OBJECTIVES: The two major types of diabetes, Type I and Type II diabetes, can have life-threatening complications, which often lead to significant adverse economic consequences. This study investigates the extent to which Type I and Type II diabetes impose significant financial burdens on an employer METHODS: The data source is a rich administrative claims database from a national, Fortune 100 manufacturer. It includes all medical, pharmaceutical, and disability claims for employees, spouses, dependents, and retirees (n>100,000). The diabetes research sample consists of individual with at least two medical and/or disability claims for diabetes or at least one prescription drug claim for a hypoglycemic agent. Resource utilization by diabetes patients, who are identified as either Type I or Type II diabetics, is contrasted with that of matched samples from the employer’s overall beneficiary population. RESULTS: Direct (medical and pharmaceutical) and indirect (disability and sporadic absenteeism) costs of Type I and Type II diabetes are analyzed. The total average per capita annual costs are $2,612 for the Matched Type I Control sample compared to $9,397 for Type I diabetics, and $3,432 for the Matched Type II Control sample compared to $7,639 for Type II diabetics. While Type I diabetics cost the employer more than Type II diabetics on average, the cost of Type II diabetes patients, who were prescribed insulin, exceeds the cost of Type I diabetes patients. Also, while the costs of both types of diabetes are relatively high, less than 50% of total medical costs for these patients are for the treatment of diabetes or related co-morbid conditions. CONCLUSIONS: Diabetes adds a significant financial burden on the employer. The resources used by both types of diabetics are substantial, not only for the treatment of diabetes, but also for the treatment of related co-morbid conditions, as well as other conditions.