Objectives One of the challenges facing societies today is the increased medical expenses of the elderly. Therefore, identifying the factors associated with this increase can help health policymakers control the costs imposed on the elderly and their families. This study aims to identify the factors related to the increase in hospitalization costs of the elderly with circulatory system diseases using the generalized gamma marginalized two-part model. Methods & Materials In this retrospective cohort study, 335 samples were selected by a simple random sampling method from among the older patients of Imam Khomeini and Golestan hospitals in Ahvaz, Iran during 2015-2016 having circulatory system diseases and age ≥60 years. The relationship of age, gender, hospitalization status in intensive care unit (ICU), marital status, admission season, and number of hospitalization days with the increase in treatment costs of the elderly was examined using the generalized gamma marginalized two-part model in SAS 9.4 software. The response variable was the patients’ treatment costs. The significance level was set at 0.05. Results The mean age of participants was 70.718.27 years, where 54% were female and 46% were male. The average medical costs in patients admitted to ICU was 3.70 times higher than that in patients who were not admitted to this unit. The odds ratio showed that, for each day of increase in hospital stay, the hospitalization costs of the patients increased by 1.11. The hospitalization costs for older men were 1.67 times higher than in older women. In single patients, it was 2 times higher than in married patients. Moreover, with each year of increase in age (after age 60), the hospitalization costs increased by 0.96. Using the marginalized two-part model, it was found that the variables of age, number of hospitalization days, marital status, gender, and admission to ICU had a significant relationship with the increase in the hospitalization costs of the elderly (P<0.05). Conclusion The burden of hospitalization costs on younger elderly with circulatory system diseases is higher. Older men incur more hospital costs than older women, and single elderly people incur more hospital costs than married ones. The increase in the number of hospitalization days is another factor that can increase the hospitalization costs of the older patients, especially in those admitted to ICU.