In this article, we’ll explain how to find funding for residential treatment for children and youth in need of services outside the home environment. If you know your child needs care but you need help to pay for it, we will explain the options available.
A Parent Note
Finding a program and finding a way to pay are related problems, but they are not the same question. Ask who decides whether your child’s needs meet the admission and coverage criteria, and who can explain the payment route. The process can differ by program, payer and state. This article is a parent’s starting point, not a coverage decision or legal advice.
What to Ask and Keep Track Of
Keep a record of the people you speak to, the dates and the documents they request. Ask for coverage or admission decisions in writing. If you receive a denial, ask the payer or agency for its review/appeal process and deadlines. Do not assume the same process applies to every payer or state.
How Much Does Residential Treatment Cost?
Costs vary widely depending on the program, location, level of care, and services offered. As one children’s example, Bridges Treatment Center, a children’s residential treatment center in Virginia, lists a daily rate of $588 to $736 (roughly $18,000 to $22,000 per month) in its published FY2026 rate sheet.
Very few people can afford to pay for residential care on their own or “out of pocket”.
Residential care is very expensive and sadly there are times that children do not receive the help they need, not because the care isn’t available, but because there isn’t a way to pay for it.
This situation is not hopeless, though. Financial assistance for mental health treatment is available and we explore different options below.
Funding Available for Residential Treatment for Children and Youth
Here are ways that residential treatment is paid for.
Medicaid
Medicaid is the primary way many children receive residential treatment. A child may qualify for Medicaid if the parents’ income is below a certain threshold, if the child is in foster care or as part of an adoption subsidy package for a child who was in foster care.
If a family currently receives private insurance (such as through a parent’s employer), there are situations when the family can request Medicaid enrollment to cover costs not paid for with insurance. These are called “medically needy” or “spend down” plans. Some states also offer waivers for those who might not otherwise receive services.
Managing the Medicaid system can be tricky, so inquire about an advocate available who can help you get access to needed care for your child. These advocates are provided and paid for by the Medicaid system.
Private Insurance
Insurance companies (such as Blue Cross, Aetna, Cigna, and many others) typically cover a portion of the cost of residential treatment. This may mean that families are required to pay a deductible and then a percentage of the cost of care thereafter. Read our guide on how to get insurance to pay for residential treatment.
Insurance may cover only a portion of the care, such as medical and mental health care only. Insurance may also have a cap or total dollar amount they will cover.
If insurance determines to only pay for part of the needed care, parents have the option to appeal the decision. It may be wise to hire an attorney to help with appeals in these situations.
Court System
If a youth has committed a crime, placement will be made by a judge and the burden of cost will fall to the court system.
School District
Although rare, it is possible for a school district to pay for an out-of-district placement if parents can prove this is the least restrictive option and no in-district option is suitable to meet the needs of the child.
Typically, a school district pays only for the educational portion of a child’s placement in treatment.
Foster Care System
For children who are currently in foster care, ask your child’s caseworker and your state Medicaid plan how residential treatment would be paid for and whether you could be asked to contribute. These arrangements vary by state and program.
If a child is not in foster care, there are times when he or she may be placed in foster care (either voluntarily, by the court system, or by the Department of Human Services) in order to fund treatment.
If your child is placed in foster care to fund treatment, the court may order you to contribute to the cost of care. Whether this happens, and how much, varies by state. States that charge parents generally use child support guidelines based on parental income and ability to pay, not a fixed share of the treatment cost. Federal guidance issued in July 2022 (U.S. Department of Health and Human Services) encourages states to pursue child support in these cases only in very rare circumstances.
If your child is adopted from foster care and receives an adoption subsidy, the subsidy does not automatically stop if your child reenters care, and courts have flexibility in setting any contribution amount. Policies vary by state, and Families Rising (formerly NACAC) advises agencies not to charge adoptive families child support in these situations.
Adoption Subsidy
If your child was adopted from foster care, you might receive an adoption subsidy. Part of these subsidy funds can be used to pay for a child’s care. If the funds are insufficient to pay for needed services (as they often are), you can request that the funds be re-examined. Some states also have additional funding for higher-level services for special needs children who are adopted from foster care.
Private Pay
Parents can pay out of pocket for a child’s treatment. Many facilities offer a sliding scale or payment plan for these situations. Loans for treatment are also available.
Termination of Parental Rights (TPR)
Giving the state custody of a child so the child can get funded treatment is called custody relinquishment. Its legal form varies by state, and it is not the same as termination of parental rights (TPR), which permanently ends the legal parent-child relationship. Some families feel pressured to give up custody when no other funding option works, and advocates urge families to explore every other funding option first. If you are facing this choice, seek the help of an attorney who specializes in adoption and child welfare issues.
In the case of a child with severe mental health or behavioral issues, a judge may grant relinquishment in order for the child to receive needed services.
Grants for Mental Health Services
While there are some grants available for mental health services, such as these SAMHSA grants and NIMH funding grants, typically these grants are for organizations who provide mental health care to the community, not individuals.
The American Counseling Association lists information about federal grants for counseling.
Here is a link with information about substance abuse treatment grants.
Frequently Asked Questions (FAQ) About Paying for Child & Youth Residential Treatment
Here are answers to commonly asked questions about finding funds for residential treatment for children.
While finding funding for residential treatment for children and youth can be an overwhelming process, we encourage you not to give up. Help is available from a variety of sources in order to provide your child with the needed mental health care.
Support Tools for Families Exploring Residential Treatment
Download Residential Treatment Report {Exclusive Access to 75+ Parent Reviews & Practical Advice}
How to Get Funding Available for Residential Treatment for Children
I am sorry but with all the typos in your pages it really makes people think twice about taking you seriously.
**It makes you look like an incompetent company/agency.
Thanks for your honest feedback. I apologize that the errors are a distraction. Like so many of us here, I am busy mom of children with special needs who is doing her best to juggle many responsibilities. My goal in creating the site was to get the information out that is desperately needed. I appreciate your grace with some typos that slip through in the editing process.
IO don’t find anything wrong with typoes. It makes me feel like I am reading something that a real person has written as an adult with dislexia. I get comments like that all the time. Typeo does not take away from my ability to understand what you are saying at all. It does not make you seem less ligament or incompetent. People place so much attention to writeing but not enough on the messeage.
Can you please send link/info on the “How to get funding available for Residential Treatment for children”?
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