Adoption Subsidy: A Brief Guide in 2026

What is an Adoption Subsidy?

To quote from the Alabama Administrative Code, “Adoption subsidy is provided to facilitate the adoption of children with special needs by assisting with the removal of financial barriers to adoption.”[1]

What are the Requirements for Adoption Subsidy?

Furthermore, pursuant to the same statute, there are four factors that must be met to qualify for legal subsidy:

1. The child must be legally free for adoption and the Agency/Department have determined and documented that a child cannot or should not be returned to the home of his parents;

2. The child must be determined to have special needs (this does not mean the child must have a disability; more on this later);

3. The child, in most cases, at the time of initiation of adoption proceedings, should be in the care of the Department of Human Resources (“DHR”) or a child-placement agency; and

4. Reasonable efforts must be made to locate an adoptive resource for a child without benefit of an adoption subsidy or medical assistance under Medicaid, except where it would be contrary to the child’s best interests because of the existence of significant emotional ties with the prospective adoptive parents while in the care of these parents as a foster care child.

Generally, the barrier to qualification will be showing that the child has special needs, as the other qualifications should already be met at the time conversations over subsidy begin.

What Qualifies a Child as “Special Needs?”

At least one of the following conditions must be met for the child to qualify as a child with special needs:

1. The child is five (5) years of age or older,

2. The child is a member of a sibling group of two (2) or more being placed for adoption in the same home at the same time,

3. The child has a physical disability[2],

4. The child has a mental disability[3],

5. The child has a known emotional disturbance/ behavioral issue that requires on-going treatment[4],

6. A child has racial or ethnic factors that make it unlikely that the child will be adopted without a subsidy (this is will likely not be a factor)[5].

Deferred Adoption Subsidy

Additionally, if the child has known and documented factors that place the child at recognized high risk of developing a physical or mental disability at a future time, the child will qualify instead for a deferred subsidy.

A deferred subsidy, as the name suggests, is a subsidy agreement which defers monetary payments until the onset of symptoms. Furthermore, in order to begin receiving payments, the child must have a proven physical or mental disability which may be traced back to when the child was in care of the Department or placement agency.

By way of example, if the child develops reactive attachment disorder (“RAD”), which is not uncommon for children in who have been in foster care, the child will likely qualify to begin receiving payments under a deferred subsidy. Alternatively, if a child develops cancer years after leaving foster care, that child will likely not qualify to begin receiving payments, because the ailment arose after the child left foster care and was not connected to the child’s time in foster care. However, that should not prevent the adoptive parents from making the request.

How Much is the Adoption Subsidy?

There is no set amount for adoption subsidy, and the Administrative Code states: “[t]his is a negotiated rate and can never exceed the amount the child would have received for basic foster care maintenance.” However, a reasonable expectation would be approximately $500 to $600 per month per child.

More often than not, if the pre-adoptive parents have been receiving subsidy for the child while the child has been in foster care, the adoption subsidy will closely align with that amount.

Exceptional Needs Result in an Exceptional Subsidy Amount

If a child has exceptional needs—such as chronic illness, 24-hour awake supervision, or intensive care—the child may qualify for a much larger subsidy amount. These increased subsidies include, therapeutic subsidy, medical subsidy, medically fragile subsidy, counseling subsidy, and level-one difficulty of care subsidy. This article is not intended to be an in-depth analysis of these exceptional subsidies. For more information on these subsidies, you can review the administrative code by clicking HERE or contact our office by clicking HERE for additional guidance.

When does the Subsidy End?

Adoption subsidy arises from two funding sources (State Adoption Subsidy and Federal IV-E Adoption subsidy). These two sources have different termination ages, so it is important for adoptive parents to understand which funding source is providing their child’s subsidy.

A. Federal IV-E Subsidy:

DHR’s default funding source is Federal IV-E Adoption subsidy (“Federal Subsidy”). Federal Subsidy will end when the child turns 18 years old. However, Federal Subsidy may be extended until the child is 21 under one of two circumstances:

1. The child is determined by a doctor to be mentally or physically disabled or

2. The Federal Subsidy agreement was entered when the child was 17 years old and the child is:

• • Currently enrolled in high school, college, university, trade school, or vocational school; or
  • Participating in classes on resume writing and interview skills, GED preparation classes, Job Corps; or
  • Employed at least 80 hours per month; or
  • Incapable of participating in any of the above activities due to a medical condition; or
  • Otherwise involved in an activity that pertains to education or employment.

B. State Adoption Subsidy

If your adopted child receives State Subsidy, it will continue for until your child turns 19 years old. However, State Subsidy may be extended only if the child is still in high school and may not be extended after the child is 21.

One-Time Legal Subsidy

For children adopted from foster care (either through DHR or another child-placement agency), the adoptive parents will almost certainly qualify for a one-time payment of $1,000 for the reimbursement of the cost of an adoption. In these cases, the reimbursement is received by check, which may be applied for either by the adoptive parents or by the adoption attorney directly.

What Should You Do If You Feel You Have Been Wrongfully Denied?

It is the responsibility of the DHR caseworker to ensure that the subsidy conversation is had and that a contract is entered prior to the finalization of the adoption. If you feel that the caseworker has failed, you can request supervisor oversight and work your way up the chain of command. If you feel that this is not sufficient, call us. Our office may be able to represent you to ensure that your adoptive-child is receiving the subsidy they are entitled to.

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[1] Ala. Admin. Code § 660-5-22-.06(1).

[2] Physical disability is defined as a chronically debilitating, progressive, or fatal disease which requires assistance for the child in activities of daily living or requirement of assistance of another person or mechanical device for movement from place to place.

[3] Mental disability is defined as a condition which is characterized by impaired intellectual development and impedes the ability to function independently as diagnosed by a licensed medical doctor or qualified mental health professional.

[4] Emotional disturbance is defined as an emotional condition which impedes the child’s ordinary developmental progress as diagnosed by a medical doctor or qualified mental health professional.

[5] This factor, while contained within the Administrative Code, is a holdover of a bygone era and will no longer suffice to qualify for adoption subsidy today.