The aims of this study were to investigate the proportion of households facing catastrophic health expenditures based on household income quintiles, and to analyze the relationship between expenditures and household income quintile decline.

Study data were obtained from an annually conducted survey of the 2012–2013 Korean health panel. There were 12,909 subjects aged 20–64 years from economically active households, whose income quintile remained unchanged or declined by more than one quintile from 2012 to 2013. Logistic regression analysis was performed to determine whether catastrophic health expenditures in 2012 were related to more than one quintile income decline in 2013.

Households facing catastrophic health expenditures of ≥ 40%, ≥ 30%, and ≥ 10% of a household’s capacity to pay, were 1.58 times (p < 0.003), 1.75 times (p < 0.000), and 1.23 times (p < 0.001) more likely to face a decline in income quintile, respectively.

Over a 1 year period, the proportion of households facing more than one quintile income decline was 16.4%, while 2.1% to 2.5% of households in Korea faced catastrophic health expenditures. Catastrophic health expenditure experienced in 2012 was significantly associated with income quintile decline 1 year later. Therefore, lowering the proportion of households with catastrophic health expenditure may reduce the proportion of households with income quintiles decline.