Kenya’s Social Health Insurance Regulations 2024: What Every Employer and Citizen Must Know
- Muhoro & Gitonga Associates
- Apr 16, 2024
- 7 min read
Updated: Oct 30
Table of Contents
Background and Legal Framework
What the Social Health Insurance Regulations 2024 Establish
Who Must Register and who is Covered
Contributions and the 2.75 Percent Issue
Employer Obligations and Payroll Compliance
Benefits Package and Empanelment of Facilities
Governance Structure and Role of The Social Health Authority
Data Transfer, Privacy and NHIF To SHIF Transition
Enforcement, Penalties and Dispute Resolution
Key Amendments in the 2024 Amendment Regulations
Recent Litigation and Its Practical Impact (Select Cases)
Practical Compliance Checklist for Employers and Providers
Strategic Considerations for Law Firms, Employers and Health Facilities
Executive Summary
This article explains the practical effect of the Social Health Insurance Regulations 2024 and their September 2024 amendments on employers, employees, health facilities and advisers. It summarises contribution rules, registration, benefits and the major court rulings that have affected rollout and enforcement.
The aim is actionable clarity so organisations can comply while mitigating legal and operational risk.
Background and Legal Framework
The Social Health Insurance Regulations 2024 implement the Social Health Insurance Act and provide the operational rules for the Social Health Insurance Fund. They replace and reconfigure the regime previously governed by the National Hospital Insurance Fund.
The principal regulations were gazetted in March 2024 and are supplemented by the Social Health Insurance Amendment Regulations published later in 2024.
What the Social Health Insurance Regulations 2024 Establish
The regulations set out registration rules, means testing, the benefits package, the role of empanelled facilities, tariffs, governance arrangements and enforcement mechanisms for the Social Health Insurance Fund. They also provide for the operational relationship between the Primary Healthcare Fund and the Social Health Insurance Fund for primary care purchases.
Those core enabling provisions are the legal basis for contributions and service delivery under the new regime.
Who must register and who is covered
Registration is designed to be universal for persons resident in Kenya though the regulations carve specific rules for formal sector employees, informal sector contributors and vulnerable groups. The regulations require registration of beneficiaries and prescribe procedures for employer based and individual registration.
The practical result is that most salaried workers will be captured through employer payroll remittances while informal sector members may register via digital portals or the designated payment channels.
Contributions and the 2.75 Percent Issue
The regulations provide for a statutory contribution to the Social Health Insurance Fund. A central and contested feature is the 2.75 percent deduction from gross income for certain contributors. That deduction has been subject to litigation and judicial scrutiny.
Courts have tested whether the deduction amounts to double taxation and whether the deduction framework complies with constitutional and taxation statutes. These judicial outcomes have influenced public debate and government statements about continued collection and mechanics of remittance.
Employer Obligations and Payroll Compliance
Employers are required to deduct and remit contributions according to the timelines and procedures set out in the regulations and subsequent public notices. The government published notices and guidance instructing employers to transition deduction and remittance processes from NHIF to the Social Health Insurance Fund with effect from the operational date announced by the Ministry.
In practice employers must update payroll systems, staff contracts and pay advice templates and implement reporting and reconciliation processes. Non compliance attracts administrative penalties and enforcement action under the regulations.
Benefits Package and Empanelment of Facilities
The Regulations specify the benefits package for primary and higher level care and require empanelment and contracting of facilities by the Social Health Authority (Authority) for funded primary care. Facilities seeking to provide services under the Fund must be empanelled, adhere to prescribed quality and reporting standards and accept the tariffs set out in the regulations and schedules.
Providers should carefully review the Second Schedule in the Regulations and ensure contracting and billing systems match the tariffs and reporting obligations.
Governance Structure and role of the Social Health Authority
The Social Health Authority is central to administration, empanelment, benefit management, tariff setting and oversight of the Fund. The regulations set out the Authority’s mandate, administrative functions and procedures for procurement and contracting.
These governance provisions also determine how the Primary Healthcare Fund and other public health funds interact with the SHIF in purchasing services. Organisations should pay attention to procurement rules, conflict of interest safeguards, and the Authority’s enforcement powers.
Data Transfer, Privacy and NHIF to SHIF Transition
The transition from NHIF to the Social Health Insurance Fund raised data protection and transfer issues. The regulations permit transfer of certain records to enable continuity of coverage but such transfers must respect applicable data protection law.
Employers and providers handling personal health or payroll data must ensure they have lawful processing bases, that data is secured, and that affected persons are notified in accordance with the Data Protection Act. The automatic migration of membership records has been one point of contention in litigation.
Enforcement, Penalties and Dispute Resolution
The regulations create administrative penalties for non compliance with registration, remittance and reporting obligations. They also provide for administrative review and appeal mechanisms and preserve judicial review.
