Middle-class workers are in for a shock after the state raided their payslips for statutory deductions to fund the new Social Health Insurance Fund.

Along with the housing tax and pay-as-you-earn (Paye) for some workers, the middle class has lost a substantial portion of their wages, forever, to the government.

For example, a Kenyan earning a gross salary of Sh500,000 will have Sh161,957 deducted.

This consists of SHIF deduction of Sh13,750, NSSF of Sh2,160.00, Paye of Sh138,547.86 and housing tax of Sh7,500.

This is an increase of about 17,373 from 2022 when President Uhuru Kenyatta retired.

The Social Health Insurance Fund came into effect this month, with workers now being hit by the reality of the new rate imposed by President William Ruto’s administration.

Every Kenyan is expected to pay 2.75% of their gross income, the highest tax on wages since independence.

Kenyans in the informal sector are also expected to pay 2.75 percent of their earnings, to be determined through a means-tested tool that is not yet operational.

According to the NHIF, the lowest monthly premium was Sh150, rising to Sh950 for Kenyans earning Sh35,000.

Any gross earnings above Sh35,000 will now attract a higher tax, up to 16 times higher for high earners.

SHA will take Sh963 every month for those earning Sh35,000. Those earning Sh100,000 gross salary will lose Sh2,750 every month or Sh33,000 a year.

The maximum NHIF monthly premium was Sh1,700 for those earning Sh100,000 and above.

The most a Kenyan earning a gross salary of Sh100,000 can now take home is Sh79,000 after Paye, SHIF, NSSF and Housing Tax deductions.

Kenyans earning Sh200,000 gross monthly salary will contribute Sh5,500 every month to SHIF or Sh66,000 per year.

This amount is comparable to what Kenya pays for private health insurance, which most employers provide.

Those earning Sh300,000 gross monthly salary will lose Sh99,000 every year.

Kenyans in this income bracket are few and already heavily taxed.

There is already resentment because many of the SHA benefits are low compared to private insurance schemes, the calculations show.

Public health specialists and health economists, for example, have questioned the wisdom of allocating Sh935 per household in a year to buy eyeglasses.

John Kiragu, a public health specialist and member of the Kenya Health Economics Association, recently said funding should be reviewed.

“Increase the prioritization of eye care funding by improving the reimbursement rates in the benefit package to be between Sh5,000 and Sh8,000 based on current market prices for spectacles and accessories to alleviate suffering among the youth and the poor with uncorrected refractive errors ”, Kiragu. said.

Most private insurers offer about Sh20,000 for glasses. The SHA has also allocated Sh900 for outpatients per person per year. This is much less than the Sh1,500 allocated by the NHIF.

Health economists and union leaders who spoke to the Star paint a bleak picture for workers, saying that while the state is overzealous in attacking the ever-thinning paychecks of the working class, taxpayers have no value for money.

Nyatike MP Tom Odege, who is also the general secretary of the Kenya Union of Public Servants, says with the new SHIF deductions coming into force, workers are now losing up to 40% of their income due to tax and statutory deductions that do not add up value of their lives.

“Work in Kenya has become unbearable. Workers lose over 40% of their income to taxes and statutory deductions, which makes it very difficult to operate and cover your normal expenses,” he said.

In response, Odege said union leaders are increasingly losing patience and will soon embark on the wage hike campaign, an initiative that often features clashes between labor and government and usually involves downing tools.

“As workers’ representatives, we have little choice but to demand higher payments to help workers survive,” he said.

Alex Kireria, a health policy analyst, believes that the government got the design and implementation process of the health insurance scheme wrong.

“To successfully design and implement a new policy, start by conducting a baseline survey to determine people’s attitudes toward it, acceptability, affordability, and other things. The outcome of the survey is what then feeds into policy and which in turn informs the working strategy. The entire SHIF edifice lacks all these,” Kireria said.

“This fundamental aberration cannot be discussed. Yes, there is the parentage law, but its implementation is totally wrong and Kenyans are the ones who suffer. But it’s sad that the government is raiding the paycheck of the middle class to underwrite all this fakeness.”

Nicholas Mwangi, a health economist, told the Star that while the concept of social insurance is sound, the design and implementation of the SHIF was not well thought out.

“Social Security works well in an economy with many wage earners, who then form a large pool to draw from. In our case, we have a shrinking middle class that the government wants to squeeze every penny out of,” he said.

The economist believes that SHIF’s policy is not necessarily to launch effective health insurance, but to increase revenues.

“Nothing confirms this more than the fact that SHIF people always write long lists of services but severely limit the funding of services. So when people go to hospitals, there is no service, meaning the public is forced into their pockets and the middle class has to maintain an expensive private insurance policy. Poor Kenyans must remain in social groups where endless health fundraisers take place. This, despite the steep deductions that continue. It is sad and unfair,” said Mwangi.

“The middle class gets a rough deal in this country because even for those at the bottom of the pyramid, they have to look to the middle class for support, and that lot is often a single paycheck or illness, a path to poverty. “

Groups representing workers are now questioning the benefits workers will get from the health tax.

Doctors say the higher deductibles are not commensurate with the benefits package or the actual services available in hospitals.

SHIF is one of the three funds administered by the Social Health Authority, the new body that replaced the National Hospital Insurance Fund.

While the SHIF is funded through premium contributions, the other two funds – the Primary Care Fund and the Emergency, Chronic and Critical Illness Fund – will be funded by the government through taxes, donations and gifts.

“SHA deducts more from workers’ wages but gives less. This is unacceptable as workers pay more for substandard services, threatening their well-being,” said Davji Atellah, secretary general of the Kenya Union of Pharmacists and Dentists.

The government ordered employers to pay the fees to any of the six banks that collect the money for the SHA.

“We urge Human Resource Practitioners to declare their employees on the employer portal to guarantee their eligibility to benefit under the Social Health Authority. Undeclared employees cannot access services even if they have self-registered,” said PS Harry Kimtai.

“We also have our own payment number for individuals who want to pay through M-Pesa. Generate eSlip number and use M-Pesa invoice number 200222 to pay.”

Sanitary facilities will be reimbursed at Sh11,200 for normal delivery and Sh32,600 for caesarean section.

Experts say some of these rates are below the market price and Kenyans may still be able to top up in some hospitals.

The fund will pay Sh2,400 for admission to the bed each day. NHIF paid 4,000 lei daily. Admission is limited to a maximum of 50 days.

However, discounts for some services have been increased, to the benefit of health institutions.

For example, facilities will be reimbursed Sh10,650 for dialysis per session and Sh180,000 per month for peritoneal dialysis. There are a maximum of three sessions per week for hemodialysis, compared to two sessions only under NHIF.