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Employees get first NHIF tax breather in new plan

 

The Kenya Revenue Authority (KRA) has asked employers to honour a newly-introduced 15 percent relief on their workers’ National Health Insurance Fund (NHIF) premium payments.

The taxman said the relief took effect last month (January) and should be captured in the latest employee payslips.

The State-backed Finance Bill 2021 introduced a 15 percent tax relief on the medical insurance fund contributions with a Sh5,000 monthly cap on the claims.

The change was meant to expand the relief to policyholders, which initially only covered education, life, and health insurance premiums.

“Contributions to NHIF will, therefore, be eligible in the computation of insurance relief. The effective date of this amendment was January 1, 2020,” the taxman said in a notice.

This is good news for nearly 10.6 million workers currently contributing Sh57.1 billion to NHIF and may entice more Kenyans to enrol in the scheme.

Maximum relief

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

Given that NHIF contributions are a must for employed persons, all employees are bound to enjoy this relief. Self-employed individuals, who contribute voluntarily will equally benefit.

There have also been proposals to increase NHIF contribution to finance the Universal Health Care programme. This has, however, not materialised in the past amid concerns that the move would increase the cost of employment and also strain employees.

An earlier Budget Policy Statement by Finance CS Ukur Yatani had indicated that each household could make a compulsory Sh500 contribution to NHIF as the State lines up a health cover for all Kenyans.

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

Kenya—a lower-middle-income state—has a 2022 target for UHC through expanded NHIF after years of the push by activists for free healthcare.   BY DAILY NATION   

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