Tax Alert: Kenya Oct. 2024 SHIF Update
In Oct. 2023, three new Kenyan health laws, the Social Health Insurance Act, Digital Health Act, and Primary Health Care Act, were enacted to replace NHIF. Additionally, the Social Health Insurance Regulations were gazetted in March 2024, to operationalize the SHIA Act.
The SHIA Act mandates that all Kenyan households, as well as non-Kenyan residents living in Kenya for over a year, must register with the SHIF, including former NHIF members who need to re-register.
SHIA contributions and healthcare access are set to begin on October 1, 2024. The government announced that NHIF memberships will close on September 30, 2024, with payments up to that date going to the NHIF fund and payments from October 2024 onwards directed to the SHIF fund. The new Social Insurance Authority will assume all former NHIF board functions.
Under SHIF, salaried households shall pay 2.75% of their monthly income, with non-salaried households contributing 2.75% of their annual income based on household data, with a minimum of KES 300 per month. Contributions are eligible for a 15% relief, subject to a maximum insurance relief of KES 5,000 per month.
Employers must register with on SHA portal (www.sha.go.ke) to manage employee contributions, including registration, payments and records & are required to deduct and remit employee contributions by the 9th date of each month after payroll. Late payments incur a 2% penalty on outstanding amounts.
However, in July 2024, the High Court of Kenya ruled that these three new health Acts were unconstitutional due to insufficient public participation and ordered the Parliament of Kenya to address this issue within 120 days, with a 45-day suspension to allow for an appeal.
The Kenya Cabinet Secretary for Health appealed the High Court’s ruling and requested a stay of execution, arguing that suspending the three new health Acts would disrupt the transition to SHIF, deprive citizens of health coverage and endanger the Kenyan Constitution, which ensures the right to the highest health standards.
In Sept. 2024, the Court of Appeal granted a stay order on the High Court’s ruling, allowing the government to continue implementing the new Acts during the appeal process. The Court emphasized that reverting to the old NHIF fund would create instability in the health sector and prioritized an expedited hearing of the appeal.
While awaiting the Kenya Court of Appeal’s decision on the constitutionality of the three Acts, SHIF will be implemented starting October 1, 2024.
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