In a development that a lot of parents across the nation may be happy about, Vice President Kamala Harris has announced new measures aiming to reduce the burden of childcare costs for working families, with extra support for early educators. Here’s the full story.
HHS Finalizes Rule for Child Care & Development Block Grant
The Department of Health and Human Services (HHS) has, on the 14th of March, finalized a rule that will strengthen the Child Care & Development Block Grant (CCDBG) program.
Overview of CCDBG Program
This program provides support for over a million children each month and helps families with childcare assistance.
Expanding Support
The new measures will expand upon the current legislation in a governmental push to offer affordable and accessible child care for all.
The key highlights of the new rules are as follows.
Capping Co-Payments
The rule sets a cap on co-payments for families participating in CCDBD to a max of 7% of their income.
The government estimates that this will save families over $200 a month, a move that will be welcomed by many people living in states without existing co-payment caps.
Supporting Vulnerable Families
States are being encouraged to waive co-payments entirely for families of children with disabilities, those experiencing homelessness, children in foster care, children in Head Start programs, and families at or below 150% of the federal poverty level.
Fair Payment for Providers
In a move aimed at bringing an element of financial stability to around 140,000 childcare providers, the new rule forces states to pay childcare providers more fairly and promptly.
The hope is that the availability of quality childcare options will be enhanced by incentivizing more providers to participate in the CCDBG program.
Streamlining Access
The government is simplifying eligibility and enrollment processes to make it easier for families to access CCDBG subsidies.
This will reduce long bureaucratic hurdles that often impede parent employment, training, and education.
Easing Financial Strain on Working Families
The burden of high childcare co-payments has long been an issue, straining family budgets and often becoming a barrier to employment for parents unable to afford them.
This can often be a sizeable chunk of a family’s income, especially for low-income working families.
Burdensome Co-Payments
Statistics show that higher-income families typically allocate 6-8% of their income to childcare expenses, while low-income families can pay upwards of 31%.
Potential Extra Money
The government is hoping to alleviate the significant financial strain these co-payments can have by capping them at no more than 7%.
They predict that this will help families in states without existing co-payment caps save anywhere between $110 – $635 per month, depending on the state and income level.
Strengthening Child Care Providers
Childcare providers that offer care to families receiving CCDBG assistance face their own set of challenges, including delayed payments and a loss of profit if the subsidy is based on attendance rather than simply enrollment.
Improved Financial Stability
This new rule seeks to address this issue by requiring states to pay providers more fairly and promptly, providing a level of stability for providers, and opening up more childcare options to parents.
Projected Impact
The government is projecting that over 100,000 families will benefit from reduced or eliminated co-payments, while around 140,000 childcare providers will see improved financial stability and operational support.
Addressing the Cost of Living Crisis
The government is hoping that these initiatives will enable families to have an easier time, especially during the current worldwide cost of living crisis.
Priority for Biden Administration
Childcare costs have been a pressing issue for the Biden administration for some time, and with a November election coming up, Biden’s team will be rolling out a host of new measures in an effort to shore up voting support.
Bipartisan Bill on Child Tax Credit
A bipartisan bill aiming to expand the child tax credit and reinstate a set of business tax breaks recently won overwhelming approval in the House.
It’s making its way through the Senate, but progress has stalled as Republican lawmakers are not in support.
Hopes for Improved Support
Whether these new measures will impact as many families, and to such a huge extent as the government is predicting, remains to be seen.
The Impact on American Families
However, with American families feeling the brunt of it more than ever, any new measures that help improve cash flow are sure to be well received.
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The post Government Steps In: Parents to Pocket $600+ Monthly in Childcare Savings first appeared on From Frugal to Free.
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The content of this article is for informational purposes only and does not constitute or replace professional financial advice.
