Adoption Subsidy 101

Purpose: In order to encourage adoption of children considered hard to place, money may be available to the adoptive parents to defray certain expenses. Depending on the child’s eligibility, the money may be available from the federal government and/or the state placing the child.

Funding: Federal money, called “Title IV-E” funds, comes from the Social Security Act (42USC§673) and is available only in cases where the child is eligible for Aid to Families Dependent Children (AFDC) or Supplemental Security Income (SSI). Federal funding is preferable and is combined with the state funds to make up the financial package to the adoptive family. An adoption subsidy can be also be paid totally out of state funds. Although money originates from the feds or the state, it is controlled within guidelines at the local level by the local department of social services.

Eligibility: Child must meet at last one criteria:
1. Physical, mental or emotional condition existing prior to adoption.
2. Hereditary tendency, congenital problem or birth injury.
3. Individual circumstances of child related to age, racial background or sibling group.

Note: Virginia may provide a state subsidy if conditions in numbers 1 and 2, above, existed but were first diagnosed within the year following entry of the final order. Additionally, reasonable efforts must be made to place a child without a subsidy unless child has developed significant ties while in care of foster parents.

Payment Categories:
1. Monthly maintenance payment: Maximum basic payment is tied to foster care rates and as of 7/1/07 the rate in Virginia for ages 0-4 is $486; 5-12 is $568, and 13+ is $721.
2. Specialized monthly rates: Based on extraordinary need of child and/or additional parenting skills needed to raise child. Rates set at local level to ensure services necessary to move child from foster care to adoption.
3. Medicaid services (usually to supplement family medical insurance policy).
4. Additional medical and therapeutic needs: If child’s needs are not covered by Medicaid or reasonably available through public services, funds can be available to assist.
5. Non-recurring expenses: Adoptive parents may be reimbursed for up to $2,000.00 for adoption agency fees, transportation for placement, attorney fees, and court costs.

Conditional Subsidy: If a potential condition exists but has not developed prior to finalization, a condition subsidy may be entered, where monthly and special assistant payments are available if those conditions do develop. Non-recurring expenses can still be paid on a conditional subsidy.

Negotiation: State and Federal money is controlled in Virginia by local social services following state and federal requirements. Their job is to try to convince the family to take the child with no or little subsidy. The adoptive family must negotiate to obtain the needed funds and resources for the child. Adoptive parents should not fear they will lose the child if they ask for a subsidy. The funds are there to encourage placement from foster care to a permanent home and adoptive parents should not have to financially struggle to provide the child with a family.

Termination of Payments: Payments end at 18 years old but may continue until 21 because of physical or mental disability. Each year during subsidy, adoptive family must submit an Affidavit that child remains in their care, the child’s conditions continue to exist and if changes in the subsidy are requested. As long as there is a subsidy agreement, the agreement can be modified.

SUBSIDY AGREEMENT NEEDS TO BE SIGNED BEFORE FINAL ORDER OF ADOPTION. Exceptions to this rule are very limited.

Tax Credit: If there is a subsidy, the adoptive parents may take a Federal Tax Credit of $15,950.00 per child (2023 amount) whether or not they spend the money. There are restrictions on amount of income and you can only receive credit on what you actually pay in taxes spread over a five year period.

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