September 25, 2024 Kenya employers to begin making contributions to Social Health Insurance Fund
Executive summary The Ministry of Health has issued a public notice notifying employers of the transition to the Social Health Insurance Fund (SHIF) with effect from 1 October 2024 and provided the requisite transition guidance. The Social Health Insurance Act, Primary Health Care Act and Digital Health Act came into operation on 22 November 2023, followed by the gazettement of the Social Health Insurance Regulations (the Regulations) on 8 March 2024 to operationalize the Primary Healthcare Fund, the SHIF and the Emergency, Chronic, and Critical Illness Fund. The Regulations required every person resident in Kenya to register with the Social Health Authority before 30 June 2024. Employers' deduction and remittance of contributions was expected to commence on 1 July 2024. However, implementation of the requirements faced challenges, leading to a postponement of the kick-off date, Specifically, the High Court declared the Acts unconstitutional, but the Court of Appeal stayed application of the High Court decision, pending the determination of the substantive appeal. Therefore, employers must comply with the extended 1 October 2024 effective date. What this means for employers Following the Court of Appeal's ruling dated 20 September 2024, the three Acts of Parliament remain in force. To this end, employers are required to comply with the requirements to register with the Social Health Authority (SHA) and make contributions to the SHIF. Further, a public notice issued by the Ministry of Health declared 1 October 2024 as the first date of transition to SHIF. This notice, as issued, shifts the registration obligation from employees to their employers, implying that employers will now be responsible for registering their employees. Contributions The contributions to SHIF are as follows:
The Regulations further stipulate that data will be collected on non-salaried households to determine and estimate the household's ability to pay SHIF contributions based on housing characteristics, accessibility to basic services and household composition and characteristics. Offenses and penalties Failure to make timely payment of contributions will result in a penalty equivalent to 2% of the unpaid contribution for the period in question, and the total annual contribution must also be paid at the same time. Any employer who fails to pay contributions to the fund as a contributing employer or who makes unauthorized deductions from employees shall be liable for a fine not exceeding KES 2m or imprisonment for a term not exceeding three years, or both. Any person who, for the purpose of obtaining a benefit, makes any false statements or representation shall also be liable for a similar fine or imprisonment. Next steps Kenyan citizens, foreigners who are ordinarily resident in Kenya and persons including employers should register with the SHA. Note that the hearing and determination of the substantive appeal on the validity of the three Acts of Parliament is pending and, thus, employers and non-salaried persons should keep themselves abreast of latest developments.
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