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Background: The Taiwanese government implemented a stay-at-home order that restricted all community-based health promotion activities for the elderly by shutting down all community care centers from May 2021 to August 2021 to control the spread of COVID-19. Community-based dementia care centers were barely able to provide dementia care services during that period. Methods: The data used in this study were collected from a community-based dementia care center that was able to continue their dementia care services through a Tele-Health intervention program. The difference-in-differences methodology was applied to evaluate the effects of the Tele-Health intervention program on home-dwelling persons with dementia or mild cognitive impairment and on their primary caregivers during the COVID-19 pandemic. Results: The Tele-Health intervention program significantly increased the well-being of the participants and their primary caregivers, but the negative correlations between the Tele-Health intervention program and family functioning were also found to be significant. Conclusions: The significant substitution (negative) effects between the Tele-Health intervention program and family functioning raises the concern that promotion of the Tele-Health intervention program comes at the potential cost of a loss of family functioning. Policymakers should be cautious when considering the Tele-Health intervention program in response to pandemics and demographic transitions.