Requires states to consider foster family homes or cottage homes to be the least restrictive setting for children who have attained six years of age and have been removed from their homes, if suitable relatives or other designated caregivers are not available. A cottage home is a residential operation in which not more than 12 children reside; that implements a trauma-informed treatment plan for its residents; that involves family members of a child in the treatment for the child, and maintains contact with the family of the child, if available and if the involvement is clinically appropriate for the well-being of the child; that is licensed by the state where it is located; and that is accredited. The bill makes cottage homes eligible for foster care maintenance payments.