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NHIF contributors to get 15pc relief on premiums in proposed law

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NHIF contributors to get 15pc relief on premiums in proposed law


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NHIF Building in Upperhill, Nairobi. FILE PHOTO | NMG

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Summary

  • Workers contributing to the National Hospital Insurance Fund (NHIF) will enjoy tax reliefs of 15 percent of their premiums if Parliament passes a Bill that analysts say is targeted at enticing more Kenyans to enrol into the scheme.
  • An analysis by consultancy firm, Deloitte shows that by allowing a tax relief on the NHIF contributions, individuals will enjoy a maximum relief Sh255 per month–being 15 per cent of Sh1,700 which is the maximum monthly NHIF contribution.

Workers contributing to the National Hospital Insurance Fund (NHIF) will enjoy tax reliefs of 15 percent of their premiums if Parliament passes a Bill that analysts say is targeted at enticing more Kenyans to enrol into the scheme.

The State-backed Finance Bill 2021 proposes to introduce a tax relief on individuals who make contributions to the fund with the amount of insurance relief to be claimed being equivalent to 15per cent of the premiums paid with a cap of Sh5,000 per month.

Currently, only policyholders of education, life and health insurance enjoy an insurance relief on the premiums paid.

An analysis by consultancy firm, Deloitte shows that by allowing a tax relief on the NHIF contributions, individuals will enjoy a maximum relief Sh255 per month–being 15 per cent of Sh1,700 which is the maximum monthly NHIF contribution.

Big four agenda

Given the fact that NHIF contributions are mandatory for employed persons, all employees are bound to enjoy this relief. Self-employed individuals who make voluntary contributions will equally benefit.

“Albeit minimal, the relief is bound to encourage more NHIF remittances and simultaneously aid the government in attaining its Universal Health Coverage (UHC) agenda as stipulated in the Big Four agenda,” Deloitte said in a brief.

There have been proposals to increase NHIF contribution to finance the UHC programme. This has however not materialized in the past amid concern that the move would increase the cost of employment and also strain employees.

“With the introduction of the NHIF relief, taxpayers may wonder whether this is a precursor to new NHIF rates” Deloitte said.

A Budget Policy Statement by Mr Yatani had in February indicated that each household could soon make a compulsory Sh500 contribution NHIF as the State lines up a health cover for all Kenyans.

Each household would part with Sh6,000 annually to be enrolled in UHC scheme for outpatient and inpatient services, including maternity, dialysis, cancer treatment and surgery, according to the plan.



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