Object. Detailed costs to individuals with hydrocephalus and their families as well as to third-party payers have not been previously described. The purpose of this study was to determine the primary caregiver out-of-pocket expenses and the third-party payer reimbursement rate associated with a shunt failure episode. Methods. A retrospective study of children born between 2000 and 2005 who underwent initial ventriculoperitoneal (VP) shunt placement and who subsequently experienced a shunt failure requiring surgical intervention within 2 years of their initial shunt placement was conducted. Institutional reimbursement and demographic data from Children's Hospital of Alabama (CHA) were augmented with a caregiver survey of any out-of pocket expenses encountered during the shunt failure episode. Institutional reimbursements and caregiver out-of-pocket expenses were then combined to provide the cost for a shunt failure episode at CHA. Results. For shunt failures, the median reimbursement total was $5008 (interquartile range [IQR] $2068-$17,984), the median caregiver out-of-pocket expenses was $419 (IQR $251-$1112), and the median total cost was $5411 (IQR $2428-$18,582). Private insurance reimbursed at a median rate of $5074 (IQR $2170-$14,852) compared with public insurance, which reimbursed at a median rate of $4800 (IQR $1876-$19, 395). Caregivers with private insurance reported a median $963 (IQR $322-$1741) for out-of-pocket expenses, whereas caregivers with public insurance reported a median $391 (IQR $241-$554) for out-of-pocket expenses (p = 0.017). Conclusions. This study confirmed that private insurance reimbursed at a higher rate, and that although patients had a shorter length of stay as compared with those with public insurance, their out-of-pocket expenses associated with a shunt failure episode were greater. However, it could not be determined if the significant difference in out-of-pocket expenses between those with private and those with public insurance was due directly to the cost of shunt failure. This model does not take into consideration community resources and services available to those with public insurance. These resources and services could offset the out-of-pocket burden, and therefore should be considered in future cost models.