How Govt Will Target Kenyans Without a Salary in SHIF Reforms

The government is planning to compel unemployed Kenyans to pay at least Ksh300 per month according to proposed regulations to operationalise the Social Health Insurance Act (SHIF), 2023.

In the new regulations, that were published by the Ministry of Health despite a stay order by the High court on certain provisions of the Act, a household whose income is not derived from salaried employment shall pay an annual contribution to the SHIF at a rate of 2.75% of the proportion of household income. That is subject to a minimum of Ksh300 monthly. 

In simple terms, if one earns an income that is not a salary, he or she will be mandated to remit at the very least Ksh300 every month to the government. But for the unsalaried, the contributions will have to be done annually as a lumpsum as opposed to on a monthly basis.

Similarly, those whose income is derived from salaried employment shall pay a monthly statutory contribution to SHIF at a rate of 2.75% per month. However, compared to those without a salary, they will have to remit 2.75% of their gross salaries by the ninth day of every month.

“The amount payable shall be paid fourteen days before the lapse of the annual contribution of the beneficiary."

To facilitate annual contributions by non-salaried Kenyans unable to raise the amount upfront, the authority under Section 4 of the draft regulations says premium financing will be availed "in collaboration with other financing institutions".

“The Authority, in collaboration with the Ministry responsible for cooperatives and micro, small and medium enterprises development and other financing institutions, shall provide premium financing to non-salaried persons to enable them to pay their annual contributions within the intervals under which their income becomes available,” read the regulations in part.

Insurance premium financing is essentially a loan extended to someone seeking an insurance policy but is unable to raise the full amount. The lender provides the full amount with the beneficiary paying it back with interest over a longer period of time that could up to the length of the policy e.g. 12 months.

Also, there is no upper limit to contributions by salaried Kenyans. Unlike the now-defunct National Health Insurance Fund (NHIF) that capped contributions at Ksh5,000 for top earners (previously Ksh2,700), contributions to SHIF will have no cap. This means, high-income employees may incur higher costs. 

Kenyans Aged 25 Without a Salary

The regulations also cover Kenyans who are unemployed and have attained the age of 25, who will be subjected to similar contributions of Ksh300 per month.

They go on to state that an individual aged 25 and above who has no income of his or her own or is living with the contributor shall be treated as a household separate from the contributor.

For example, if you are at the age of 25 and you have recently graduated from college, and you happen to live with parents who contribute to the SHIF fund, then you will be required to pay Ksh300 to the government. You cannot be covered under your parents’ SHIF cover.

Note that, if you are not salaried, you will be required to make an annual contribution of the household income as determined by the prescribed means of testing, or the minimum of Ksh300 multiplied by 12 months (Ksh3,600) if you qualify to pay the minimum only. This will need to be done 14 calendar days before the lapse the period under coverage e.g. by December 17 if your annual cover begins on January 1.

Households That Need Financial Assistance

The Social Health Authority - the body that governs SHIF - shall identify indigent households that require financial assistance and for whom the National Government or the County Government is liable to pay their contributions in line with the Social Health Insurance Act.

The Ministry of Health, the Ministry of Social Protection and the county governments will embark on identifying the households that require financial assistance and submit the list of such households to the Authority.

This will be done through the collection of data from households for the purposes of conducting proxy means testing whereby information on household or individual characteristics correlated with income levels is used in a formal algorithm to proxy household income, welfare or need.

Through this data collection method, the Authority shall use the means testing instrument developed by the Ministry of Health in collaboration with the Ministry responsible for social protection and the county governments.

The data collected from households shall take note of various social aspects that include 

• Housing characteristics
• Access to basic services
• Household composition and characteristics; and 
• Any other socioeconomic aspects that may be relevant

“The data collected shall be used to determine and estimate the household income for the purposes of the payment of the premiums.

“The Authority shall conduct periodic means testing reviews on households whose income is not derived from salaried employment and on households in need of financial assistance,” the Authority further noted.

The Ministry responsible for social protection shall be liable as a contributor in the case of the national government while the County Executive Committee member responsible for social protection shall be liable as a contributor in the case of the county government.

The two forms of government shall remit the amounts payable within nine days from the date when the annual contribution of the beneficiaries is due.

The regulations risk hitting not just salaried Kenyans but every Kenyan earning an income in the event they are finalised to operationalise the Social Health Insurance Act (SHIF), 2023, which would see the current National Health Hospital Insurance Fund (NHIF) scrapped for the first time since the year 1966.

The Act paves the way for the introduction of three funds namely; the Primary Healthcare Fund, Social Health Insurance Fund and Chronic Illness and Emergency Fund.

‍What If You Don’t Remit to SHIF?

To ensure compliance with the deductions, the SHIF Act makes it mandatory for all Kenyans to remit monthly contributions, failure to which they would 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.

Foreigners Travelling to Kenya

Those entering Kenya from abroad will be required to have a travel health insurance cover which will cover the person’s entire period of stay in the country.

The cover will need to provide the traveller with cover against the following:

• Personal accident that may lead to death or permanent total disability;
• Emergency medical expenses;
• Emergency medical evacuation;
• Repatriation of mortal remains;
• Hospital benefits;
• Prescription medicines; and
• any other benefit as may be prescribed by the Cabinet Secretary.

“A non-Kenyan may obtain the travel health insurance cover at the point of entry in Kenya. The Authority shall not provide travel health insurance covers for Kenyans or non-Kenyans,” added the regulations.

‍Uproar & High Court Ruling

The SHIF Act sparked controversy with Kenyans complaining that the government was relentlessly raiding their salaried income coming at a time when the country’s economy has been struggling, thus worsening the high cost of living.

The Kenya Medical Practitioners, Pharmacists and Dentists Union (KMPDU) challenged the implementation of the social health insurance scheme in court, taking issue with Section 26 (5) of the Act and arguing that this would deter Kenyan citizens from accessing government services.

On Monday, November 27, the High Court suspended the implementation of the Social Health Insurance Act pending the hearing and determination of the case. The implementation of the Act was suspended until February 7, 2024. 

The Ministry of Health has nonetheless invited public participation on the regulations.

Social Health Insurance Fund (SHIF) Regulations 2023, In Brief

MoH on Tuesday, November 28, published SHIF regulations that are to guide the operationalisation of the new fund to replace NHIF.

This is a clear indication that the government is pressing ahead with healthcare reforms. Here are some of the regulations in brief.

1. Universal Registration:

• All Kenyan residents, including foreign nationals working in Kenya, must register with the SHIF.

2. Contribution Structure:

• A 2.75% gross salary deduction for salaried employees, with no upper limit.
• Under NHIF there was an upper limit. This means, potentially higher contributions for higher-income employees.
  

3. Minimum Contributions for Non-Salaried Kenyans

• Non-salaried households are mandated to contribute at least Ksh300 per month.
• The actual amount will be subject to an evaluation of financial capacity.
• Persons aged 25 and above to be considered separate households

‍4. Comprehensive Healthcare Benefits:

• SHIF covers everything from primary care to critical illnesses. It promises a more robust safety net for all Kenyans.

5. Tariff Reviews & Adjustments:

• The regulations envisage periodic tariff reviews considering economic and healthcare sector changes.
• This means there’s potential for future adjustments in contributions or benefits; employers and employees should stay informed.

6. For the Global Workforce:

• Non-Kenyans entering the country must have travel health insurance.