Who is Eligible, Page 3

Who Is Eligible for Benefits?

Adoption benefits are usually available to all regular employees. In some cases, the employee needs to have worked for the company for a specific amount of time; in others, enrollment in a company insurance plan is required. The designations used by many companies for those eligible are full-time salaried "permanent" or "regular" employees.

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How Do Plans Actually Work?

What Expenses Are Covered?

Coverage varies widely, with benefit amounts ranging up to $6,000 per adoption. The most common approaches are:

Reimbursement for specific expenses;
Specific "set" allowance, regardless of expense; or
Reimbursement or coverage through the company's medical plan for medical expenses only.

Most often, employees are reimbursed for a given percentage (80 percent appears to be the norm) of specific itemized expenses. Virtually all plans have a ceiling, with the median reimbursement being about $2,000. The most frequently covered expenses are public and private agency fees, court costs, and legal fees associated with the adoption. Newer policies have broadened coverage to include foreign adoption fees, medical costs, temporary foster care charges, transportation costs, pregnancy expenses for the birth mother, and counseling fees associated with the placement and initial adjustment.

When a specific allowance is offered, employees receive a lump sum regardless of actual costs. Allowances usually range from $500 to $1,000, with more companies paying at the higher end. If more than one child is adopted, some companies pay only one allowance while others pay an allowance per child.

The least common approach covers only the medical costs of adoption through company medical insurance plans. So far, this approach has been used only in specific, limited situations with tightly defined eligible medical expenses.

It may also be possible for companies to provide coverage for adoption-related legal expenses by including adoption in company-sponsored group legal plans for employees.

The table below provides information about the adoption benefits covered by the 98 employers surveyed in 1990 by Hewitt Associates.

Type of Adoption Benefit	Percentage That Cover It
Legal fees	82
Medical expenses of birth mother	63
Agency or placement fees	38
Medical expenses for child	23
Travel/lodging expenses	17
Temporary foster care	14
Miscellaneous expenses	11

When Are Benefits Paid?

In most cases, benefits are paid after the adoption is finalized. Some companies, recognizing the accumulating expenses and the need for a child to live in the home prior to finalization, are providing reimbursement earlier--when the child is placed in the home or as expenses are incurred. The reimbursement for the adoption of children with special needs is paid after finalization.

Are all types of adoption covered?

In cases where a stepparent wants to adopt, only about half the companies surveyed in a l980 study covered adoption costs. Among plans implemented more recently, the trend is toward including all adoptions.

Some of the companies surveyed by the U.S. General Accounting Office in l989 (67 companies, 7 Federal Government agencies, and 3 nonprofit organizations), had an age limit on the adopted child that determined whether benefits would be paid. Most of those with age limits specify the child must be under either 16 or 18 years of age.

How Do Adoption Benefits and Maternity Benefits Compare?

While most companies recognize the need for fairness to all employees, adoption benefits have not kept pace with maternity benefits. Since regulations require that pregnancy be treated as any other disability, reimbursements through medical plans have risen dramatically. This has not been the case for adoptions, since an adoptive parent is not "disabled" by parenthood. Yet, there are companies that try to parallel maternity benefits by steadily increasing the adoption reimbursement. At least one company--Time, Incorporated--bases its maximum adoption benefit on the latest 3-month average of pregnancy costs in the area.

Are Benefits Taxable?

Currently, adoption benefits in the form of cash assistance are federally taxable. However, there are ways for companies to provide employees with non-taxable benefits related to adoption. Medical and legal expenses may be covered under company-sponsored group plans, which are currently non-taxable.

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Credits: Child Welfare Information Gateway (http://www.childwelfare.gov)