Social Health Insurance Fund - What you need to Know
In a groundbreaking move, the Social Health Insurance Act, of 2023, has ushered in a new era in Kenya's healthcare landscape, repealing the National Hospital Insurance Fund (NHIF) and giving rise to three distinct funds. Effective as of November 22, 2023, this transformative legislation aims to address the challenges faced by its predecessor and set the stage for comprehensive healthcare financing reform.
The three newly established funds - the Primary Healthcare Fund, Social Health Insurance Fund, and Chronic Illness and Emergency Fund - mark a pivotal shift in the country's healthcare infrastructure. Health Cabinet Secretary Susan Nakhumicha announced these changes through a gazette notice, signaling a significant step towards the planned reform in health financing.
Key Changes and Implications:
Under the Social Health Insurance Act, the Social Health Authority (SHA) will now replace the defunct NHIF. Notably, the Act introduces a mandatory requirement for individuals eligible for registration in the national insurance fund to provide proof of compliance before accessing public services. This move emphasizes the government's commitment to ensuring widespread adherence to the provisions of the Act.
Additionally, the Act extends eligibility for membership to all non-Kenyan residents residing in the country for more than 12 months. Those staying for a shorter period must possess travel health insurance coverage.
To deter fraudulent activities and maintain the integrity of the health insurance scheme, the Act imposes stringent penalties. Individuals suspected of defrauding the system through false statements risk imprisonment for five years, a fine of Sh1 million, or both.
As the now-defunct NHIF is set to transfer all cash balances to the Social Health Insurance Fund, companies must adapt swiftly to the changing landscape to avoid non-compliance penalties.
Employee Contributions and FaidiHR Integration:
Employee contributions to the Social Health Insurance Fund (SHIF) will now be calculated as a flat 2.75% of earnings for workers in formal employment. This is a departure from the previous NHIF structure, where contributions were wage-related but set as fixed amounts corresponding to specific earnings bands.
In light of these significant legislative changes, businesses in Kenya face the challenge of aligning their payroll systems with the new requirements outlined in the Social Health Insurance Act. Failure to do so may result in fines, legal repercussions, and disruptions to employee benefits.
This is where FaidiHR steps in as a strategic ally for businesses navigating the transition. Our platform not only streamlines payroll processes but also ensures seamless integration of legislative updates. With FaidiHR, companies can effortlessly implement the new provisions of the Social Health Insurance Act, avoiding fines and legal complications associated with non-compliance.
Benefits of FaidiHR in Ensuring Compliance:
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Automated Compliance Checks: FaidiHR's automated system performs real-time compliance checks, ensuring that employees meet the necessary requirements for registration and contribution.
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Efficient Record-Keeping: The platform maintains accurate and up-to-date records, facilitating easy access to proof of compliance when required.
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Legislative Updates: FaidiHR is designed to adapt to legislative changes promptly, providing companies with a reliable solution to stay compliant with evolving regulations.
Act Now: Secure Your Compliance with FaidiHR
In the wake of these transformative changes, FaidiHR invites businesses to proactively embrace innovation and ensure seamless compliance with the Social Health Insurance Act. By integrating our platform into your payroll processes, you not only streamline operations but also safeguard your company against potential fines and legal challenges.
Don't wait for compliance issues to arise—act now and experience the ease and efficiency of FaidiHR. Book a free demo today via FaidiHR Demo to witness firsthand how our solution can revolutionize your payroll management in the era of Kenya's healthcare financing reform.