What We Know (and Don’t Know) About Adoption Subsidies

Adoption subsidy is governed by Federal Law under Title I-V E of the Social Security Act and State Law under Social Services Law 451 and regulations of the New York State Office of Children and Family Services (OCFS) under 18 N.Y.C.R.R. 421. There are many complexities and exceptions, even exceptions to exceptions. What follows is a general

ELIGIBILITY: Eligibility for adoption subsidy is determined by the child’s legal status. Guardianship and custody of the child must have been granted to an agency, public or private, by surrender or order terminating parental rights before the child’s eighteenth birthday. Also eligible is a child in foster care whose parents or only known parent is deceased.

COMPONENTS OF SUBSIDY: Subsidy consists of maintenance payments, Medicaid eligibility and reimbursement of adoption related expenses.

MAINTENANCE: Maintenance payments are paid monthly until the child’s 21st birthday unless the child is no longer dependent on his or her adoptive parents for support at earlier date. For more about this, see “You May No Longer Be Entitled to a Subsidy” at the bottom of this article. Each year, adoptive parents are required to verify to the Social Services District paying subsidy that they continue to support the child.

Maintenance payments may be paid in cases where a freed child in the custody of a New York agency is adopted by parents in another state.  In addition, for parents who adopt in-state and later move out of New York, subsidy payments will continue.

If the adoptive parent dies, maintenance payments are held in abeyance until a person becomes the child’s guardian. Payments retroactive to the date of death are paid to the guardian and monthly thereafter. A person becomes a guardian if named as guardian in the adoptive parent’s will, if any, or by Court order of guardianship. A Designation of Back-up executed by an adoptive parent during the finalization process does not confer guardianship. If an adopted person is orphaned after his or her eighteenth birthday, subsidy will be paid directly to the adoptee or to a person he or she names as a representative payee, subject to agency approval.

Maintenance cannot be decreased, except with the consent of the adoptive parents, but will increase automatically as the child moves into an older age bracket or there is an increase in the applicable district foster care board rate. Adoption subsidy rates are based on the foster care board rates in the child’s social services district of origin and differ significantly in the 58 social services districts in New York State. Each local social services district is allowed to set its own rates. The state only determines the maximum amounts it will reimburse to the local districts. There is no minimum.

A child who is eligible for adoption subsidy in New York can receive no less than 75% of the applicable local district foster care board rate in accordance with Title 18 NYCRR., Part 421, Section 421.24 (c)(1-13). For a child placed outside the district, the applicable board rate can be either the rate of the adoptive parent’s county of residence or the child’s district of origin. For a child placed outside New York the applicable rate is the rate of the child’s district of origin.

The income of the person(s) adopting a special needs child cannot be considered in determining whether or not to enter into a subsidy agreement. Income may only be considered for the purpose of determining the amount of the monthly payment. Local districts may elect to provide all subsidies at either 1) 100% of the local board rate regardless of income or 2) a lesser amount (not less than 75% of the applicable board rate) based on the prospective parent(s) annual income. They determine the amount by a formula that takes into account family size and income as it relates to the State Income Standard, within 275% of the federal poverty line. Whichever method a district uses, it must use the same method for all subsidized adoptions. 24 districts (including the City of New York) pay maintenance at the applicable county board rate and 34 pay less but no lower than 75% of the county rate

MEDICAID: Medicaid Authorization or Medical Assistance for IV-E eligible handicapped children continues until their 21st birthday. If the adoptive parents have enrolled the child on their insurance policy, Medicaid covers qualifying expenses not paid by any other insurance of the parent(s). Medical Assistance or Medicaid for hard-to-place children is not continued past the eighteenth birthday unless there is a determination of financial need.

What determines whether the child is IV-E were his circumstances at the time he was placed into foster care: (i) he must have been receiving or was eligible to receive public assistance and (ii) within 60 days after placement, a court made an order approving placement after determining reasonable efforts had been made to prevent the child coming into foster care. If the child is not IV-E and hard-to-place, he will receive Medicaid only if one of his adoptive parents is 62 or was subject to mandatory retirement within five years after the child was placed in the home for adoption.

