New Child Care Assistance Reimbursement Rates

To ensure equitable child care access for families, states must assess market rates and child care costs every three years to inform child care assistance reimbursement rates. With market fluctuations during the pandemic, Indiana opted to delay rate changes. Instead, it issued a temporary 20% increase for all assistance payments to offset increasing child care costs. Increases took effect in April 2021 and continue today.

Historically, rate structures were based on market rate surveys. While an important input, market rates do not always reflect the difference between child care costs and a family's ability to afford it. To better understand costs, Indiana embarked on a comprehensive analysis of cost-modeling data beginning in 2021 using Stabilization Grant applications. To date, cost data has been collected by age group, provider type and quality level for 3,100+ providers and 8,984 classrooms across early childhood and school-age programs.

Indiana’s new cost-based approach for setting reimbursement rates helps to provide an understanding of the actual cost of care per child to ensure that providers are reimbursed accordingly. This is done by focusing on cost drivers, which allows providers across auspices, quality levels, geography and the age groups they serve to be compared on an "apples-to-apples" basis.

Additionally, the new model accommodates the realities of child care services, including shifting daily schedules, flexible staffing models and classrooms that open, close or are converted to other age groups (e.g., before-/after-school care) depending on the time of day.

Using this new model, OECOSL is introducing a transitional rate structure from July 30 through fall 2024 when the state must reassess and introduce a permanent structure. When the new transitional rates take effect on July 30, Emergency Relief Grants will cease. New rates offer a minimum 20% increase across all payments and additional increases for specific providers and care types where cost data showed inequities. These included notable increases, for example, for providers serving infants and toddlers in Licensed Centers and Registered Ministries.

A public comment period was hosted for providers and community members to share their feedback. The state will continue seeking providers' feedback to evolve the model during this one-year transitional period.

Rates will take effect on July 30, 2023. Providers should expect to see the new structure applied to payments received on August 30, 2023.

View new rates