Formal sector workers to pay new NHIF fees

Feb 2013. Business Daily.

Formal sector employees will start paying the controversial NHIF fees on April 1, opening a new chapter in the history of health insurance in Kenya.

Simon ole Kirgotty, the managing trustee of the public health insurer, said NHIF will start charging the new fees following last month’s dismissal of the Central Organisation of Trade Unions’ (Cotu) suit opposing the move.

Industrial Court judge Nzioki Wa Makau threw out Cotu’s opposition to the new levies in a judgement delivered on January 25, 2013.

Cotu had sought the court’s intervention on the matter citing lack of consultation and mismanagement of the Sh9 billion that NHIF collects from formal sector workers annually.

“Nothing prevented us from introducing the new rates beginning this month but we have chosen to delay that until April 1 leaving us time to consult with stakeholders,” said Mr ole Kirgotty.

“We are maintaining the same rates as proposed in 2010,” he said.

NHIF’s new membership regime will see monthly contributions rise by up to 525 per cent, more than tripling the fund’s annual revenue.

The new fees will put more than Sh20 billion in the hands of NHIF management even as the agency’s latest financial statement shows that it spent a third of last year’s pool of funds on salaries and administrative costs.

Opponents of the new fees, led by Cotu, have argued that NHIF lacks capacity to manage such an amount of money and demanded far-reaching reforms before the new fees are introduced.

Under the new regime, formal sector workers earning a gross salary of Sh100,000 and above will make a monthly contribution of Sh2,000 up from the current Sh320 to finance an expanded programme that covers both outpatient and in-patient services for its members.

Those earning between Sh50,000 and Sh100,000 will contribute Sh1,500 per month while the lowest paid formal sector workers on a salary of less than Sh5,999 will contribute Sh150.

The scheme has a separate band for the self-employed, who will pay Sh500 per month for similar range of services from the fund.

Mr Kirgotty said that NHIF has been talking to the Federation of Kenya Employers (FKE) in the wake of the judgment and that it won its approval on condition that employers are not forced to contribute above the current rates.

“Employers’ main concern was that they would be required to match their workers’ contribution. We have clarified that the rates are only applicable to employees,” he said.

Mr Kirgotty added that NHIF is talking to Cotu officials who have fiercely opposed the new rates but now appear to have lost all legal avenues to maintain the status quo.

 

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