Does Insurance Cover Adoption? An In-Depth Look

Adoption is an avenue many parents choose to grow their family. Oxford Dictionary defines adoption as “the action or fact of legally taking another’s child and bringing it up as one’s own.” There are many reasons why a parent may choose to grow their family through adoption, from fertility issues to familial issues to social concerns. While the reasons may vary, one thing is certain: the adoption process comes with some of its own financial hurdles. 

The expenses associated with adoption typically include any of the biological parents’ expenses, along with the adoptive parents. The adoptive parents’ expenses usually include obtaining a study of your home, securing an attorney to prepare the legal documents, completing potential renovations to your home, traveling to visit with the child, and preparing to care for the child for the duration of their childhood.8

It is also important to note that the type of adoption that you choose also impacts what adoption fees you will be incurring. For example, adopting a child internationally versus domestically will have differing costs. Along the same thought, many social service agencies cover or reimburse the expenses of adopting a child in foster care.4 

There are several types of adoptions, which differ significantly in terms of their associated costs. For example, if you foster to adopt through social services, those costs are typically under $2600. If you choose to adopt domestically within the U.S., those fees range from $20,000 to $45,000. If you choose to adopt internationally, you typically look at costs of $35,000-$70,000. Families may also choose to have a step-parent or second-parent adoption in order to secure the legal rights of that second parent. Those adoptions typically cost between $350 and $2,00010

Breakdown of Adoption Costs

Foster-to-Adopt	Domestic	International	Step-Parent / Second Parent
Price Range	$0 – $3,000	$30,000 – $60,000	$25,000 – 45,000	$350 – $2000

With adoption costs ranging anywhere from $0 to $50,0002, it’s common to ask if there are any types of insurance that cover adoption costs. Before researching the types of insurance that would fit your situation, it is important to explore how you wish to pursue adopting a child and reach out to agencies to gather information about your individual expenses.

Types of Insurance Coverage for Adoption

There are some insurances that you can purchase to assist with protecting your assets against the unexpected events that sometimes come along with adoption. These are called “adoption cancellation insurance” and “adoption disruption insurance.”1 In the event that a birth parent does not follow through with an adoption, the adoption cancellation insurance will help recover some of the expenses paid by the potential adoptive parents. Likewise, if an adoption does go through, but it is disrupted or not finalized over a specified period of time, adoption disruption insurance will help recover qualifying expenses. There are typically strict criteria in order for either insurance to be applicable, as the adoption process is not as predictable as most folks would like. 

Depending on your policy stipulations, you may also be able to borrow against your life insurance or take out a home equity loan to offset the costs of the adoption. Of course, this will likely come with some sort of a financial obligation to pay back these loans.

View this article if you are curious about adopting insurance.

What Does Insurance Typically Cover?

As described above, most insurances will typically cover fees that you have paid towards an adoption that has since been disrupted or has not become finalized. Once an adoption is finalized, you will have the ability to add that child to your auto and health insurance to continue their care. As we know, raising children in today’s society comes with its own set of costs. It is estimated that caring for a child costs parents roughly $21,000 per year8, not including activities and extracurriculars as that child grows. 

Limitations and Exclusions

Some limitations that you may experience are if you adopt a child that has pre-existing health conditions. Those conditions may limit their ability to be added to your health insurance or cause them to have a higher premium than another child may. Additionally, children who are adopted through foster care are typically eligible for Medicaid. In order for their medical expenses to be covered, they may need to utilize a medical provider that accepts Medicaid, and, at times, it can be difficult to locate a provider that is both available and accepts Medicaid. 

Additionally, children who have been in foster care have experienced loss and trauma and have a higher chance of increased mental health disorders. They also may have medical needs that have gone unmet and now need to be met or have complications as a result of them. This likely results in additional appointments and needs that may surpass their health insurance plans, resulting in extra costs to you. 

Along with these costs, the expenses that a birth mother incurs is also typically paid for during adoption. These can range from childbirth and recovery costs, maternity clothes, transportation and housing. If a birth mother has their own health insurance, the fees that would be paid by the adoptive parents are typically limited to co-pays. However, if they do not, these costs are typically spelled out in the adoption agreement. Additionally, the adoptive parents are responsible for the birth parent’s legal fees on top of their own, which can raise their total legal fees upwards of $4,500.11It is rare for the adoptive parents to directly pay the birth parents, and the adoption agency usually handles this transaction. 

Here is a related video that may be helpful if the adoption fails:

Alternative Financial Assistance Options

While not all adoption and childcare expenses are covered by adoption, do not let that prevent you from completing the process. Several states provide adoption insurance coverage, and federal grants are available. Children who are adopted through foster care, if qualified, have the opportunity to receive ongoing health insurance, financial assistance, and college tuition assistance. 

Just like when a new child is born into your family, there are tax benefits to growing your family via adoption. Adoptive parents typically qualify for tax credits in order to cover the expenses associated with the adoption, as well as deductions towards the continuing costs of raising a child. These benefits may require you to pay the expenses ahead of time and receive the tax credit at the end of the tax year for reimbursement, but they are designed to provide relief towards the financial stressors that come along with the adoption process. 

Your employer may also have options available to you, so we would encourage you to reach out with your own individual situation.5 Many employers offer financial reimbursements for adoption fees. There has been a globalized recognition of adoption where many employers are recognizing the adjustments needed following a finalized adoption are similar to those of having a new baby and the need for maternity and/or paternity leave. This paid family leave helps cover expenses while your child transitions into the home and becomes acclimated to their new environment. 

Adoption Insurance Coverage Conclusion

As you can see, the world of adoption certainly comes with its own set of challenges. There are additional expenses that come with adding another child to your family through adoption. This is recognized both locally and federally, and there are several grants, loans, and employer benefits that adoptive parents can benefit from. 

While this article provides some basic information about where to start and what assistance may be out there, it is imperative that you reach out to your insurance providers and agency staff with questions about your individual situation. Many decisions are made based on the type of adoption, along with the child’s circumstances, needs, and other factors. Along with that, the cost of each adoption varies depending on whether you adopt through a private agency or a public agency, as outlined in this article. It is important to conduct your own research into what options would best fit you and your growing family.