasible for insurance companies.

Both Ryan and Price’s plans would grant coverage to people with pre-existing conditions, for example, but only for people who have had continuous health insurance coverage. Insurers would be able to exclude customers who have let their health care coverage lapse prior to purchasing a new plan–which is a possibility if people are unable to pay their premiums, experts say. Price’s plan also lets insurers impose hefty premium increases annually on consumers, both with and without pre-existing conditions, who have let their coverage lapse prior to purchasing a new plan.

What’s more, post-ACA policies could bring back lifetime and annual dollar limits on care. They would also likely eliminate access to the 15 types of preventive care, including various vaccines, screenings and other medical testing, made free under the law, health insurance industry experts say.

3. Less transparency, less coverage

The ACA has a minimum standard for all insurance plans: To meet federal requirements, each plan must include 10 essential benefits, including laboratory services and ambulatory care.

This standard will likely be eliminated, says Robert Chernesky, a solutions marketing manager for Infogix, a data analytics company that works with large health insurers around regulatory compliance. Without these clearly marked benefits, he adds, it will be more difficult for consumers and businesses to make “apples-to-apples comparisons” as they evaluate different plans.

Another downside is that once minimum requirements are scrapped, many individuals and employers will sign up for low-cost plans that lack adequate coverage, says Gerald Kominski, a professor at UCLA’s Department of Health Policy and Management.

“People are notoriously bad at assessing their true health care risks, and they are focused excessively on health insurance premiums,” Kominski says.

4. Lower costs for some businesses

Under the ACA, the small-business health insurance market has grown more standardized as more businesses have sought coverage, health insurance experts say, and risks have been pooled together. As a result, businesses whose employees have fewer health care needs have been lumped with businesses whose employees have greater needs. A side effect of repeal could be that businesses with healthier employees may find their health care costs suddenly go down, says Kominski, but so too may the quality of plans. That’s because the minimum qualifications the ACA put in place for health care plans will no longer apply.

“Allowing more segmentation of the market, and repealing basic benefit requirements, allows insurers to sell ‘more affordable’ insurance,” Kominski says. “But, like many markets, it’s buyer beware, because cheaper [isn’t] always better.”

Related: What President Trump’s Agenda Means for Small Business Owners

5. A shift to HRAs

In December, in a rare show of bipartisan cooperation, Congress passed the 21st Century Cures Act. In addition to earmarking $6 billion to fund programs for mental health, opioid addiction, and cancer research, the health bill contained an important provision for small businesses. Under Title 18, small businesses with 50 or more employees can use Health Reimbursement Arrangements (HRAs) to pay for portions of their employees’ insurance costs. (HRAs are tax-favored accounts that are seen by many as a cheaper way for companies that can’t afford group coverage to pay for health care.)

Once the ACA is repealed, more employers, large and small, are expected to turn to HRAs to offer their employees health insurance, Fenton says.