How is this calculated?
Magic.
Haha... just kidding...
You can charge whatever you wish, of course. Some physicians are worried they are charging too much, and others fret they aren't charging enough to get paid fairly. This calculator exists to put both sides at ease - to give you an idea of what it means to get paid fairly and also charge a fair and reasonable price to members.
So, the details...
Every cost you enter is converted into an annual figure. Benefits & payroll burden percentage is applied to the salaries, then the reserve percentage (at the bottom) is then added on top of everything: salaries, benefits & payroll, and all of your fixed overhead. That total is divided across a full panel with everyone paid their desired salary. That gives the individual membership price. All of the other prices (household, employer groups, etc.) are based upon that individual member price.
Some assumptions that are made: instead of charging per-person, you'll have more success charging per household unit (individual, couple, etc.). Some household units are 7 people, some are 4, but they pay the same. This calculator assumes that individuals = 1 person, couples = 2 people, single parent families = 3 people, and families are 4 people. Not only that, it assumes that your panel is made up of about 30% individuals, 30% couples, and 40% families. If you expect to market to more individuals and less families, you could afford a slightly cheaper individual rate. If you're family-heavy, then these amounts are about right.
The panel size you need to survive is a strict output, not a guess (hence the 'minimum' salaries available). In most businesses, the owner's salary is the last thing to fill after all the other hard costs are met (many of us call that the 'break-even' point - before we're paid as an owner). This is why I've included the "What you need to survive" section - which is based off of the 'minimum' values you put for yourself as a provider, any staff that might be willing to be paid less than they should at first (spouses, mostly), and perhaps other providers willing to be paid a base salary and then bonused after minimums are met.
When more than one person has a variable salary, money above the floors is split in proportion to desired salary — a physician wanting $300k and one wanting $200k move up 60/40, not 50/50. Anyone who reaches their desired number stops there and their share is redistributed to whoever is still short. Of course this is where you will have room to adjust your own practice, as it will likely be less formulaic than this with your own variables to consider.
Five numbers are fixed rather than left up to you. They're simply my advice...
- Household pricing is a multiple of the individual rate, built from a per-head rule: 1.0 for the first adult, 0.8 for a second, 0.35 per child, assuming two children. That gives 1.8× for a couple, 1.7× for a single-parent family, and 2.5× for a family. Households use less care per head than their size suggests, so pricing them at full multiples prices you out (honestly this is something we're stealing from the insurance industry - they've figured this out, so we get to borrow from them).
- The household mix is assumed to be 30% individual, 30% couple, and 40% family memberships. Single-parent families are priced so you can quote them, but they're not included in the calculation - as they typically make up a small percentage of panels.
- Prices are rounded up to the nearest $5, never down. Honestly, I just like even numbers and it makes sense to move them up, not down.
- Employer memberships are priced at 90% of retail. The discount reflects the volume, saving on administrative effort, and typically fewer visits per employee versus a typical retail member. I advise not giving a discount to an employer group unless you're getting one check for multiple 'households.' I recommend starting that discount at 5 employees. You may want a deeper discount for 10+ or 20+ lives - that's up to you.
- HSA thresholds are $150/month per person and $300/month for two or more (as of 2026). Above these, HSA dollars can't be used toward a membership, which materially changes how affordable you look. The calculator flags it rather than stopping you.
Why not just charge per person, or per child? My advice is to keep things simple. I'm borrowing from the insurance industry, where they've figured out that charging per person isn't as successful (or as simple) as groups of people. Plus, if you work with employer groups that offer any kind of insurance or other health benefit alongside your membership, your pricing will fit right alongside it. I highly recommend sticking to the simple setup rather than charging per person - you'll find that it allows more people the ability to afford your membership.