If a non-IV-E child is handicapped, he will receive Medicaid until eighteen. At that time adoptive parents must verify to the district that the child’s handicapping condition still exists. If so, the district will arrange for the child’s medical expenses to be paid until 21 by New York State under COBRA (Comprehensive Omnibus Budget Reconciliation Act). It differs from Medicaid not in coverage but in mode of payment. Either the adoptive parents pay the child’s expenses out of pocket and submit receipts to the district or the district establishes an account to which providers submit their bills directly. Medicaid is not affected by amelioration, remission or cure of the handicapping condition and may be used for other conditions as well.

In an adoptive parent resides in or moves to another State, upon receiving notice to that effect, New York Adoption Services (NYSAS) will contact appropriate officials in the state of residence to invoke provisions under the Interstate Compact on Medical Assistance Act for Medicaid in the local state of residence to be substituted for New York Medicaid. That may or may not change coverage according to local state standards.

REIMBURSEMENT OF ADOPTION RELATED EXPENSES: Adoptive parents and the social services district must sign a reimbursement agreement before the date of finalization. The reimbursable amount is a maximum of $2,000 per child and includes reasonable attorney fees and costs for medical examinations that must be submitted to the Court. If the adoptive family lives out-of-state but finalizes in New York, also reimbursable are expenses for transportation, lodging and meals in a restaurant. Expenses for other children or third parties accompanying the adoptive family are not reimbursable. To claim reimbursement, adoptive parents must submit original receipts.

QUALIFYING FOR SUBSIDY AND ELIGIBILITY CRITERIA: Eligible children must qualify for subsidy under one of two categories: (i) hard-to-place or (ii) handicapped.

HARD-TO-PLACE: The child has at least one of the following demographic characteristics:

  • The child is one of a group of two siblings placed together, or with a sibling already adopted, one of whom is five or older, a member of a minority group (Black or Hispanic) and otherwise eligible for subsidy; or
  • The child is a sibling to a child the adoptive parents have already adopted and the child to be adopted is aged five or older, or the child to be adopted is a member of a minority, or the already adopted sibling is eligible for a subsidy; or
  • The child is one of a group of three siblings placed together; or
  • The child is eight or older and a member of a minority group; or
  • The child is ten or older; or
  • The child is not placed in an adoptive home until six months or more after being freed for adoption or after disruption of a prior adoptive placement; or
  • The child has lived with the adoptive parents for twelve or more months before they sign an Adoptive Placement Agreement (APA) and has formed such an attachment to them that placing him or her in another home would adversely affect his development. Note: An Adoptive Placement Agreement can be signed only after the child is freed for adoption.

HANDICAPPED: A child has a specific physical, mental or emotional condition or disability, including a developmental disability, of such severity and kind as would constitute a significant obstacle to adoption including by way of illustration and not limitation:

  • Requires repeated or frequent hospitalization, treatment or follow up care or
  • Has a  physical defect or deformity, whether congenital or acquired by accident or injury, which makes or is expected to make him partially or totally incapacitated for education or remunerative employment or
  • Has a  substantial disfigurement or loss or deformity of facial features, torso or extremities or
  • Has been diagnosed as having a psychiatric or personality disorder, mental retardation or other serious intellectual incapacity or brain damage which seriously affects his ability to relate to peers or authority figures.

APPLICATION PROCESS: An adoptive parent need not wait until the child is legally free to apply for subsidy. The application may be submitted while a proceeding for termination of parental rights is pending. The application consists of a twelve page Adoption Subsidy Agreement signed by the adoptive parent and district and, in the case of a handicapped child, clinical reports documenting the qualifying condition. The district forwards the Agreement to the New York State Adoption Service (NYSAS) in Albany. It either approves or denies the application and returns it to the district.  Denial of an application for a handicapped subsidy almost always relates to the sufficiency of the clinical report. In such cases, the Agreement may be resubmitted with a better report.

QUALIFYING HANDICAPPED CHILD FOR RATES BEYOND BASIC: The most contentious part of the subsidy process is qualifying a handicapped child for a special or exceptional rate. Application for a special or exceptional rate must be approved by the district and NYSAS:

To qualify for a special rate:

  • the child suffers from pronounced conditions as a result of which a physician certifies the child requires a high degree of physical care; or
  • the child has been diagnosed by a qualified psychiatrist or psychologist as being moderately developmentally disabled or having a behavioral disorder to the extent he requires a high degree of supervision.

