Saturday, June 22, 2024

Rich earners spared from high NHIF deductions; low earners to pay from gross salaries

Top earners in Kenya have been spared from high NHIF deductions. Under the revised proposal, premiums to be paid by top earnerw have been capped at Sh. 5,000.

However low earners will pay a percentage of 2.75 which will be deducted from their gross salaries.

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This means that for the new NHIF levy, those earning between Sh. 0 and and Sh. 181,818 will pay a mathematical percentage of their gross salary while those earning above this might pay a flat maximum rate of Sh. 5,000.

As a result, those who would have paid minimum of Sh. 20,000 for NHIF will be spared since they will now pay a maximum of Sh. 5,000.

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An earlier proposal in the Social Health Insurance Bill, 2023 to have graduated contributions pegged at 2.75 per cent of gross monthly pay would have seen high-income earners pay upwards of Sh. 22,000 a month.

Workers earning Sh. 350,000 could have paid Sh. 9,625. Workers earning Sh. 13,750 would have paid Sh. 500,000. Those getting Sh. 800,000 could have paid Sh. 22,000.

NHIF to be scrapped, replaced with three different funds

“The upper and lower caps on premiums need to be applied in our setting. That is what informed the 2.75 per cent of gross earnings up to the cap of Sh. 5,000 per month,” NHIF Acting chief executive officer Samson Kuhora said.

The deductions will be collected under the Social Health Insurance Fund that is set to replace the National Health Insurance Fund.

At the moment, monthly contributions to the NHIF by formal workers in the country are graduated depending on each worker’s pay and range between Sh. 150 and Sh. 1,700. Kenyans working in the inform sector pay a flat rste of Sh. 500 monthly.

The new mandatory 2.75 per cent NHIF deductions on gross salaries will see low earning Kenyans take home less money while the government’s takeaway from payslips will increase.

For instance, from the pay-as-you-earn, NSSF, housing levy and health care contribution, the government will take about Sh. 10,264 (which will be an equivalent of 20.5 per cent) from Kenyans earning Sh.50,000 gross pay. Currently, the total deductions amount to Sh. 8,460.

Kenyans earning Sh. 100,000 will now have to oart with a total of 27.4 per cent in government deductions and levies. This will be equivalent to Sh. 27,389 deductions.

Under the new scheme, all Kenyans will be required to enroll under any of the three social health schemes to be set ip through a formula that will mirror the Kenya Revenue Authority PIN. This means that those who fail to enroll may be denied access to government services.

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