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Hepatitis E disease is responsible for substantial morbidity in Nepal. A socioeconomic analysis was performed to describe the costs and the effects of hepatitis E disease (HE) on health status in a Nepalese population living in the Kathmandu Valley. A modified health status index was used to quantify healthy days lost associated with HE. One hundred thirty-four individuals recently recovered from HE were interviewed in June 1998. The median age was 22 years and 60% were female. Study participants were sick and bedridden for a median of 22 and 10 days, respectively. The median healthy days lost per individual was 35 (768,000 total per region). The median cost of illness per individual, including direct and indirect, was $37 ($1,238,676 total per region). The percentage of yearly income lost for wage earners totaled 19.4%. Hepatitis E disease is associated with significant costs and loss of healthy days in Nepal. Further research is warranted to understand and limit this common disease.