ADOPTION SUBSIDY IN NEW JERSEY
The adoption subsidy
program in New Jersey began in 1973.
It is based on Federal and State legislation (Chapter 484, Laws of 1983, amending
N.J.S.A. 30:4C-46 et seq.) and State regulations. The purpose of the subsidy is to
attract adoptive families for special needs children who could benefit from an adoptive
family, but who, without some assistance, might not succeed in getting a family who is
able and willing to assume the full cost of providing for their needs. The income of the
adoptive family does not affect the child’s eligibility for an adoption subsidy.
The Division of Youth and
Family Services (DYFS) is responsible for administering the
rules and regulations of the subsidized adoption program. These regulations can be found
in the DYFS Administrative Code Manual, III F,
N.J.A.C. 10: 121-2.
A “special needs” child is
defined by DYFS as a child who is legally free to be placed for
adoption by the state of N.J., and who is reasonably expected not to be placed for adoption
due to the lack of a prospective adoptive home due to any of the following:
A medical or dental condition which will
require repeated or frequent
hospitalization or treatment;
A physical handicap, by reason of
physical defect or deformity, whether
congenital or acquired by accident, injury, or disease, which makes or may
be expected to make a child totally or partially incapacitated for education or
for remunerative occupation.
A substantial disfigurement, such as the
loss or deformation of facial features,
torso, or extremities;
A diagnosed emotional or behavioral
problem, psychiatric disorder, serious
intellectual incapacity or brain damage which seriously affects the child’s ability
to relate to his peers or authority figures, including but not limited to a
The child is one of a group of three or
more siblings (including half siblings)
and it is considered necessary that the group be placed together, or the child
is one of two siblings (including half siblings) one of whom meets the hard to
place criteria, and it is considered most appropriate that the children be
6. The child is 10 years old or older;
The child is over 2 years of age and a
member of an ethnic group for whom
adoptive homes are not readily available.
The child is over 5 years of age and has
been living with foster parents for at
least 12 months, and adoption by the foster parent is the most appropriate
plan for the child. A child under 5 may be deemed special needs and qualify
for subsidy under this subsection if he or she qualifies under # 7 above;
9. Any other condition which may be approved by the Director.
Children with serious
problems in their family background, such as mental illness or drug
addiction, who are otherwise developing normally, are not considered special needs.
However, if in the future, the child develops significant physical or emotional problems
related to his background, the adoptive family may apply for consideration for subsidy
at that time.
Except in situations
involving adoption by a child’s foster parents, a reasonable effort will
be made to place the child in an adoptive setting without providing a subsidy, except where
the Division determines that such efforts should not be made because of the special needs
of the child or the special qualifications of the adoptive parents.
New Jersey’s adoption subsidy includes the following:
through the New Jersey Medicaid Program. In
general, an adoptive family is responsible for meeting the cost of their
child’s medical and psychological needs through the use of Medicaid,
any privately held family health insurance, and their own income,
including the subsidy payment.
Families moving out of state who cannot locate an
provider can request assistance from their local Medicaid office or from the
child welfare agency in their state of residence.
2. Monthly Maintenance Payments and Clothing Allowance. The
monthly amounts of these payments are based on
DYFS’ established board
and clothing rate schedules, which vary according to the age of the child, and
the difficulty of caring for a particular child. At the present time the
maintenance subsidy ranges from $492 per month to $753 per month,
and the clothing allowance ranges from $2.01 per day to $2.85 per day.
For children being adopted by their foster parents, the subsidy amount will
be the same as their foster care maintenance rate. For all children, periodic
increases in rates due to a child’s age or agency approved cost of living
increases result in periodic increases in the subsidy rates.
3. Special Services. Most hard-to-place children do not qualify to
receive additional “special services” under the
subsidy program. However,
in those rare cases when a determination is made that:
The child has unusual, documented
exceptional needs that require
support services that cannot reasonably be expected to be met from
the subsidy board payments; and
No other source or program is
available or able to pay for the
including N.J. Medicaid and the family’s privately held health insurance.
(The special services provider must contact the local Medicaid district
office to determine whether the service is one which the Medicaid
For the above
exceptions, the Assistant Director, and sometimes the DYFS
Director’s approval is required in advance of the rendering of the service.
This approval may be for a one time purchase, or granted on a time limited
basis, with periodic reviews to determine and confirm the continuing need
for the special service. In these situations, DYFS pays for the service at the
Medicaid rate, or a rate less than the provider’s customary rate, when
possible (for example at the provider’s “most favored” customer’s rate.
Payments for special
services for adopted children receiving subsidy
may include, but are not limited to speech therapy, physical therapy,
special training, and the purchase of corrective appliances, when these
needs are justified and cannot be met in any other way.
Tutoring is not part of the subsidy program.
Respite and post-adoption counseling are currently available in the subsidy program.
In general, child
care to enable adoptive parents to work, and summer
camp are not part of the subsidy program. However, children with
extraordinary needs who require these services, and who cannot receive
them from the school or other sources may apply to DYFS for possible
payment or partial subsidy. Approval must be secured prior to initiation
of the service
4. Legal Fees Any child
eligible for adoption subsidy is automatically
eligible for payment of legal fees for finalization of the adoption.
