To estimate the direct and indirect cost burden of untreated insomnia among younger adults (age 18-64), and to estimate the direct costs of untreated insomnia for elderly patients (age 65 and over). A retrospective, observational study comparing insomnia patients to matched samples without insomnia. Self-insured, employer sponsored health insurance plans in the U.S. 138,820 younger adults and 75,558 elderly patients with insomnia, plus equal-sized, matched comparison groups. NA. Direct costs included inpatient, outpatient, pharmacy, and emergency room costs for all diseases, for six months before an index date. The index date for insomnia patients was the date of diagnosis with or the onset of prescription treatment for insomnia, some-time during July 1, 1999-June 30, 2003. Non-insomnia patients were assigned the same index dates as the insomnia patients to whom they were matched. Indirect costs included costs related to absenteeism from work and the use of short-term disability programs. Propensity score matching was used to find insomnia and non-insomnia patients who had similar demographics, location, health plan type, comorbidities, and drug use patterns. Regression analyses controlled for factors that were different even after matching was completed. We found that average direct and indirect costs for younger adults with insomnia were about $1,253 greater than for patients without insomnia. Among the elderly, direct costs were about $1,143 greater for insomnia patients. Insomnia is associated with a significant economic burden for younger and older patients.