Kenya | How SHIF Deduction Works

Kenya | How SHIF Deduction Works

The National Health Insurance Fund has been replaced by the Social Health Insurance Fund (SHIF) administered by the Social Healthcare Authority (SHA) effective 1st October 2024.

A contributor to this fund is defined as a person liable to contribute to the Fund as provided under Section 27 of the Social Health Insurance Act (SHIA), which includes: 
  1. Every salaried Kenyan household, 
  2. A salaried non-Kenyan resident, ordinarily residing in Kenya for a period exceeding twelve months, 
  3. The national government,
  4. A county government, and 
  5. Any other employer.
A household whose income is derived from salaried employment shall pay a monthly statutory deduction contribution to the Social Health Insurance Fund (SHIF) at a rate of 2.75% of the gross salary or wage of the household. The contribution may not be less than Ksh 300 per month.

Monthly Employees:
Where an employee's 2.75% of gross salary is less than Ksh 300 for the month, the SHIF deduction will automatically calculate Ksh 300.

Fortnight and Weekly employees:
If an employee earns a gross wage in the first fortnight or week where 2.75% is less than Ksh 300, the system will automatically calculate the SHIF deduction as Ksh 300. In the following fortnight or week, if 2.75% of the employee's MTD (Month-to-Date) gross salary remains less than Ksh 300, the SHIF deduction will not be calculated. The deduction will only be calculated in the fortnight or week where 2.75% of the employee's MTD gross salary exceeds Ksh 300, and only the amount exceeding Ksh 300 will be deducted.

Ultimately, the MTD SHIF deduction should be 2.75% of the MTD gross salary.

See an example below:
                  
      




    • Related Articles

    • Kenya | Insurance Relief

      An Insurance relief component is calculated on the payslip section for employees who qualify for the relief. The relief is calculated at a rate of 15% of the amount of premiums paid but shall not exceed KSh 5000.00 per month totalling KSh 60 000 ...

    • Kenya | Social Health Insurance (SHIF) 2024 Guide

      This guide provides a comprehensive breakdown of the legislation governing the Social Health Insurance Fund (SHIF), offering clear insights to help you navigate the amendments with ease.

    • Kenya Product User Guide

      To aid our users in the understanding and application of compliance in Kenya, PaySpace has released an external Product User Guide. This is a "How to guide" to follow during company implementations, company maintenance, and for general support ...

    • Frequencies & Pay Dates | Adding a New Frequency

      Overview Frequencies refer to the pay cycles within a company e.g. monthly, fortnightly or weekly. When a new company is added on the system, the frequencies are created. Thereafter, you can add more frequencies if necessary. If only one frequency ...

    • South Africa | How Does The Loan Deduction Interest Note Component Calculate?

      The Loan Deduction Interest Note Component will take the outstanding balance of the loan and multiply it by the monthly/fortnightly/weekly interest rate (depending on the frequency) provided by the user. Note: The interest rate is inserted on the ...