Background <p>The COVID-19 pandemic has exacerbated poverty among vulnerable populations worldwide. However, no study has clarified the extent to which COVID-19 infection increases the likelihood of becoming a welfare recipient in Japan. Therefore, we examined the association between diagnosed/confirmed COVID-19 infection and the probability of receiving public assistance.</p> Methods <p>This retrospective cohort study used data from the National Database of five Japanese prefectures. We conducted multivariate analyses using Generalized Estimating Equations (GEEs) as the primary analytic approach. The outcome variable was whether a participant received public assistance. The main exposure variable was diagnosed/confirmed COVID-19 infection status, and covariates included age, sex, and quarter. Additionally, we used a General Linear Model (GLM) to assess the risk of requiring public assistance within three months after infection among individuals with diagnosed/confirmed COVID-19 as a secondary analysis. Explanatory variables in this analysis included age, sex, prescriptions, and utilization of care services in 2019.</p> Results <p>The total sample comprised 16,712,657 participants (7,247,496 with diagnosed/confirmed COVID-19 and 9,465,161 without diagnosed/confirmed COVID-19). The GEE analysis showed that the Incidence Rate Ratio (IRR) was highest in the month of diagnosed/confirmed COVID-19 infection (IRR: 2.57, 95% CI: 2.54–2.59, <i>p</i> &lt; 0.001) and subsequently showed a gradual decline. The GLM analysis indicated that not using outpatient or inpatient care services in 2019 was associated with the highest risk of receiving public assistance (IRR: 25.3, 95% CI: 23.3–27.5).</p> Conclusions <p>The diagnosed/confirmed COVID-19 infection was associated with an increased likelihood of receiving public assistance. Furthermore, individuals who had not utilized hospital or clinic services in 2019 were at the highest risk of becoming welfare recipients compared with other individuals.</p>