What is an adoption subsidy?

An adoption subsidy is adoption assistance in the form of financial support for children exiting foster care by way of adoption. In the 1980s, the Adoption Assistance and Child Welfare Act rolled out the first federal subsidies to encourage adoption from foster care. This Act “authorizes each State with an approved plan to make foster care maintenance payments covering the cost of food, clothing, shelter, daily supervision, school supplies, a child’s personal incidentals,” along with liability insurance. Additionally, it required states to create plans for adoption assistance payments as well as conduct studies that assess the impact of the foster and adoption payments and report those findings to congress. 

Nearly twenty years later, in 1997, the Adoption and Safe Families Act addressed concerns about the high volume of children in foster care for extremely long periods of time, many of which faced multiple placements during their time in care. These Acts were created so that safety and permanence can be prioritized if reunification was not possible. Each state and county has different subsidy amounts for varying situations, but they all have the goal of providing permanency and increased hope for kids who are adopted from foster care. The state and federal subsidies usually include Medicaid, childcare, and maintenance payments, but could also include mental health care, behavioral care, and therapies for special needs. Subsidies are just one tool used to encourage families to adopt from foster care.   

If you are considering adopting from foster care and want to learn more about your child’s specific situation, you can contact your caseworker to answer any questions specific to your state and child’s circumstances. Although each state and counties’ policies may differ, subsidy eligibility and amounts are not determined by the family income level, but instead are based on the specific needs of your child. 

Why do subsidies matter?

For the Adoptive Family  

– Financial Obstacles: Prior to the Adoption Assistance and Child Welfare Act, the financial costs of adding a child or sibling set to a family through adoption may have felt unrealistic for middle and lower-class families. While children are in foster care, the state provides for his or her childcare and medical coverage, along with clothing allotment. Without an adoption subsidy, a family would be absorbing this hefty childcare obligation into their monthly budget as well as adding them to their family insurance plans. These costs can add up quickly for a family, creating a scenario where their financial security may at risk if they were to pursue adoption. This could then put the permanency of the child in foster care at risk. The Adoption Assistance and Child Welfare Act was one of the first steps toward offering subsidies that would remove financial burdens that families would assume when adoption occurred.

According to the North American Council on Adoptable Children (NACAC), a study by Children’s Rights determined that “81 percent of preadoptive and adoptive parents said that adoption assistance was important to their decision to adopt, and 58 percent said they could not adopt a foster child without this support that helps them meet the child’s special needs.” An adoption subsidy is especially important for families that are considering adopting a child with significant special needs. Families hoping to care for children with significant physical or medical needs want to ensure that they will have the proper resources at their disposal to continue caring for their child after he or she is adopted out of the foster system.  

– Childcare Costs: If a child is not yet in school, childcare costs can be incredibly expensive. An adoption subsidy can ensure consistency for the child, allowing him to stay with his familiar teachers and care providers as he moves from foster care to adoption. This consistency matters for the development of young children. If their education is disrupted due to the financial burdens families would face assuming those costs, children could experience delays in both social and academic development.  The childcare cost may have benefits for school-age children as well. For working parents who take advantage of before or after school programs for their child, an adoption subsidy would allow children to continue with those programs until the age of 13 in some states. 

For the Child

– Permanence: The first goal and highest priority of fostering is reunification with childrens’ biological families, but that is not always the outcome for kids in care. If reunification isn’t possible, permanence, safety, and consistency is the next highest priority for children in care. An adoption subsidy can increase the likelihood of permanency for children in care by removing some of the financial barriers their adoptive families could undertake when a child exits from foster care. Study after study has been done to show just how advantageous it is for kids to be adopted out of foster care rather than age out of the system. 

One particular study conducted by the Chapin Hill at the University of Chicago found that kids who were able to extend their stay in foster care until age 21 were simply delaying homelessness rather than preventing it. Many of these kids that aged out of the system reported not having a place of their own and staying at a family or friend’s house for varying periods, some just for one night, but for others it could mean 6 months of inconsistent housing. Offering these adoption subsidies to families wanting to adopt children from foster care before they age out of the system can ensure the opportunity for the young adult to avoid potential couch surfing and homelessness that is so incredibly common with young adults that experienced long-term stints in foster care.  

This same study found that less than half of the participants that aged out of the foster system reported having checking and savings accounts. Although this statistic seems simple, the reality is that a family willing to consistently mentor a person into young adulthood can provide incomparable support as these kids begin to navigate independence. This permanence through adoption is not just extended into the child’s adulthood but extends into a multi-generational permanence as they have a family unit to forever learn from and rely upon.  

