Personal Services Contracts and Florida Medicaid: How DCF Values Family Care

DCF's manual gives three ways to value care received in exchange for money, depending on what the agreement says (ESS 1640.0614.04):

For a set period: DCF uses the time the care was actually given. "As needed" or for an interim period: the caregiver's statement must give the expected frequency and the basis for that expectation. For life: DCF multiplies the yearly fair market value by the life expectancy factor for the person's age at their last birthday, using the table in Appendix A-14.

The manual adds that contacting "an outside source in the same locality" will usually be needed to set the value. The case record must also say how the value was set. In practice, a contract is stronger when it already contains that evidence, such as written rate quotes from two or three local home care agencies for the same tasks.

Services that usually have a market price include:

transportation and escorting to appointments medication set-up meal preparation laundry bill paying and insurance paperwork coordinating doctors and home care staff supervision for someone with dementia

Companionship is real but hard to price as a job.

Expect the most questions in a nursing home. The facility already provides personal care, meals, laundry and nursing, so a contract paying a relative for the same tasks invites the question of what the relative is adding. Advocacy, outside appointments, managing finances and care coordination are easier to explain. In assisted living, the line depends on what the facility's own contract covers. Read it before drafting.

Because DCF measures compensation by the agreement and expectations at the time of the exchange, care given years ago with no agreement has nothing on paper to point to. A parent who writes a $40,000 "thank you" check today for past care will usually see DCF review it as a transfer. The family would then need to rebut that presumption with evidence (ESS 1640.0616). The cleaner approach is to sign first and pay for the care that follows.

Hypothetical: a mother, 84, lives at home. Her daughter will provide about 15 hours a week of transportation, medication set-up, meals and bill paying. Two local agencies quote $28 an hour for similar services. The yearly value is about $21,840 (15 × $28 × 52), or about $1,820 a month.

Monthly, as care is given One lump sum for lifetime care DCF's measure Actual care given, supported by the log $21,840 × 7.21 (A-14, female, 84) ≈ $157,466 Spend-down effect Gradual Immediate If the mother dies or moves to a nursing home in year two Payments simply stop The daughter holds money for care never given, which can raise transfer, estate and sibling questions Caregiver's taxes Spread across years Generally income in the year received (IRS Publication 525) Evidence burden Ongoing log and pay records Strong proof the rate and hours are realistic for life

Many families find monthly pay easier to defend and easier to explain to siblings. A lump sum is sometimes considered when a large spend-down is needed quickly, but it puts much more weight on the valuation and on the caregiver's follow-through. A contract can include a refund clause for unperformed years. Whether that clause helps or hurts depends on the facts.

Often the child giving care is also the parent's agent under a power of attorney. A Florida agent is a fiduciary who must act in good faith and must not act against the principal's interests. The agent must also try to preserve the principal's known estate plan (Fla. Stat. 709.2114). Signing a contract with yourself, on your parent's behalf, is a conflict. Some ways to reduce it:

have the parent sign while able; have a co-agent or another family member sign for the parent; make sure the power of attorney actually allows the transaction.

Being paid as caregiver is also different from agent compensation. Florida generally allows a qualified agent reasonable compensation for acting as agent, unless the document says otherwise (Fla. Stat. 709.2112). Keep the two separate in the records.

The IRS says a worker is a household employee when the family controls not only what work is done but how it's done. Health aides, caretakers and drivers are among its examples (IRS Publication 926). A daughter following her mother's schedule and instructions usually fits that description. A 1099 generally fits only a caregiver who is genuinely self-employed, offering services to the public in an independent business.

If the caregiver is a household employee and is paid $3,000 or more in cash wages in 2026, the parent generally:

withholds and pays Social Security and Medicare tax; files Schedule H with their 2026 return by April 15, 2027; gives the caregiver a W-2 by February 1, 2027.

Federal unemployment tax applies once wages reach $1,000 in a quarter. The family exceptions (a spouse, a child under 21, and in limited cases a parent) don't cover an adult child caring for a parent. Income tax withholding is optional unless both sides agree. A Form I-9 is completed and kept, not filed (IRS Publication 926). A CPA can set this up.

A sound contract spends the parent's money at fair value, which can reduce what everyone inherits. Families that avoid conflict usually share the draft, quotes and rate with siblings before signing. If the parent's will divides everything equally, the parent might decide whether paid care should change anything. That's a choice for the parent, not the caregiver.