A subsidized adoption refers to the adoption of a child with special needs where an adoption assistance agreement is established between the adoptive parents and a state or local government agency. The adopted child may qualify for either Title IV-E or State Adoption Assistance. A child who has an adoption assistance agreement in effect with a state or local government agency is eligible to receive Medicaid. It does not matter if the child is receiving a monthly cash subsidy. There is no income or asset test for this type of Medicaid.
The adoption assistance agreement usually ends the month that the child turns 18. However, the adoption assistance may extend through the month in which the child turns 21 if the child is determined to be physically, mentally or emotionally disabled by the agency originating the adoption assistance agreement. Subsidized Adoption Medicaid ends at the end of the month the adoption assistance agreement ends.