Many California family child care providers will now be better able to afford health care

Laurel Lucia

Family child care providers in California provide early care and education out of their homes to hundreds of thousands of children. They constitute a critical component of the broader infrastructure for caring for and educating young children and enabling parents to work. Family child care providers are predominantly women of color and often in households with low income. As self-employed small business owners, they are not offered job-based coverage unless it is through a second job or the employer of a spouse or another family member. As a result, compared to other full-time workers, family child care providers are less likely to have job-based coverage and more likely to have insurance through Covered California or Medi-Cal, or to be uninsured. Many family child care providers—with or without insurance—report delaying or not getting the care they need, often due to affordability concerns.

California’s family child care providers voted in 2020 to be represented by Child Care Providers United (CCPU), a joint union of SEIU Locals 99 and 521 and UDW/AFSCME Local 3930. CCPU is specifically authorized to represent the approximately 40,000 home-based providers who work with children from families receiving subsidies for child care. (In total, California is estimated to have more than 100,000 home-based providers, though recent data on this is limited.) An initial priority for the union was improving access to affordable health care. The first CCPU collective bargaining agreement established a Joint Labor-Management Committee with representatives from CCPU and the State to explore what action could be taken to improve health care affordability and access. In support of the Committee’s work, providers organized petitions, held a dozen rallies and press conferences around the state, and made calls to decision-makers and visits to Sacramento to advocate not only for more affordable health care but also improved retirement security. As a result of the work in the Committee and the concurrent push made by providers, the governor and legislature authorized $100 million in general fund support for making premiums and out-of-pocket expenses more affordable, starting this budget year.

This blog post outlines the assistance offered by the recently-established Child Care Providers United California Workers Health Care Fund, summarizes recent findings from a David Binder Research/ California Health Care Foundation survey that underscore the need for this new health care investment for family child care providers, and discusses how the program will improve affordability for providers and benefit California as a whole.

Eligibility for new health care assistance began this month

Starting January 1, many family child care providers became eligible for reimbursement of certain premiums and out-of-pocket costs to make health care more affordable, using the $100 million in new funds. Licensed and license-exempt providers who provide care to a subsidized child for a requisite number of months are eligible for the Child Care Providers United Health Care Fund reimbursement if they are enrolled in a qualified health plan including Medi-Cal, Medicare, Covered California, and employer plans. Reimbursement payments will begin in Spring 2023 but are expected to cover expenses back to January 1, 2023. This California program was inspired by but is not identical to Carewell SEIU 503 Healthcare Cost Assistance benefits, a long-standing health care affordability program for Oregon home care workers enrolled in Marketplace coverage or Medicare.

Eligible California family child care providers will receive non-taxable reimbursement for their own health care expenses but not dependent expenses.

  • Premium reimbursement. The fund will fully reimburse any Covered California silver-level HMO plan premiums[1] paid by family child care providers after accounting for federal subsidies, except in cases in which the provider has access to an employer plan through their own job. For Medicare enrollees, the fund will reimburse up to $164.90 per month in Part B premiums and up to $50 per month for Part D or Medicare Advantage premiums. Providers enrolled in job-based coverage through a second job or a family member’s employer will be eligible for up to $100 per month in premium reimbursement. Undocumented providers, who are not eligible to purchase coverage through Covered California under federal policy, are eligible for premium reimbursement of up to $100 per month if they are ineligible for Medi-Cal and purchase a silver-level HMO plan or an equivalent plan directly from an insurer.
  • Out-of-pocket reimbursement. Family child care providers enrolled in eligible Covered California, Medicare, or job-based coverage plans, can receive reimbursement for up to $8,750 per year in out-of-pocket expenses such as copayments, coinsurance, and deductibles paid for services covered by their health plans. Undocumented providers who purchase an eligible plan directly from an insurer are also eligible for this reimbursement. Providers enrolled in Medi-Cal are eligible for up to $100 per month in reimbursement of permissible health care expenses that are not part of the health plan such as braces, glasses, and over-the-counter medicine and therapy devices. Providers enrolled in both Medi-Cal and Medicare are eligible for reimbursement for permissible expenses for Medi-Cal enrollees (up to $100 per month) plus reimbursement of any out-of-pocket cost for Medicare covered services (up to $8,750 per year).

Recent survey findings highlight the need for this health care affordability assistance

Findings from a recent survey highlight the affordability challenges that family child care providers face in accessing health insurance and care, and point to the real needs that this new health care investment will address. In July 2022, David Binder Research (DBR), with funding from the California Health Care Foundation, surveyed more than 1,700 California home-based providers from around the state who provide care to subsidized children, and asked about their health care experiences. Survey respondents included providers who are licensed to care for a maximum of 8 or 14 children (56%) and license-exempt providers (36%) who provide what is sometimes referred to as family, friend, and neighbor care.[2]

Family child care providers are predominantly women of color. The providers surveyed are 93% female, and 47% are Latino, 22% are Black, and 19% are White, according to the DBR survey. More than half of providers surveyed (56%) reported having household income less than approximately two times the federal poverty level, while the remainder have higher income (27%) or do not know their income or prefer not to say (18%).[3] Family child care providers are more likely to be age 45 or older (55%) than California workers as a whole (43%). At least three out of ten (30%) family child care providers have children under age 18. A separate survey conducted by the UC Berkeley Center for the Study of Child Care Employment (CSCCE) in 2020 found that 42% of California licensed family child care providers were born outside the U.S.

As self-employed small business owners, family child care providers are not offered job-based coverage unless it is through a second job or the employer of a spouse or another family member. As a result, approximately four out of ten (42%) family child care providers have coverage through their own employer or a family member’s employer (DBR survey) compared to approximately seven out of ten (69%) for all California adults working at least 20 hours per week, according to the California Health Interview Survey 2021.

