The compulsory plans of 2.75% NHIF deductions

President William Ruto’s plan to make it mandatory for every household in Kenya to contribute 2.75% of its income to fund a new social healthcare fund will see the government take at least 20% of the monthly pay from Kenyans earning KSh50,000 and above in the latest onslaught on payslips.
The Social Health Insurance Bill, 2023 will also make it mandatory for all Kenyans to be members of a new social insurance scheme, which will replace the current National Health Insurance Fund , to enjoy government services.
To fund the grand health scheme, the State plans to increase deductions from the current range of KSh150 to KSh1,700 to a flat rate calculated at 2.75% of gross monthly earnings.
The looming deductions will further cut the take-home income for Kenyan workers whose monthly earnings have been hit by the housing tax and increased contributions to the National Social Security Fund.
The State will, through the pay-as-you-earn, NSSF, housing levy and health care contribution, take about KSh10,264 or 20.5% from those earning KSh50,000 gross pay, up from the current KSh8,460.
Workers earning KSh100,000 will give up KSh27,389 or 27.4%, with the pain deepening for those higher salaries.
The deductions highlight the pain of workers in funding President Ruto’s universal health coverage (UHC), affordable housing and enhanced pension plans in addition to other budgetary needs.
Under the State-backed Social Health Insurance Bill, 2023, UHC will be modelled on three separate funds—one for preventive and primary health care, another for primary referrals and a third covering treatment of chronic diseases.
“These funds are to be managed by a single board and secretariat, based on the proposed 2.75% deductions on household income from both formal and informal sectors,” State House spokesperson Hussein Mohammed said.
Mr. Mohammed said that the funds are part of the plan by the President to deliver the UHC promise. The ruling Kenya Kwanza coalition’s manifesto pledged to employ and initiate payments for community health promoters and integrate preventive and promotive services.
Mr. Mohammed said the Primary Health Care Bill 2023 establishes a framework, for the delivery of, access to and management of primary health care.
The Bill provides for the re-organisation of service delivery at the primary health care levels, including dispensaries and health centres.
“It establishes the framework for the 100,000 community health promoters to be commissioned by the President in October 2023 and outlines the services they will offer when they visit households,” he said.
“This means Kenyans seeking services at these levels can walk in and walk out without incurring any Bill.”
But to actualise the dream, the government will line up regulations that will make membership in the new health care compulsory in a bid to rope in the 80% of Kenyans in the informal sector to contribute to the scheme.
Those without proof of up-to-date contributions will be denied State services under the regulations that will bring social health care membership to the same league as Kenya Revenue Authority personal identification numbers.
This means that non-contributors to the health care scheme will be barred from making critical transactions such as registration of land titles, approval of development plans, transfer and licensing of motor vehicles and access to the Hustler Fund.
The State sees enhanced contributions as a way of giving a lifeline to the UHC but will have to overcome the headache of dormant membership that has over the years hurt the NHIF.
The public health insurer collected premiums worth KSh78.84 billion in the year to June 2022 against the targeted KSh90.57 billion and has defaulted on paying hospitals for services offered.
In May this year, hospitals started turning away patients seeking treatment on the NHIF cover over unpaid claims of at least KSh12 billion, lifting the lid on the scheme’s dire financial state.
The hospitals claimed that the arrears had been accumulating since last year.
Higher health care contributions, combined with the new housing levy, a new band of PAYE of 35%, and NSSF will see Kenyans earning over KSh200,000 a month give the State at least 30.8% of their earnings from the current 27%.
A KSh200,000 payslip will cede KSh61,639 from the current KSh53,959, being an additional KSh7,680 while workers earning KSh500,000 face deductions of KSh164,389 (33%), up from KSh143,959.
A KSh800,000 earner will give the State KSh276,106 or 34.5%, being an additional KSh42,147.
National Assembly Leader of Majority Kimani Ichung’wah is expected to table the bill in Parliament for debate and passage into law.
Others are Primary Healthcare Bill, 2023, Digital Health Bill, 2023 and the Facility Improvement Financing Bill, 2023.
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