The National Health Insurance Fund (NHIF) was established under Parliament Act of 1966 with the primary objective of providing comprehensive medical insurance coverage to all its members and their declared dependents, including children and spouses. Since its inception, NHIF has undergone numerous reforms to enhance its effectiveness and to accommodate the changing healthcare needs of Kenyans. In 2021, the agency introduced new contribution rates, ranging from a minimum of Kes. 150 to a maximum of Kes. 1,700 for employees, as outlined in the following table:
|Range of Employee’s Salary (Kes.)||Monthly NHIF Contribution (Kes.)|
|0 – 5,999||150|
|6,000 – 7,999||300|
|8,000 – 11,999||400|
|12,000 – 14,999||500|
|15,000 – 19,999||600|
|20,000 – 24,999||750|
|25,000 – 29,999||850|
|30,000 – 34,999||900|
|35,000 – 39,999||950|
|40,000 – 44,999||1,000|
|45,000 – 49,999||1,100|
|50,000 – 59,999||1,200|
|60,000 – 69,999||1,300|
|70,000 – 79,999||1,400|
|80,000 – 89,999||1,500|
|90,000 – 99,999||1,600|
|100,000 and above||1,700|
It is important to note that NHIF membership is open to all Kenyan citizens aged 18 years and above, regardless of their employment status. Individuals in the informal sector, retirees, self-employed individuals, and voluntary contributors are required to remit Kes. 500 on a monthly basis or Kes. 6,000 annually.
Registered NHIF members and their dependents enjoy the flexibility to access inpatient services at any accredited hospital of their preference. However, when it comes to outpatient services, members are confined to the accredited hospital they designated during their NHIF enrollment.
Furthermore, with the enactment of the Finance Act No. 8 of 2021, employees benefit from a 15% Insurance relief on their NHIF contributions, in accordance with the existing Income Tax Act CAP 470, Section 31.
Proposed Social Health Insurance Funds Rates
In an effort to enhance healthcare accessibility for all Kenyans, the government has proposed a series of changes to NHIF. These changes involve dissolving NHIF and establishing three distinct funds: the Primary Health Fund, Social Health Insurance Fund, and Emergency, Chronic, and Critical Illness Fund. The proposal requires both employed and unemployed Kenyans to contribute 2.75% of their gross monthly income to support the Universal Health Coverage scheme. While this initiative is aimed at ensuring access to quality healthcare, it has generated mixed reactions.
The Proposed Social Health Insurance Fund Changes Include:
- Introduction of a standard contribution rate of 2.75% of the gross monthly income for individuals in salaried employment, replacing the current system based on gross salary brackets (ranging from Kes. 150 to Kes. 1,700).
- Self-employed individuals will be subject to a special contribution rate of 2.75% of their declared or assessed gross monthly income, with a minimum contribution of Kes. 300.
- Other contributors not employed or categorized as vulnerable individuals will pay a monthly contribution of Kes. 1,000, as opposed to the Kes. 500 initially proposed in the draft regulations of 2022.
- The maximum cap of Kes. 1,700 for those earning Kes. 100,000 or more will be eliminated.
- The national government will contribute Kes. 13,300 on behalf of individuals listed as vulnerable by the State Department of Social Protection.
- The proposed regulations will reduce the waiting period for access to benefits after registration from 90 days to 60 days.
Implications of Social Health Insurance Fund Changes:
- Enhanced Accessibility and Affordability for Low-Income Earners: The proposed regulations will reduce the monthly contributions for low-income earners, making healthcare services more affordable for both formal and informal sector workers with lower incomes.
- Increased Contribution Burden for Unemployed Individuals Aged 18 and Above: The proposed increase in contribution rates from Kes. 500 to Kes. 1,000 for unemployed individuals aged 18 and above may pose financial challenges for this demographic, potentially hindering their ability to access healthcare services.
- Elevated Financial Burden for High-Income Earners: High-income earners will face a significant increase in their contribution rates, potentially reducing their disposable income.
- Increased Government Expenditure: The government’s commitment to increasing its contributions on behalf of indigent and vulnerable individuals may strain its finances, especially considering existing budget deficits resulting from low revenue collection and high expenses
Implications of Social Health Insurance Fund Changes for Employers:
Under the current system, employers in the formal sector deduct NHIF contributions from their
employees’ gross salaries and remit these funds to NHIF. The proposed changes will require all
employers to retain this mandate by deducting 2.75% of their employees’ gross salaries and
promptly remit these contributions to NHIF to ensure compliance and avoid potential penalties and
interest associated with non-compliance. It’s important to emphasize that there is no corresponding
contribution required from the employer; their sole responsibility is to deduct and remit these funds.
In conclusion, the proposed changes to the National Health Insurance Fund (NHIF), including dissolving NHIF and establishing three distinct funds: the Primary Health Fund, Social Health Insurance Fund, and Emergency, Chronic, and Critical Illness Fund, represent a significant shift in healthcare financing and access in Kenya. This transformation aligns with the government’s broader strategy of recruiting community health promoters to bolster preventive healthcare efforts. While these changes aim to make quality healthcare more accessible and affordable, they bring with them a set of complex implications which therefore necessitates a thorough consideration of its impact on various socioeconomic groups and the government’s fiscal sustainability.
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