By Elijah Odhiambo
Self-employed contributors to the National Health Insurance Fund (NHIF) will now pay lower penalties should they default on their contributions.
Defaulters will now be required to pay 10 percent of the contribution amount under the revised penalty rates, which are anticipated to go into effect the following month.
The penalty for individuals who contribute Sh500 would now be Sh50, down from Sh200 under the previous rates, should they default.
NHIF acting CEO Samson Kuhora through a public notice on Thursday said the new rates will take effect from May 1.
“As per Section 19(2) of the NHIF Act, self-employed contributors who fail to pay their monthly contributions by the day when the monthly contributions are due shall be liable to pay equal to 10 percent of the amount of the contribution,” Kuhora said.
This follows the NHIF Act of 1998’s amendment in January 2022, which highlighted the updated penalty rates for members who submit late contributions.
Members’ monthly payments are still due on the ninth day of the month, after which penalties will be assessed for both self-employed contributors and employer remittances.
8.8 million Kenyans were in default on their monthly contributions by June 2022, according to a recent NHIF report published in January.
This represents close to half of all NHIF participants, indicating a sizeable number of Kenyans who are no longer receiving benefits from the fund.
Data from the National Health Insurance Fund shows that by June 2022, there were 8.8 million members in default status, up from 5.03 million in 2021.
As a result, the national health insurance missed its Sh90.57 billion premium income target for the year under consideration.
Membership increased from 13.94 million to 15.4 million, although only 6.7 million of those were considered to be active.
Companies to pay interest equal to CBK lending rate
In the new changes, however, Companies will from May pay an interest penalty equal to the Central Bank of Kenya lending rate if they fail to remit or match contributions of their workers to the National Health Insurance Fund (NHIF) on time.
“Employers who fail to remit the employees’ monthly standard contributions by the due date shall be liable to pay a penalty equal to the lending rate of interest of the amount of contributions, as may be published by the Central Bank of Kenya from time to time,” Kuhora said.
Samson Kuhora, the acting chief executive of the NHIF, announced that the insurance will start applying the new fine on May 1 in order to prevent companies from failing to pay contributions that are due before the ninth day of the following month.
The NHIF (Amendment) Act, 2022, which went into effect in January of last year, includes the fine, but its implementation was postponed after businesses successfully opposed this requirement and its penalties in court for employment and labor relations.
The current base lending rate for CBK is 9.5 percent, underscoring the severe penalties that await firms who fail to meet their NHIF commitments.
The court temporarily halted law enforcement and prohibited the Health Cabinet Secretary from publishing any regulations that would put the modified law into effect.
“The NHIF Act No. 9 of 1998 which was amended on January 10th 2022 highlights the revised penalty rate on late contributions. The effective date for the new penalty rate is May 1st 2023,” Mr Kuhora says in the notice.
Businesses seeking to be exempted from this requirement are required to provide a private medical scheme with benefits equal to or better than those offered by the NHIF.