This report presents a comparison of the National Hospital Insurance Fund (NHIF) and the soon-to-be-implemented Social Health Insurance Fund (SHIF) deductions from gross salaries. The SHIF is expected to come into effect from 1st October 2024, with deductions set at 2.75% of an individual’s gross salary. The following breakdown compares NHIF and SHIF contributions across varying salary levels.

Summary of Deductions:

Key Observations:

1. Lower Salary Bracket (Ksh 20,000):

Under NHIF, the deduction is Ksh 750.

Under SHIF, the deduction is lower at Ksh 550 (2.75% of Ksh 20,000).

SHIF provides a more affordable contribution at this salary level compared to NHIF.

2. Middle Salary Brackets (Ksh 50,000 – Ksh 200,000):

At Ksh 50,000, SHIF deductions exceed NHIF, with SHIF deducting Ksh 1,375 compared to NHIF’s Ksh 1,200.

As the gross salary increases, the SHIF deduction grows substantially. For instance, at Ksh 100,000, SHIF deducts Ksh 2,750, which is significantly higher than NHIF’s Ksh 1,700.

At Ksh 200,000, the SHIF deduction (Ksh 5,500) surpasses the NHIF deduction, which remains static at Ksh 1,700.

3. Upper Salary Brackets (Ksh 500,000 – Ksh 1,000,000):

At Ksh 500,000, SHIF deductions skyrocket to Ksh 13,750, while NHIF continues to deduct Ksh 1,700.

For those earning Ksh 1,000,000, SHIF takes Ksh 27,500, while NHIF remains unchanged at Ksh 1,700.

SHIF introduces a progressive contribution model where deductions increase with salary, compared to NHIF’s fixed rates after a certain income level.

Conclusion:

SHIF introduces a progressive structure that ensures higher earners contribute more towards health insurance. For lower-income individuals, SHIF provides a slight relief compared to NHIF, but for middle and higher-income earners, SHIF contributions rise significantly. This shift aims to increase health insurance funding from higher earners, making healthcare more sustainable but more costly for wealthier individuals.