To qualify for an exceptional rate:

  • The child is certified by a physician to require 24-hour-a-day care by a qualified nurse or persons closely supervised by qualified nurses or physicians, or
  • The child has severe behavior problems characterized by the infliction of violence on themselves, other persons or their physical surroundings and has been certified by a psychiatrist or psychologist as requiring high levels of individual supervision in the home, or
  • The child has been diagnosed by a qualified physician as having severe mental illness, such as child schizophrenia, severe developmental disabilities, brain damage or autism, or
  • The child has been diagnosed by a physician as having acquired immune deficiency (AIDS) or human immunodeficiency virus (HIV)-related Illness

Qualifying for special or exceptional rates is based entirely upon the report of a clinician. Adoptive parents have a role in preparation of the clinicians report and, by maximizing participation, can help reduce or eliminate many common mistakes or pitfalls. The report must be current, not an existing or old one and must be signed by a physician, psychiatrist or psychologist as appropriate, not by a nurse practitioner, speech therapist, educator, social worker or other health care provider. The child’s Individualized Education Plan is insufficient.

The report should begin with acknowledgment that the child is being examined for adoption subsidy purposes and because the adoptive parent may require extra resources to take care of the child’s special or exceptional needs. It should contain:

  • a record of the clinicians examination with a description of tests administered, test results and diagnosis(es)
  • a description how the child’s problem affects his daily life with a summary of the frequency and severity of episodes
  • pattern and frequency of intervention by emergency room visit or hospitalization
  • dosage and frequency child must be administered prescribed medications
  • current treatment and treatment plan and obstacles to treatment
  • and, for applications based upon HIV related illness, the results of a PCR test

The child’s condition/diagnoses alone is not controlling. For instance, some children with an attention deficit hyperactivity disorder may be controllable by medication, some may require therapy in addition to medication, and some may not be controllable with either. Whether a child qualifies for a special or exceptional rate depends upon how the condition manifests itself in daily life and the demands it places on the time, effort and money of the adoptive parent. The clinical report should include facts, which only adoptive parents can provide, demonstrating why the child requires a high degree of physical care or supervision.

It is not necessary for an adoptive parent to have the experience, specialized training and proven ability to provide the supervision the child needs or ability to accept assistance and guidance and work with clinicians treating the child in order to obtain approval for a special or exceptional rate subsidy. However, it is both relevant and highly persuasive for a report to describe how the adoptive parents are involved and what they do to help the child, as for example, attending therapy sessions, going to the library and reading books, taking classes and  involving herself and the child in groups and after school activities. Presenting themselves as participants in the child’s treatment is highly significant.

An adoptive parent should accompany the child to the examination to establish a relationship with the clinician and provide information directly to the clinician.  Parents should not rely on a caseworker, relative or babysitter to provide information which may be cursory or incomplete. The clinician should know from the adoptive parent firsthand about the child’s behavior and what it is like to live with the child on a daily basis. The adoptive parent also should make an appointment to review the report, not only to more fully understand the clinical picture but also to correct or augment language.

The clinician also should observe the child firsthand not merely state “the adoptive parent reports that…” Reports of mental or emotional disorder must contain entries in all of the required 5 DSM axis:

  • 1: psychiatric disorder by number
  • 2: psychological disorders
  • 3: medical conditions
  • 4: cause — what are the psychological stressors that trigger troublesome behavior
  • 5: global assessment of functioning or GAF which should not be above 60.

What follows is a clinician’s report that qualified a child for a special rate based on asthma:

“Samantha B has been a patient of mine since her arrival in Puerto Rico three years ago. I have diagnosed her as having asthma (Code 493).  It is chronic respiratory disease that cannot be cured only controlled. In view of her continual symptoms and frequency and severity of asthmatic attacks which limit her physical activity, her condition is severe persistent. I have prescribed and she follows a regularly scheduled daily regimen of preventative and anti-inflammatory medications, including such corticosteroids as Singular, Pulmocit, and Qvar and most recently, in view of her more frequent attacks, Prednisonlone the anticholinergic Pratropium. While effective in reducing symptomology for two to three weeks at a time, her acute asthmatic attacks recur frequently, characterized by wheezing, chest pain, bronchospasms and difficulty breathing.  At the onset of an attack, Sally C immediately brings Samantha to my office and I have seen her in crisis approximately once monthly for immediate relief by administration of such bronchodialators as inhaled Albuterol among others.

