7 min read · Last updated September 3, 2026

In this article

• What CCDF actually pays for
• The three eligible provider types
• How to set up a relative or in-home provider
• What families get wrong or miss
• What to do if your provider is denied
• Frequently asked questions

Marisol Ortiz works two jobs and needed someone to watch her 4-year-old daughter, Camila, three mornings a week while Marisol worked an early shift. Her mother, Camila’s grandmother, lives two blocks away and offered right away. Marisol assumed her state’s Child Care and Development Fund (CCDF) subsidy would simply start paying her mother once the paperwork went in. It was not that automatic. Her state’s child care agency needed to confirm her mother’s relationship to Camila, register her as a provider, and run a background check before a single payment could go out.

What CCDF actually pays for

CCDF is the federal-state block grant that funds every state’s child care subsidy program. It is administered by the Administration for Children and Families (ACF), part of the U.S. Department of Health and Human Services (HHS), and the eligible provider categories come from federal regulation at 45 CFR 98.2. States use CCDF dollars to cover part or all of a family’s child care cost once the family qualifies, but the money only flows to a provider type the state agency has approved. If you already know your household qualifies on income and are working through the application itself, MRS’s CCDF application guide walks through that separate process step by step. This article covers a narrower question: once you are approved, who can actually be paid.

The three eligible provider types, in plain terms

Federal rule sorts eligible providers into three groups. A center-based provider operates a licensed facility outside anyone’s home, serving groups of children in classrooms or age-based rooms. A family child care provider cares for children inside a private home, but it has to be a home other than the child’s own. Most states also require a license or formal registration once that provider serves more than a small handful of children. The third group covers in-home and relative care, sometimes called “kith and kin” (see childcare.gov’s explainer on choosing a relative, friend, or neighbor provider). This is a relative, or a trusted friend or neighbor, who often cares for the child inside the child’s own home. This provider type may be exempt from full licensing, but still has to register with the state to receive payment.

The federal definition of an eligible relative is specific. Under 45 CFR 98.2, an eligible relative provider is a grandparent, great-grandparent, sibling who lives in a separate residence from the child, aunt, or uncle, and the provider must be at least 18 years old. The regulation actually defines this by the child’s relationship to the provider: the child must be that provider’s grandchild, great-grandchild, sibling, niece, or nephew. That is why a child’s own niece or nephew is not a separate eligible-provider category. A cousin, family friend, or neighbor generally falls into the broader “in-home” category instead of the “relative” category, and states can set their own added rules for that group. The table below lines up the three categories side by side.

Provider type	Setting	License or registration required?	Background check required?	Can a same-household parent/stepparent qualify?	Typical reimbursement basis
Center-based	Non-residential facility (classroom-style)	Yes, full state licensing	Yes, for all staff with child contact	No	State market rate survey, set for licensed/regulated care
Family child care home	A private residence other than the child’s own home	Usually yes, licensed or registered depending on group size and state	Yes, for the provider and often other adults in the home	No	State market rate survey, same basis as centers in most states
Relative / kith-and-kin (in-home)	Often the child’s own home, or the provider’s home	Often license-exempt, but state registration is still required to be paid	Generally yes for license-exempt providers receiving CCDF, though states may exempt certain relatives from parts of monitoring	No, a parent, step-parent, or legal guardian in the child’s own household is not an eligible relative provider	Varies by state; some pay a flat or reduced rate instead of the full market rate

How to set up a relative or in-home provider

If you want a grandparent, aunt, uncle, or family friend paid through CCDF, contact your state or local CCDF agency before care starts, not after. The agency will ask for the provider’s identifying information, their relationship to the child if any, and their home address. A sibling provider only counts as a “relative” if they live in a separate residence from the child. Most states then require the provider to complete a background check, and some add a short health and safety orientation before approving the first payment. Processing can take a few weeks, so start the paperwork as soon as you know who will be watching your child. Once your provider is approved, your family’s copay still applies the same way it does for centers, and MRS’s sliding-fee-scale explainer breaks down how that share is calculated.

What families get wrong or miss

The most common mistake is assuming that any relative watching the child automatically qualifies for payment.

That rule surprises a lot of two-parent and blended households, especially when one parent works nights and the other technically “watches” the kids during the day. Families also miss that a sibling has to live at a separate address to count as an eligible relative, so an adult sibling still living at home cannot be the paid provider either. A third common gap is timing: families let a relative start providing care before the background check and registration clear, then find out the arrangement cannot be reimbursed retroactively. Confirm approval before the first day of care, not after.

What to do if your provider is denied

Ask your caseworker for the specific reason in writing. A denial is often fixable. If a relative was rejected because they live in the same home as the child, that outcome will not change, since it is a federal definition rather than a state judgment call. But if the denial was about paperwork, a missed background check step, or a licensing status question for a family child care home, most states allow the provider to correct the issue and reapply. If your family disagrees with the state’s decision, ask about the formal appeal or fair hearing process; every CCDF agency is required to offer one, though the exact steps vary by state.

Frequently asked questions

Can my child’s grandmother get paid through CCDF if she lives in my house? It depends on her role. If she is simply present in the household but not the child’s parent or legal guardian, some states allow it once she registers and passes a background check. Confirm directly with your state CCDF agency, since living arrangements can affect eligibility differently than they do for siblings.

Does a family friend or neighbor count as a “relative” provider? No. Under 45 CFR 98.2, the eligible relative category covers grandparents, great-grandparents, separate-residence siblings, aunts, and uncles, since the rule is defined by the child being that provider’s grandchild, great-grandchild, sibling, niece, or nephew. A friend or neighbor falls under the broader in-home provider category instead, which states regulate with their own added requirements.

Do relative providers get paid the same rate as a licensed center? Not always. Many states reimburse centers and licensed family child care homes using a market rate survey, while some pay relative or kith-and-kin providers a flat or reduced rate instead. Ask your state CCDF agency for the exact rate that applies to your provider type.

Can a same-household parent or step-parent ever be paid to watch their own child? No. Federal rule does not include a parent, step-parent, or legal guardian living with the child among the eligible relative categories, regardless of income or work schedule. That parent can still be present in the home, but cannot be the paid CCDF provider of record.

How long does it take to get a relative provider approved? Timelines vary by state and depend on how quickly the background check clears, but families should expect the process to take several weeks. Start the registration as soon as you choose a provider, since payment is not retroactive to days care was provided before approval.