Correctly Calculating the Present Value of Future Medical Costs in Personal Injury Cases

By Henry Fishkind, PhD; and Byron Walden, CPA, CVA, MBA

Calculating the present value of future medical costs in personal injury (PI) cases is both necessary and can  sometimes be difficult. The calculations involve three key sets of analyses: (1) a life-care plan estimating the future costs for medical and life-care services for the injured party; (2) a forecast for rates of medical and life-care cost inflation over the same period of time as the expected services; and (3) the calculation of an appropriate discount rate to reduce the future trajectory of medical and life-care costs to their present value. We highlight each of these issues in this short PDF article.