NJM Blog
NJM Blog

How Adoption Could Affect Your Insurance Policy

November 16, 2018
How Adoption Could Affect Your Insurance Policies

In some ways, preparing for an adoption is a lot like preparing for any other child. You’re inviting a new child into your home, and you want to be as ready as possible for the experience. Get ready to paint the walls, purchase new furniture, request hand-me-down clothes and toys and find the best children’s books. Having a child means taking on a new role as caretaker, role model and guide. Having a child also means taking on a slate of expenses that you didn’t have before.

Part of the cost of adoption is the cost of bringing any other child into your family: childcare, healthcare, education, extracurricular activities, college savings and more. Of course, adopted kids sometimes have their own needs. Here’s how adoption will affect your insurance policies.

Health insurance

Adoptive parents of newborns are responsible for health costs for the child from the time of birth to discharge. Thus, your health insurance provider will be paying some of the hospital bills for the birth. Don’t worry about notifying your insurance company if you haven’t decided on adopting within the open enrollment period, though: adoption is considered a Life Event, meaning that you can enroll new children in your plan outside of open enrollment periods. In addition to that, discrimination by health insurance providers against adopted children is prohibited in most situations; providers cannot deny or delay services that they would provide to a biological child just because the child is adopted.

If you’re adopting an older child, you might also face unexpected health costs. Stresses experienced at a young age can have lifelong health implications. For example, foster children are more likely to experience mental health issues like post-traumatic stress disorder, anxiety disorders and attachment disorders. You’ll want to look into insurance policies that include coverage for mental health services. Although some foster and adopted children are eligible for Medicaid, you might decide to invest in a premium health insurance plan for your family.

Spending Accounts

Your employer might offer you the opportunity to participate in a Health Spending Account or Flexible Spending Account. You might not have used these options before, but now that you’re adopting a child, they could turn out useful. Health Spending Accounts allow you to put money away for health-related bills, before it’s taxed. Flexible Spending Accounts allow you to do the same for other expenses like childcare.

Auto Insurance

It’s possible that, as your family grows, you might want to replace your car with something bigger, sturdier and more fuel-efficient. Make sure you contact your auto insurance company to add that minivan to your policy. Your auto insurer might also give you discounts for installing safety features, like an Anti-Theft Device, in your car.

If you’re adopting an older child, their own insurance needs might sneak up faster than you think. Not only will your auto insurance policy be affected by having another driver in your house, but your child will need to go through all the driver safety and training programs required in your state. NJM offers resources to families whose teenagers are ready to drive. See the Teen Driver Safety Program for more information.

Home Insurance

Just purchasing a new car might not be enough. With the welcome of your adopted child to your home, you might want to make the big change of purchasing a new house. Whether you’re upgrading from a condo to a house or just moving to a new neighborhood, you’ll need to take out an insurance policy on your new home.

You’ll also want to install safety features in your home to keep the new baby or endorsements to your homeowners insurance to protect against any expenses incurred as a result of identity fraud. For more information on protecting your child from identity theft, read up on protecting your child’s identity.

Paying for Adoption

If you’re concerned about the cost of adoption, consider all the programs that exist to help subsidize the costs. Some employers will provide benefits, like financial assistance, adoption counseling and employee leave, specifically designed for families considering adoption. In fact, parental leave is required of companies that have fifty or more employees, and it doesn’t discriminate between birth families and adoptive families. You can also get tax credits and state credits for adopting. Some states will provide subsidies for adopted children coming out of foster care, similar to what foster parents receive. In addition to that, you can apply for loans and grants to cover adoption-related costs.

November is National Adoption Awareness Month. It exists to bring awareness to the more than 65,000 children eligible for adoption in the foster care system. On average, a foster child remains in state care for two years; six percent of foster children remain there for five or more years. Foster children who never find a forever family are particularly at risk for homelessness, unemployment, and incarceration as adults. National Adoption Day, the Saturday before Thanksgiving, has seen 70,000 foster children adopted since its inception in 1999.