PURPOSE: Serious injuries or illnesses impose a significant burden on the affected individuals. This study examined the long-term recovery of health-related quality of life (HRQoL) after a serious injury or illness and quantified the economic costs attributable to the quality-adjusted life-years (QALYs) lost to serious injury or illness. METHODS: Data were sourced from the Household, Income and Labour Dynamics in Australia (HILDA) database. The propensity score matching-difference-in-differences (PSM-DiD) method was used to explore the recovery of HRQoL over a six-year follow-up period. HRQoL was measured by the short-form six-dimension utility index, physical health, and mental health. RESULTS: We found that those who suffered any serious injuries or illnesses had a decline of 0.020 in QALYs during the year of event, reducing further until a trough of 0.032 by the third year and thereafter began to recover. Further analyses revealed that although serious injuries or illnesses had a significantly greater loss in physical health, the loss in mental health persisted over a longer period. Finally, the economic cost associated with the lost in QALYs due to serious injuries or illnesses was estimated at 85 per person during the year of event and increased to a peak of ,250 per person by the end of the third-year post-exposure. CONCLUSION: Our findings highlight that follow-up care designed to mitigate the impacts of a serious injury or illness on people's HRQoL should consider cost-effective strategies that are long-lasting and support those affected throughout at least, the first three years of their injuries or illnesses.