Government Increases Deductions to Fund Health Scheme, Impacting Kenyan Workers

In a bid to finance a comprehensive health program, the Kenyan government is planning to revise existing deductions. Currently ranging from Sh150 to Sh1,700, these deductions will be streamlined into a flat rate, calculated at 2.75 percent of an individual's gross monthly earnings.

These impending changes in deductions are expected to further reduce the net income of Kenyan workers, who are already grappling with decreased monthly earnings due to the housing tax and increased contributions to the National Social Security Fund (NSSF).

As part of this new plan, the government will now collect approximately Sh10,264, equivalent to 20.5 percent of the income of those earning Sh50,000 in gross pay. This marks an increase from the current deduction of Sh8,460.

The impact of these changes will be felt more acutely by those earning higher salaries, with individuals earning Sh100,000 set to give up Sh27,389, or 27.4 percent of their gross income.

These deductions underscore the financial challenges faced by workers as they contribute towards President Ruto's vision of universal health coverage (UHC), affordable housing, and improved pension plans, alongside other budgetary needs.

Under the State-backed Social Health Insurance Bill of 2023, UHC will be structured around three distinct funds: one for preventive and primary healthcare, another for primary referrals, and a third dedicated to the treatment of chronic diseases. This multifaceted approach aims to ensure comprehensive healthcare coverage for all citizens, addressing a wide range of healthcare requirements.