Payment for these fees is $500.00 per child. This covers both the
attorney’s fee and the filing fee. The ARC does not recommend particular
attorneys, but upon request of the adoptive parents, will provide the family
with a list of those attorneys who are willing to provide the necessary legal
services for the amount assigned.
The above requirements and
standards may be subject to exceptions in specific cases
where the Division determines that strict compliance would result in undue hardship, or
jeopardize the health, safety, and welfare of the prospective adoptive parent or child, or
the public generally, except that no exception to these rules may exceed the limitations
provided by Federal or State law.
When seeking an exception
to the policies on behalf of an adoptive parent or child, it is
necessary for a written request to be prepared indicating the hardship or problem that will
be created if the requirement is not waived. The Supervisor of the Subsidy Unit, Office of Resource Family and Adoption Support,
reviews the request, and upon approving it, forwards the signed approval (Form 16-76) to
the DYFS Assistant Director. When the recommendation is for approval,
the Assistant Director forwards the request to the Director for final approval as necessary.
Decisions as to whether a
child qualifies to receive an adoption subsidy, and decisions as
to what the specific provisions of a child’s adoption subsidy will be, should be determined
and approved by DYFS prior to the placement of the child in an adoptive home, and must
be completed prior to the finalization of the adoption.
Once a subsidy is granted, DYFS completes an annual paper review to determine :
that the child/family continues to be
eligible for the subsidy, i.e. that the child
is still being maintained and supported by the family, and
that any special services that were given
on a time-limited or need- limited
basis are in fact still applicable.
A change in the amount of
the maintenance subsidy rate can be made only with the consent
of the adoptive parent. Therefore if, because of the child’s handicapping condition, it is
anticipated that there may be a reduction in the subsidy rate after the adoption takes place,
this possibility must be written into the initial subsidy agreement and agreed upon by all
parties prior to the child’s placement.
The Division of Youth and
Family Services recognizes that parenting a child is a very
expensive endeavor, requiring financial and other sacrifices. The Adoption subsidy is
designed to cover only a portion of the cost of raising a child, and should be viewed by the
adoptive family as partial assistance. Unless there are unusual “special services” required
by the child’s condition prior to finalization of the adoption, the maintenance level set at
finalization, combined with Medicaid eligibility, should be considered the
full and final agreement between the Division and the adoptive family.
Adoption Subsidy Beyond Child’s 18th Birthday
State law and regulation
allow subsidy to continue beyond a child’s 18th birthday when the
child is enrolled in a
full time secondary school program (e.g., high school) or when a developmentally
disabled child is in a special education program through the local school district.
Approval to continue adoption subsidy in these situations may be granted by the Supervisor, Subsidy Unit. By statute, no child may receive
adoption subsidy after turning age 21.
When an adoptee turns 18,
the family must provide the Subsidy Unit with written confirmation
from the child’s school district of the child’s enrollment and the expected date of graduation.
Child Not Residing in the Adoptive
Home: If a child ultimately resides
other than the adoptive parents, the subsidy may continue, provided that the adoptive
parents maintain responsibility for the child’s financial support in an amount equal to,
or greater than the monthly subsidy provided by the Division. The adoptive parent
must be willing and able to provide written proof to DYFS of monies paid toward the
support of the child. DYFS cannot issue subsidy payments directly to the new
caretaker, however, and thus payments will continue to be issued to the adoptive
parents. All arrangements for financial support must be made directly between
the adoptive parents and the new caretaker, with proof of that arrangement
provided to the Subsidy Unit upon request. DYFS shall request updated information at the
time of the annual review.
2. Death of
Adoptive Parent: In the event of the death of the adoptive parent(s).
payments shall be transferred to the new caretaker when the caretaker demonstrates legal
responsibility for the child as a result of being named guardian in the adoptive parent’s will
or having obtained a custody order through the courts.
An adoptive parent or
applicant has the right to request a regional dispositional conference
and/or an administrative hearing if he or she wishes to appeal an adverse action regarding
adoption subsidy payments or services, or the failure of DYFS to act with reasonable
promptness on an application for such payments. Such a conference must be requested
within ten (10) business days of the disputed action or decision, or of being notified of that
decision. After the regional dispositional conference decision is rendered, if the adoptive
parent or applicant is dissatisfied with the decision, he or she may file an application for a
hearing with the Division’s Administrative Hearings unit within 15 calendar days. These
requests will be sent by the Division to the Office of Administrative Law which will conduct
all such hearings. Following receipt of the Initial Decision for the Office of Administrative
Law and the expiration of the applicable comment periods, the Director shall issue a Final
Decision which accepts, rejects, or modifies the Initial Decision. A copy of the Final
Decision will be served on all parties of record.
The money which DYFS pays
as a subsidy to the adoptive parents is considered by the
Internal Revenue Service as non-taxable income. In order for the adoptive parents to claim
the child as a tax exemption, they must show that they provide more than half of the child’s
support from monies other than the subsidy payments. Adoptive parents with questions are
advised to consult the Internal Revenue Service or a qualified tax accountant.
