Do Grandparents Get Paid for Fostering Grandchildren?

Yes, grandparents can get paid for fostering their grandchildren, but only through the formal foster care system. If your grandchild has been placed in your home by a child welfare agency and you become a licensed foster parent, the state pays you a monthly foster care maintenance payment at the same rate a stranger would receive. If the arrangement is informal, meaning the child is not in state custody, foster care payments are not available, though smaller forms of assistance are.

The Same Rate as Any Other Foster Parent

Federal law protects the payment rate. In Miller v. Youakim, the U.S. Supreme Court held that children placed in relatives’ homes meeting state licensing standards must be included in the same federal foster care program as children placed with unrelated foster parents.¹ A licensed grandparent cannot be paid less than a licensed non-relative caring for the same child.

The payment is a reimbursement for the child’s food, shelter, clothing, school supplies, and daily needs, not income to the grandparent. Federal tax law excludes qualified foster care payments from gross income, so you do not owe income tax on them.² The IRS also confirms these payments are not counted as earned income for the Earned Income Tax Credit.³

How Much the Monthly Payment Is

Rates are set by each state and rise with the child’s age, since teenagers cost more to support than young children. The range across the country is wide. Some states pay under $400 a month for a young child; others pay over $1,000. A teenager in a higher-paying state might bring in close to $1,300 a month, while the same teenager in a lower-paying state might generate under $500. States adjust these figures each year.

Children with significant physical, emotional, or behavioral needs often qualify for an enhanced “difficulty of care” payment on top of the base rate. Federal law defines these as additional compensation for the extra care a documented condition requires.² Many states also provide separate allowances for clothing, back-to-school supplies, and initial placement costs. Those extras matter most in the first weeks, when a child often arrives with almost nothing.

What Licensing Requires

To collect the payment, you have to be licensed. That means the same core standards a stranger would meet: background checks, a home study, and training.

Background Checks

Federal law requires a fingerprint-based check of national crime databases for every prospective foster parent, plus a check of child abuse and neglect registries in every state where the applicant and other household adults have lived during the preceding five years.⁴ Every adult in the home has to submit, not just you.

Some criminal histories are permanent bars: child abuse or neglect, domestic violence, crimes against children including child pornography, and violent felonies such as sexual assault and homicide. Other felony convictions, including physical assault and drug offenses, disqualify an applicant if they occurred within the preceding five years.⁴

Home Study and Training

A social worker visits to check that the home is clean, in good repair, has enough bedroom space for the child, and is free of obvious hazards. The study also covers interviews about your parenting experience and your ability to care for a child who has been through a hard situation. The agency will look at your household finances too, not to require wealth but to confirm you are not relying on the foster payment for basic survival.

Training hours vary by state and cover topics like child development, trauma-informed care, and behavioral strategies. Some states set the same training bar for relatives as for strangers; others have reduced training requirements for kinship placements to speed things up.

Waivers for Grandparents

This is the part worth asking about directly. Federal law lets child welfare agencies waive non-safety licensing standards on a case-by-case basis for relative foster homes.⁵ Fire safety and background checks cannot be waived. Bedroom count, square footage rules, or certain training hours can be. If your spare bedroom is slightly under the state’s standard measurement, a waiver may still get you licensed. The waiver has to be granted individually for a specific child, not as a blanket policy, so raise it with the caseworker rather than assuming a checklist deficiency ends the process.

If the Child Is Not in State Custody

Many grandparents take in a grandchild without any court or agency involvement. Maybe the parents asked, or the situation just evolved. In that case, foster care payments are off the table because the child is not in state custody. Two smaller resources are worth pursuing.

The most widely available is a “child-only” grant through the Temporary Assistance for Needy Families program. It is designed for a child living with a relative who is not the parent, and the caregiver’s own income and assets are generally not counted. The agency looks at the child’s circumstances. The tradeoff is size: TANF child-only grants pay substantially less than foster care rates, often in the low hundreds of dollars a month for a single child. You apply through the local department of social or human services with proof of the relationship and that the child lives with you.

