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Bill cuts NHIF premiums for informal workers

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Bill cuts NHIF premiums for informal workers

Economy

Bill cuts NHIF premiums for informal workers


NHIF Building in Upper Hill, Nairobi. FILE PHOTO | NMG

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Summary

  • The reduction in monthly contributions comes as coronavirus-induced layoffs and pay cuts have forced more than half of NHIF’s active members to stop paying premiums.
  • The NHIF says 5.7 million members or 54 percent of its members had stopped paying premiums at the end of last month, including some who had benefited from the insurer’s services.
  • Official data show that the NHIF had 8,898 million members at the end of June last year, with 4,452 million from the formal sector and 4,546 million from the informal sector.

Monthly contributions to the National Hospital Insurance Fund (NHIF) by informal sector workers will be reduced to Sh300 if Parliament adopts the proposed changes to the law, making the scheme affordable for low-income cadres.

Informal workers currently pay Sh500 in NHIF monthly contributions. The push for lower rates would reduce the state-backed insurer’s efforts to increase revenue and improve coverage for diseases like cancer.

Informal workers paid Sh350 in monthly contributions before rates increased to Sh500 six years ago, a move intended to boost NHIF collections from the informal sector.

The NHIF is betting on mandatory membership for all adults and employers matching their workers’ contributions to increase collections from the $ 60 billion raised annually, based on receipts in the year through June 2020.

“The proposed amendment aims to ensure that many Kenyans, particularly those in the informal sector, the non-working and the destitute, can pay the NHIF contribution by reducing the rate from the current 500 shillings a month to 300 shillings. “says the proposed changes to the NHIF (Amendment) Bill 2021.

The proposal to reduce monthly contributions for informal workers comes at a time when the state seeks to force all adult Kenyans to contribute to the NHIF and employers to match workers’ monthly contributions to the fund.

The State has proposed that it be mandatory for employers to match the monthly remittances of Sh1,700 that major contributors make to the NHIF.

However, employers have opposed the proposal, warning that it would not only affect the wage bill and the sustainability of companies, but also weaken companies’ ability to create jobs and maintain existing jobs.

NHIF membership will be mandatory for every Kenyan adult, contributing Sh500 each month or Sh6,000 annually, if Parliament adopts the proposed changes to the NHIF Act.

Most low-income Kenyans lack health insurance, forcing them to pay hospital bills out of pocket, leaving families vulnerable to the high costs of treatment.

The reduction in monthly contributions comes as coronavirus-induced layoffs and pay cuts have forced more than half of NHIF’s active members to stop paying premiums.

The NHIF says 5.7 million members or 54 percent of its members had stopped paying premiums at the end of last month, including some who had benefited from the insurer’s services.

Official data show that the NHIF had 8,898 million members at the end of June last year, with 4,452 million from the formal sector and 4,546 million from the informal sector.

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