Adoption Subsidies

This information was taken directly from Child Welfare Information Gateway

In every State, children with special needs are waiting in foster care for adoptive families. The most recent data 1 suggest that an estimated 115,000 children are available to be adopted from foster care. In the past, the costs of care and services were major obstacles to parents who would otherwise adopt and be suitable parents for children from foster care, and many foster children were not placed for adoption due to this barrier.

The Adoption Assistance and Child Welfare Act of 1980 2 provided the first Federal subsidies to encourage the adoption of children from the nation’s foster care system. These subsidies, known as adoption assistance, serve to minimize the financial obstacles to adoption. In addition, other types of assistance often are available to help with medical care or other services. Adoption assistance serves to remove barriers and contribute to an increase in adoption of children with special needs.

Continue to Adoption Assistance for Children Adopted From Foster Care: Federal Title IV-E Adoption Assistance

What is an adoption subsidy?

Adoption subsidies, also known as Adoption Assistance Payments (AAP), are monthly payments made to parents who adopt children with special needs from the U.S. foster care system. The amount is based on the severity of the child's disabilities and is in no way related to the income of the adoptive parents. Subsidy (along with Medicaid coverage for the adoptee until adulthood) is meant to defray some of the costs associated with raising children. It is not meant to reimburse all expenses. It is not income so it is not taxable. It is not meant to take the place of child support after a divorce. It was designed to make adoption more affordable and therefore more feasible for the typical adult or couple. The average base amount nationwide is about $350.00 per month.

In 1980, Congress created the subsidy program (Public Law 96-272) to encourage foster parents and others to adopt waiting children because permanency offers important lifelong and generational benefits to children. This program has been very successful in three ways:

  • in helping to reform foster care,
  • in encouraging record numbers of adoptions, and
  • in saving tax dollars that would have otherwise been spent keeping children in foster care.

Several studies have shown that even fully subsidized children save the government billions of dollars in the long term by keeping children out of foster care and institutions.

Do internationally adopted children qualify for adoption subsidy?

No. Federal law was originally written to lessen the number of children in U.S. foster care, but a few internationally adopted children did qualify years ago. Changes in federal law and in the laws of the few states that once allowed it have now eliminated this possibility. State laws and services are always changing, however, so all adoptive parents should ask their agency about any other programs for which their internationally adopted children may qualify. Of course, children born outside of the U.S. who may enter the U.S. foster care system if the adoption dissolves (fails) could possibly qualify for an adoption subsidy as they move out of U.S. foster care and into their second adoptive home.

Does my child qualify for an adoption subsidy?

Each child in foster care, whether placed through a private or public agency, should have a Title IV-E eligibility checklist form in his or her file that shows whether or not the child qualifies for the AAP program. In some cases, a child who does not qualify for a federal adoption subsidy may still qualify for a state-funded subsidy.

If the child's risk factors and/or special needs qualify the child for the program, the parents will be asked to sign a contract, called an adoption assistance agreement.

Negotiating a Subsidy Contract

Federal law requires that contracts be negotiated to meet the individual needs of each child. Further, parents have the right to re-open negotiations and ask for a new contract any time the child's needs or the family circumstances change. There is no limit to how often or how many times any contract can be negotiated.

The ideal time to negotiate the subsidy is right before the child moves in, but many agencies don't get to it until the child has been in the home a few days or even weeks. This is fine as long as the contract is backdated to the day the child moved in for good (not just for a visit). This backdating will ensure payment back to the first day of eligibility. Many parents will want to renegotiate again after the child has been in the home a while and they have a better idea of the costs associated with meeting the child's needs.

If a family is told to wait to negotiate until after finalization, they should contact a supervisor for a second opinion because federal law says the contract should be dated from the date the child moves in for adoption. When subsidy contracts are negotiated later (as in cases where families were not told about subsidies), retroactive payments may go back to the date of move-in as well, but, by law, a fair hearing is required first, before retroactive payments can be made.

There are several documents that are "required reading" and a few helpful books.

  • The state subsidy profile sheet (and other fact sheets) that explains what each child might qualify for in the way of subsidy and special services. (You need the profile from the state that is placing the child into adoption.) Share this document with the child's agency.
  • The "Forever Families" report (.pdf format) that explains how benefits differ from state to state.

Access to the voluminous U.S. Department of Health and Human Services, Children's Bureau Child Welfare Policy Manual (the federal laws and rules governing subsidies and negotiation), and

  • Book: "Adoption and Financial Assistance," by Rita Laws and Tim O'Hanlon
  • Book: "Accessing Federal Adoption Subsidies After Legalization," by Tim O'Hanlon.

It is also helpful to have a copy of state laws governing subsidy.

