How to Calculate the Present Value of Future Medical Expenses (Free Tool)
You get one number from a future medical cost analysis that a mediator, an adjuster or a jury can act on: the present value, the lump sum that, invested today, pays every future bill in the life care plan as it comes due. The nominal total (every bill added up at the price it will carry in the year it is paid) is always larger and is the number opposing counsel will accuse you of using if you are not clear. This post explains how to list the items, where to source the two rates the calculation depends on, how to handle lifetime items honestly, why a sensitivity table beats a single figure, and how to write the paragraph for the demand.
What the analysis contains
- Cost items. Each future need expressed as an annual cost in today's dollars, with a start year and a duration (or "lifetime"). Attendant care, therapy, medications, equipment replacement cycles, procedures, physician visits. These come from the life care plan or the treating physicians' documented recommendations.
- A medical inflation rate. The rate each cost grows between today and the year it is paid. The usual anchor is the Bureau of Labor Statistics Consumer Price Index for medical care, published on FRED as CPIMEDSL; a long-run compound growth rate is less sensitive to one year's swing than the latest twelve-month change.
- A discount rate. The rate the lump sum is assumed to earn. The usual anchor is a Treasury yield, such as the 10-year constant-maturity series on FRED, DGS10.
- A life table for lifetime items. The National Center for Health Statistics, United States Life Tables, 2023 (National Vital Statistics Reports, Vol. 74, No. 6, July 2025), gives remaining life expectancy and survival probabilities by age and sex.
What to get right
1. The net discount rate is what drives the result
Present value depends on the gap between the discount rate and the inflation rate, not on either alone. A 5 percent discount rate with 2.8 percent medical inflation behaves very differently from 5 percent with 4 percent. Some jurisdictions apply a "total offset" convention, treating the two as cancelling, and some fix a statutory rate. Check local law before relying on market rates.
2. Source both rates and show the range
Opposing counsel's economist will pick a different pair. A sensitivity table that re-runs the calculation at discount rates from 0 to 6 percent shows the range the number lives in and makes the demand harder to dismiss as a single optimistic point.
3. Lifetime items: fixed horizon or survival-weighted
"To life expectancy" runs the cost for the CDC expected remaining years at the person's age, the convention most life care plans use. "Survival-weighted" multiplies each year's cost by the probability of being alive that year, which is lower in the near term but extends past life expectancy. Both are defensible; say which one you used.
4. Reduced life expectancy
If the injury shortens life expectancy, the general-population table overstates the horizon. Get a case-specific figure from a physician or life care planner and enter it as a fixed duration.
5. Year zero
Decide whether the current year is inflated and discounted or treated as today's dollars. The calculator treats year zero as neither, and the formulas are printed on the page so an economist can check them.
Run the calculation with sourced defaults
Enter the cost items, a medical inflation rate and a discount rate. The calculator returns per-item and total present value, a year-by-year schedule, a 0 to 6 percent sensitivity table and a demand-letter paragraph, with lifetime items drawn from the CDC 2023 life table. Free, runs in your browser.
Open the Present Value Calculator →A worked example (hypothetical)
The facts below are invented for illustration. No real claimant, case or life care plan is described, and the figures are illustrative arithmetic, not a valuation.
A 42-year-old woman has a spinal cord injury. The life care plan lists, in today's dollars: attendant care at $60,000 per year for life; a power wheelchair at $8,000 every five years for life; physical therapy at $6,000 per year for ten years; and a single surgical revision at $45,000 in year eight. Counsel chooses 2.8 percent medical inflation and a 5 percent discount rate, and runs lifetime items to life expectancy.
The calculator grows each item at 2.8 percent to the year it is paid and discounts it back at 5 percent. The ten years of therapy come to roughly $52,000 in present value against a nominal $68,000. The single surgery in year eight comes to about $38,000 against a nominal $56,000. The attendant care line, which runs for the remaining life expectancy of a 42-year-old woman from the CDC table, dominates the total, and the sensitivity table shows it moving by hundreds of thousands of dollars between a 3 percent and a 6 percent discount rate. The demand-letter paragraph states the total, both rates with their sources, the life table used, and that lifetime items were run to life expectancy.
For plaintiff counsel, the paragraph and the sensitivity table go into the demand with the life care plan attached. For defense counsel, the same table shows exactly which assumption to contest, and running the survival-weighted method side by side shows how much of the attendant care figure depends on the horizon choice.
What to request next
- The life care plan with the clinical basis for each item: the treating recommendation, the frequency, the replacement cycle and the current price source.
- Any physician opinion on life expectancy specific to this patient and injury.
- The treating records that document the needs to date, so each future item traces to a page.
- For defense: the plaintiff economist's rates and sources, and the method used for lifetime items.
What the tool does not do
The calculator applies one inflation rate and one discount rate to every item and uses a general-population life table. A forensic economist will apply jurisdiction-specific discounting rules, growth rates by cost category and a formal life table, and should produce the trial figure. This tool gets you to a credible, sourced range for the demand and mediation. Nothing you enter leaves your browser except an anonymous usage count.
Next step: the medical record behind the cost items
Upload the chart and get a Bates-cited chronology of the injury, the treatment to date and the documented future needs, so each cost item in the demand traces to a page.
Upload the chart →Frequently asked questions
What is the present value of future medical expenses?
The lump sum that, invested today at the discount rate, would pay each future medical bill as it comes due, after each bill has been grown at medical inflation to the year it will be paid. It is the figure claimed as damages; the nominal total is context only.
What inflation and discount rates should I use?
Anchor both in a published source and show the range. The calculator defaults to the long-run growth of the BLS Consumer Price Index for medical care (series CPIMEDSL on FRED) for inflation and the 10-year Treasury constant-maturity yield (series DGS10 on FRED) for the discount rate, and lets you substitute others. Some jurisdictions apply a total-offset rule or a fixed statutory rate; check local law.
How are lifetime items handled?
Either for a fixed horizon equal to the remaining life expectancy at the person's age and sex from the CDC United States Life Tables, 2023 (the convention most life care plans use), or survival-weighted, where each year's cost is multiplied by the probability of being alive that year. State which method you used.
What if the injury itself shortens life expectancy?
The general-population table then overstates the horizon. A physician or life care planner should supply a case-specific figure, which you can enter as a fixed duration instead of lifetime.
Related: finding life expectancy and work-life expectancy for a lost-earnings claim and the medical damages valuation guide.