My understanding of how NM's child-care assistance program works is that my family would be financially better off if our income were lower. I'm hoping someone can explain why I'm wrong.
Eligibility for the CCA program: “The Child Care Assistance Program subsidizes the cost of child care for families at or below 400% of the federal poverty level that are working, in school, or searching for employment.” NM Child Care Assistance Program
The CCA benefit: There is currently no co-pay, i.e. my understanding is that if you earn 399% of the FPL, then you get the full subsidy, which is $1925 pcm for an infant at 5 Star Child Care Center (NM Child Care Provider Rates). My child attends such a center.
The Federal Poverty Level: 400% of the FPL for 2023 is $99,440 for a 3 person household like mine (HHS Poverty Guidelines for 2023).
Counter-intuititive financial consequences: So, if our gross household income were $100k, it seems we would pay ~9k in income tax and $23K in childcare, leaving ~$69k. If our income were $99k, we would pay ~$9k in taxes, leaving $91k.
Am I missing something crucial here? Is it really the case that we’d be $22k better off if we earned $99k instead of $100k?
Efforts to find answers elsewhere: I called the NMECECD but the person I spoke to wasn't able to answer the question, only to confirm the eligibility threshold. I was told that if I apply for CCA then my question could be addressed in an eligibility interview, but it was unclear whether I would get an interview given that our family income is above the eligibility threshold of 400% FPL. I emailed the NMECECD but have not yet received a response.
