Financing Adoption

Learn how to finance an adoption and discover available resources that may help cover adoption costs.

The Cost of Adoption

You may be shocked to learn that there are few costs to adopting a child. Or you may be surprised to discover that not every adoption costs thousands of dollars.

Homestudy and Updates

If you work with a private agency, you will probably be asked to pay a fee for your homestudy. This fee may range from a few hundred dollars to several thousand dollars. Agencies may also charge for updates or addendums to your homestudy, which are required every one to two years. Fortunately, there are many ways to reduce and even avoid those fees:

Adopting a Waiting Child

While families often pay extremely high fees to adopt infants, whether independently or through a private agency, adopting a waiting child is one way to reduce the cost of adoption dramatically. If a family plans to adopt a U.S. child who is in foster care through a public agency, the public agency in the family's county or state will often complete the homestudy at no cost. Adoptive parent preparation classes may be provided as part of the homestudy process. If the waiting child resides in the same county or state as the family, the costs of post-placement supervision may also be covered by the family's agency.

Foster Adoption

Like the adoption of any other waiting child, foster adoption will involve few, if any, costs to the family. If a family is comfortable with the levels of risk and openness involved with a child who first enters the home as a foster child, this may be a way to adopt.

As a foster parent, you will receive a check each month to cover the cost of caring for the child, and the child will also receive medical assistance. If you adopt that child, you will continue to receive financial and medical assistance.

While some agencies have a different homestudy process for foster parents and adoptive parents, others have dual licensing, and will allow families to complete one homestudy approving them for both foster care and adoption, at no cost to the family. Post-placement supervision can be provided by the same agency that supervises the foster care, and may also be free.

An advantage of starting out as a foster parent is the quantity of training and preparation. In addition to the series of classes at the beginning of the process, foster parents receive training on an on-going basis, addressing a variety of parenting issues. To learn more about foster parenting, visit the website of the National Resource Center for Foster Care and Permanency Planning at http://www.hunter.cuny.edu/socwork/nrcfcpp.

Employee Benefits

A growing number of companies and government agencies are offering adoption benefits to their employees. Check with your employer to find out your company's policies. Benefits may include:

adoption information and referral services
legal expenses
agency fees
medical expenses
post adoption counseling
paid or unpaid leave time for the adoptive parent
financial reimbursement

Sliding Scales

When using a sliding scale, an agency sets a fee for its services based on the family's income or ability to pay. If you are exploring working with a private agency, ask if this is an option, even if it is not mentioned in the agency's literature. A sliding scale can make the cost of a homestudy, parent preparation classes, or post placement supervision much more affordable for low or middle income families, allowing them to focus their financial plans on raising their children rather than only on adopting them.

Payment Plans

Adoption agencies do not expect the entire cost of an adoption to be paid "up front." For example, an agency might divide payment into three portions, with one-third of the total amount to be paid when filing the initial application, one- third at completion of the homestudy process, and one- third when the child is placed and the post placement supervision period begins. Budgeted over time, these costs will not make such a big dent in money you may be saving for the costs of raising a child. When fees are linked to a specific service or part of the process, the family is also in a better position when something unexpected happens, such as an agency suddenly going out of business. Ask specific agencies about their payment plans when you are selecting an agency.

Loans & Grants

Loans may make sense to cover large and immediate expenses that may be reimbursed later by your employer, the military, or the government's reimbursement of non-recurring adoption expenses. One source of loans is the National Adoption Foundation which can be accessed through www.nafadopt.org. The National Adoption Foundation also awards grants for families in need.

Loans and travel assistance may also be available through travel agencies or banks. Some airlines offer discounts for adoption-related travel. You may also want to ask your social worker about the Adopt Air program.

Some adoptive families have been helped financially by their religious organizations; others have accepted assistance from relatives. You may be able to think of other possible resources in your own community of support.

Military Reimbursments

The military provides active-duty personnel a reimbursement for most one-time adoption costs, up to $2,000 per child. The maximum amount available in a given year is $5,000, even if both parents are in the military. Reimbursement is made after the adoption is finalized.

A child with disabilities may also be eligible for up to $1,000 a month in assistance under the military's program for persons with disabilities. In addition, the military's Exceptional Family Member Program is designed to ensure that families of children with special needs are assigned to duty stations where the child's needs can be met.

Tax Credits

New federal legislation that increases tax credits and exclusions for all adoptive families was passed in June, 2001. The Hope for Children Act (Public Law 107-16), which took effect on January 1, 2001, provides an adoption tax credit of $10,000 for all adoptions from 2002 and thereafter, and a tax exclusion of up to $10,000 for employer-provided adoption benefits, effective in 2003. Prior to these dates, families are entitled to a tax credit of up to $5,000 and a tax exclusion of up to $5,000 ($6,000 for children with special needs).

A tax credit is an amount that is subtracted from one's total tax liability, and is therefore more valuable than a tax deduction. Knowing that tax relief is forthcoming may allow a family to pay attorney fees or court costs, which can later be offset by the tax credit.

Information is also provided in Internal Revenue Service Publication 968: "Tax Benefits for Adoption; For Adoptive Parents", available from the IRS at www.irs.ustreas.gov. Tax laws can change at any time, so families interested in new information on tax credits may want to stay informed about pending legislation.

Criminal Clearances

Criminal clearances are required as part of the homestudy process. Required criminal checks may include:

Federal (FBI) Criminal History
State Police Criminal History
Child Abuse Clearances
Domestic Violence or Sexual Offense Clearances
Fingerprints

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Usually the family must pay for background checks required by its state. They are not generally expensive but do vary from state to state. Try these ideas to pay for the clearances your state requires:

One-Time Non-Recurring Expenses
Employee Benefits
Military Reimbursements
Parent Preparation

Many adoption agencies and many states require that families complete adoptive parenting preparation classes or training. There may be no fee, as a public or private agency may cover this cost, especially if the family is adopting a waiting child. If not, this training may be included in the cost already paid for the homestudy, or the family may be expected to pay for it separately. Here are some possibilities for reducing or eliminating this cost:

Foster Adoption

Foster adoption will involve few, if any, costs to the family. If a family is comfortable with the levels of risk and openness involved with a child who first enters the home as a foster child, this may be a way to adopt.

While some agencies have a different homestudy process for foster parents and adoptive parents, others have dual licensing, and will allow families to complete one homestudy approving them for both foster care and adoption, at no cost to the family. Post placement supervision can be provided by the same agency that supervises the foster care, and may also be free.

Remember that for a U.S. waiting child you should not be asked to pay high fees. When you do encounter fees...

Compare fees among agencies and, when the time comes, among attorneys.
Clarify in writing the fees that are expected and what they cover.
Use the suggestions provided in this section to minimize fees.
Clarify when payments should be made.
Don't pay everything in advance.
Keep photocopies of all paperwork and keep receipts for all expenses.

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