Adoption legislation allows
DYFS to make subsidy payments on behalf of children who are
placed by private adoption agencies approved to provide adoption services in New Jersey,
when these children meet the same special needs criteria outlined above. A private agency
seeking subsidy for a child would forward to the Subsidy Unit:
The Supervisor, Subsidy
Unit reviews the packet and determines the child’s eligibility for subsidy,
using the established definition of hard-to-place. If a negative decision is rendered, it must
be reviewed and confirmed by the DYFS Assistant Director. If the decision is still for denial of subsidy, the agency is advised
in writing of the decision and of the family’s right to appeal, as described above.
If the subsidy is approved,
the Subsidy Unit Supervisor completes the DYFS Form 14-183, entering
the amount of the subsidy, the payment for legal fees, and any special services that will be
provided. DYFS notifies the private agency in writing of the approval and forwards copies
of all forms and 4 copies of the Agreement (DYFS Form 14-184. All copies of this form
must be signed by the adoptive parents, and two of the signed copies subsequently
returned to the Subsidy Unit.
Subsidy payment is
effective the date the application for adoption subsidy is received by
the Division from the private agency, or the date of the placement, whichever is later.
Whenever a private agency
child is from out of state, the child’s eligibility for subsidy from
his home state must be explored by the private agency.
Non-recurring Adoption Expenses
Families who adopt a child
who receives a subsidy may also be eligible to receive up to
$2000 of reimbursement for non-recurring adoption expenses. These are any reasonable
and necessary one-time costs associated with completing an adoption. Examples are:
attorney fees, court costs, cost of birth certificate; cost of home study and supervision;
medical examinations for each family member; cost of travel, food, and lodging related
to the child’s adoption. Examples of costs that are not eligible for reimbursement include:
home renovations; family counseling; and ongoing expenses related to maintaining the
The Application for
Reimbursement for Non-recurring Adoption Expenses
(DYFS Form 14-209) is given to the family at the time of placement. However, the
completed application is not submitted until after finalization of the adoption. The Subsidy Unit Supervisor reviews and approves or rejects expenses for reimbursement.
Another very recent benefit
for adoptive families was signed into law on June 7, 2001.
It is an adoption tax credit (an amount that can be deducted directly from the taxes you
owe in a particular year) for expenses incurred in the adoption of a child (excluding step
parent adoptions). In order to take advantage of this benefit, one’s family income cannot
exceed $190,000; and for incomes between $150,000 and $190,000, only a partial credit
may be claimed. The provisions of the law are as follows:
For the adoption of U.S. children with
special needs, i.e. a child who has been
determined to be hard-to-place, the law provides a flat $10,000 credit regardless
of the expenses incurred so long as the adoption was finalized after 12/31/02.
For the adoption of U.S. children without
special needs, the law provides a tax
credit of up to $10,000 for adoption expenses, even if the adoption is never
finalized. (for adoptions occurring after 12/31/01). In these adoptions the credit
needs to be taken in the year the expenses were incurred.
For the adoption of children from other
countries, effective 12/31/01 the law
provides a tax credit of up to $10,000 for adoption expenses incurred, but only
if and when the adoption is finalized. In an international adoption, the date of
finalization varies, depending upon which type of “immediate relative” (“IR”)
visa is granted.
Taking advantage of the tax
credit does not necessarily exclude you from taking advantage
of the tax exclusion allowed for a formal employer-sponsored adoption assistance plan,
but there is the same income qualification.
Understanding the tax
credit rules in adoption can get complicated. There have been a
few IRS clarifications, and parents can go to the IRS website www.irs.gov
or use Adoptive Families website for access to articles explaining the tax credit in more detail.
Families who have already
adopted a child without receiving an adoption subsidy, and
who now believe that their child qualifies for such a subsidy, may file an appeal for a
reconsideration of their child’s eligibility for assistance under Title IV E. In some situations
they may even apply for retroactive benefits. This is an avenue of appeal for adoptive
parents whose children may not have appeared to qualify as special needs children at
the time of their adoptive placement, but who later, due to causes that occurred prior to their
adoptive placement, developed the same types of problems that would qualify them to
receive a subsidy if they were being adopted now.
On June 25, 1992, the
Children’s Bureau issued a landmark Policy Interpretation Question
(PIQ 92-02) entitled Fair Hearing and Extenuating Circumstances. This established the
method by which states could make case by case exceptions to their subsidy policies to
allow adoptive parents to demonstrate that extenuating circumstances kept them from
completing an adoption assistance agreement prior to legalization of the adoption. The
extenuating circumstances which the adoptive parent need show may be such things as
a prior lack of information about their child which subsequent growth and development
Parents wishing to exercise
their right to apply for subsidy post-adoptively should contact
the adoption section of the Department of Human Services in the state from which their
child came, and explain their interest in filing an appeal for Title IV E adoption assistance.
Information should be sought as to what the state’s current subsidy policies are and how they
can obtain an administrative hearing to present information about their child. Attorneys are
not necessary, but they can be helpful.