OBJECTIVES: Rising life expectancy is associated with increasing prevalence of dementia in European countries. With progressing disease severity patients’ call on health care services and social support grows. Several studies stress the burden imposed on family members caring for dementia-patients. However, empirical data assessing the economic value of informal care compared to health insurance expenditures is scarce. Within the cluster-randomized IDA study health care service utilization and informal caregiving time were assessed for 383 community living individuals suffering from mild to moderate dementia. METHODS: To examine costs from a health insurance perspective administrative data on all types of services provided were collected and valued with corresponding administrative prices over a three-year period. Patients’ caregivers reported in yearly interviews the hours daily dedicated to the patient in care and supervision. The time provided for informal caregiving was valued by applying hourly wages of a nursing service and a domestic help respectively. Total costs and cost components were calculated from societal perspective and payers’ point of view and analyzed by relevant subgroups. RESULTS: Caring for a home-dwelling dementia-patient amounts annually to around €47.000 from societal perspective with informal care covering nearly 80% of this sum. For a patient with moderate dementia values assigned to informal care are approximately 70% higher than for a person with mild dementia. Health insurance has to spend €10,000 for an average dementia-patient per year, with services for long-term care representing the most costly part. CONCLUSIONS: Informal care is the major cost component in care for dementia, and it is strongly rising with disease progression. Changes in family structures and traditional living arrangements thus pose an enormous challenge regarding the future organization of dementia care. To maintain today’s care-setting, concepts fostering community-based dementia care and support to family caregivers need to be further developed.