Medicaid Planning Service Break-Even: About $52K/Month

Fixed costs $7.9K Base overhead

Contribution margin 73% After variable costs

Break-even revenue $10.8K Monthly target

Break-even timing Month 3 Launch ramp

Break-even calculator

Test whether monthly revenue covers variable expenses and fixed costs for a Medicaid planning service.

Lean Base Full

Monthly revenue Use the monthly fee and case volume you expect to bill. $ Slow start Mature run Variable expenses Use costs that rise with each case, like document review, filing fees, referral commissions, and legal consults. $ Lower cost Higher cost

Money available to cover fixed costs $425,083 $577,083 revenue - $152,000 variable expenses

Margin ratio

74%

Covers fixed costs

Yes

Fixed monthly costs Use overhead you pay even before new cases come in. $ Lean overhead Heavy overhead

Break-even chart Revenue Total costs

Which expenses stay fixed, and which move with sales in this Medicaid planning service?

Cost classification

Break-even gets reliable only when client-driven spend is separated from monthly overhead. In the first operating year, the model breaks even in Month 3, so small classification errors can overstate margin fast.

Expense	Cost	Break-Even Treatment	Common Mistake
Professional Office Rent	Fixed	Use $4,500 per month as baseline overhead before contribution margin.	Spreading rent by client and hiding the true monthly hurdle.
CRM and Planning Software	Fixed	Use $850 per month unless the subscription changes with users or cases.	Treating software as variable without a usage-based charge.
Professional Liability Insurance	Fixed	Use $600 per month in the fixed overhead stack.	Leaving insurance out because it is not tied to a single client.
Legal Compliance Retainer	Fixed	Use $1,200 per month as recurring compliance overhead.	Mixing the retainer with case-specific legal consults.
Planner and Case Staff Salaries	Semi-fixed	Model salary in staffing steps: principal planner, case manager, administrative coordinator, junior planner, and outreach roles change as capacity expands.	Assuming payroll rises smoothly with each new client.
External Document Review	Variable	Use 8% of first-year revenue because review work moves with client volume.	Treating case-specific review as overhead instead of client-driven spend.
Medicaid Filing Fees	Variable	Use 4% of revenue across the forecast period.	Putting filing fees below the line instead of in contribution margin.
Marketing Budget and CAC	Semi-variable	Model the $45,000 first-year budget with $450 customer acquisition cost, so spend has both a planned base and volume-linked behavior.	Using total marketing spend only and ignoring acquisition efficiency.

How does break-even change across lean, base, and full operating cases for a Medicaid planning service?

Scenario table

Break-even shifts because revenue per family, billable hours, and staffing scale together. The lean case sits right on the edge, the base case clears it with a small cushion, and the full case has a wide buffer if referrals and onboarding keep pace.

Planning cases only; actual results will move with referral flow, case mix, and staffing pace.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean referral-light start	$44k	$12k	$32k	73%	$0k	Basically at break-even, so a small dip in referrals can turn it red.
Base service mix	$202k	$45k	$32k	61%	$9k	Clears break-even with a modest cushion, but CAC and case depth still matter.
Full staffed growth plan	$410k	$102k	$40k	75%	$267k	Well above break-even if staffing and referral flow hold.

What breaks the break-even plan if revenue slips or servicing costs rise?

Stress test

The base plan clears break-even with room to spare, but the cushion shrinks fast if first-year revenue misses, fixed overhead climbs, or variable spend moves above 27%. A 50% revenue drop still clears break-even, but it cuts the buffer sharply.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change; first-year revenue stays at $2.424M and variable spend stays at 27%.	$565k	$1.86M cushion	Strong cushion, but intake must stay steady.
Revenue shortfall	First-year revenue falls 50% to $1.212M.	$565k	$647k cushion	A big top-line miss still clears break-even, but the buffer gets thin.
Fixed-cost increase	Fixed overhead rises by $10k to $422k.	$578k	$1.85M cushion	Extra office or payroll cost matters most if intake slows too.
Margin pressure	Variable spend rises from 27% to 35%.	$634k	$1.79M cushion	Referral and legal costs push the break-even line up fast.
Combined pressure	Revenue falls 50%, fixed overhead rises by $10k, and variable spend rises to 35%.	$650k	$562k cushion	The plan still clears break-even, but the safety margin is much smaller.

What should the founder verify before signing the lease and adding payroll?

Founder checklist

Do not lock in rent or full payroll until referral volume is repeatable, the case mix clears break-even, and cash can absorb the early ramp. The model only works if the actual family mix matches the assumed fee and labor load.

1Signed families13 families/mo

Verify at least 13 signed families a month and a weighted Year 1 fee near $4,040 per family before you commit to fixed overhead.

2Fixed load$34.4K/mo

Your fixed stack is about $34.4K a month before variable case costs, so the $4,500 rent only works after referrals are steady.

3Contribution73% CM

Year 1 variable costs take 27% of revenue, so review-heavy cases need tight control or they will squeeze the 73% contribution margin.

4Case flow4.5 hrs

Each active customer takes about 4.5 billable hours a month in Year 1, so map intake, document collection, review, implementation, and application support before adding staff.

5Cash runway$813K

Hold at least the Month 2 minimum cash need of $813K because breakeven does not arrive until Month 3.

6CAC test$450 CAC

Test referral and paid acquisition at the $450 CAC against the $45K Year 1 marketing budget before you scale spend.