Once you have the documents listed above, gather up the documentation of your child's special needs such as medical records, prescription histories, psychological evaluations, school records, and the information about risk factors and special needs listed in the documents given to you by the adoption agency.

Next, match the level of your child's special needs to the appropriate level of adoption subsidy. (Note: a few states have one level of payment only.)

Example (To Illustrate How to Find the Subsidy Level):

Negotiating Tyrone's Subsidy

John's newly adopted ten year old son, Tyrone, has been diagnosed with severe learning disabilities and asthma. The state that placed Tyrone with John has 4 different levels of adoption subsidy and two age-related increase options. Level 2 includes conditions like asthma, and Level 3 covers certain disabilities of a severe nature, including learning problems. In addition, Tyrone qualifies for one age related increase as a child who is "between the ages of 6 and 12." Each level and age increase represents an extra 50 dollars over the Level 1 base rate of $350.00. Therefore, Tyrone qualifies for $500.00 per month. This is the base rate, plus an extra $50 due to age and an extra $100 due to a Level 3 disability.

John will ask that the contract be written for this amount, and will provide documentation of Tyrone's special needs. The state can agree or can argue that the learning disability is not severe enough to qualify beyond Level 2. If John and the state agency cannot agree on a final amount, John may ask for an impartial review of his case called a "fair hearing."

Eventually, John and the state agree on $475.00 per month. However, further testing reveals that Tyrone's learning disabilities are more serious than once thought. John takes this new documentation and uses it to re-negotiate a new contract at $500.00 per month.

Special Services

Service subsidies or special services are state-funded programs that come and go based on whether or not the funding is present. These services are extra aids that can be negotiated on top of Medicaid coverage and adoption subsidy. Special services vary from state to state. They may include day care, residential treatment, medical costs not covered under Medicaid, respite care, and more. Family circumstances and the child's special needs determine eligibility.

Federal law says that in addition to the child's level of disability, family circumstances can be taken into account during the negotiation process. "Family circumstances" is defined as the family's ability to incorporate the expense of the child's needs into the family budget. (A parent's income may not be used to determine qualification or subsidy dollar amount.) Changes in family circumstance such as losing a job, relocation to another state, and divorce, can also be cited when re-negotiating a contract.

Example (To Illustrate How to Negotiate Service Subsidies):

Negotiating Tyrone's Services

In addition to Medicaid and subsidy, Tyrone may qualify for up to 5 hours per month of respite care and 5 hours per week of tutoring, at state expense. The state decides to give John the maximum of each service because John is a single parent and because Tyrone's learning problems are severe. The amount and type of special services are negotiated on a case by case basis looking at the child's needs and the family's general circumstances (but not income).

When does the adoption subsidy end?

Most end when the child turns 18. (Certain disabled children may be able to qualify for Supplemental Security Income (SSI) at age 18 to keep Medicaid in force.) Some states will keep subsidies for certain children active until age 21, but this should be negotiated before the child turns 18.

Once an adoption assistance agreement is signed, it can be terminated at any time by parental request. However, the State may only suspend the contract under three circumstances, according to federal law:

  • the child has attained the age of 18 (or 21, in some cases),
  • the State determines that the adoptive parents are no longer legally responsible for support of the child, or
  • the State determines that the adoptive parents are no longer providing any support to the child.
  • Subsidies can continue if a child enters residential treatment as long as the parents remain responsible in some way for the child.

Preparing for a Fair Hearing

Should negotiations break down, a family has the right to a fair hearing at no cost to them. To prepare for a hearing, download or print out the NACAC Fact Sheet on this topic. If your case is complex, NACAC may assign a volunteer to help you prepare. If the hearing officer rules against you, you can appeal the decision. The State will tell you how. Bear in mind that deadlines must be met. The amount of time you have to ask for an appeal is limited by State law.

Advocating for Your Child

You are your child's advocate as well as his or her parent. If you do not advocate for your child, no one else will. Children with special needs qualify for these benefits only during childhood, a relatively short period. Certainly, parents have a right to forego adoption assistance, but parents with limited financial resources should not hesitate to negotiate on behalf of their children. Subsidies are not charity. They are your child's entitlement.

~ Rita Laws, Ph.D. © Copyright © 2003 Rita Laws and Nancy Ashe. All rights reserved. No part of this material may be reproduced in any form without written consent.


1 This figure is from the Adoption and Foster Care Analysis and Reporting System (AFCARS) data for 2009. See research/afcars/tar/report17.htm

2 See Information Gateway’s website for more information on this Act: federal/index.cfm?event=federalLegislation.viewLegis&id=22


Child Welfare Information Gateway. (2011). Employer-provided adoption benefits.’' Washington DC: U.S. Department of Health and Human Services, Children’s Bureau.