The National Hospital Insurance Fund (Amendment) Bill, 2021

Proposed Provision for Amendment Proposed Amendment Our Comments
Title The Bill proposes to amend the title to the Act by adding the establishment of the National Health Scheme to the objects of the Act. This increased functionality is aimed at ensuring that the National Health Insurance Fund (the Fund) makes significant efforts at attaining Universal Health Coverage.
S. 1 The Bill proposes to define a child as a person who has not attained the age of 18 years and includes a posthumous child, stepchild, adopted child and any child to whom the contributor stands in loco parentis that has not attained the age of eighteen (18) years.


This definition would exclude persons who are over the age of eighteen (18) years and are students or indentured or are not employed and are dependent on the contributor. Also excluded from the definition of child would be persons with disabilities who are wholly dependent on and living with the contributor. These persons are proposed to be defined as beneficiaries in the Act, hence making the proposed amendment in line with the Constitution and the Children’s Act.
S. 5(1) The Bill proposes to introduce empanelled healthcare providers, who would replace “declared hospitals”. The criteria for the empanelment and contracting of healthcare providers for the purposes of the Act shall be set by the Minister of Health and the National Hospital Insurance Fund Management Board (the Board). This is a change from the current system of using “declared hospitals” to venture into the use of empanelled and contracted healthcare providers. The working of this proposed system is unclear as at now, and it is expected that the regulations to be promulgated by the Minister might shed more light on this.
The functions of the Board are proposed to be expanded to include facilitating the attainment of Universal Health Coverage including communication and stakeholder engagement. This is one of the pillars of Vision 2030 as well as a part of the President’s Big 4 Agenda and is set to be achieved through the National Health Insurance Fund, therefore including it in the functions of the Board is a move towards prioritising the aim given that 2030 is not too far off.
S. 9 The Bill provides for the Chairman and other members of the Board other than the Chief Executive Officer (CEO) to have their sitting allowances or other remuneration paid out of the Fund. The amount shall be determined by the Board and other relevant government agencies. The Act currently provides for this remuneration but only with the Board deciding in consultation with the Cabinet Secretary in charge of health. It does not provide for the sources of the funds. Therefore, the proposed amendment would give clarity on this issue as well as increased accountability when it comes to making the payments.
S. 10 It is proposed to have a CEO recruited competitively by the Board and other relevant agencies, who shall be an ex-officio member of the Board with no voting rights. The CEO shall deal with the day-to-day management of the Fund and shall serve for a term of three years, with eligibility for reappointment for a further and final term of three (3) years.

The qualifications of the CEO are also indicated as follows:

  • Having a Bachelors’ degree from a university recognized in Kenya;
  • Having at least ten (10) years’ experience at a senior management level with skills in health insurance, health financing, financial management, health economics, healthcare, administration, law, or business administration; and
  • Meets the requirements of Chapter 6 of the Constitution which provides for the integrity requirements for public officers.
This proposal is clearer than the current provisions of the Act, which neither provide for the qualifications, term of service and accountability threshold in the appointment of the CEO.
S. 10A The Bill proposes the recruitment of a qualified person to serve as the Secretary to the Board. The Act currently provides for the CEO to serve as the Corporation Secretary to the Board. The functions of the Corporation Secretary shall be as follows:

  • Issue notices for Board meetings in consultation with the CEO;
  • Keep custody of records of the deliberations, decisions and resolutions of the Board;
  • Transmit decisions and resolutions of the Board to the CEO for execution, implementation and other relevant action;
  • Provide guidance to the Board on their duties and responsibilities on matters relating to governance; and
  • Perform such other duties as the Board may direct.
The Act currently does not provide for a Secretary to the Board, therefore this proposed amendment would fill that gap. Further, specifically providing for the functions of the Secretary would also give clarity to the holder of that office as to what their role would be and provide room to hold them accountable should they not fulfil it.
S. 11 This section empowers the Board to appoint officers, inspectors and servants on terms and conditions that the Board shall determine. The Bill proposes to amend this section such that the officers, inspectors, and servants will be collectively referred to as “staff”. This term would allow for the Board to recruit the employees it needs to serve the Fund as needed, without limiting their designation.
S. 12 The Bill proposes to provide for a common seal for the Board, which shall be kept in the custody of the Corporation Secretary and is not to be used except on the direction of the Board. When the common seal is affixed, the Chairperson, CEO or any other person authorised in that behalf by a Board resolution may authenticate it. The Act currently does not clarify the persons that are to authenticate the use of the common seal on behalf of the Board. This proposed amendment would address this lack of clarity. Further, there is also a measure of accountability since the only way any other person other than the Chairperson or CEO can authenticate the common seal is through a Board resolution.
S. 15



