COVID-19 was a major health shock that is believed to disproportionately affect the livelihood of poor and vulnerable population. This study investigates the impact of COVID-19 on household welfare, the latter measured in terms of food and non-food consumption. More importantly, this study examines the role of remittances as an insurance strategy to cope with the effect of COVID-19 during the times of the health crisis. The study uses a unique nationally representative household survey data collected by the Central Department of Economics, Tribhuvan University in 2021. For a cleaner identification of the impact, the study also considers the endogeneity of remittances by employing a two stage least squares method. The results show reduced probabilities of 8.6 and 12.4 percentage points of both food and non-food consumption respectively in highly affected areas. This finding is true for both the actual and self-reported consumption profile reported by the households. Further, the study shows that the remittance recipient household did not experience COVID-19-induced fall in food and non-food consumption suggesting that remittances acted as an insurance strategy to mitigate the effect of COVID-19 on household consumption. Interestingly, in the specification relating to the non-food consumption, the result shows that the remittance receiving COVID-19 affected households, actually experienced increase in their non-food consumption. This study is expected to guide policy makers to get insights about the role of remittance to minimize the effects of health shocks on household welfare.