Tier 1 / Tier 2 (CACFP Reimbursement)

Tier 1 and Tier 2 are the two reimbursement rate levels within the CACFP program for family day care homes (also called family child care homes). The tier system was established to direct more resources to providers serving children in low-income areas while still providing some support to all participating providers.

Tier 1 providers receive higher reimbursement rates and qualify through one of several criteria: the provider's home is located in a low-income area (where at least 50% of children are eligible for free or reduced-price meals), the provider's household income is at or below 185% of the federal poverty level, or the provider receives SNAP benefits. Tier 2 providers are all other participating family day care home providers who do not meet Tier 1 criteria. However, Tier 2 providers can claim Tier 1 rates for individual children in their care who come from households that meet income eligibility requirements.

The difference in reimbursement between tiers is significant. For example, Tier 1 lunch reimbursement might be $1.40 per meal while Tier 2 is $0.84 per meal. Over the course of a year, this difference can amount to thousands of dollars. Family child care providers should carefully determine their tier status and, if classified as Tier 2, collect income eligibility documentation from enrolled families to claim Tier 1 rates for qualifying children.