Q: Do I have to give up custody of my child in order for public funds to pay for their mental health service/treatment?

The inadequacy of coverage of mental health care for children by both public and private insurance has created an environment that encourages families to turn to child-serving agencies such as child welfare to meet the mental health needs of children. Although child welfare is not a mental health agency, children receiving out-of-home care in both foster care and residential facilities are eligible for funding for their mental health care. The source of these funds is Title IV-E, Foster Care and Adoption Assistance Program. In about half of the states, child welfare administrators erroneously believe that the IV-E statute requires that states must have custody of children when they make out-of-home placements in order to be reimbursed for costs of care. In fact, the federal law permits states to continue receiving funds when children are removed from their homes through voluntary placement agreements when families retain custody.

The law does not require custody transfer and has specific language allowing voluntary placements. Federal law provides foster care payments to states for 180 days (6 months) after a child is removed under a voluntary placement agreement. It is in the best interest of the family that the voluntary agreement specify when and under what circumstances the child may return home. At the end of the first 180 days, federal payments may continue if a judicial determination is made that remaining in out-of-home care is in the child's best interest. This 6-month review hearing is required for both voluntary and involuntary placements and is part of a federally mandated case review system. This review hearing will cover the following:

•  The safety and well-being of the child in his/her present placement

•  Whether the child needs to continue in placement

•  Whether the family and child welfare agency are complying with the service plan

•  What kind of progress is being made

•  Whether the service plan should be changed

Another section of the statute indicates that the "child's placement and care are the responsibility of the state agency". The Children's Bureau has clarified that this responsibility does not require that the state have custody. The major responsibility of the states is the development of an individual service plan for the child. This statement was issued by The Children's Bureau in a policy interpretation question (PIQ 82-07) on August 25, 1982.

The Bazelon Center for Mental Health Law, www.bazelon.org, has extensively researched this issue and, along with the Technical Assistance Partnership for Child and Family Mental Health, is a source of additional information.