The economic impact of chronic illness has important implications for medical practice and health policy. To determine the yearly costs of illness for those who have rheumatoid arthritis, a detailed, self-administered questionnaire was developed. The questionnaire was completed by 940 patients. Direct costs (recorded as charges) include the average annual expenditures by all patients and third party payers for: hospital care ($913), physician costs ($206), other health professional visits ($71), medications ($436), laboratory tests ($217), radiographs ($116), assistive devices ($24), and nontraditional therapies ($22). The total annual medical costs per patient were $2,533. In a multivariate analysis that controlled for age, sex, education, and disease duration, the outpatient costs, inpatient costs, and total costs were all positively related to the Health Assessment Questionnaire Disability Index (P f less than 0.01) and global health (P f less than 0.01), but were not associated with self-reported pain.