OBJECTIVES: This study was conducted to examine characteristics of patients with tinea capitis (TC) and project national direct treatment costs in patients with TC from a third-party payers' perspective. METHODS: This retrospective cohort study is based on the MarketScan(r) research database during January 1, 1999 to December 31, 2002. Study patients were identified if they had a diagnosis for TC (ICD-9 code: 110) and had continuous medical and prescription coverage. Direct treatment costs included costs associated with physician office visits, hospitalizations, and prescription drugs, calculated from the third-party payers' perspective after adjusting to 2002 US dollar values. The parametric mean was calculated because treatment costs were observed to be skewed. Appropriate distribution of treatment costs was selected based on testing with mixed exponential, mixed weibull, and mixed log-normal distribution. The nationwide direct treatment costs attributable to TC were projected based on the U.S. privately insured population. RESULTS: In 2001, 2791 diagnosed patients with TC were identified of whom 60% were new (incidence cases) and 40% were recurrent. TC was more prevalent in children under 16 years old (62%), among males (59%), and those in the southern region (64%) of the U.S. The average annual cost per patient was $224 (parametric mean: $220), which was comprised of costs for prescription drugs (63%), outpatient visits (36%), and hospitalizations (1%). Costs for an oral antifungal accounted for 43% of prescription costs and topical antifungal for 11%. Average costs for patients < 3 years old were half of those for patients > 50 years old ($185 vs. $351). The national direct treatment costs attributable to TC were estimated to be $42,948,362 in US privately insured employees. CONCLUSION: This study demonstrates that patients with TC consume a substantial amount of health care resources from the perspective of the third party payers.