High direct incremental healthcare costs post-fracture are seen in the first year, but total costs from a third-party healthcare payer perspective eventually fall below pre-fracture levels. We attribute this to higher mortality among fracture cases who are already the heaviest users of healthcare (“healthy survivor bias”). Economic analyses that do not account for the possibility of a long-term reduction in direct healthcare costs in the post-fracture population may systematically overestimate the total economic burden of fracture. High healthcare costs in the first 1–2 years after an osteoporotic fracture are well recognized, but long-term costs are uncertain. We evaluated incremental costs of non-traumatic fractures up to 5 years from a third-party healthcare payer perspective. A total of 16,198 incident fracture cases and 48,594 matched non-fracture controls were identified in the province of Manitoba, Canada (1997–2002). We calculated the difference in median direct healthcare costs for the year pre-fracture and 5 years post-fracture expressed in 2009 Canadian dollars with adjustment for expected age-related healthcare cost increases. Incremental median costs for a hip fracture were highest in the first year ($25,306 in women, $21,396 in men), remaining above pre-fracture baseline to 5 years in women but falling below pre-fracture costs by 5 years in men. In those who survived 5 years following a hip fracture, incremental costs remained above pre-fracture costs at 5 years ($12,670 in women, $7,933 in men). Incremental costs were consistently increased for 5 years after spine fracture in women. Total incremental healthcare costs for all incident fractures combined showed a large increase over pre-fracture costs in the first year ($137 million in women, $57 million in men), but fell below pre-fracture costs within 3–4 years. Elevated total healthcare costs were seen at year 5 in women after wrist, humerus and spine fractures, but these were somewhat offset by decreases in total healthcare costs for other fractures. High direct healthcare costs post-fracture are seen in the first year, but total costs eventually fall below pre-fracture levels. Among those who survive 5 years following a fracture, healthcare costs remain above pre-fracture levels.