As the new Social Health Insurance Fund (SHIF) regulations take effect this month (October), employers across Kenya are scrambling to ensure they comply with the law or face potential legal action. 

Under the Social Health Insurance Act, No. 16 of 2023, employers are now required to deduct 2.75pc of their employees’ gross salary or wage and remit these contributions to SHIF by the 9th of every month.

The Social Health Authority (SHA), which oversees the implementation of the new health insurance framework, issued a directive emphasizing the urgency of the new requirements.

Companies that miss the deadline or fail to adhere to the guidelines risk severe legal repercussions.

“This is to inform all employers to ensure compliance with the SHI Act and the regulations on remittance of contributions in the respective October 2024 payrolls,” read part of the SHA’s warning, indicating that the first payrolls under the new law are being closely monitored.

The stakes are high for employers who fail to meet the new SHIF obligations.

The SHA made it clear that those who do not remit contributions on time, or who provide inaccurate data on employee deductions, will face legal penalties. 

The SHI Act outlines specific offences, including failure to submit contributions and knowingly making false statements, which could lead to fines or prosecution.

SHA officials pointed to Section 48(1) of the SHI Act, which holds employers accountable for ensuring that deductions are correctly calculated and sent to the designated SHIF accounts.

Violations of these rules could lead to businesses being taken to court, facing hefty fines, or even the arrest of responsible parties.

Additionally, employers are prohibited from making any deductions from their employees' wages that fall outside the authorised contributions under SHIF.

The SHA has warned that unauthorised deductions will also trigger legal proceedings.

For many businesses, the transition from the National Health Insurance Fund (NHIF) to the new SHIF framework represents a significant operational challenge.

SHA recently confirmed that NHIF benefit packages and rates officially ceased on October 1, 2024, and all companies are now required to implement the new SHIF structures.

While some organisations have already adjusted their payroll systems to reflect the 2.75pc deduction, others are still scrambling to make the necessary changes before the first remittance deadline.

SHA has stressed the importance of timely action, reminding employers that failure to comply will have immediate consequences, including disruptions in employee health coverage and legal penalties.

With the SHA emphasizing the enforcement of the new rules, employers are encouraged to act swiftly.

Contributions must now be sent to designated SHIF bank accounts, with the SHA pledging to strictly monitor compliance.

“This is a crucial time for businesses to ensure they are fully aligned with the SHIF requirements,” an SHA spokesperson said.

“We want to avoid any delays in health coverage for employees, but we must also enforce the law. Non-compliance will not be taken lightly.”

Employers are urged to inform their staff of the changes and ensure that all HR and payroll departments are aware of the new guidelines. 

Companies that fall behind risk being on the wrong side of the law, and the SHA has made it clear that legal action will be taken against those who do not comply.

As the government continues to implement the SHIF system, businesses have a critical role to play in ensuring the smooth transition to this new health insurance model, which aims to provide better coverage for millions of Kenyans.