Adoption Subsidy in the United States

Adoption Subsidy in the United States

In years past, many children were deemed to be "unadoptable" and languished in foster care. In part, this was due to a lack of financial resources available to support these children in adoptive homes. A classic example of this kind of child is one with elaborate medical needs. Most families could not consider adopting such a child since they would be unable to meet the high cost of medical care upon which the child is dependent.

Beginning in 1968, the State of New York started an experimental program where case benefits were provided to families adopting special needs children. Gradually, the program was replicated in other states. However, there was a financial disincentive for states establishing subsidy programs since the states issuing adoption subsidies were solely responsible for meeting the costs of maintaining the child. Federal programs only offered financial assistance to children in foster care.

Passage of Public Law 96-272

The future of many special needs children changed dramatically with the implementation of P.L. 96-272: The Adoption Assistance and Child Welfare Act of 1980. The Act required all states to establish an adoption subsidy program and remove the financial disincentives to states by providing federal dollars to be used as a portion of adoption subsidy payments for children previously eligible for the Title IV-E Foster Care Program. Since 1980, the program has grown dramatically – from no federal funding in 1980 to $1.2 billion in 2000.

Amendments to P.L. 96-272

Public Law 96-272 has been modified in recent years. The Tax Reform Act of 1986 (P.L. 99-154) amended the Title IV-E Adoption Assistance Program by requiring States to reimburse adoptive parents for the nonrecurring expenses incurred in the adoption of a child with special needs. And, the Adoption and Safe Families Act of 1997 amended the original law by allowing children who were previously eligible for Title IV-E adoption assistance to retain their eligibility for the program in a subsequent adoption in the event of the adoptive parent's death or dissolution of the adoption.

On September 24, 2001, the federal Children's Bureau released a Child Welfare Policy Manual (CWPM) that helps clarify many aspects of the Title IV-E Adoption Assistance Program. For the first time, parents and professionals can find current, accurate information on-line pertaining to adoption subsid issues, and other child welfare topics.

Subsidy as a Tool

Subsidy programs have proven to be a very important tool in the placement of children with special needs. Subsidies enable a whole new population of families to consider special needs adoption. As a result, thousands of children have grown up in homes, not systems.

Unfortunately, many potential adoptive parents of special needs children do not have full information about adoption subsidies. Sometimes, adoption workers fail to mention the program to prospective adoption parents. Other times, adoptive families do not see the need for a subsidy at the time of adoption. Either way, children are ultimately those at risk.

Federal vs. State Subsidy Programs

Generally, if special needs children can meet certain eligibility requirements, they can receive either federal or state adoption assistance. The federal Title IV-E program is open to those adoptive children who can walk through one of four eligibility "doors":

  1. Aid to Families of Dependent Children (AFDC)
  2. Supplemental Security Income (SSI)
  3. A baby born to a minor parent who is in foster care
  4. A child who received Title IV-E Adoption Assistance in a previous adoption, but whose original adoption was dissolved or the adoptive parents died

NOTE: Even though AFDC was eliminated (August 1996), eligibility for Title IV-E is determined based on the states' AFDC eligibility standards as of June 1, 1995.

Children who do not gain eligibility through one of these four ways may be non-IV-E-eligible and receive a state subsidy financed with state or local funds (i.e., without federal reimbursement). The benefits provided under state programs are often—but not always—similar to benefits provided using federal funds.

Adoption assistance programs vary significantly from state to state. If you would like to review detailed information about a state's program, visit NACAC's State Profiles section of our site. You can also review a chart that compares the major aspects of states' adoption assistance programs.

Special Provisions

Annual Review of Assistance Agreements

Most states review assistance agreements on an annual basis. These reviews are used to ascertain whether the child in question is still under the care of the adoptive family, whether the child's or family's circumstances have changed in any way, etc.

Modification of Assistance Agreements

In addition to changes reported during the annual review, families may also ask that their assistance agreement be modified and/or re-negotiated at any time if their or the child's situation changes significantly.

Kinship Care Adoptions

Adopting relatives are entitled to all benefits and/or services that other adopters receive.

Independent Adoptions

Independent (i.e., adoptions facilitated by attorneys without agency involvement) adoptees with special needs are ineligible for subsidy.

International Adoptions

The Title IV-E Adoption Assistance Program was created to move children from the U.S. foster care system to permanent adoptive homes. However, in a few states, families adopting international children have been granted reimbursements for nonrecurring adoption costs (up to $2,000).

Deferred Assistance Agreements

Families may sign deferred assistance agreements that establish an initial maintenance payment of $0/month. The benefit of a deferred agreement is that the amount can easily be altered if specific needs arise in the future. These types of agreements can also be used in conjunction with Medicaid coverage in many instances.

Administrative Fair Hearings

In all cases, parents have the right to appeal any adoption assistance decision they deem unfair or unfavorable. Such appeals are generally initiated by using a state's designated fair hearing process. While specific processes vary from state to state, it generally involves filing an appeal through the head of the local child welfare/adoption agency. The local agency is obligated to inform parents about the steps included in the process. The family may wish to be represented by an attorney and/or seek the advice of other organizations or special needs adopters when undertaking an appeal.

For additional information, please contact NACAC's Adoption Subsidy Resource Center at 800-470-6665, 651-644-3036, or e-mail at


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