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In response to recent court developments, the Ministry of Health has issued a position statement confirming that the 2.75% contribution to the Social Health Insurance Fund (SHIF) remains legally binding.
This announcement follows a High Court ruling on June 13, 2025, which declared certain SHIF deductions unlawful in the case of Clarence Eboso v. Ministry of Health & Social Health Authority (SHA).
Justice Chacha Mwita ruled that deducting SHIF contributions from an employee's gross income, after income tax has already been applied, constitutes a violation of tax law.
Social Health Authority (SHA) headquarters in Nairobi
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He emphasised that gross income should only be subjected to income tax, and any additional deductions from it thereafter amount to double taxation, which is unlawful.
Despite the legal challenge, the ministry maintains that the 2.75% levy remains valid and continues to operate within Kenya’s legal health framework.
Health CS Aden Duale said that the court's ruling did not compel any immediate suspension of the deductions, as it acknowledged that the matter is under active review by the Court of Appeal.
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Contribution Valid Under Existing Law
The Ministry clarified that the 2.75% contribution to SHA remains legally in effect and is recognised as a tax-deductible expense under the Tax Laws (Amendment) Act, 2024.
It pointed out that SHA operates under the Universal Health Coverage laws, including the Social Health Insurance Act, the Digital Health Act, and the Primary Health Care Act.
According to the ministry, these laws are integral to providing financial protection and access to quality health services for all Kenyans.
The ministry’s statement aims to reassure the public that the contributions will continue as planned, pending any further legal developments.
Health Cabinet Secretary Aden Duale
SHIF vs SHA Explained
Social Health Insurance Fund (SHIF)
The Social Health Insurance Fund (SHIF) is a mandatory health insurance scheme introduced by the government as part of its broader efforts to enhance healthcare access and financial protection for all citizens.
It is designed to collect funds through mandatory contributions from both employees in the formal sector and self-employed individuals to support the provision of universal health coverage (UHC).
The contributions, typically deducted from an individual's gross income, are pooled into the SHIF to be used for financing healthcare services, including primary, secondary, and specialised care, particularly for those unable to afford private healthcare.
It is part of a move to overhaul the country’s health insurance system, transitioning from the National Health Insurance Fund (NHIF) to a more inclusive and robust system.
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Social Health Authority (SHA) offices in Nairobi
SHA (Social Health Authority)
The Social Health Authority (SHA) is the governmental body responsible for the administration and management of the Social Health Insurance Fund (SHIF).
The SHA is tasked with overseeing the implementation of the SHIF policy, including managing contributions, ensuring the effective use of the funds.
The SHA operates within the framework of Kenya’s health laws, including the Social Health Insurance Act, the Digital Health Act, and the Primary Health Care Act.
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