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ADOPTION BENEFITS GAIN POPULARITY

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The percent of employers offering adoption benefits continues to grow, a recent survey shows.

The growth fits in with a larger trend toward providing more work/life benefits to employees, benefit consultants and managers say.

Adoption assistance is "a very low-cost but also high-morale benefit," said Aimee Chamernik, a work/life consultant with Lincolnshire, Ill.-based Hewitt Associates L.L.C., which released the survey.

"It is cheap, because not very many people take advantage of it in any given year, but it is a huge loyalty binder," she said. Ms. Chamernik said that ensuring greater equity of benefits for employees who can have children naturally and those who must or choose to adopt also is driving the trend.

In 1997, 26% percent of surveyed employers offered adoption reimbursement benefits, according to the survey. In 1992, 15% of employers offered adoption benefits, according to a Hewitt spokes-woman. The survey looked at benefit practices at 1,020 major U.S. employers.

The spectrum of adoption-related expenses covered by benefit programs varies. Most employers that offer the benefit help cover legal fees for adoption. Sixty-nine percent of employers offering adoption benefits paid for legal costs, according to the Hewitt survey, while 53% covered medical expenses of the birth mother and 41% provided for agency or placement fees. Twenty-three percent of employers reported no restrictions on the type of expenses covered.

However, 92% of employers reported placing dollar limits on benefits. Maximums ranged from $750 to $8,000, according to the Hewitt study. The average maximum was $2,776.

Ms. Chamernik said dollar limits have risen slightly over the past few years while adoption costs have been going up, too. It is mostly employers introducing new programs that is "raising the bar a bit," she said.

Stamford, Conn.-based Xerox Corp. has had an adoption benefits program for several years, according to Marilyn Timbers, life cycle program manager. Xerox offers $3,000 per adoption, covering costs such as legal and medical fees and traveling expenses. An employee also gets free education and counseling on problems he or she faces before, during or after an adoption, she said.

The benefits were introduced as a reaction to employees' questions about adoption, said Ms. Timbers, who could not provide information on frequency of use.

The cost "comes back fourfold to the employer in terms of goodwill and productivity," Ms. Timbers said. The adoption benefit program "really emphasizes that the company cares for its employees and their families." In terms of productivity, she said employees anticipating adoption must collect huge amounts of information, usually during business hours. So, "we have a direct payback in employee time" when the company helps employees get that information, Ms. Timbers said.

The Small Business Job Protection Act of 1996 allows an employer to reimburse an employee for up to $5,000 per adoption ($6,000 for a child with special needs) without the reimbursement being included in employee's taxable income. The reimbursements are tax-free for employees making up to $75,000 a year; for those making between $75,000 and $115,000 annually, the tax breaks decrease with rising income. Employees earning more than $115,000 a year, as well as those adopting their own stepchildren, do not get the tax break.

Ms. Timbers said the 1996 law has not triggered changes to Xerox's program, and Hewitt's Ms. Chamernik concurred that the tax benefits so far do not seem to have a great direct impact on an employer's decision to introduce adoption assistance. "It is an added bonus," she said, and it gives the benefit more publicity, but it is nothing that would drive the upswing in popularity.

But Norma Lewis, a principal and health and welfare practice leader in the St. Louis office of Buck Consultants Inc., disagrees, saying that "the tax changes definitely had an impact." She said she had noticed a very recent upsurge in interest among her clients.

Carol McAlpine, vp and director of employee benefits at Willis Corroon's U.S. headquarters in Nashville, Tenn., said the tax breaks "played no role" in her company's decision to introduce adoption benefits this January. Willis Corroon reimburses employees up to $5,000 for regular adoptions and $6,000 for adoptions of children with special needs. Six or seven people have applied for reimbursement so far, Ms. McAlpine said. The idea behind the benefit was to assure greater equity between those employees who can have children naturally and those who cannot or choose not to.

"It seemed to be the right and fair thing to do," she said.

Copies of the survey, "Work and Family Benefits Provided by Major U.S. Employers in 1997," are available for $50 from the Publications Desk at Hewitt Associates L.L.C. at 847-295-5000