How are future medical expenses calculated in a US personal injury case?
Future medical expenses are calculated as the present value of all reasonably certain future costs. A life care planner prepares a Life Care Plan itemizing each anticipated expense. An economic expert then converts those future costs to present value using a discount rate. Future medical expenses awarded by a jury are not subject to income tax.
What is a Life Care Plan?
A Life Care Plan is a document prepared by a certified life care planner (typically a nurse or rehabilitation specialist) that itemizes all anticipated future medical, personal care, and equipment needs resulting from the injury. It is the foundation of a future care damages claim and is usually required to support awards exceeding $100,000.
What discount rate is used in US personal injury cases?
US courts typically use a net discount rate of 1.5–3.5%, reflecting the expected real rate of return after inflation. Some states specify the discount rate by statute or court rule. Economists on both sides often disagree on the rate — the plaintiff's economist uses a lower rate (higher award) and the defendant's economist uses a higher rate (lower award).