From NHIF to the Social Health Authority

The 2023 Act (No. 16 of 2023) created the Social Health Authority (SHA) and repealed the law behind the National Hospital Insurance Fund (NHIF). It set up three funds: a primary healthcare fund, the Social Health Insurance Fund (SHIF), and a fund for emergency, chronic and critical illness. Payroll advisers report that employer deductions for SHIF began in October 2024.

Every Kenyan must register, and children born after the Act took effect are registered at birth. Section 26 lets a non-Kenyan who is ordinarily resident in Kenya register as well, and the SHA website says citizens, refugees and other non-citizens living in the country can all sign up. What members receive is an essential healthcare package set by the Cabinet Secretary for Health, paid on a tariff to empanelled facilities.

Running SHIF through payroll

For a salaried worker, section 27 makes the contribution a monthly statutory deduction: the employer takes it from wages at the prescribed rate and pays it over to the fund. Payroll advisers add that the employer must register with SHA and register each employee. Non-Kenyan residents who have lived in Kenya for more than twelve months owe contributions too, so a foreign hire who settles there joins the same system.

Payroll advisers reported in October 2024 that the rate for salaried staff is 2.75% of gross salary, with a monthly minimum and no maximum, remitted by the 9th of the following month. That open top end is a change from the banded NHIF scale, which stopped at a capped top band. Check the current figure with SHA before you budget, since the rate is fixed by regulation.

Two other items appear on the same payslip without being health benefits. EOR providers list contributions to the National Social Security Fund (NSSF), which is a pension scheme, and the affordable housing levy as separate employer duties. Neither one buys medical care.

Why registration reaches beyond the clinic

Under section 26(5), proof of SHA registration and contributions is a precondition for dealing with or using public services from national and county government. An employee whose registration lapses can therefore run into trouble well outside a hospital visit, which is a good reason to keep deductions current from the first payroll.

Short stays follow a different rule. A non-Kenyan who plans to be in Kenya for less than twelve months must hold travel health insurance designated by the Cabinet Secretary, under section 26(6). Sending a US employee out for a fixed project is a different case from hiring a resident, and it calls for that kind of designated cover.

Private medical cover alongside SHIF

Section 31(2) states that nothing in the Act stops a member from also holding private health insurance. EOR providers describe group medical cover with inpatient, outpatient, dental and optical benefits as the norm for professional roles, layered over SHIF instead of in place of it.

On tax, law-firm guidance describes a change made by the Tax Laws (Amendment) Act 2024, in force from 27 December 2024: an employee’s SHIF contribution can now be deducted when working out taxable income. How an employer-paid private plan is taxed as a benefit is a separate matter, so ask a local adviser or tax professional before you add one.

The Insurance Act and unlicensed insurers

Section 20(1) of the Insurance Act (Cap. 487) says no insurer, broker, agent or other person may directly or indirectly place Kenya business with an insurer not licensed under the Act without the prior written approval of the Commissioner of Insurance. Doing so is an offence that carries a fine or imprisonment, although the Act adds that a policy is not void for that reason alone.

The Act’s definition of Kenya business includes insuring any person or human life situated in Kenya, so health cover for someone living there falls inside the rule. Kenyan law therefore restricts placing that cover with insurers holding no Kenyan licence unless the Commissioner approves it in advance.

An international plan does not remove the SHIF duty either. A 2026 payroll guide notes that private international cover arranged by a home-country employer leaves the SHIF obligation in place, so for a resident employee an international plan can only run alongside SHIF. Whether a given plan can be written for someone living in Kenya is for the insurer to confirm.

Employer of record or independent contractor

EOR providers say a US company with no Kenyan entity usually hires through an employer of record (EOR). The EOR holds the employment relationship in Kenya, registers the employee with SHA and NSSF, runs payroll and arranges any private medical plan.

A genuine independent contractor stays off your payroll. Under section 27(2)(b) they contribute to SHA as a non-salaried household and arrange any private cover on their own. Our page on health coverage through an EOR or for contractors abroad compares the two arrangements in more detail.

Asking us for an introduction

If you want to look at extra health cover for your team in Kenya, we can introduce you to a benefits partner that works on international and remote-team cover. Mithril1 does not quote, compare or recommend health plans; the partner and the insurer decide eligibility, plans and pricing.

The quote form on this page is the place to begin: say how many people you employ in Kenya, whether they are hired through an EOR or your own entity, and which dependants you want covered, and we will forward the details to the partner. Nearby markets are covered on our pages for South Africa and the United Arab Emirates, and the Middle East and Africa guide, the international health insurance overview and the employee benefits hub give the wider picture.

A few useful answers

Common questions

Do employers in Kenya deduct SHIF contributions from pay?

Yes. For a salaried employee the Social Health Insurance Act makes the contribution a monthly statutory deduction, which the employer takes from wages and pays to the fund after registering itself and its staff with SHA.

Can a non-Kenyan employee join SHA?

Yes. Section 26 lets a non-Kenyan who is ordinarily resident in Kenya register, and non-Kenyan residents who have lived there for more than twelve months owe contributions.

Can an international health plan take the place of SHIF?

For a resident employee, SHIF registration and contributions stay in place whatever else you buy, so an international plan can only run alongside it.

Are NSSF and the housing levy health benefits?

Neither is. NSSF is a pension scheme and the affordable housing levy funds housing; both sit on the payslip next to SHIF but pay for no medical care.

How does Mithril1 help with a hire in Kenya?

We can introduce you to a benefits partner for international and remote-team health cover. Send the details through the quote form, and the partner and the insurer handle eligibility, plans and pricing.

International Health Insurance for Remote Employees in Kenya