Although family child care providers have a lower rate of job-based coverage, they have a higher rate of coverage through Medi-Cal (45%) or Covered California (23%) than all California full-time workers age 18 or older, of whom 14% had Medi-Cal and 5% had individual market coverage in 2021, according to the California Health Interview Survey. Some family child care providers reported having multiple sources of coverage such as Medi-Cal and Medicare, or Medi-Cal and private insurance through an employer, which is relatively common among all Californians.

Family child care providers lack insurance at a higher rate (19%) than the 7% of all California full-time working adults who are uninsured (California Health Interview Survey 2021). The most common reasons for lacking coverage reported by family child care providers surveyed by DBR are that the monthly premium is too high (61%) and that the out-of-pocket cost to access services is too high (37%). These responses are consistent with the most common reason given by uninsured Californians more broadly—cost (California Health Interview Survey). In spite of the premium subsidies provided under the Affordable Care Act, which were further enhanced starting in 2021, some Californians eligible for Covered California remain uninsured, primarily due to being unable to afford coverage or being unaware that they are eligible for financial assistance. Additionally, some Californians eligible for job-based coverage remain uninsured due to affordability concerns.

Chart 1. Family child care providers’ source of health coverage

Bar chart showing sources of insurance coverage for family child care providers in CA. 19% are uninsured.
Note: Sum exceeds 100% because some providers reported multiple sources of coverage
Source: David Binder Research/California Health Care Foundation survey of California family child care providers, July 2022

A substantial fraction of providers reported delaying or not getting needed medical care (34%), dental care (46%), vision care (36%), or mental health care (17%) during the past 12 months. Among those who delayed or did not get the care they needed, the reasons spanned a range of barriers including lack of affordability; information, language, logistical, or access barriers; and nervousness about seeking care. The top reason for delaying or not getting care was being unable to afford the out-of-pocket cost; this was also reported as a difficulty by approximately one-third of Covered California enrollees surveyed in 2021, according to a study by Harvard researchers published by the California Health Care Foundation. Even many Californians with job-based coverage have difficulty affording out-of-pocket costs and some Medicare beneficiaries have to pay thousands of dollars out-of-pocket on care.

Chart 2. Reasons for California family child care providers delaying or not getting the care they needed in the last 12 months

Bar chart showing the reasons California family child care providers said they delayed or did not get health care, with reasons potentially related to affordability highlighted. These are: Could not afford the monthly cost (45%); could not afford the out-of-pocket cost (60%); insurance was not accepted or did not cover the care or was uninsured (46%).
Source: David Binder Research/California Health Care Foundation survey of California family child care providers, July 2022

Given their physically demanding work, long hours, and regular contact with sick children, family child care providers have a critical need for accessible and affordable health care. Their health risks were further exacerbated by being on the frontlines of COVID, with family child care homes remaining open throughout the pandemic at higher rates than child care centers.

The new program will improve affordability for providers and benefit California as a whole

The new reimbursement program provided through the CCPU Health Care Fund will improve access to care and financial security for many family child care providers. Premium reimbursement will help providers who already have insurance afford to maintain it. And importantly, given that the top reasons for lacking insurance were premium and out-of-pocket affordability, reimbursement of those expenses could spur some uninsured providers to newly enroll in insurance. Reducing premiums for providers via reimbursement is likely to increase Covered California take-up rates among this population, similar to the way in which the enhanced premium subsidies under the American Rescue Plan increased Marketplace enrollment. To further improve access to coverage, the Fund has partnered with navigators to assist family child care providers with enrollment in Covered California. Additionally, Covered California has created a Special Enrollment Period enabling family child care providers who are eligible for this reimbursement program to enroll or change plans in February 2023, a month after open enrollment for others ends January 31.

Reimbursement of out-of-pocket expenses could improve providers’ financial security by reducing medical bills and enabling them to avoid future medical debt. It could also greatly improve access to care, by reducing if not eliminating the out-of-pocket affordability barriers that commonly resulted in providers delaying or not getting needed care.

Making health care more affordable can also help to address early care and education capacity in California, which was already insufficient prior to the pandemic. The number of licensed family child care homes decreased by 2% from March 2020 to June 2022 according to California Department of Social Services data, and child care employment in California is still below pre-pandemic employment levels. A study by the Erikson Institute found that 63% of family child care providers who left the role reported that the economics of sustaining a family child care business, including the lack of benefits such as health insurance, paid time off, and retirement, was one of the challenges contributing to their exit. Improving access to health care, improving retirement security (another current focus of CCPU), and improving paid leave are among the ways that California can help ensure that being a family child care provider is sustainable work, both for those already doing the work and for those considering opening a family child care home.

Working parents rely on family child care providers; when providers can get the health care they need to be present and well, the families they provide care for can fully participate in the workforce and be productive in their own jobs. Prior research has shown that broader public investment in early care and education is important for California’s economy as a whole and that dollars spent on early care and education have a multiplier effect throughout the economy. Improving health care affordability is not only important for providers, but it is also beneficial for California working parents and the economy as a whole.


[1] In regions in which no silver-level HMO plan is offered, premiums for the lowest cost EPO/PPO will be reimbursed.

[2] Another 8% of survey respondents did not know their license status.

[3] 56% of providers reported having 2021 household income at or below $28,947 for one person, $39,001 for two people, $49,054 for three people, $59,108 for four people, or specific higher amounts for larger households. (See survey question 52 for more specific details.) These income thresholds are equivalent to roughly 225% of the Federal Poverty Level.