Adoption Financing Information: How to Cover the Costs
While families often pay extremely high fees to adopt infants, whether independently or through a private agency, adopting a waiting child is one way to reduce the cost of adoption dramatically. If a family plans to adopt a U.S. child who is in foster care with a public agency, a public agency in the family's county or state will often complete the homestudy at no cost. Adoptive parent preparation classes may be provided as part of the homestudy process. If the waiting child resides in the same county or state as the family, the costs of post placement supervision may also be covered by the family's agency.
Like the adoption of any other waiting child, foster adoption will involve few, if any, costs to the family. If a family is comfortable with the levels of risk and openness involved with a child who first enters the home as a foster child, this may be a way to adopt.
As a foster parent, you will receive a check each month to cover the cost of caring for the child, and the child will receive medical assistance. If you adopt that child, you will continue to receive financial and medical assistance.
While some agencies have a different homestudy process for foster parents and adoptive parents, others have dual licensing, and will allow families to complete one homestudy approving them for both foster care and adoption, at no cost to the family. Post placement supervision can be provided by the same agency that supervises the foster care, and may also be free.
An advantage of starting out as a foster parent is the quantity of training and preparation you will receive. In addition to the series of classes at the beginning of the process, foster parents receive training on an on-going basis, addressing a variety of parenting issues. To learn more about foster parenting, visit the website of the National Resource Center for Foster Care and Permanency Planning at http://www.hunter.cuny.edu/socwork/nrcfcpp.
Many waiting children are entitled to state or federal adoption assistance payments (also called financial assistance or subsidy). These payments are based on the child's needs or eligibility, and not on the family's income. They provide a check for the child each month until the child reaches age 18 (sometimes age 21). No other continuing contact with the social services agency is required.
An adoption assistance agreement may also include a Medicaid card or other form of medical assistance, and/or a service subsidy. Adoption assistance payments are tax exempt. More information is available from the National Adoption Assistance Training Resource and Information Network (NAATRIN) at 800-470-6665. NAATRIN does not have a separate website, but is a service of the North American Council on Adoptable Children (NACAC). The NACAC website is www.nacac.org/adoptionsubsidy.html.
In a purchase of service contract, the child's agency or state agrees to pay the family's agency for providing the homestudy, for post-placement supervisory visits and reports, and/or for other services and expenses. When you identify a particular child in whom you are interested, you may want to find out as soon as possible if the child's agency provides purchase of service. Many waiting children are in the care of agencies who do.
In a reciprocal service agreement, two states or jurisdictions agree to provide certain services for one another without charge. Often, two neighboring states or counties will have such an agreement in place. If you adopt a child from a state or county that has a reciprocal service agreement with your state or county, fees for services such as post placement supervision or parenting preparation classes may be waived. To learn more about purchase of service and reciprocal service agreements, see "Who Pays for What" in Adopting a Child from Another State, or click here.
One-Time Non-Recurring Expenses
Under both state and federal assistance programs, adoptive parents of children with special needs are eligible for a one-time payment of non-recurring adoption expenses. The amount which may be reimbursable is determined by each state, and may vary from $200 to $2,000. Families will need to keep a record of costs, saving all receipts, and speak with their worker to find out the procedure in their state for obtaining the reimbursement. The money can be used to cover reasonable and necessary adoption fees, including:
- homestudy and updates
- required training or parent preparation classes
- criminal checks
- court costs
- attorney fees
- health and psychological exams for the adoptive parents
- travel
- miscellaneous or unexpected expenses
New federal legislation that increases tax credits and exclusions for all adoptive families was passed in June, 2001. The Hope for Children Act (Public Law 107-16), taking effect on January 1, 2001, provides an adoption tax credit of $10,000 for all adoptions from 2002 and thereafter, and a tax exclusion of up to $10,000 for employer-provided adoption benefits, effective in 2003. Prior to these dates, families are entitled to a tax credit of up to $5000 and a tax exclusion of up to $5,000 ($6,000 for children with special needs).
A tax credit is an amount that you subtract from your total tax liability, and is therefore more valuable than a tax deduction. Knowing that tax relief is forthcoming may allow a family to make some expenditures, such as paying attorney fees or court costs, which can later be made up in their budget by the tax credit.
