Ageing in India is leading to an increase in chronic diseases. Given the limited health insurance coverage, this could lead to a variety of economic- and access-related consequences for the households. Against this backdrop, this article aims at examining the impact of the presence of the elderly on household health expenditure, avoidance of treatment, loss of income and use of alternate sources of funding to pay for care. The article uses data from 2004 National Sample Survey Organisation survey on healthcare for two Indian states, namely, Bihar and Kerala. The rate of catastrophic health expenditure (CHE) is found to be higher in Kerala and is associated with a higher proportion of households having elderly members, who, in turn, have higher incidence of chronic disease. While the presence of elderly in the household, incidence of chronic disease and treatment from private sources are linked to CHE, our results suggest that other groups, such as households without elderly, may simply be delaying the economic consequences of paying for healthcare by borrowing. Though the ageing population is leading to increased health expenditure for households due to increased chronic illness, the impact of using private treatment is much less clear.