Feds Undo Child Care Rules: More Flexibility or Just Less Hassle?
Published Date: 1/5/2026
Proposed Rule
Summary
The government wants to make it easier and cheaper for states to run child care programs by rolling back some new rules from 2024. Families, child care providers, and states will see changes like no more strict limits on family co-pays and more flexible payment methods for providers. Comments on these changes are open until February 4, 2026, so everyone has a chance to weigh in before the new rules take effect.
Analyzed Economic Effects
5 provisions identified: 2 benefits, 1 costs, 2 mixed.
7% Family Co‑pay Cap Removed
The rule would remove the federal requirement that family co-payments for CCDF may not exceed 7 percent of family income (Sec. 98.45(l)(3)). States, Territories, and Tribal Lead Agencies would regain flexibility to set sliding fee scales; the proposal would become effective 60 days after a final rule is published if finalized.
Prospective Provider Payments Repealed
The rule would remove the March 2024 requirement that providers be paid prospectively and instead allow States and Territories to pay either prospectively or retrospectively; when paid retrospectively, the NPRM would require payment within 21 calendar days of receipt of a complete invoice (the 2016 rule standard).
Enrollment‑Based Payment Requirement Removed
The rule would rescind the requirement that providers be paid based on a child's authorized enrollment rather than attendance (Sec. 98.45(m)(2)) and would restore multiple options from the 2016 rule (e.g., pay based on enrollment, pay if attendance is ≥85% of authorized time, pay if absences ≤5 days in 4 weeks, or an alternative justified approach). The March 2024 rule had estimated enrollment‑payment costs of about $16.5 million per year.
Grants/Contracts Requirement Rescinded
The rule would rescind the March 2024 requirement that States and Territories must use some grants or contracts to provide direct CCDF services (Sec. 98.30(b)(1)), including for infants and toddlers, children with disabilities, and underserved areas. Parents could continue to use vouchers/certificates to choose providers, including faith‑based providers.
Estimated Federal Cost Savings
HHS estimates this NPRM would generate $6.1 million in annualized cost savings at a 7 percent discount rate in perpetuity (discounted to 2024), and over 2025–2029 it reports annualized transfers of about -$23.4 million (3% discount) and -$22.8 million (7% discount) and annualized costs of about -$6.7 million (3%) and -$6.6 million (7%).
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Key Dates
Department and Agencies
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