Back ground: To access quality of care and overcome catastrophic out of pocket expense nationsrnworking on community based health insurance whereby risk pooling and sharing. To achieve this,rnhouseholds enrolled in the insurance and also renewed their membership since health insurance is anrninstrument in achieving universal health coverage. Even if the amount of the initial up take andrnenrollment is important, high dropout rate endangers the sustainability of community based healthrninsurance (CBHI) and enhances the existing enrollment problems.rnObjectives: To asses factors affecting dropout of community based health insurance (CBHI)rnmembers from community based health insurance (CBHI) scheme.rnMethods: Community based cross sectional study design was employed using interviewerrnadministered questioners and supplemented by qualitative in-depth interviewer questioners to assessrnfactors affecting dropout of CBHI in Yirgalem town. 3 kebeles were selected by using simplernrandom sampling method .And the study participants were selected by using systematic randomrnsampling technique. The sample size required for the study is 376.Quantitative data was entered in tornSPSS version 24 for analyses. Qualitative data was transcribed, analyzed manually using thernthematic area analysis approach.rn rnResults: The study found that educational statuses of respondents were found to be an associatedrnfactor for drop out of CBHI. Households who are illiterate were 1.73 times more likely to drop outrnfrom CBHI than those who were sinor and above, AOR = 1.73, 95% CI (0.365, 0.566). Sociorneconomic status of households also affect dropout. Household with wealth status of low incomernwere 2.5 times less likely to drop out from the CBHI than those medium wealth statuses, AOR = 2.5;rn95% CI (1.89, 3.40). While households with higher income group were 1.58 times more likely torndrop out than those middle income groups, AOR = 1.58; 95% CI (2.04, 4.89). Limited scope ofrnillness covered by the scheme is also reason and positively correlated with members to drop out fromrntheir membership (r=0.474 at p=0.00). rnConclusion: This study brings reasons and factors for drop out of CBHI membership. It is foundrnthat education, socio economic status, limited scope of illness, distance from health facility, qualityrnof health care services were correlated with dropout of CBHI. rnRecommendation: Regional Health Bureau, Zonal and woreda health office should work tornimprove quality of health care service, availability of drugs and functionality of laboratory rninstruments.