Tax Relief

Workers wait longer for tax breaks for NHIF charges


Employees wait longer for tax breaks for NHIF fees

Monday, July 5th, 2021

Only those insured with education, life and health insurances receive relief from their NHIF premiums. FILE PHOTO | NMG

Workers will wait longer to receive a 15 percent discount from their National Hospital Insurance Fund (NHIF) contributions.

The contribution payers will receive the relief from next January as part of the changes to various tax laws that came into force on July 1 through the enactment of the Finance Act 2021.

Individuals pay a maximum of Sh1,700 per month in NHIF dues, which means they can get relief of up to Sh255, a move seen as an incentive to attract more Kenyans to join the state-sponsored system.

Currently, only those insured with education, life and health insurance benefit from a discount on their NHIF premiums.

Auditing firm Deloitte says the tax breaks are aimed at getting more Kenyans to join the NHIF and stepping up efforts towards universal access to health care.

“The relief will encourage more NHIF referrals while also helping the government achieve its universal health care (‘UHC) agenda,” Deloitte said in its review of the changes.

The changes come as the state seeks more Kenyans to join the program by requiring everyone over the age of 18 to improve access to health care.

A government sponsored amendment to the NHIF law aims to make membership mandatory for every adult and pay a monthly contribution of Sh500 or Sh6,000 annually.

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

The National Hospital Insurance Fund Act (Amendment) 2021, which targets approximately 16 million Kenyans outside the NHIF, does not show how the state will make the unemployed or informal sector workers compulsory registration and contribution.

Official data shows that NHIF has 8,898 members out of more than 25.36 million Kenyans over the age of 18.

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

NHIF covers members for outpatient and inpatient services such as consultation fees, laboratory tests, medication, dental care, surgery, radiation therapy, physiotherapy and midwifery services.

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