NHIF vs. SHIF: A Look at Gross Salary Deductions as SHIF Launches in October

NHIF vs. SHIF: A Look at Gross Salary Deductions as SHIF Launches in October

Starting October 1st, 2024, the new Social Health Insurance Fund (SHIF) will replace the National Hospital Insurance Fund (NHIF) for calculating healthcare deductions from Kenyan employees’ salaries. SHIF introduces a percentage-based deduction system, moving away from NHIF’s fixed contribution rates.

SHIF will deduct 2.75% of an employee’s gross salary, establishing a progressive structure where higher earners contribute more. This shift is part of Kenya’s ongoing efforts to improve universal healthcare access by aligning contributions with income levels.

Here’s a comparison of NHIF vs. SHIF deductions for different gross salary brackets:

Ksh 20,000 salary: Under NHIF, the deduction was Ksh 750, while SHIF will reduce this to Ksh 550.
Ksh 50,000 salary: NHIF deducted Ksh 1,200, but SHIF will slightly increase this to Ksh 1,375.
Ksh 100,000 salary: NHIF contributions were Ksh 1,700, whereas SHIF will raise this to Ksh 2,750.
Ksh 200,000 salary: NHIF charged Ksh 1,700, but SHIF’s 2.75% rate will result in Ksh 5,500.
Ksh 500,000 salary: Previously fixed at Ksh 1,700 under NHIF, SHIF will now deduct Ksh 13,750 for this income level.
Ksh 1,000,000 salary: NHIF deductions remained at Ksh 1,700, but under SHIF, contributions will significantly rise to Ksh 27,500.

Overall, SHIF’s percentage-based model lessens the burden on lower-income workers while increasing contributions for higher-income earners. The start of SHIF represents a significant change in Kenya’s healthcare financing system.