Jimmy Tomczak, 25, believes there’s very little one needs to get outside and live. After graduating from the University of Michigan, he started his own company based on this idea, creating eco-friendly sandals out of recycled billboard vinyl. He recently spent a week at Burning Man; he travels often and says he needs only a laptop and cell phone to make money.
“The place I keep my stuff,” he says, is a duplex in Detroit, in the apartment upstairs from his mom and 13-year-old sister, who are both on his mother’s employee health insurance plan. The Affordable Care Act has allowed Tomczak to get coverage on that plan (it requires just a $20 co-pay for office visits and covers most prescriptions) so far, but when he turns 26 in April, he’ll be on his own. So he’ll shop on the ACA-created exchanges with the help of a tax subsidy to cover the plan he chooses.
Jimmy’s age and good health might tempt him to pay the small penalty and forgo coverage, but while some friends have chosen this option, Jimmy wants the safety net. “The best coverage is a holistic approach to sleep, eating, exercise, maintaining good relationships, and having a positive impact,” he says. “But when everything else is changing, and I’m in a different city each day, I need to make sure [my health] is a sure thing.… You’ve heard that young people think they’re invincible, but as an entrepreneur I take risks, and I would rather take big risks in business and building my company than with my health.”
Tomczak’s income varies depending on his business, which makes it difficult to predict what he’ll pay in premiums under the new law. His income range, which he declined to give on the record, is near the cutoff for subsidy eligibility, so his coverage could vary significantly with a relatively small difference in earnings. If he earns more, he will need to pay around 5 percent of his annual income—or 33 percent of the overall premium—for silver-plan coverage, with the remainder covered by a government subsidy.
Because Michigan opted into the Medicaid expansion, if Tomczak’s income falls, he’ll be eligible for Medicaid coverage. Had the state opted out, his income would have been too high for existing Medicaid and too low to qualify for subsidies; like several million Americans in states that are not expanding their Medicaid programs, he would be left without affordable options. In another state, a lower income would have made his premium three times higher than if he made a few thousand dollars more, because he would have to pay 100 percent of the cost.
Although Tomczak intends to purchase insurance on the exchanges, he hasn’t researched his options extensively because he’ll be on his mom’s plan until April. “Six months seems like an eternity in the business life cycle,” he says. “I can wait five months and be more educated”—although the standard enrollment period for 2014 will end March 31.
While a majority of young people are enthusiastic about the law, confusion is also common. “They’re not doing a great job [marketing the ACA],” Tomczak says. “You’ll have two equally qualified experts say totally different things.” He says he’s determined to study his options and make the best decision possible. “An entrepreneur can only bend the rules so much.”