This article estimates dementia's incremental cost to the traditional Medicare program. The authors compared Medicare expenditures for 60 months following a claims-based dementia diagnosis to those for a randomly selected, matched comparison group. Dementia's five-year incremental cost to the traditional Medicare program is approximately $15 700 per patient, nearly half of which is incurred in the first year after diagnosis. Increased costs for individuals with dementia were driven by more intensive use of Medicare part A covered services.