Free Tool

Discounting Calculator for Health Economics

Convert future costs or health effects into present values with annual discounting, for a single amount or an equal amount each year. Pick a published HTA discount rate from the presets or type your own.

The calculator opens with the hypothetical worked examples below.

Discount rate

What are you discounting?

Currency (symbol only)

Annual discount rate

NICE (England) rate for costs.

Presets from published HTA guidelines

Reference case: 3.5% a year for costs and health effects; 1.5% may be considered only in specific circumstances. Source : NICE health technology evaluations manual (PMG36) (opens in a new tab)
Reference case: 1.5% a year for costs and outcomes, with 0% and 3% as sensitivity analyses. Source : CDA-AMC Guidelines for the Economic Evaluation of Health Technologies, 4th edition (opens in a new tab)
Institute for Clinical and Economic Review reference case: 3% a year for costs and outcomes. Source : ICER Reference Case (opens in a new tab)
2.5% a year for costs and outcomes over horizons under 30 years (the rate when the guide was published in 2020), then falling gradually to a 1.5% floor. Source : HAS Choices in methods for economic evaluation (2020) (opens in a new tab)
Differential discounting: 3% a year for costs and 1.5% a year for health effects. Source : Zorginstituut Nederland Guideline for economic evaluations in healthcare (2024) (opens in a new tab)

Rates checked against the linked documents on 29 October 2026. Guidelines are revised, so confirm the current version before relying on a rate.

Present value

Future cost

Year in which it occurs

Year 1 is the first year and is not discounted.

Discount factor, year 5: 0.871442; 1 ÷ (1 + 0.035)^4
Present value: £8,714.42

PV = £10,000 × 0.871442 = £8,714.42

Discount factors for the first 10 years

Discount factors at 3.5% a year, first year undiscounted
Year t	t − 1	Discount factor	Cumulative
1	0	1.0000	1.0000
2	1	0.9662	1.9662
3	2	0.9335	2.8997
4	3	0.9019	3.8016
5	4	0.8714	4.6731
6	5	0.8420	5.5151
7	6	0.8135	6.3286
8	7	0.7860	7.1145
9	8	0.7594	7.8740
10	9	0.7337	8.6077

At 3.5% a year. Discount factor = 1 ÷ (1 + r)^{t − 1}. The cumulative column is the sum of the factors up to that year: multiply it by an equal annual amount to get the present value of that amount over the years shown.

Educational tool. This calculator is for learning and quick checks. It is not a substitute for a full economic model, which handles time, uncertainty and the methods an HTA body requires, or for an HTA submission. Calculations run in your browser and the numbers you enter are not stored.

Method

How the calculation works

Discounting converts amounts that occur in the future into their equivalent value today. This calculator uses annual discounting with the first year undiscounted: an amount that occurs in year t (t = 1, 2, 3, …) is multiplied by a discount factor.

DF_t = 1 ÷ (1 + r)^{t − 1}

Single amount: PV = V × DF_t = V ÷ (1 + r)^{t − 1}

Equal annual amount: PV = A × Σ_t=1..N 1 ÷ (1 + r)^{t − 1}

= A × (1 + r) × [1 − (1 + r)^−N] ÷ r, for r > 0 (PV = A × N when r = 0)

DF_t: Discount factor for year t: the weight applied to a cost or health effect that occurs in that year.
t: Year in which the amount occurs, counted from the start of the analysis: year 1 is the first year and is not discounted.
r: Annual discount rate as a decimal, for example 0.035 for 3.5%.
V: A single future amount: a cost, or a health effect such as QALYs.
A, N: An equal amount occurring in each year, and the number of years it occurs (years 1 to N).
PV: Present value: the amount expressed in today's terms after discounting.

Other conventions exist. Some models discount from the end of the first year (V ÷ (1 + r)^t), by model cycle, or continuously, and some guidelines change the rate over very long horizons. Check which convention the guideline or model you are working with uses. The QALY calculator applies the same convention to health states that last part of a year.

Worked example

Worked examples (hypothetical)

Both examples use costs in pounds and a rate of 3.5% a year. The numbers are hypothetical and are the default inputs of the calculator above.

Single future amount: £10,000 in year 5

DF₅ = 1 ÷ 1.035⁴ = 1 ÷ 1.147523 = 0.871442
PV = £10,000 × 0.871442 = £8,714.42

Equal annual amount: £1,000 a year for 10 years

Sum of DF₁ to DF₁₀ = 1 + 0.9662 + 0.9335 + … + 0.7337 = 8.607687
PV = £1,000 × 8.607687 = £8,607.69
Undiscounted total = £1,000 × 10 = £10,000.00
Reduction from discounting = £10,000.00 − £8,607.69 = £1,392.31

The closed-form formula gives the same sum: 1.035 × (1 − 1.035⁻¹⁰) ÷ 0.035 = 8.607687. The table of discount factors in the calculator shows each year’s factor and the running total.

In practice

How HTA bodies use this

Each methods guide behind the presets states a reference-case discount rate for costs and health effects. The rates differ: CDA-AMC also asks for sensitivity analyses at 0% and 3%, and Zorginstituut Nederland discounts health effects at a lower rate than costs. Check the guide of the HTA body you are working with.

Guideline	Costs	Health effects
NICE (England)	3.5%	3.5%
CDA-AMC (Canada)	1.5%	1.5%
ICER (US)	3%	3%
HAS (France)	2.5%	2.5%
Zorginstituut (Netherlands)	3%	1.5%

Reference-case rates as stated in each linked document, checked on 29 October 2026. The notes next to each preset in the calculator summarise the conditions, such as NICE’s 1.5% option and the HAS rate for horizons beyond 30 years.

In practice discounting is applied inside the economic model, year by year or cycle by cycle, to both arms, before the ICER is calculated. Perspective, costing and discounting are covered in Module 5: Health Economics Fundamentals, and how models apply them in Module 8: Economic Modelling.

FAQ

Frequently asked questions

Discounting converts future costs and health effects into present values, so that options whose costs and benefits fall at different times can be compared on the same basis. Each future year is multiplied by a discount factor; under the convention used here the factor for year t is 1 ÷ (1 + r)^(t − 1).

If costs were discounted and health effects were not, simply delaying a programme would keep making it look more cost-effective. Discounting both keeps comparisons consistent over time. Some guidelines use the same rate for costs and effects; others, such as Zorginstituut Nederland, use a lower rate for health effects (1.5%) than for costs (3%).

Not in this calculator. Year 1 has a discount factor of 1, year 2 is divided by (1 + r), year 3 by (1 + r)², and so on. The CDA-AMC guidelines, for example, ask for costs and outcomes that occur beyond one year to be discounted. Some models instead discount from the end of year 1, by cycle or continuously, so check the convention your guideline or model uses.

No. Inflation adjustment converts costs from different price years into a single price year. Discounting reflects the lower value placed on costs and benefits that occur later, and it is applied to costs that are already expressed in the prices of one year.

Use the rate in the methods guide of the HTA body or payer you are preparing the analysis for. The presets on this page show published reference-case rates with links to the source documents. Guidelines are revised over time, so check the current version before you rely on a rate.

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Go further

Learn the Methods Behind the Numbers

The HTA Course covers costing, discounting, QALYs, the ICER and economic modelling in 15 modules and 79 self-paced lessons, with worked examples throughout.