Health insurance is among the solutions promoted in developing countries since 1990s to improve access to health care services because it avoids direct payments of fees by patients and spread the financial risk among all the insured. Community based health insurance is an emerging and promising concept which addresses health care challenges faced in particular by the rural poor and workers of informal sector. Moving away from out of pocket (OOP) payments for health care at the time of use to prepayment through health insurance is an important step towards financial hardships associated with paying for health services. Ethiopia is a low income country with more of health spending out of pocket payment by households. Community based health insurance was introduced in Ethiopia in 2010.It covers only the rural community and informal sectors. This paper evaluates the impact of community based health insurance on health service utilization by providing financial protection in woreda kilteawlaelo for these rural community and informal sector workers. The insurance coverage increased access to public facility services. The insured are also better protected from large financial burden due to health expenditures than the uninsured .The study suggests that more attention needs to be paid to expanding insurance coverage and setting an appropriate benefit
