Background: Community-based health insurance is an emerging strategy for providing financial protection against health-related poverty. They have developed into alternative health financing mechanisms for out-of-pocket expenses in low-and middle-income countries. Hence, the aim of this study was to assess the drop-out rate of community-based health insurance membership and associated factors in Dera district, Northwest Ethiopia, 2020. Methods: Through systematic random sampling techniques, a community-based crosssectional study was conducted on 584 participants. A structured interviewer-based administered questionnaire was used for data collection. EpI data is used for data entry, while SPSS 20 version is used for analysis. P-value <0.2 binary logistic regression was entered into multivariable logistic regression. Variables with a P-value of <0.05 and a 95% confidence level were considered to be significantly associated with the outcome variable. Results: The CBHI dropout rate in the district is calculated to be 37.3% (95% CI: 34, 41%) in the district. Length of enrollment, ≥4 years in the CBHI program (AOR=0.39, 95% CI: 0.26, 0.59), households visit the health facilities 4-6 times a year (AOR=1.92, 95% CI: 1.10, 3.32), have no access to the hospital (AOR=1.68, 95% CI: 1.02, 2.77), knowledge of CBHI (AOR=1.93, 95% CI: 1.32, 2.82) and official position holder for decision-making in the households (AOR=2.07, 95% CI: 1.33, 3.23) were factors associated with CBHI dropout rate in the scheme. Conclusion: This finding confirmed that the CBHI dropout rate in the district was high. Length of enrollment, health facility visit, hospital accessibility, knowledge of CBHI, and official position holders used for decision-making are significantly associated with the CBHI dropout rate. Therefore, emphasis should be given on improving members' understanding of the CBHI package of benefits; increasing access to hospitals and empowering women will increase the utilization of CBHI. In addition, the quality of care for CBHI patients can be improved when they had access to health services.