A method for estimating the voltage of a battery element of a vehicle battery system is provided. The method comprises providing a balancing/sensing circuit having a series combination of a balancing switch and a balancing resistive element electrically connected in parallel with the battery element, and measuring the voltage across the combination of the balancing switch and balancing resistive element when the balancing switch is presumed to be in a “closed” state. The method further comprises deriving a compensated value for the measured voltage using empirically-derived data, wherein the compensated value compensates for a voltage drop occurring in the balancing/sensing circuit when the balancing switch is in the “closed” state and represents an estimate of the voltage of the battery element. A battery system is also provided that includes a battery element, a balancing/sensing circuit, a sensor, and a control module configured to perform the method described above.