The Social Health Insurance Fund is the novel mandatory health insurance scheme that was introduced by the Social Health Insurance Act,[1] to replace the National Health Insurance Fund (NHIF) as an instrument to provide equitable universal health coverage by pooling funds to ensure each registered member has access to quality, affordable and timely healthcare. Those qualified to be members are all Kenyan citizens,[2] and non-Kenyan citizens who typically reside in Kenya.[3] Contrary to the band system of NHIF band system,[4] SHIF is contributed to by each member by deducting 2.75% of their gross income if they are salaried.[5]

On the other hand, for the informal sector, the transformation has been moving away from the flat rate payment system (premium of Ksh 500) in NHIF, to a more accommodating payment structure. One of the main features is that the minimum premium to be paid by informal workers is Ksh 300.[6] On the other hand, the informal working class pays 2.75% of their household income,[7] which is made sure by a formal process known as means testing.[8]

Means testing relies on data collected on the household relating to the housing characteristics, access to basic services and household composition and characteristics. The data is fed into an algorithm that groups the non-salaried workers into bands of high, medium, low income bands and those in need of financial assistance. The amount assessed is then multiplied by 2.75% to get the premium payable.

The SHIF model has introduced a lipa mdogo mdogo paying plan whereby the informal worker is allowed to pay a deposit of a value worth premium of 4 months, then pay the remaining credit of 8months either daily, weekly or monthly or pay through loaning from the Hustler fund insurance Premium finance. This hustler fund works in collaboration with the government to aid informal workers to pay for their insurance premium.[9] If one believes the premium is too high, they may appeal to the Contributions appeal to review the amount payable. If an informal worker is deemed to need financial assistance shall be assisted to pay for the premium by the national and/or the county government annually.[10]

Despite the various benefits SHIF has brought about, it still leaves informal workers vulnerable. Firstly, Mean Testing is done on an annual basis resulting in a flat-line amount to be paid, but it leaves workers who earn periodically i.e daily and on fluctuating contracts vulnerable to overpayment. Secondly, those who subscribe to the lipa mdogo mdogo payment plan are hit with hefty interest of 8% per annum if paid monthly and 9.5% per annum for those who don’t pay within the monthly time frame. Thirdly, if you fail to pay on time your account shall be deactivated which denies the informal workers access to healthcare services violating their right to health. Lastly, unlike the NHIF premium, which was voluntary based for informal workers, SHIF is mandatory for all informal workers too, which leaves them economically vulnerable when the deductions are due when they lack sufficient financial capacity.[11]

Written by Amos Likuyi

References:

[1] Social Health Insurance Act, No 16, 2023.

[2] Section 26(1), Social Health Insurance Act, No 16, 2023.

[3] Section 26(2), Social Health Insurance Act, No 16, 2023.

[4] Band system refers to the mode of assigning premium payable based on income brackets.

[5] Section 17, Social Health Insurance Regulations, Legal Notice 49 of 2024.

[6] Section 18(2), Social Health Insurance Regulations, Legal Notice 49 of 2024.

[7] Section 18, Social Health Insurance Regulations, Legal Notice 49 of 2024.

[8] Section 21, Social Health Insurance Regulations, Legal Notice 49 of 2024.

[9]Section 18(4), Social Health Insurance Regulations, Legal Notice 49 of 2024.

[10] Section 19, Social Health Insurance Regulations, Legal Notice 49 of 2024.

[11] Those who previously had the capacity to pay but are now financially unable but they have yet to be reassessed by the means testing to be financially incapable which may result in their accounts deactivated.