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This study aims to investigate the evolution of financial protection of households against OOP in South Korea, where subsequent policies of expanding benefit coverage have been implemented primarily focusing on several severe diseases, by measuring catastrophic healthcare expenditure (CHE) and the characteristics of households vulnerable to CHE. Using the Korea Health Panel 2011–2018, this study analyzed CHE trends by the targeted severe diseases and other health problems and household income and examined the determinants of CHE using binary logistic regression. Our findings showed that CHE decreased in households with the targeted severe diseases but increased in households experiencing hospitalization that were not related to the targeted diseases, which appeared to have a significantly higher likelihood of CHE in 2018 than households with the targeted severe diseases. In addition, CHE was more prevalent and increased or remained stagnant among households whose heads had health problems than others. Inequalities in CHE also increased, showing increased Concentration Index (CI) and increased incidences of CHE in the lower income quartile during the study period. These results suggest that the current policies are insufficient to achieve its financial protection goals against healthcare expenditure in South Korea. In particular, benefit expansions targeting a specific disease may cause inequitable distribution of resources and may not enhance protection against households’ financial burden.