An AAP is an employer-sponsored spending account that allows both employer and employee contributions to pay for eligible adoption-related expenses. Employee contributions are pretax and deducted from the employee’s paychecks to fund the AAP account. The employee decides how much to contribute for the year.
It is very important to plan carefully when you enroll in an AAP. This is a "use-it-or-lose-it" account. Any money left in your AAP at the end of the plan year will be forfeited.
Contribution limits and individual eligibility
Currently, the maximum annual contribution limit per child is $14,440.
If your employer offers an AAP, you must meet the IRS's income criteria to be able to enroll and contribute. To be eligible for enrollment:
- You must have a household Modified Adjusted Gross Income (MAGI) of less than $216,660 to be able to contribute the full $14,440 per child
- You can have a household MAGI between $216,660 and 256,659 and contribute a prorated amount of the $14,440 per child (check with your HR representative to determine your contribution maximum)
MAGI is established by the IRS and subject to change annually. Consult with your financial advisor for more details.
Using your AAP
If you are eligible and considering enrollment in an AAP, estimate how much funding you will need to put toward your adoption-related expenses. Things to consider:
- You can submit claims for domestic adoptions as the expenses occur.
- A foreign adoption must be successful before expenses can be submitted and paid.
Select how much money you want to withhold from each paycheck.
The amount you select is withheld pretax from your pay in equal portions throughout the year and deposited into your AAP.
You can submit your claim on the Further member portal, which will prompt you for the appropriate information and supporting documents. You can also complete the adoption assistance reimbursement claim form and send it, along with receipts and supporting documentation, to Further via mail, fax, or secure email. You'll get reimbursed up to the available balance in your account.
Eligible adoption expenses
Any out-of-pocket expenses related to the adoption of an eligible child (listed under section 23 of the Internal Revenue Code) qualify for reimbursement.
These are examples of adoption expenses eligible for reimbursement:
- Adoption application and home study fees
- Agency and placement fees
- Legal fees and court costs
- Reasonable travel and lodging expenses related to the adoption
- Medical expenses for the adoptive child prior to placement
Examples of expenses that are not eligible for reimbursement include:
- Expenses related to the adoption of a spouse’s child
- Costs related to adopting a child over the age of 18 and who are capable of self-care
- Payments that aren’t related to the adoption of an eligible child as defined by the IRS
- Expenses for a foreign adoption unless the adoption is successful
If your adoption doesn't go through
For adoptions that are not successful, you can stop your payroll deductions to prevent any additional contributions. For domestic adoptions, you can also submit claims for expenses already incurred but not yet paid. However, any remaining funds in your account will be forfeited.