Samantha was hospitalized for three days in August 2013 following a severe attack.  That is her first hospitalization and suggests she is developing tolerance to long-term control medications. As the severity of her attacks has increased, I prescribe a treatment of masking and inhalation of Albuterol every for to six hours and see her in my office after five days into her treatment.  During the fifteen day treatments, Samantha stays home form school and is monitored by Mrs. C.

Samantha’s asthma places extra demands on Mr. and Mrs. C.  During nocturnal attacks, Mrs. C is awakened, administers quick-relief medication and brings Samantha to my office first thing in the morning. She must monitor Samantha s masking and constantly watches for the first signs of an attack in order to bring her to my office immediately before the attack worsens.  In my opinion, Samantha requires a high degree of care beyond what normally is to be expected with asthma sufferers.”

PAYMENT OF SUBSIDY: Subsidy payments begin upon finalization of the adoption. There may be a gap of one or two months before adoptive parents receive their first check due to administrative tasks in setting up their account. Payments are retroactive to the date of finalization. On rare occasions the district may misplace the paperwork and, if an adoptive parent has not already been contacted by the district’s subsidy unit, it is prudent to call after 45 days to make certain the paperwork is in order.

In New York City, the caseworkers in the Administration for Children’s Services (ACS) Adoption Subsidy Unit are divided by surname of the adoptive parents.

If the adoptive parents are married, payments (whether made by direct deposit or check) are usually made to the order of both spouses, though districts have discretion to make payments payable to only one spouse. If the adoptive parents divorce, the parent retaining custody of the child should inform ACS or DSS and have payment made to her or his order only. If the child is adopted by unmarried cohabiting persons jointly, payments will be made to the person who was the child’s certified foster parent.

LEGAL STATUS OF SUBSIDY PAYMENTS: Although paid to the adoptive parent, subsidy is a resource for the child and not income to the adoptive parents for the purpose of calculating support obligations. As a public welfare benefit, maintenance also is exempt from income tax (and FICA, which means that maintenance payments do not count toward future Social Security benefits).

Maintenance may be spent as adoptive parents see fit without having to account to the government and without government oversight. While generally not income for tax purposes, it may be considered income for such other purposes among others as determining eligibility for subsidized housing or for calculating rent. Government agencies, financial institutions, mortgage lenders, colleges and others processing applications for financial assistance have different definitions of income that in some instances include maintenance.

POST-FINALIZATION APPLICATION FOR SUBSIDY OR INCREASE IN SUBSIDY RATE: Adoption subsidy must be applied for and approved prior to the finalization of an adoption. There are instances post-finalization where a hard-to-place child begins to manifest medical, emotional or behavioral disorders. Adoptive parents may apply through their district for a change of subsidy from hard-to-place to handicapped. The advantage of doing so is that a hard to place child will become eligible for Medicaid if not IV-E eligible. The post finalization application must be accompanied by the report of a clinician who certifies to a reasonable degree of medical certainty that the condition existed before finalization and that the adoptive parents were not aware of it.

Similarly, adoptive parents may apply post-finalization for a rate increase to special or exceptional. Since the condition was known before finalization, what the clinician must certify is that it has worsened post-finalization. The process and procedures are the same as when applying for a subsidy. An approved post-finalization application is retroactive to the date the application was submitted, not to the date of adoption.

FAIR HEARING: An adoptive parent aggrieved by denial of his subsidy application, or application for special or exceptional rates, may request a Fair Hearing before an Administrative Law Judge (ALJ). The request must be made in writing within 60 days of denial to Ms. Beth Mancini, Bureau of Special Hearings, New York State Office of Children and Family Services, 52 Washington Street, North Building, Room 322, Rensselaer, New York 12144-2796. Adoptive parents must appear, with or without a personal representative, witnesses or attorney. Also appearing will be a representative of the district or NYSAS.

