Understanding the SHIF — what replaced NHIF

## What is SHIF?

The Social Health Insurance Fund (SHIF) replaced the National Hospital Insurance Fund (NHIF) from 1 October 2024. SHIF provides social health insurance coverage for all Kenyans.

The key change: from flat brackets to a percentage

NHIF used a graduated bracket system with fixed monthly deductions based on income ranges. SHIF uses a simple percentage:

SHIF rate: 2.75% of gross salary

There is no cap — the 2.75% applies to the full gross salary.

Impact on take-home pay

For someone earning KES 100,000 gross:

SHIF is higher for most employees, especially those earning above KES 50,000.

Employer obligations

Employers must:

Deduct 2.75% SHIF from each employee's gross salary

Add it to the PAYE return and remit by the 9th of the following month

Update payroll systems to reflect the new calculation

Self-employed individuals

If you are self-employed or a sole proprietor, you are required to contribute to SHIF voluntarily. The rate is 2.75% of your gross income.

Does SHIF affect PAYE calculation?

SHIF itself is not deducted before calculating PAYE. PAYE is calculated on gross salary, then SHIF is a separate deduction from take-home pay. Both are remitted to KRA together via the PAYE return.

What NHIF coverage do I have while transitioning?

The government has indicated that existing NHIF coverage continues during the transition. Check with the Social Health Authority (SHA) for the latest guidance on coverage and claims under SHIF.