Employees to wait longer for tax relief on NHIF charges

Employees will wait longer to enjoy a 15 percent relief on their National Hospital Insurance Fund (NHIF) contributions.

The contributors will get the relief from next January as part of changes to various taxation laws that took effect on July 1 through the enactment of the Finance Act 2021.

Individuals pay a maximum of Sh1,700 per month in NHIF contributions, meaning that they will get a relief of up to Sh255, a move seen as an incentive to woo more Kenyans to join the State-backed scheme.

Currently, only policyholders of education, life and health insurance enjoy relief on their NHIF premiums.

Audit firm Deloitte says the tax relief aims to encourage more Kenyans to join NHIF and boost efforts to ensure universal access to healthcare.

“The relief is bound to encourage more NHIF remittances and simultaneously aid the government in attaining its Universal Health Coverage (‘UHC) agenda,” Deloitte said in its review of the changes.

The changes come as the State targets more Kenyans to join the scheme by making it compulsory for every individual aged above 18 to scale up access to healthcare.

A State-backed amendment to the NHIF Act seeks to make membership compulsory for every adult and make a monthly contribution of Sh500 or Sh6,000 annually.

NHIF membership is currently compulsory for all employees in the formal sector with contributions between Sh150 and Sh1,700 depending on their pay. It is voluntary for informal workers to join and contribute Sh500 monthly.

The National Hospital Insurance Fund (Amendment) Bill 2021, which targets about 16 million Kenyans outside the NHIF, does not show how the State will make the unemployed or those working in the informal sector compulsorily register and contribute.

Official data shows that NHIF has 8.898 members out of the more than 25.36 million Kenyans aged above 18.

The scheme received Sh60.81 billion in the year to June from its members and paid out Sh54.3 billion in hospital claims.

NHIF covers members for outpatient and inpatient services such as consultation fees, laboratory tests, drugs, dental healthcare, surgery, radiotherapy, physiotherapy and midwifery services.