My wife is considering taking a part time job next year, doing something which she enjoys but does not pay well. The job offers health insurance. For just herself, the premium would be $600 per month, though she gets a $665/month 'allowance' for insurance, so it would basically cost her nothing. For our entire family, the premium would be $1865/mo, minus the allowance, so a net of $1200 per month. I expect our AGI for the year to be under $70K.
If I understand the rules regarding the ACA premium tax credit correctly, if my wife takes this job, we would no longer be eligible for the tax credit? I believe the rule states that no credit/subsidy is allowed if insurance is available to the family (it is), and if the plan is "affordable" - meaning the cost of the employee's contribution, for the employee's coverage only, is less than 9.69% of AGI (or MAGI? Let's assume they're the same).
By my definition, this insurance is not affordable - it would cost us $14,400 per year, or 21% of our income. Even the normal price for my wife alone would be greater than 9.69% of AGI. But because my wife gets an 'allowance', making her cost effectively $0, it becomes by definition 'affordable', regardless of what it will actually cost my family? This seems like a rigged way of determining affordability - the insurance would ALWAYS be considered 'affordable', regardless of how little our income is or how high the cost of the family policy.
Am I interpreting the law correctly?
At this point, it looks as though my wife will turn down this job, because after losing the subsidy and paying for this insurance the net pay for the job goes down to almost nothing. Law of unintended consequences at play here?