This paper examines the effect of remittance inflows on health care expenditure in Nepal using the Nepal Living Standards Survey 2010–2011. Using the recursive three‐stage least square regression method, the propensity score matching method, and the Oaxaca–Blinder decomposition method, we find a positive and significant effect of remittances on health care expenditure. In particular, our analysis shows a 0.099% increase in health care expenditure for every 1% increase in overall remittances. This effect increases to 0.189% for earned remittances (remittances received from a household member). We also find that remittance‐receiving households with at least one migrant family member have different health care spending behavior than those with no migrant members.