The Zanzibar Health Services Fund (ZHSF) was formally established by the Zanzibar Health Services Fund Act No. 1 of 2023, passed by the House of Representatives, assented to by the President on 20 March 2023, and published in the Government Gazette on 31 March 2023.
The Fund began operations in July 2023, marking the start of a phased implementation programme. It is a statutory health insurance scheme introduced by the Revolutionary Government of Zanzibar to secure universal health coverage and sustainable financing of healthcare services.
Who Needs to Contribute
The Act makes membership mandatory for nearly all residents of Zanzibar. Those covered include:
- Workers in the public and private sectors.
- Informal sector workers and self-employed individuals.
- Students in higher education institutions.
- Retirees from both formal and informal sectors.
- Foreign residents living in Zanzibar for more than six months.
- All other permanent residents, regardless of nationality.
While ZHSF is compulsory, individuals remain free to hold additional health insurance policies if they wish.
Employer Responsibilities
- Registration: Employers must register their organisation and employees. New employees must be registered within 30 days of hire.
- Contribution and Remittance: Employers must deduct 3.5% from each employee’s salary, add a further 3.5% employer’s contribution, and remit the total 7% to the Fund within 14 days of the month-end.
- Ongoing Duties: Employers must update the Fund on any workforce changes and ensure employees receive their ZHSF membership cards.
Non-compliance is treated as an offence and may result in fines.
Employee Contributions and Benefits
- Contribution Rate: Each employee contributes 3.5% of consolidated monthly salary, matched by 3.5% from the employer.
- Contribution Base: Salary is defined as consolidated gross remuneration – including basic pay and regular allowances – with no ceiling applied.
- Benefits: Members and their dependants are entitled to comprehensive healthcare, delivered through over 60 accredited facilities in Zanzibar and more than 9,000 facilities on mainland Tanzania via cooperation with the NHIF.
- Membership Card: Issued within approximately 28 days of registration, this card must be presented when accessing healthcare services.
Contribution Base
- Calculated on the “Consolidated salary” (basic pay plus regular allowances/the regular wage or gross salary) on which income tax is assessed.
- No salary cap applies.
- Informal sector contributions will be set by ministerial regulations on a household basis.
Tax Treatment
- Under the current Income Tax Act, PAYE is calculated on employment income after deducting employee contributions to an approved retirement fund (ZSSF), but not after deducting health fund contributions (ZHSF).
- The employer’s contribution to the ZHSF payment is not a taxable benefit to the employee and is treated as a normal deductible business expense for the employer when computing corporate income tax.
Implementation Timeline
• Public Sector: Compulsory from 3 July 2023.
• Private Sector: Voluntary enrolment from March 2024.
• Informal Sector, Students, Retirees: Phased in by ministerial regulations.