Ruto's 2.75% Compulsory NHIF Deductions: Breakdown Of New Salary Cuts To Take Effect In October 2023

• The government set plans to support the Universal Health Coverage (UHC) implementation through an increase in National Health Insurance Fund (NHIF) deductions
• President William Ruto's Cabinet approved four Bills, including the Social Health Insurance Bill 2023, proposing the mandatory contribution of 2.75% of every worker's basic pay
• All Kenyans above 18 years will contribute monthly to the social health fund effective October 2023

Employed Kenyans will have to part with 2.75% monthly deductions towards the National Health Insurance Fund (NHIF).

President William Ruto's Cabinet approved proposals to repeal NHIF and introduce three funds, including the Social Health Fund.

Ruto's Social Health Fund monthly deductions

The current NHIF scheme will be amended under the Social Health Insurance Bill, 2023, which seeks to establish the Social Health Fund.

The Bill proposed mandatory monthly basic salary deductions of up to 2.75% towards the fund, to be paid by all households in Kenya.

Jubilee Insurance Group Chief Executive Officer (CEO) Julius Kipngetich explained that the Social Protection Fund will take care of all Kenyans.

"Social protection means it takes care of you primarily up to a certain limit. You can buy your NHIF cover under this fund, but there is a limit. The fund will be almost shared between the individual and the government because the government cannot afford to pay 100%," said Kipngetich, in an exclusive interview with TUKO.co.ke.

Kenyans will be subjected to a minimum monthly contribution of KSh 300 without a cap on the maximum contribution.

"We are changing the funding system to allow the vulnerable to access NHIF free of charge... those who are in the lower category to pay less and those who earn more to pay more," said President William Ruto during his tour of Western region on Thursday, August 31.

Who will pay NHIF?

Apart from the Kenyan households, foreigners residing in Kenya for a period exceeding 12 months, the national government, county government and employers will contribute to the fund.

Households that do not earn employment income will contribute 2.75% annually based on a socio-economic assessment by the 100,000 community workers employed under the scheme.

The government will contribute KSh 26 billion towards the kitty for needy households in the country.

Monthly tax deductions for employed Kenyans

Employees earning a monthly basic salary of KSh 50,000 will contribute up to KSh 10,264 in tax from the Social Health Fund, PAYE, NSSF, and housing levy deductions.

This represents a 20.5% growth compared to KSh 8,460 from the previous monthly deductions.

Those earning KSh 100,000 will pay 27.4% or KSh 27,389 in new deduction should members of parliament approve the proposal.

Employees pocketing KSh 200,000 will pay KSh 61,639 in taxes while those earning KSh 500,000 contribute 164,389, Business Daily reported.

The deductions confirm Ruto's statement that those earning more will contribute more to government taxes.

The government increased PAYE to 35% for workers earning more than KSh 800,000, a move that will see them pay KSh 276,106 in total deductions.