Did you know that your employer may have an adoption benefit program to help you with the costs of your adoption? Indeed, in an effort to offer competitive employee benefits, more and more companies are implementing employee adoption benefit programs to help their employees defray adoption costs.
Employer-based adoption benefit programs take different forms. Typical plans include tax-free financial assistance to reimburse the employee for his/her adoption expenses. Reimbursable adoption expenses can include public or private agency fees, legal fees, counseling fees and birth mother living expenses. A typical benefit plan reimburses between $3,000 and $6,000. Some employers reimburse at higher rates for adoptions of children with special needs.
In most cases, employee adoption benefits are paid after the adoption is finalized. However, some employers pay benefits when the child is placed with the employee well before finalization or as the expenses are incurred.
Did you also know that you may be able to stay home with your adoptive child up to three months after his/her birth and your employer must hold your job and maintain your medical insurance for you? The Family and Medical Leave Act of 1993 (“FMLA”) applies equally to employees who adopt a child, and therefore, employers subject to the FMLA must grant parental leave to parents who have adopted a child. FMLA is a federal law that requires most employers with 50 or more employees to offer both mothers and fathers up to 12 weeks of unpaid leave upon the birth or adoption of a child. FMLA ensures that the employee can return to his/her current job or an equivalent position after up to a three-month absence. It also requires employers to continue the employee’s health benefits during the leave period.
Some employers allow employees to take more than the 12 weeks of unpaid leave as provided by the FMLA. Employees may be permitted to combine accumulated paid leave (such as vacation or sick leave) with unpaid leave to extend their total leave time. Better yet, some employers offer paid leave for employees who adopt a child. Paid parental leave varies from one to 20 weeks and averages three weeks. Certain employers may be bound by public and private union contracts that have provisions for adoption leave.
The IRS treats employer-based financial assistance received by the employee as tax free and will allow the employee to exclude the amount his/her income. In addition, the employee also is permitted to claim the adoption tax credit for the remaining amount of adoption expenses incurred for the same adoption. Be sure to check with your tax advisor to see how these deductions and credits apply to you.
Employer-based adoption assistance programs and FMLA benefits provide adoptive parents with additional resources to aid in the costs of adoption. Check with your employer to learn more about these programs and benefits.