Objective: To estimate the incremental effect of waist circumference (WC) on health-care costs among overweight and obese subjects after adjusting for body mass index (BMI). Methods: A prospective study. The subjects were members of Internet panels in the United States (US) and Germany. 10,816 individuals (United States: n = 5410; Germany: n = 5406) aged 30-70 years with BMI scores between 20 and 35 kg/m2 were recruited and grouped by category: healthy weight (BMI 20-24.9 kg/m2), overweight (BMI 25-29.9 kg/m 2), and obese (BMI 30-35 kg/m2). Within the overweight and obese categories, the individuals were stratified by sex and within those subgroups, characterized as above or below the median WC. The subjects self-reported weight, WC, and health-care resource use at baseline, 3 months, and 6 months using online questionnaires. Over 65% of the recruited subjects completed all surveys. Resource utilization was translated into health-care costs by multiplying unit costs from national sources in each country. Annualized health costs were summarized for subjects with low and high WC within the overweight and obese categories. A two-part model generated predicted annual costs because of the WC difference controlling for BMI, demographic, and lifestyle variables among the overweight and obese subjects. Results: When BMI and other characteristics are constant, annual health-care costs are 16% to 18% higher in Germany and 20% to 30% higher in the United States for the subjects with a high WC compared with subjects with a low WC. Conclusions: Targeting people with a high waist circumference for weight management whether they are overweight or obese may maximize cost-efficacy. © 2010, International Society for Pharmacoeconomics and Outcomes Research (ISPOR).