As the Social Health Insurance Fund (SHIF) becomes a vital component of Kenya’s healthcare system, employers are at the forefront of ensuring compliance with the regulations set forth by the Social Health Insurance Act No. 16 of 2023 (SHI Act). This Act, enacted on October 19, 2023, with implementation set for November 22, 2023, repeals the long-standing National Health Insurance Fund (NHIF) Act and introduces a new framework to streamline healthcare contributions for all Kenyan employees.
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The SHIF is designed to provide enhanced healthcare benefits to all workers in Kenya, and employers play a critical role in ensuring the success of the scheme. This article outlines the importance of SHIF contributions, the remittance process, employer obligations, and potential penalties for non-compliance.
Key Provisions of the SHI Act No. 16 of 2023
The SHI Act introduces a structured approach to healthcare contributions by requiring all employers to deduct and remit contributions from their employees’ wages. This new structure comes into effect on October 1, 2024, when the old NHIF benefit packages and rates will cease. The SHI Act mandates new benefits and tariffs under the Social Health Authority (SHA) to improve the healthcare coverage for Kenyan workers.
The following provisions of the Act are critical for employers to note:
1. Monthly Deductions: Employers must deduct a statutory contribution from their employees’ wages or salary every month. The rate prescribed under the Act is 2.75% of the gross salary or wage, as stated in Section 27(2)(a) of the SHI Act.
2. Timely Remittance: Employers are required to remit the contributions to the SHIF by the 9th day of every month. This ensures that the fund can continue to provide healthcare benefits to its contributors without interruptions.
3. Employer Liability: The SHI Act imposes penalties for any employer or contributing entity that fails to comply with the requirements. Section 48(1) outlines offenses and liabilities for employers who:
- Fail to remit contributions within the prescribed period.
- Make unauthorized deductions from employees’ wages.
- Provide false information regarding contributions or deductions.
Steps for Employers: How to Remit SHIF Contributions
Employers must follow a specific process to ensure that contributions are properly deducted and remitted to the SHIF. Here is a detailed guide on the steps involved:
1. Calculate Contributions
The employer must calculate 2.75% of each employee’s gross salary or wage. This calculation should be done every month for all employees under the employer’s payroll.
2. Deduct from Employee Wages
Once the contribution amount is calculated, the employer is responsible for deducting this amount from the employees’ wages or salary. This deduction should be reflected on the employee’s pay slip.
3. Remit the Contributions
After deducting the contributions, employers must remit the funds to the SHIF through the designated bank accounts. Employers are provided with a list of approved bank accounts where contributions should be deposited. Below is a breakdown of some of these accounts:
Social Health Insurance Fund (SHIF)
Bank Name: KCB
Branch: Capital Hill
Account Number: 1329035704
Social Health Insurance Fund (SHIF)
Bank Name: SIDIAN
Branch: Kilimani
Account Number: 01036020040330
Social Health Insurance Fund (SHIF)
Bank Name: CO-OPERATIVE
Branch: Upper Hill
Account Number: 01101176474001
Social Health Insurance Fund (SHIF)
Bank Name: EQUITY
Branch: Community
Account Number: 0170285746991
Social Health Insurance Fund (SHIF)
Bank Name: ABSA
Branch: Absa Towers
Account Number: 2052202135
Social Health Insurance Fund (SHIF)
Bank Name: DTB
Branch: Capital Center
Account Number: 0298631001
Employers can choose any of these designated banks to deposit their monthly contributions based on convenience.
4. Keep Records
Employers must maintain accurate records of all remitted contributions, including copies of receipts and proof of payment. These records will serve as documentation in the event of audits or compliance checks by the Social Health Authority.
Penalties for Non-Compliance
The SHI Act comes with strict penalties for employers who do not adhere to the requirements. The penalties are intended to ensure that all contributions are paid on time and that employees’ healthcare rights are protected.
Section 48(1) of the SHI Act outlines the offenses as follows:
- Failure to Remit: Employers who fail to remit contributions by the 9th day of the month, without lawful excuse, are in violation of the Act. Penalties may include fines or imprisonment, depending on the severity of the offense.
- Unauthorized Deductions: Making any deductions from an employee’s wages other than those authorized for SHIF purposes is illegal. Employers found guilty of such actions will face legal consequences.
- False Information: Employers who knowingly furnish false information, including falsified documents regarding SHIF contributions, are committing an offense under the SHI Act.
Employers must, therefore, ensure compliance at all times to avoid costly penalties that can affect both the business and employees.
Ensuring Employer Compliance
To avoid the consequences of non-compliance, employers should implement internal mechanisms that guarantee timely and accurate SHIF remittance. Some of the strategies include:
- Payroll Systems: Automating payroll systems to calculate SHIF contributions and generate reminders for timely remittance.
- Financial Audits: Conducting regular audits to ensure that all deductions and remittances are accurate and in line with the SHI Act.
- Training for HR and Finance Teams: HR and finance teams must be educated on the requirements of the SHI Act to ensure they understand the employer’s obligations.
Conclusion
The introduction of the SHIF under the SHI Act marks a significant change in Kenya’s healthcare landscape. As an employer, compliance with the SHI Act is not only a legal obligation but also a crucial way to ensure that your employees have access to healthcare benefits. By understanding the remittance process and ensuring timely payment of contributions, employers can avoid penalties and support their employees’ health and well-being.
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For further inquiries or assistance, employers are encouraged to contact the Social Health Authority through their toll-free number 0800 720 601 or email at [email protected]. Ensuring compliance with the SHIF regulations is a step toward securing the health of the workforce and contributing to the overall growth of Kenya’s healthcare system.
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