New Medi-Cal Rules Should Recognize That Child Care Providers Are Already Working

A new policy brief by Katie Hamm and Mario Cardona of EducationCounsel, was recently released examining how new federal Medicaid work requirements could affect home-based child care providers. The brief, Making Medicaid Work Requirements Work for Home-Based Child Care, explains why providers who are already working long hours may still face barriers to keeping their health coverage if state systems do not recognize the informal, self-employed, and irregular ways their work and income are documented. Home-based child care providers do so much more than care for children during the day. They open their homes early, stay open late, prepare meals, plan activities, clean, complete paperwork, communicate with families, and keep their small businesses running, working long hours while earning modest incomes. Beginning in 2027, some providers may have to prove that work in order to keep their Medi-Cal coverage. The concern is not that child care providers are not working, we know they do hard work with long hours. The concern is whether the state’s systems will recognize the way home-based child care work is scheduled, paid, and documented.

In July 2025, Congress passed a federal law, HR1 - often referred to in the media and by political figures as the One Big Beautiful Bill Act. Among many other changes, the law created new Medicaid “community engagement” requirements, often called work requirements. Medicaid is called Medi-Cal here in California. Under the new law, some adults will have to show that they meet at least one of the following requirements each month:

• Work, volunteer, attend a work program, or participate in another approved activity for at least 80 hours

• Attend school at least half-time

• Earn at least $580 per month

• For seasonal workers, earn an average of at least $580 per month over six months

States will be required to begin following the new federal requirements no later than January 1, 2027, unless they receive additional time. These new rules will generally apply to certain adults ages 19 through 64 who receive Medicaid through the Affordable Care Act expansion.

Many people are excluded, including:

• Parents and caregivers of children under age 14

• People with certain disabilities or serious health conditions

• Pregnant and postpartum people

• People caring for someone with a disability

• Certain veterans

• People participating in substance-use treatment

• People already meeting certain SNAP or TANF work requirements

Many early educators rely on Medi-Cal and other public benefit programs because child care wages remain low. Home-based providers often work 10 to 12 hours per day and provide more than 56 hours of care each week. Even so, the average annual child care income for a licensed home-based provider remains very low. There are estimates that 43% of early educators rely on programs such as Medicaid and SNAP. While providers will easily meet an 80-hour monthly work requirement, the challenge may be proving it. 

Home-based providers may be:

• Self-employed

• Paid differently from month to month

• Waiting for delayed child care subsidy payments

• Paid in cash, through barter, or with room and board

• Providing unpaid care to relatives or friends

• Working many hours that do not appear on a traditional timesheet

Those hours can include cleaning, shopping for supplies, preparing lessons, communicating with families, and completing required business paperwork, and that work is real, even when a payroll database cannot see it. The federal rules include an exemption for certain “family caregivers.” According to the brief, a person may qualify as a family caregiver when they provide assistance to a child under age 14 and:

• Are related to the child;

• Live with the child; or

• Are unrelated, live elsewhere, and provide at least 80 hours of care each month.

This could protect some family, friend, and neighbor providers, but not every home-based provider will qualify. A licensed family child care provider who operates a business and serves several families may still need to show work hours or income. To protect these caregivers, California should make the process clear, simple, and easy to understand so providers know whether they are exempt and what information they may need to submit - the biggest risk is that eligible providers lose Medi-Cal because of paperwork.

That could happen when:

• The state cannot find a provider in a payroll database

• The provider does not have traditional timesheets

• A subsidy payment arrives after the month in which the work occurred

• A notice is confusing, delayed, or sent in the wrong language

• The provider cannot step away from children to attend an appointment during normal business hours

• The state does not accept the records the provider actually uses

The brief warns that millions of people could lose Medicaid because of procedural problems, even when they are legally eligible or meeting the work requirement, which could also affect families. When a provider loses health coverage, they may have to leave child care for a job that offers employer-sponsored insurance. At a time when families already struggle to find care, California cannot afford to lose more providers.

Although the new requirement comes from the federal government, California should:

Identify exemptions first

Before asking a provider to repeatedly prove work hours, California should determine whether the provider qualifies for a caregiver or another exemption.

California should accept practical forms of documentation, including:

• Parent-provider agreements

• Child care subsidy contracts

• Attendance records

• Receipts and invoices

• Schedule C tax filings

• Child care management software reports

• Records showing expected or contracted subsidy payments

Count all child care work

Work should include more than the time children are physically present, and should also include time spent:

• Cleaning

• Planning activities

• Purchasing supplies

• Communicating with parents

• Completing required paperwork

• Running the child care business

Keep the process simple

The brief recommends that states:

• Allow self-attestation during 2027

• Avoid checking compliance more often than the required six-month review

• Offer appointments outside normal business hours

• Provide help in multiple languages

• Include providers when designing forms and verification systems

This is an important moment for providers and advocates to speak up. California agencies are building the systems that will determine how exemptions, work hours, and income are verified. The decisions made now will shape whether eligible providers are able to keep their health coverage.

Providers and advocates can ask:

• How will California identify providers who qualify for an exemption?

• What records will providers be allowed to use?

• Will unpaid preparation and business hours count as work?

• How will delayed subsidy payments be handled?

• Will notices be clear and available in the languages providers use?

• Will help be available during evenings and weekends?

• How will California prevent eligible providers from losing coverage because of paperwork?

Home-based child care providers are already doing essential work, and California needs to make sure we build a system that sees that work and respects it!