Parent Co-Payment
The portion of childcare cost paid out-of-pocket by families receiving subsidized care, scaled to income.
The parent co-payment (also called the family fee or family co-pay) is the share of childcare cost that subsidized families pay directly to their provider, with the remaining cost covered by state and federal subsidy dollars through the Child Care and Development Fund. Federal CCDF rules require states to assess co-payments using a sliding fee scale based on family income, family size, and number of children in care, with the goal of maintaining affordability. Federal guidance recommends that co-payments not exceed 7% of family income, aligning with the HHS affordability threshold, and states are required to submit their co-payment schedules as part of the CCDF State Plan. Co-payment policies vary significantly: some states (including New Mexico, Kentucky, and several others) have waived co-payments entirely for all subsidized families, treating childcare more like K-12 education; others maintain co-payments ranging from 1% to 10% of income. The 2024 federal CCDF final rule tightened co-payment rules, requiring states to cap co-payments at 7% of family income for all subsidized families by the full implementation date and waive co-payments for families below the federal poverty line, receiving TANF, experiencing homelessness, or with children in foster care. Co-payments affect family budgets meaningfully: a family earning $40,000 with a 7% co-payment would owe $2,800 per year ($54 per week), an amount that can still strain tight budgets and lead some families to decline subsidy offers. Co-payments are generally paid directly to the provider, either weekly or monthly, with the state reimbursing the provider for the balance up to the state's approved reimbursement rate. In some states, families can select providers that charge more than the state reimbursement rate, in which case the family is responsible for both the co-payment and the overage.