Abstract Background In recent years, supported by non-governmental organizations (NGOs), a number of community-based health insurance (CBHI) schemes have been operating in rural India. Such schemes design their benefit packages according to local priorities. This paper examines healthcare seeking behaviour among self-help group households with a view to understanding the implications for the benefit packages offered by such schemes. Methods We use cross-sectional data collected from two of Indiaâ s poorest states and estimate an alternative-specific conditional logit model to examine healthcare seeking behaviour. Results We find that the majority of respondents do access some form of care and that there is overwhelming use of private providers. Non-degree allopathic providers (NDAP) also called rural medical practitioners are the most popular providers. In the case of acute illnesses, proximity plays an important role in determining provider choice. For chronic illnesses, cost of care influences provider choice. Conclusion Given the importance of proximity in determining provider choice, benefit packages offered by CBHI schemes should consider coverage of transportation costs and reimbursement of foregone earnings.