or couples wanting a family, the worst news they could hear from their doctor is that they can't have children. It's devastating to all who hear it, but there's hope—infertility treatments and adoption. Today's advances improve the chances for infertile couples to give birth to their own children. And, there are so many children waiting to be adopted.

Not everyone plans to go through infertility treatments or to adopt a child. The expenses can be overwhelming. It's good to have an idea of the costs before moving forward with either plan. If you don't, you could end up financially ill-prepared to raise a child later.

A good place to start is by attending an adoption support group or orientation meeting that some nonprofit adoption organizations offer, suggests Brent Neiser, certified financial planner licensee and director of collaborative programs for the National Endowment for Financial Education (NEFE®) in Englewood, Colo. Neiser says adoption is "like learning a new language. You want to get familiar with the terms and how different organizations apply those terms and the costs associated with them."

Public agency/state social services adoptions (domestic)
Private agency adoptions (domestic)
Intercountry adoptions
Help to alleviate adoption costs

    Useful resources

    Infertility treatments

Public agency/state social services adoptions (domestic)
The least expensive, and sometimes speedier, adoption is through a public agency or state social services agency. Upfront fees and expenses range from zero to $2,500, including travel, home study, and attorney's fees, according to the National Adoption Information Clearinghouse (NAIC) in Washington, D.C. Usually public agencies only place children with special needs, which are defined differently in each state but could include children with unique physical, mental, or emotional needs.

Most states reimburse nonrecurring adoption expenses (that don't exceed $2,000) under a federal match program. If you adopt a child with special needs, you'll probably qualify for federal and/or state adoption subsidies—also known as adoption assistance. Adoption assistance is exempt from taxation—it's not considered income. However, the amount of assistance you receive may affect whether you can claim the child as a dependent and an exemption on income taxes. The two major sources of adoption assistance are:

  • The Federal Title IV-E program under the Social Security Act. Adopting parents do not have to meet any financial eligibility criteria to receive adoption assistance. The adopted child must have been eligible for one of two programs before adoption in order to qualify: Aid to Families with Dependent Children (AFDC)—which was eliminated by Congress in 1996 and replaced with Temporary Aid to Needy Families (TANF), or Supplemental Security Income (SSI) under the Social Security Act. The adoption subsidy agreement must be negotiated and signed before the child's adoption is final (some exceptions apply).

  • State programs, which vary. State subsidy programs provide assistance for children not eligible under the Federal IV-E program.

Private agency adoptions (domestic)
Private adoptions are one of the more expensive options available. Average fees private agencies charge range from $4,000 to $30,000, according to the NAIC. The fees cover birth parent counseling, adoptive home study and preparation, child's birth expenses, postplacement supervision until the adoption is final, and some agency costs.

Some private agencies offer reduced fees based on your income—known as sliding-scale fees. Be sure to ask the agency you choose if it offers this benefit.

An independent adoption is a type of private adoption, where a couple seeks out a birth parent or hires a lawyer to arrange the adoption. Additional costs include placing advertisements to find a baby. There have been cases where adoptive parents pay the birth parent's expenses only to have the birth parent change her mind and not reimburse the money. An independent adoption costs $8,000 to $30,000 or more. Independent adoptions are illegal in some states.

Intercountry adoptions
Intercountry adoption fees range from $7,000 to $25,000, which covers agency fees, immigration processing fees, and court costs, according to the NAIC. Additional costs may include travel, an in-country stay to process the adoption abroad (length of stay varies by country), child foster care (typically in South and Central America), the child's medical care (sometimes in South and Central America), and—if the parents don't travel— fees for an escort to accompany the child back to the adoptive parents' country.

Help to alleviate adoption costs
Federal Adoption Tax Credit
Adoptive parents can claim qualified adoption expenses as a tax credit on federal income tax returns. The maximum credit is $5,000 per child and $6,000 if you adopt a special needs child. Qualified expenses may include agency and attorney fees, court costs, and some travel expenses. However, the maximum amount you claim cannot exceed the total cost of the adoption.

Not everyone qualifies for the adoption tax credit. If your family's modified adjusted gross income is $75,000 or less, you can take the full credit. If your income is more than $75,000, but less than $114,999, you can take a partial credit. More than $115,000—no credit allowed.

You can claim the credit even if the adoption has not become final and if the adoption process is interrupted and never becomes final. International adoptions qualify for the tax credit, but not until the end of the year that the adoption becomes final.

The adoption credit is scheduled to expire Dec. 31, 2001. For more information, look for Internal Revenue Service Form 968 at www.irs.gov or call 800-829-3676 and ask for Form 968.

Employee Benefits
A 1995 study found that about a quarter of the nation's employers offer some form of adoption benefits to employees, says NEFE®. Some of these benefits include a tax-free reimbursement for specific costs or a set amount of money, paid or unpaid leave, and adoption information classes.

Other help
  • State tax credits (in certain states)

  • Military subsidies

  • Dependency exemptions

  • Adoption loans—Many adoptive parents use a home-equity line of credit; be sure to speak with a loan officer at your credit union.
For more information about help alleviating the cost of adoption, NEFE® has a booklet available on its Web site (listed in Useful resources below) that outlines the costs involved with different types of adoptions and what financial assistance is available.

    affects about 10%
    of the reproductive-age

    adoption fees
    range from
    $7,000 to $25,000.

    In vitro fertilization,
    considered to be
    the most effective
    infertility treatment,
    costs an estimated

    Private adoption fees
    range from
    $4,000 to $30,000.

    The least expensive,
    and sometimes speedier,
    adoption is through
    a public agency
    or a state social
    services agency.

Infertility treatments
Infertility affects an estimated 6.5 million couples, or about 10% of the reproductive-age population. According to government statistics from 1997, the most recent year for which figures are available, women in the U.S. underwent about 60,000 cycles of in vitro fertilization. (IVF involves taking eggs from a woman, fertilizing them in the laboratory with her partner's sperm, and transferring the resulting embryos back to her uterus a few days later.)

Sean Tipton, chief of government affairs for the American Society for Reproductive Medicine, in Washington, D.C., told The Los Angeles Times that number is rising at a rate of about 10% annually and was likely to be close to 100,000 at the end of 2000.

IVF, considered by most experts to be the most effective infertility treatment, costs an estimated $10,000, for each round of treatment. Often several rounds of treatment are needed before a woman becomes pregnant. Add to treatment cost the price of necessary drugs, which run $1,000 to $4,000 each round.

Only about 15% of insurance plans cover IVF, forcing many couples to pay the entire bill. Many put off infertility treatments until they're older and can afford them, even though the chance of success is far greater among couples in their 20s and early 30s.

Almost 50% of infertile couples never seek treatment because of financial pressure, doctors say. The largest cost is for the drug component, which has created a "black market" for infertility drugs. Thousands of women and couples are illegally obtaining fertility drugs at discount prices from other patients who bought more of the medication than they needed.

Experts recommend that, before making the financial commitment to infertility treatments, you find out success rates for the procedures at your health care facility. The National Center for Chronic Disease Prevention and Health Promotion can help you find treatment success rates.

Useful resources

© 2001 Credit Union National Association Inc.