The child may also qualify for Medicaid or the Children’s Health Insurance Program based on household income, even outside the foster care system. Apply separately through the state’s Medicaid office.

Guardianship Assistance: A Middle Path

If you have been a licensed foster parent for your grandchild and the state has ruled out both reunification with the parents and adoption, you may be able to become the child’s legal guardian and continue receiving monthly payments through kinship guardianship assistance.

Federal law requires the child to have been eligible for Title IV-E foster care payments while living with you for at least six consecutive months before this guardianship can be established.⁶ The state must find that the child has a strong attachment to you and that you are committed to caring for the child permanently. A child 14 or older must be consulted.⁷

The monthly payment cannot exceed what the foster care maintenance payment would have been, so the money is comparable to what you were already receiving. The child exits the foster system. No more caseworker visits, court reviews, or the possibility that the agency changes the placement plan. You hold legal authority over the child’s life, and payments continue until age 18, with some states extending them to 21. The state also covers nonrecurring legal expenses related to obtaining guardianship, up to $2,000.⁶

Adoption Assistance

If you adopt your grandchild out of foster care, adoption assistance is often available. The amount is negotiated with the state before the adoption is finalized and cannot exceed what the child would have received in a foster family home.⁶ Payments generally run until the child turns 18, and many states extend them to 21 if the young adult is still in school or has a documented disability. Adoption gives you full parental rights and removes the child welfare agency from the picture. The child typically keeps Medicaid eligibility through the adoption assistance agreement.

Other Money You Should Not Overlook

Medicaid

Children in Title IV-E foster care are automatically eligible for Medicaid, which covers medical, dental, and mental health services at no cost to you.⁸ This usually continues through guardianship and adoption assistance.

Social Security Benefits

If your grandchild’s parent has died, is disabled, or is drawing Social Security retirement, the child may qualify for dependent or survivor benefits.⁹ These payments come directly from Social Security and are separate from any foster care or TANF money. They are not automatic. You have to apply through your local Social Security office, and for some families this turns out to be the single largest source of income for the child’s care.

Taxes

If you provide more than half of your grandchild’s financial support, you may be able to claim the child as a dependent, which can open up the Child Tax Credit, the Earned Income Tax Credit if you otherwise qualify, and head-of-household filing status. Foster care payments themselves are not taxable and are not counted as earned income.³ The interaction between foster payments, dependency claims, and tax credits gets complicated depending on your legal arrangement, so a tax professional is worth the call.

How to Start

If your grandchild is already in state custody or about to enter it, call your local child welfare or social services agency and tell them you are a relative interested in becoming a licensed kinship foster parent for a specific child. They will hand you the application, authorize background checks, and schedule the home study. Ask directly about non-safety licensing waivers if any part of your home falls short of the checklist.⁵

If there is no agency involvement, start at the local department of social or human services and ask about the TANF child-only grant, and then ask about Medicaid or CHIP for the child while you are there. Either way, check whether the child qualifies for Social Security based on a parent’s work record. That money is often missed entirely.

1
Justia Law. Miller v. Youakim, 440 U.S. 125 (1979)
2
Office of the Law Revision Counsel. 26 USC 131 – Certain Foster Care Payments
3
Internal Revenue Service. Taxable and Nontaxable Income
4
Child Welfare Information Gateway. Adam Walsh Child Protection and Safety Act of 2006
5
Office of the Law Revision Counsel. 42 USC 671 – State Plan for Foster Care and Adoption Assistance
6
Office of the Law Revision Counsel. 42 USC 673 – Adoption and Guardianship Assistance Program
7
U.S. Department of Health and Human Services. Kinship Guardianship Assistance Eligibility for Title IV-E Medicaid
8
Medicaid.gov. Improving Timely Health Care for Children and Youth in Foster Care
9
Social Security Administration. Benefits for Children