Kenya: Ambitious state healthcare reform raises contributions for most employees

Employer Action Code: Act

The president has signed into law four pieces of legislation in 2023 (Social Health Insurance Act, Primary Health Care Act, Digital Health Act and Facility Improvement Financing Act) that will extend public healthcare coverage to all Kenyans and long-term residents as well as restructure healthcare financing and administration. Before these reforms, public healthcare coverage was compulsory only for formal employees, funded by employee contributions to the National Health Insurance Fund (NHIF). The new legislation is yet to be published in the official gazette, and implementation guidelines as well as effective dates are pending.

Key details

• A new Social Health Insurance Fund (SHIF), funded primarily by employee contributions, will be established to finance universal public healthcare, augmented by a new Primary Healthcare Fund and a new Emergency, Chronic and Critical Illness Fund — both funded primarily by government allocations. A new Health Insurance Authority will administer public healthcare benefits and funding. The NHIF will be wound down by October 2024 and its funds transferred to the SHIF.
• Registration and participation in the SHIF will be required for all Kenyans and foreigners residing in Kenya for over 12 months.
• Employee contributions to the SHIF will be calculated as a flat 2.75% of earnings for workers in formal employment. Previously, contributions to the NHIF were also wage‑related but set as fixed amounts corresponding to specific earnings bands. Prior and new monthly employee contributions for selected monthly earnings levels are shown in the table below.

• As over 80% of workers are engaged in informal employment and subsistence agriculture, individuals and households without formal earned income will be subject to an annual SHIF contribution based on household income, subject to means testing.
• Foreign visitors in Kenya for under 12 months will be required to have valid travel health insurance.

Employer implications

Employers should be aware of the increased employee costs for state healthcare and the sweeping nature of the intended changes to the national healthcare system. Draft legislation in recent years had called for employer matching of employee healthcare contributions, but this provision was dropped (though the new Social Health Insurance Act does include a vague reference to the possibility of employer contributions). Due to the extent of past demands on the NHIF, and its own limitations, virtually all companies surveyed by WTW provide supplemental healthcare benefits via private insurance; this is unlikely to change in the near term. If anything, the ambitious reworking of the national healthcare system to provide care for a population of over 50 million people may result in some public healthcare services being disrupted due to increased demand, making private health insurance even more attractive.