Read more about the Hope for Children Act and Tax Benefits for Adoptive Families at Adoption in the Workplace. Information is also provided in Internal Revenue Service Publication 968: "Tax Benefits for Adoption; For Adoptive Parents", available from the IRS at www.irs.ustreas.gov. Tax laws can change at any time, so families interested in new information on tax credits may want to stay informed about pending legislation.
A growing number of companies and government agencies are offering adoption benefits to their employees. Check with your employer to find out your company's policies. Benefits may include:
- adoption information and referral services
- legal expenses
- agency fees
- medical expenses
- post adoption counseling
- paid or unpaid leave time for the adoptive parent
- financial reimbursement
Learn more about how families can advocate for adoption benefits in their places of employment or how employers can offer adoption benefits at Adoption in the Workplace.
When using a sliding scale, an agency sets a fee for its services based on the family's income or ability to pay. If you are exploring working with a private agency, ask if this is an option, even if it is not mentioned in the agency's literature. A sliding scale can make the cost of a homestudy, parent preparation classes, or post placement supervision much more affordable for low or middle income families, allowing them to focus their financial plans on raising their children rather than only on adopting them.
Adoption agencies do not expect the entire cost of an adoption to be paid "up front." For example, an agency might divide payment into three portions, with 1/3 of the total amount to be paid when filing the initial application, 1/3 at completion of the homestudy process, and 1/3 when the child is placed and the post placement supervision period begins. Budgeted over time, these costs will not make such a big dent in money you may be saving for the costs of raising a child. When fees are linked to a specific service or part of the process, the family is also in a better position when something unexpected happens, such as an agency suddenly going out of business. Ask specific agencies about their payment plans when you are selecting an agency.
Loans may make sense to cover large and immediate expenses that may be reimbursed later by your employer, the military, or the government's reimbursement of non-recurring adoption expenses. One source of loans is the National Adoption Foundation which can be reached at 203-791-3811 or www.nafadopt.org. The National Adoption Foundation also awards grants for families in need.
Loans and travel assistance may also be available through travel agencies or banks. Some airlines offer discounts for adoption-related travel. You may also want to ask your social worker about the Adopt Air program. Some adoptive families have been helped financially by their religious organizations; others have accepted assistance from relatives. You may be able to think of other possible resources in your own community of support.
The military provides active-duty personnel a reimbursement for most one-time adoption costs, up to $2000 per child. The maximum amount available in a given year is $5000, even if both parents are in the military. Reimbursement is made after the adoption is finalized.
A child with disabilities may also be eligible for up to $1,000 a month in assistance under the military's Program for Persons with Disabilities. In addition, the military's Exceptional Family Member Program is designed to ensure that families of children with special needs are assigned to duty stations where the child's needs can be met.
Computers, the Internet, and other technology can be useful to you in lowering your adoption costs. One new development is distance learning, which makes it possible to take courses through the Internet. The Adoption Roadmap is an online parent preparation course offered by the National Adoption Center. There are fees for the course, but your agency may be willing to pay them. Some states, counties, and agencies require that families take a specific type of training, but others will allow families to use this online course to meet training requirements. The Adoption Roadmap can be a convenient, affordable way for families to prepare for adoptive parenting.
Another recent development in the adoption community is the use of videoconferencing. Through video conferencing, families are able to see, hear, and converse with a child or children in a distant location. Many social workers are now using this as a way to facilitate "visiting" between prospective adoptive parents and waiting children, saving the family expensive travel costs.
Once your child is home with you, chats, message boards, listserves and e-zines are ways that adoptive parents can use the Internet and new technology to find financial resources. Chats and message boards in the AdoptUSKids Learning Center provide a place for adoptive families to share their financial knowledge. And subscribing to the online e-mail magazines, such as the National Adoption Center's newsletter, will provide you with adoption news which may affect financial resources.
If you are as successful in your adoption journey as we hope, one day you will be helping your adopted child or teenager make the transition to adulthood. You may discover that the need for a college education is in your child's future and may find yourself looking for ways to finance it. An increasing number of states are offering scholarships for college tuition to young people adopted from the state's foster care system. To find out if your state is one of them, check with your state adoption specialist. You may also want to contact your county or state to ask about other programs such as subsidized child care for adopted children.