Employers and providers should ensure a compliance calendar, internal reconciliation procedures and a mechanism to respond promptly to Authority queries to reduce risk of enforcement action.
Key Amendments in the 2024 Amendment Regulations
The Social Health Insurance Amendment Regulations 2024 clarified several operational points including registration processes and certain technical provisions around empanelment and remittance. These amendments were published in September 2024 and should be read together with the principal regulations because they change entry and operational rules for contributors and facilities.
Organisations must therefore apply the principal regulations and the amendment regulations together when designing compliance systems.
Recent Litigation and its Practical Impact (Select Cases)
The rollout and contribution mechanics of SHIF have been the subject of high profile litigation. In 2024 the High Court in Aura v Cabinet Secretary, Ministry of Health & 11 others; Kenya Medical Practitioners & Dentist Council & another (Interested Parties) (Constitutional Petition E473 of 2023) [2024] KEHC 8255 (KLR) (Constitutional and Human Rights) (12 July 2024) (Judgment), delivered a judgement that raised constitutional concerns about parts of the new health statutes and ordered limited suspensions.
The government successfully obtained a stay at the Court of Appeal in Cabinet Secretary, Ministry of Health v Aura & 13 others (Civil Appeal (Application) E565 of 2024) [2024] KECA 1195 (KLR) (20 September 2024) (Ruling), permitting operationalisation while appeals and related petitions proceeded. In 2025 a number of High Court proceedings addressed issues ranging from the legality of the 2.75 percent deduction to the lawfulness of membership migration and staff establishment matters at the Authority.
These judgments and interlocutory rulings have created a live landscape where statutory language, administrative guidance and judicial directions must all be considered. Practically employers should continue compliance in line with statutory notices and the Court of Appeal stay while monitoring ongoing appeals for finality.
Practical Compliance Checklist for Employers and Providers
a. Update payroll to capture the correct contribution base and remittance codes.
b. Issue revised pay advice and employment notices to staff explaining deductions and rights.
c. Register with the Authority portal and test remittance and reconciliation processes.
d. Review contracts with empanelled facilities and ensure billing procedures match tariffs.
e. Put in place data protection and record transfer safeguards.
f. Track litigation and public notices from the Ministry of Health and the Authority and keep counsel on call for urgent compliance queries.
Completing these steps will materially reduce the risk of penalties and operational disruption.
Strategic Considerations for Law Firms, Employers and Health Facilities
For Law Firms: Advise clients on the split between payroll taxes and statutory contributions to avoid double taxation exposure. Draft targeted employment law advice and template letters for staff consultation.
For Employers: Consider phased technical implementation with payroll vendors and a communications campaign to staff. Maintain documentary evidence of employer compliance decisions and consultations.
For Health Facilities: Ensure prompt application for empanelment if participating in the Fund. Revise billing and IT workflows to accommodate new tariffs and the Authority’s claims verification procedures.
FAQs
Q1: Who must pay the 2.75 percent deduction and is it final?
The statutory framework provides for a contribution mechanism; however several courts have considered whether the 2.75 percent deduction as applied constitutes double taxation. The litigation means the legal position has been contested though operational notices have required continued remittance. Employers should follow current government notices while monitoring appeal outcomes.
Q2: Has the Court stopped the rollout of the Social Health Insurance Fund?
The rollout faced High Court challenges in 2024 but the Court of Appeal granted a stay allowing the government to proceed with operationalisation from 1 October 2024 pending appeals. Parties should assume operational rules are in effect unless a competent court issues a specific order to the contrary.
Q3: What should an employer do if an employee objects to payroll deductions?
Employers should provide written explanations, cite the legal basis in the regulations and maintain records of consultations. Complex disputes should be escalated to in house counsel or an external employment law specialist. If a judicial order specifically restrains the deduction for a particular employee or class of employees employers must comply with that order.
Q4: Are empanelled facilities contractually bound to the tariffs in the Regulations?
Yes providers delivering services under the Fund must follow empanelment contracts and the tariffs set out in the regulated schedules. Disputes over tariffs are handled through the Authority’s contractual and dispute resolution procedures and, where necessary, the courts.
Q5: Do data transfers from NHIF to SHIF violate data protection laws?
Data transfers must have a lawful basis and satisfy the Data Protection Act requirements. The Regulations provide for certain transfers to ensure continuity while litigation has tested the lawfulness of automatic or bulk transfers. Entities should document legal bases and take technical safeguards.
How This Affects You Now
If you are an employer begin technical payroll updates and staff communications immediately. If you are a provider apply for empanelment and review contracts and billing systems. If you are a law firm update client alerts and track the decisive appeal outcomes that could change the statutory landscape. Continue to monitor official Ministry of Health notices and authoritative court repositories until the appellate process concludes.
For more information, please refer to the Social Health Insurance Regulations, 2024.
