Adoption Equality Act of 1998

Adoption Equality Act of 1998 - Amends title IV part E (Federal Payments for Foster Care and Adoption Assistance) of the Social Security Act (SSA) to revise adoption assistance eligibility guidelines for children with special needs.

(Sec. 2) Makes eligible for such assistance only children with special needs who before termination of parental rights and the initiation of adoption proceedings were: (1) in the care of a public or licensed private child care agency or Indian tribal organization, either pursuant to a voluntary placement agreement (provided the child was in care for not more than 180 days), or as a result of a judicial determination to the effect that continuation in the home would be contrary to the child's safety and welfare; or (2) residing in a foster family home or child care institution with the child's minor parent. Requires a State to consider such special needs, together with the circumstances of the adopting parents, in determining the amount of Federal adoption subsidies paid to them.

Prohibits assistance with respect to any child who is not a U.S. citizen or resident and who was adopted outside the United States or was brought into it for adoption purposes.

(Sec. 3) Prescribes guidelines under which the Secretary of Health and Human Services shall reduce, for specified fiscal years, Federal payments to the States for administrative costs based on determinations of amounts attributable to the Medicaid program under the Food Stamp Act of 1977.

Requires the Secretary to make a bonus payment to any State: (1) whose income and eligibility rules are not more restrictive than the income and resource eligibility rules applied by the State for the temporary assistance to needy families (TANF) program funded under SSA title IV part A; and (2) which assures the Secretary that families applying for TANF may apply for Medicaid under SSA title XIX.