BACKGROUND: Disability and chronic conditions both have an impact on health expenditures and although they are conceptually related, they present different dimensions of ill-health. Recent concepts of disability combine a biological understanding of impairment with the social dimension of activity limitation and resulted in the development of the Global Activity Limitation Indicator (GALI). This paper reports on the predictive value of the GALI on health care expenditures in relation to the presence of chronic conditions. METHODS: Data from the Belgian Health Interview Survey 2008 were linked with data from the compulsory national health insurance (n = 7,286). The effect of activity limitation on health care expenditures was assessed via cost ratios from multivariate linear regression models. To study the factors contributing to the difference in health expenditure between persons with and without activity limitations, the Blinder-Oaxaca decomposition method was used. RESULTS: Activity limitations are a strong determinant of health care expenditures. People with severe activity limitations (5.1%) accounted for 16.9% of the total health expenditure, whereas those without activity limitations (79.0%), were responsible for 51.5% of the total health expenditure. These observed differences in health care expenditures can to some extent be explained by chronic conditions, but activity limitations also contribute substantially to higher health care expenditures in the absence of chronic conditions (cost ratio 2.46; 95% CI 1.74-3.48 for moderate and 4.45; 95% CI 2.47-8.02 for severe activity limitations). The association between activity limitation and health care expenditures is stronger for reimbursed health care costs than for out-of-pocket payments. CONCLUSION: In the absence of chronic conditions, activity limitations appear to be an important determinant of health care expenditures. To make projections on health care expenditures, routine data on activity limitations are essential and complementary to data on ...