– Healthcare: There is a wide spectrum of needs that kids adopted from foster care could have. Adoption subsidies ensure that the child’s current medical needs as well as future medical needs can be prioritized. This is especially necessary when children come into foster care with special needs. Children with special needs that require frequent treatments and modifications are much more difficult to place in permanent homes. An adoption subsidy can provide encouragement for families that they will not be left to their own devices to provide for the needs of a child with unique challenges. It may also add a layer of financial security for a family that may encounter changing diagnoses and treatments. A child with Down syndrome may have medical needs that change throughout his or her development, and an adoption subsidy can ensure that the needs of the child are met.

An adoption subsidy that allows for the mental health needs for children who have experienced trauma adds an additional layer of security for a family that may feel ill-prepared to negotiate those mental health challenges. As children grow and gain more understanding about the trauma they experienced, it is advantageous for families to know they have resources available for them to lean into when supporting their children well past their adoption date. There is no timeline for trauma to show its impact. Mental health needs may not appear until adolescence. It is comforting for families to know that their child’s adoption subsidy may include a variety of therapies and medications to help for situations that may arise years after a finalized adoption.

– Interests and Connectedness: Adoption subsidies could also include a maintenance payment that can be used for any needs that may emerge for the child. This could be used towards clothing, school supplies, or even extra-curricular activities. An adoption subsidy can give the child moving from foster care into adoption the opportunity to pursue his or her interests, be it dance or baseball or acting classes. The maintenance payment is intended to give families the opportunity to say “YES” to some of those critical opportunities that allow their adopted children to find fulfilling hobbies and activities that will shape their futures. That could mean opportunities to learn life lessons through activities and the chance to be mentored by coaches or instructors connected to their interests and passions.  

If families are financially equipped to save the monthly subsidy, it could be saved for higher education costs or for establishing independence through car payments or cell phone costs. This, again, is another way an adoption subsidy can be used to help provide opportunities for the child that impact her future further into adulthood. 

For the State 

– Cost Reward Analysis: Research has shown that permanence through adoption for kids in foster care actually costs less than continuing care through the children’s division, not to mention the adverse life-long consequences that can happen when children age out of the system rather than being adopted. When children age out of the system, they are more likely to need state assistance later in life. In fact, the Chapin Hill Midwest Study found that almost one-third of the youth that aged out of foster care reported food insecurity and nearly half reported using food stamps. Mary Eschelbach Hansen, from American University, studied the public value of adoption and stated that “In all, a dollar spent on the adoption of a child from foster care yields about three dollars in benefits” for the public. Adoption subsidies are just one incentive that can pay dividends to both the children adopted and the public that has provided care through the foster system. 

How is this different than an adoption tax credit?

A subsidy is a recurring monthly assistance to families specifically adopting through foster care and is available until the age of 18 in most cases or age 21 in some states. However, the adoption tax credit is awarded to any families that have adopted internationally, domestically, privately, or through the foster system. Families can claim the adoption tax credit up to the cost of the adoption, with a maximum of $13,750. The tax credit is also available for each adoption, so if a family adopts siblings, then there is a tax credit for each child. Depending upon the amount of taxes paid in, it may take a year or two for you to receive the full tax credit. If a family is adopting through the foster system, they would be eligible for the tax credit (even if the children’s division in your state pays for the adoption expenses), as well as the adoption subsidies. Again, the tax credit, in addition to the adoption subsidy provided by the state is further incentive for families that feel the reluctance to adopt from the foster system due to potential financial strain. These benefits can allow families to pursue adoption with peace of mind that they have resources available to them, along with a bit of financial security. 

In all, adoption subsidies for families that plan to adopt from the foster system are absolutely pivotal for kids that have vulnerable futures. They help provide a small measure of financial relief to the family choosing to adopt through medical coverage and childcare subsidies, but for the child that will be adopted, there are incredible and positive ramifications for her stability, permanence, and future. Not only will children have a family that belongs to them forever, but they will also have the chance at different outcomes for their education, employment, and future family trajectory. Obviously, it is the forever families rather than the adoption subsidy that provides these open doors of opportunity to children that have struggled through foster care, but the adoption subsidy can provide enough encouragement for those forever families to leap into adoption, knowing they are on the journey with supportive people and resources available. 

Callie Smothers is a writer, English teacher, and softball coach from the midwest. She and her husband have a family built through adoption, including two ornery, beautiful four-year-olds that are actually 5 months apart. Her family specializes in making messes, creating imaginative stories, and playing hard outdoors as much as possible. Check out her other writings on her Worship in a Warship Facebook page.