Technical rules of evidence followed in a court do not apply, except unduly repetitious evidence or testimony or cross-examination may be excluded at the discretion of the ALJ. A written transcript or recording of the hearing and documents received into evidence constitute the record. Anything not in the record cannot be considered by the ALJ when rendering his or her decision. He or she must do so within 60 days after the close of the hearing. The standard of proof is less than the lowest standard applied in court — a fair preponderance of the evidence. A decision after fair hearing need only be supported by substantial evidence. An adoptive parent may bring and offer into evidence reports not included in the subsidy application.

It is highly recommended that adoptive parents retain an attorney or at least consult with an attorney before the hearing. What mostly is at issue in denial of special or exceptional rates is the sufficiency of the clinician’s report. An attorney may conclude the report is insufficient as a matter of law and may recommend the adoptive parent  withdraw his request for a fair hearing and submit a new application. An advantage of being represented by an attorney at a fair hearing is that he can subpoena documents and report in the possession of the district or NYSAS in advance of the hearing. Having to read them for the first time when produced at the hearing does not afford time to properly prepare the case.

If an adoptive parent has not retained an attorney and speaks for himself, the ALJ has a legal obligation to make certain the adoptive parent, especially if he has difficulty with English, understands the nature of the issues involved in the hearing and assists the parent in eliciting information to make a complete record. A failure to do so is reversible by a court for failing to accord the parent minimal due process rights.

APPLICATION TO COURT TO ANNUL ADVERSE FAIR HEARING DECISION: Within four months after the decision is rendered, an adoptive parent aggrieved by the decision may also appeal to the State Supreme Court pursuant to Article 78 of the Civil Practice Law and Rules. The grounds for appeal are not whether the decision was right or wrong on the merits but whether the ALJ made his decision in violation of lawful procedure, committed an error of law, was arbitrary or capricious or whether it was supported by substantial evidence. It is suggested that parents consult an attorney if they would like to pursue this option.

YOU MAY NO LONGER BE ENTITLED TO A SUBSIDY IF:  If the adoptive parents are no longer providing any financial support to the child prior to the child’s 21st birthday, they may no longer be entitled to the adoption subsidy.  The threshold is generally whether or not the parent is providing any meaningful support. This is admittedly a grey area, as New York state law stipulates that parents are financial responsible for the children until their 21st birthday. Further, it is unclear whether a subsidy ended because a child left the home, for example, could be reinstated if the child returned home prior to their 21st birthday.


  1. An Adoption Subsidy Agreement is a legal contract. Often for convenience a caseworker will ask an adoptive parent to sign a blank copy that he or she plans to fill in later. Don’t do it! Sign the Agreement only after it includes all material information.
  2. Always keep a copy of the approved Agreement. Obtain one before finalization from the caseworker or from the adoption attorney.
  3. If a child qualifies for subsidy as hard-to-place, he must have been living in the home for twelve months before the Adoptive Placement Agreement is signed. Do not sign it before then.
  4. If a child qualifies for subsidy as handicapped, obtain a copy of the clinician’s report included in the subsidy application. It establishes a base-line for use in a post-finalization application for a rate increase. New caseworkers especially, but also experienced caseworkers as well, may take the position that adoptive parents are not entitled to a copy. That is incorrect. As a matter of law adoptive parents are entitled to receive, and agencies must provide, all evaluations or reports regarding the child. That the clinician’s report is being used for subsidy purposes is irrelevant.
  5. Clinical examinations are usually arranged by the district or agency. However, if parents are not satisfied with the initial report they may have the child examined by a second clinician — but at their own expense. The cost is reimbursable as a non-recurring adoption expense. Ask that it be included in the subsidy application in lieu of the first report. If it is not included and the application is denied, an adoptive parent should bring it to the fair hearing. It will be included in the record of the fair hearing, as will other reports, even if it was not relied upon in the decision to deny the application.
  6. In his report for use in a post-finalization application involving a hard-to-place child, the clinician must certify the condition existed before finalization. A failure to do so may result in the application being denied.
  7. It may be preferable for an adoptive parent to not take an adverse decision to fair hearing. It all depends upon the sufficiency of the clinical reports. As significant as the facts, is how they are presented and the language used. Rather than litigate, it may be preferable to get a better report and resubmit the application.

Source: 2007 Coalition conference workshop presentation by Michael J. Neff, Esq, former NYSOCFS Adoption Legal Specialist. © 2007. Reprinted and updated with permission.

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