Why Your Salary This Month May Get Extra Deductions

Your November take-home pay could be taking a 2.75% hit if regulations being finalised to operationalise the Social Health Insurance Act (SHIF), 2023, require an immediate shift from the current National Health Hospital Insurance Fund (NHIF) contribution structure. 

This follows the Thursday, November 23, gazettement of the commencement of the Act that replaces the NHIF by Health CS Susan Nakhumicha. 

This paves way for a raft of reforms in health financing including the introduction of three funds namely; the Primary Healthcare Fund, Social Health Insurance Fund and Chronic Illness and Emergency Fund.

To raise monies for SHIF, the Act stipulates a mandatory 2.75% deduction of the gross salary of all employed Kenyans with a minimum contribution of Ksh300 down from the previous Ksh500 in the defunct NHIF. There is no set maximum deduction. 

With the gazettement, the SHIF will be governed by the Social Health Authority (SHA) whose board has already been appointed. Dr. Timothy Olweny will chair the SHA Board with Cotu Secretary-General Francis Atwoli, Dr. Zakayo Kariuki Gichuki and Jacinta Kathamu Mutegi being some of the board members.

The Act allows the Cabinet Secretary, together with the SHA Board to come up with regulations on how SHIF will be operationalised. These regulations are currently being worked on, according to a source at the NHIF who spoke to Money254.co.ke on condition of anonymity.

The regulations are set to, among other things, provide guidance on when the deductions will be made, the commencement date of these deductions, the deadline, where and through which channels the contributions will be made.

Regulations are expected to be announced this week, which could mean salaries processed from November 22 may be subject to the new deductions.

Denial of Govt Services

To ensure compliance with the deductions, SHIFT Act makes it mandatory for all adult Kenyans to contribute, failure to which they will be denied government services. 

Section 26(5) mandates SHIF registration empowering national and county governments to withhold services from those without membership, as part of financing universal health coverage (UHC).

You will be required to show proof of compliance to access government services.

“A person who is registrable as a member under this Act shall produce proof of compliance with the provisions of this Act on registration and contribution as a precondition of dealing with or accessing public services from the national and county governments," the law states in part.

Similarly all non-Kenyans residing in Kenya for a period exceeding 12 months are required to register mandatorily for SHIF under the Act. If one is staying in Kenya for less than 12 months, however, they need not register for SHIF but have travel health insurance coverage. 

Earlier on November 19, 2023, President William Ruto revealed the government’s plan to provide “free” healthcare to all Kenyans from January 2024 indicating the regulations to operationalise the Act would need to be ready by then.

“From January 2024, we will be reducing the minimum NHIF (now SHIF) contribution to Ksh300 from the Ksh500 you are currently paying for the lowest-income earners. And those who will not be able to afford that Ksh300, the Government of Kenya will pay for you because we will assess every citizen’s ability to pay. 

“And every Kenyan will be going to hospital, getting treated and returning home without ever being asked for money. Because we want to make sure that Kenya is a country of equality,” the head of state said during a church service in Sotik, Bomet County. 

For a household that doesn't earn income through employment, an annual contribution equivalent to 2.75 percent of the household's income will be calculated based on a socio-economic evaluation conducted by community health workers nationwide.