Health is important to explain individuals’ productivity. Poor health can leads to less productivity and pushes into poverty. However, in Bangladesh, attention is hardly given in this issue. Emphasis of this study is to inform policy makers about health impact on labor productivity and its interventions. Study was based on statistical analysis of respondents aged 15-65 years from nationally representative Household Income Expenditure Survey-2005. Health status, productivity, and health impact is measured by days of illness 30 days prior to survey, natural logarithm of individuals’ hourly wage, and internal rate of return to health respectively. Analysis of rate of returns to health by urban and rural locations reveals improvements in health conditions have a greater impact on productivity. Improving individual health conditions can raise household wages and improve living standards. Therefore, national policies should focus on this issue to maintain social stability, economic growth and well-being of people.