SHIF Explained for Employers in Kenya

SHIF, the Social Health Insurance Fund, replaced the old NHIF as Kenya's mandatory health contribution. If you run payroll, you need to deduct and remit it correctly. Here is what employers need to know.

What SHIF is

SHIF is a mandatory contribution to the Social Health Authority (SHA) that funds Kenya's universal health coverage. It replaced NHIF, and the way it is calculated is different, so old NHIF assumptions no longer apply.

The rate

SHIF is 2.75% of an employee's gross monthly salary, with a minimum of KES 300 per month for lower earners. Unlike NSSF and the Housing Levy, SHIF is an employee-only deduction, there is no employer match.

Tax treatment

SHIF contributions are an allowable deduction for tax, they reduce the employee's taxable pay, which softens the net impact for the employee. Make sure your payroll applies the deduction before calculating PAYE.

How and when to remit

Ensure every employee is registered with SHA, deduct 2.75% (minimum KES 300) each month, remit by the statutory monthly deadline (the 9th of the following month), and reflect the deduction clearly on payslips.

What changed from NHIF

• NHIF used fixed banded amounts; SHIF is a straight percentage of gross pay (with a floor).
• Higher earners now generally contribute more than under the old NHIF bands.
• Registration moved to the Social Health Authority (SHA).

SHIF is one of four payroll statutory items, alongside PAYE, NSSF and the Housing Levy. See our Kenya payroll guide for the full picture. Our HR compliance and HR outsourcing services keep your deductions correct and current.

Official sources: Social Health Authority (SHIF), KRA.

Disclaimer: This article is general guidance for educational purposes and is not legal or tax advice. Statutory rates and requirements change. For advice specific to your organisation, speak to a qualified HR, legal or tax professional.