OBJECTIVE. To quantify the economic effect on employers when the spouse or dependent of an employee is diagnosed with cancer. METHODS. Costs based on claims data for five major employers (number of employees exceeds 100,000) over the period of 1995-1998 were analyzed from the employers' perspectives. The employers' burden is measured in terms of direct health-related costs and indirect productivity costs (i.e., both lost worktime and reduced at-work performance). Costs for employees who had a family member with cancer were compared to costs for employees who did not. For employees who had a family member with cancer, the relationship between the employee's costs and the timing of the family member's cancer diagnosis and treatment was examined. Regression analyses were used to estimate the incremental costs associated with caring for a family member before, during and after the diagnosis of cancer. RESULTS. Caregiving costs were most pronounced during the 3-month period leading up to and the 3-month period following diagnosis. Loss of productivity accounted for most of the incremental costs and reached approximately $1,500 per employee per year. Medical and drug costs added approximately $230 per employee per year. When a family member suffered from anemia in addition to cancer, the costs during the anemia period (defined as four weeks preceding through four weeks following a claims diagnosis of anemia) were over 40 percent higher than in comparable cancer periods without anemia. CONCLUSIONS. The economic impact of caregiving for a family member with cancer is significant, and translates into increased workplace costs. Moreover, this cost increase is more pronounced when cancer-related anemia is present. These patterns suggest that programs to prevent or quickly treat a family member's cancer and any related anemia could yield indirect benefits to employers by reducing the burden on employees as caregivers.