Introduction

The Social Health Insurance Act, 2023 (the Act) and Social Health Insurance Regulations (the Regulations) have been introduced as part of the government’s plan to achieve Universal Health Coverage for its citizens. The Regulations are meant to facilitate the implementation of the Act that was operationalized on 21^st November 2023 through a legal notice by the Cabinet Secretary in charge of health. This in effect has done away with the National Health Insurance Fund. The Act is operational except for the following sections:

• Section 26(5) which provides for the registration and contribution to the Social Health Insurance Fund as a precondition for access of services from both the county and national government;
• Section 27(4) which provides that a person shall only access healthcare services where their contributions to the Social Health Insurance Fund are up to date; and
• Section 47(3) which obligates every Kenyan to be uniquely identified for the purposes of the provision of health services.

The Act has introduced the Primary Health Fund; Social Health Insurance Fund (SHIF); and the Emergency, Chronic and Critical Illness Fund (the Funds). The Regulations are geared towards the implementation of the Funds. Membership and contribution to the SHIF shall enable one access to the benefits provided to contributors and beneficiaries in all the Funds. The pre-condition to access benefits under the Funds is to ensure that contributions to the SHIF are always up to date.

Every person resident in Kenya shall apply to the Social Insurance Authority for registration as a member of the Social Health Insurance Fund not later than the 30^th of June 2024. Payment of contributions and access to healthcare services under the Act and Regulations shall commence on the 1^st of July 2024.

We then delve into the key effects of the Act and Regulations. These have been explained as:

• Impact on employees;
• Impact on employers; and
• Impact on self-employed persons.

Impact on Employees

The Regulations place the rate of contribution to the Social Health Insurance Fund at 2.75% of a contributor’s income. The minimum amount payable every month by contributors shall not be less than KES. 300 per month. The Regulations do not provide for a maximum cap in terms of contributions. This is a departure from the National Health Insurance Fund that provided for a maximum contribution of KES 1,700 with the least contribution being KES. 150.

Impact on Employers

Employers are tasked with making a deduction from the gross salary of their employees and submit such contribution to the Social Health Insurance Fund at the rate of 2.75% of the gross salary. This deduction is supposed to be remitted to the Social Health Authority by the 9^th day of each month. Employers will also be required to inform the Social Insurance Authority of any changes in the employment status of its employees. The Regulations do not place the requirement of matching the employees’ contributions. The proposed contribution rate of 2.75% will solely be deducted from an employee’s gross salary. Employers do not have the option of opting out. Employers must comply and make the stipulated contribution on behalf of their employees within the stated timelines. In the event an employer terminates the employment of a salaried contributor, the employer shall be required to notify the Social Insurance Authority within thirty (30) days thereof and remit the final contribution of the employee.

Impact on the Self Employed

Where a household does not have salaried income, the contribution to the SHIF shall be on annual basis on proportion of household income as determined by the means testing. The Social Health Authority shall collect data from households for the purposes of conducting proxy means of testing. In collecting the data, the Social Health Authority shall use the means of testing instrument developed by the Ministry of Health in collaboration with the ministry responsible for social protection and county governments. The specific data collected from the households shall be based in various socio-economic aspects including:

• housing characteristics;
• access to basic services;
• household composition and characteristics; and
• any other socio-economic aspects as may be relevant.

The aim of this is to assist the Ministry of Health ascertain the percentage of income to be contributed to the SHIF by a household that does not derive its income from formal employment. The Regulations propose a rate of 2.75% which shall not be less than KES. 300 which shall be paid fourteen days before the lapse of annual contribution.

It is also proposed that the Social Health Authority in collaboration with the ministry responsible for cooperatives and small and medium enterprises development and other financing institutions shall provide premium financing to non-salaried persons to enable pay their annual contributions within the intervals that their income becomes available.

Conclusion

The overall impact of the Regulations is that they will bring about an elevated financial burden to contributors as the proposed contribution rate is an increase from the National Health Insurance Fund scale as will be explained below. If well managed, the Funds will also bring about a robust health insurance system that provides comprehensive medical coverage to all members.

If you have any queries relating to the above, please do not hesitate to contact James Wairoto and Joy Ngano. Please note that this e-alert is meant for general information only and should not be relied upon without seeking specific subject matter legal advice.