Answer: In an effort to offer competitive employee benefits, more and more companies are implementing employee adoption benefit programs. Employee adoption benefits are paid by private employers to help their employees adopt. It is not uncommon to have an employer reimburse between $10,000 – $25,000 to employees who adopt domestically. Be sure to ask the HR person where you work if your company provides this benefit.
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.
FMLA allows you 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 research if the Federal Adoption Tax Credit applies to you as this is another excellent source of financial subsidy for those who adopt.
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.