Objective. To estimate incremental healthcare expenditures associated with thyroid disorders among individuals with diabetes. Research Design and Methods. Cross-sectional study design with data on adults over 20 years of age with diabetes (N=4,490) from two years (2007 and 2009) of the Medical Expenditure Panel Survey (MEPS) was used. Ordinary least square regressions on log-transformed total expenditures and type of healthcare expenditures (inpatient, emergency room, outpatient, prescription drug, and other) were performed to estimate the incremental expenditures associated with thyroid disorders after controlling for demographic, socioeconomic, health status, lifestyle risk factors, macrovascular comorbid conditions (MCCs), and chronic conditions (CCs). Results. Among individuals with diabetes, those with thyroid disorders had significantly greater average annual total healthcare expenditures ($15,182) than those without thyroid disorders ($11,093). Individuals with thyroid disorders had 34.3% greater total healthcare expenditures compared to those without thyroid disorders, after controlling for demographic, socio-economic, and perceived health status. Furthermore, controlling for CCs and MCCs, this increase in expenditures was reduced to 21.4%. Conclusions. Among individuals with diabetes, thyroid disorders were associated with greater healthcare expenditures; such excess expenditures may be due to CCs and MCCs. Comanagement of CCs and reducing MCCs may be a pathway to reduce high healthcare expenditures.