In late 2024, the National Hospital Insurance Fund (NHIF) was replaced by the Social Health Insurance Fund (SHIF), run by the Social Health Authority (SHA). If you process payroll, the change was bigger than a name swap — it moved health contributions from fixed salary bands to a flat percentage. Here is how SHIF works in 2026.
What is SHIF?
SHIF is Kenya's mandatory health insurance scheme, established under the Social Health Insurance Act, 2023. It funds the national health benefit package and applies to every employed person. Employers deduct it monthly and remit it to the SHA.
The 2026 SHIF rate
SHIF is 2.75% of gross monthly salary, with a minimum contribution of KES 300 per month and no upper cap. That last point is the biggest change from NHIF: where the old fund topped out at a fixed maximum, SHIF keeps applying 2.75% no matter how high the salary goes.
- An employee on KES 20,000 pays KES 550.
- An employee on KES 100,000 pays KES 2,750.
- An employee on KES 400,000 pays KES 11,000.
How SHIF differs from NHIF
| NHIF (old) | SHIF (2026) | |
|---|---|---|
| Basis | Fixed salary bands | Flat 2.75% of gross |
| Maximum | Capped (KES 1,700) | No cap |
| Minimum | KES 150 | KES 300 |
| Remitted to | NHIF | Social Health Authority |
Is SHIF an employer or employee cost?
SHIF is an employee-only deduction. The employer withholds it from the employee's pay and remits it, but — unlike NSSF and the Housing Levy — the employer does not match it. Your payroll cost is the administration, not a second contribution.
SHIF and PAYE: the tax benefit
SHIF is deducted from gross salary before taxable pay is calculated, alongside NSSF and the Housing Levy. Because it reduces taxable income, it slightly lowers the PAYE an employee owes. On a KES 100,000 salary, the KES 2,750 SHIF contribution comes off before the tax bands are applied.
Employer obligations
- Register the business and employees on the SHA portal.
- Deduct 2.75% (or the KES 300 minimum) each month.
- Remit and reconcile within the statutory deadline.
- Apply SHIF to gross pay — a common error is applying it to net.
How Force HRM handles SHIF
Force HRM applies the current SHIF rate and minimum automatically on every run, in the right sequence so your PAYE stays correct, and produces the figures you need to remit to the SHA. See Force HRM in action.
SHIF rules are still being refined through implementing regulations. Figures here are current for 2026 — confirm against current SHA and KRA guidance before filing.