What Is an Adoption Subsidy?

Adoption Subsidies Are Available for Special Needs Children

Caucasian baby girl with Down Syndrome playing with blocks
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The Adoption Assistance and Child Welfare Act of 1980, also known as Public Law 96-272, was created by Congress to provide federal adoption subsidies to help encourage placement of special needs children. Children can receive federally-funded adoption subsidies under Title IV-E of the Child Welfare and Adoption Assistance Act of 1980, or they can get state-funded adoption subsidies (non-Title IV-E) based on each state's guidelines.

They can't receive both subsidies. 

Defining Special Needs

A child may be deemed special needs and be eligible for an adoption subsidy based on a variety of guidelines that are unique to each state. Some of the guidelines that help determine a child's eligibility include:

  • The age of the child
  • A sibling group of three or more children who are being adopted together
  • Medical disability
  • Mental disability
  • Emotional disability
  • A family history indicating that the child may need medical treatment or therapy at various developmental milestones
  • The child is a member of a minority group

Other Eligibility Factors

Eligibility for a Title IV-E subsidy also depends on the state making a determination that it's impossible for the child to remain with his birth parent or parents. The state must have made every reasonable effort to find parents willing to adopt the child without receiving a subsidy unless such efforts would not be in the child's best interests.

This might be the case if his foster parents wanted to adopt him. It would be in his best interests to remain in a home where he has formed attachments rather than be uprooted and placed with parents who are willing to forego the subsidy. 

A special needs child must also meet at least one of several other eligibility conditions under Title IV-E:

  • He has been in foster care for at least 60 months.
  • The child is entitled to Supplemental Security Income (SSI) benefits.
  • The child is born to another child who is currently in foster care. 

Federal law initially required that a child's birth family must meet income requirements for Aid to Families of Dependent Children, but the AFDC program was terminated in 1996. Congress then passed the Fostering Connections and Increasing Adoptions Act of 2008 to phase out this requirement. All children who are eligible for subsidies due to special needs will be eligible for subsidies by 2018 regardless of their birth parents' incomes, provided that they're adopted from foster care. 

When a child has been declared eligible for an adoption subsidy, the subsidy effectively stays with him. If the adoption is dissolved for some reason or if his adoptive parents die so he must be placed with a new family, he keeps his subsidy regardless of the change. 

Subsidy Benefits

Subsidies include monthly maintenance payments up to the amount a state was paying for the child to remain in foster care. There is no set amount — it's determined on a case-by-case basis — and it's not set in stone. If a child's needs change, his adoptive parents can ask that the maintenance payment is adjusted accordingly.

 

Some adoptive parents are eligible for one-time reimbursements for costs associated with adopting a special needs child. The federal limit for such a reimbursement is $2,000 as of 2016, but individual states are free to cap these payments at lesser amounts and many do. 

Children who have federally-funded Title IV-E subsidies are automatically eligible for Medicaid benefits. But if the child has state-funded adoption subsidy (non-title IV-E), it is the state's decision as to whether that child is eligible for Medicaid. Benefits cover a broad range of medical services, therapy, and treatment.