Trump Administration Rescinds Child Care Fund Rules on Co-payments and Provider Payments
The Health and Human Services Department issued a final rule that eliminates federal mandates requiring states to cap family co-payments at 7 percent of income, deliver some services via grants or contracts, pay providers prospectively, and base payments on enrollment rather than attendance. The changes, effective July 13 2026, restore operational flexibility to the 50 states and territories that administer the Child Care and Development Fund.
theconservativetreehouse.comWASHINGTON, May 12 2026. The Health and Human Services Department published a final rule rescinding four federal requirements imposed on the Child Care and Development Fund, per the Federal Register notice dated May 12 2026.
The CCDF is the primary federal grant program supporting child care assistance for low-income families. It serves more than 1.2 million children under age 13 whose families meet state income eligibility criteria, according to the program's documented scope.
The rule removes the requirement that states limit family co-payments to no more than 7 percent of household income. It also eliminates the obligation to deliver a portion of services through grants or contracts instead of vouchers, ends the mandate to pay providers on a prospective basis, and drops the rule that payments must be calculated according to enrollment rather than actual attendance.
These changes take effect July 13 2026, 62 days after publication.
States and territories will face lower administrative costs and reduced compliance burdens once the rule is in force. They can now set co-payment levels, payment timing, and service delivery methods according to their own priorities and budgets. The rescission also removes the enrollment-based payment floor that had required states to reimburse providers for vacant slots.
Downstream, state agencies must update their CCDF plans and payment systems by the effective date to reflect the new flexibility. The changes free up state resources previously dedicated to meeting the rescinded federal standards, potentially allowing reallocation within existing CCDF block grants.
Congress retains oversight authority through the annual appropriations process and can still impose new conditions via legislation. No comment period remains open on the final rule.
This final rule reverses requirements finalized during the prior administration. The original mandates took effect in 2024 as part of broader revisions to CCDF regulations aimed at stabilizing provider revenue and improving affordability for families. The 13-page document, identified as regulation 0970-AD20, includes a plain-language summary on regulations.gov.
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