The Bill proposes to have employers whose employees are liable as contributors to the Fund to also be contributors to the Fund. Employers shall make a matching contribution equal to that made by their employee. This shall be a mandatory contribution. The Fund’s Strategic Plan for the period 2018 – 2022 emphasises increased funding, which is geared at enhancing access to healthcare and improved service delivery. This is in line with Vision 2030 and the President’s Big 4 Agenda, which includes affordable healthcare. Therefore, the Fund has come up with these proposals on how to increase its funding. Having found that voluntary contributions have not achieved this aim, the next step is to make contributions mandatory.
The Bill also proposes to have the national government liable as a contributor to the Fund on behalf of the indigent and vulnerable persons identified as such by the relevant government body. The national government’s contribution shall be a special contribution that shall be determined by the Board in consultation with the Minister. This is also proposed to be a mandatory contribution. Employers and the government would have to shoulder this burden to ensure the achievement of these goals should this proposed section be passed into law.
The Bill also proposes to provide for enhanced benefits for members who make voluntary contributions to the Fund. This is also a means of increasing contributions to the Fund as well as services available to contributors and beneficiaries.
The Bill proposes to empower the Minister to make regulations for the better carrying out of this section that it proposes to amend. The passing of regulations by the Minister would provide further details and clarity in terms of operationalizing the Act.
S. 15A The Bill proposes the mandatory registration of all persons who have attained the age of eighteen (18) years that are not beneficiaries under the Act. This proposal is geared at increasing contributions to the Fund. Currently, all Kenyans that are employed and earning at least KES. 1,000 are to be contributors to the Fund. Further, registration by persons who are self-employed is on a voluntary basis. Should this proposed amendment be passed into law, all adult Kenyans, who are not beneficiaries, regardless of whether they are employed or not, would have to be registered under the Act. The indigent and vulnerable persons shall have their contributions paid for them by the government. Enforcement is likely to be a challenge for this proposed section, especially noting that failing to register under the Act has not been proposed to be an offence.
The Bill proposes that the Minister of Health shall make regulations for the better carrying out of the above subsection. It is not clear how the Fund intends to implement this mandatory contribution requirement. Therefore, it is important to enact regulations that will clarify the operationalization of this law.
S. 16 The Bill proposes to protect employees from having to pay the matching contributions in place of their employers. This is through prohibiting employers from deducting this matching contribution from their employees’ salary or other remuneration. Further, the employer would be obliged to pay such contribution in their capacity as an employer. This proposed section is meant to ensure that only employers pay the matching contribution and not subject employees to an additional burden.
The Bill proposes to have employers make matching contributions, where unpaid, only from the time the contributor becomes their employee and not pay it if after all other statutory deductions have been made, the remainder is insufficient to pay that contribution. This therefore means that the term “matching contribution” is given a literal meaning such that if the employee does not make a contribution, then the employer will also not be obliged to make a contribution.
The Bill proposes to delete paragraphs (b) and (c) of subsection (3), which provides for an employer to obtain an NHIF card for their employee where it is lost, destroyed or the employee has not given it to the employer. Further, paragraph (c) obliges the employer to retain the card of the employee except when the employee requires it to make a claim or benefit under the Act. This is a step towards greater practicality. For example, where emergency medical treatment is needed, it would be impractical to require the employee to seek out their employer to get the NHIF card for the purposes of seeking treatment.
The Bill proposes to delete subsection (4) and substitute it with another providing that the sum deducted from the salary or other remuneration of an employee by his/her employer is not recoverable from the employer by the employee once that contribution has been remitted to the Fund. Currently, the subsection reads that the amount is not recoverable once a stamp to the value of that sum has been affixed to a card issued to that person and duly cancelled. Since the use of stamps to prove payment is no longer applicable today, the amendment of this subsection is necessary.
The Bill proposes to amend subsection (6) such that it provides for a penalty for employers for failure to pay both standard and matching contributions into the Fund and imposes a penalty of KES. 1 million upon conviction for failing to make the payment within the time and manner provided for in the Act. This is an effort to promote compliance on the part of employers for both matching and standard contributions. Increasing the penalty from KES. 50,000 to KES. 1 million is also meant to have a deterrent effect on employers.

S. 18

On the penalties for late payment of contributions, the Bill proposes to have them applied not only to standard but also to matching contributions. The proposed penalty shall be equal to twenty-five per cent (25%) of the contribution. Currently, the Act provides for a penalty of twenty-five per cent (25%) of the contribution when it comes to micro and small enterprises, while applying a penalty of twice the amount of the contribution to all other entities. This proposed amendment, if passed into law, will have the effect of harmonizing penalties in all classes of enterprises.
For employers, they shall be liable to pay the penalty above, as well as the costs incurred by the employee when seeking treatment from a contracted health care provider during the period when the contribution is due. This penalty is also meant to have a deterrent effect on employers who might be considering defaulting on their contributions to the Fund. Further, it is meant to ensure that employees have access to healthcare services in any case.
The Bill proposes that the mandatory contributions of contributors who are outside the country on the day their standard or mandatory contributions fall due be payable on the day of their return to the country. This amendment would provide some reprieve for contributors who are outside the country when their contributions fall due.
S. 19 The penalty for failing to make special contributions on the part of contributors who are required to make them when due is proposed to be equal to fifty per cent (50%) of the amount of contribution for each month during which the contribution remains unpaid and is recoverable as a sum due to the Fund and when recovered shall be paid into the Fund. This penalty is a reduction from the current penalty of having to pay five (5) times the amount of the contribution for each month it remains unpaid. Perhaps the Fund expects that this will encourage an increased uptake of enhanced benefits through the payment of voluntary contributions.
S. 21


The Bill proposes to delete and replace this section with another that provides for the mode of identification of a beneficiary considering the existing legal framework for national registration. For the purposes of payment of contributions, the Bill proposes that the Board may require a contributor to furnish the Board with information or particulars or other documents necessary for the purpose of identification. The mode of identifying contributors or beneficiaries is currently through a card, which is given to the contributor after contributing for some months. The provision seeks to find an alternative method of identifying beneficiaries.
The Bill also proposes making it an offence to knowingly make a false statement relating to liability to remit a standard or matching contribution as well as failure to furnish information or particulars or produce a document when refusing or neglecting to do so without reasonable cause. The proposed penalty on conviction is a fine not exceeding KES 1 million or imprisonment for a term not exceeding twelve (12) months, or to both. This amendment includes matching contributions. Further, a maximum fine of KES. 10,000 is imposed or imprisonment for a term not exceeding six (6) months. This penalty is intended to operate as a deterrent.
Evidence of payment of contributions shall be deemed conclusive if the person liable to pay the contribution has a record of remittance of the contributions and in the case of a standard contribution, a record of the contributor’s monthly payslip that the contribution has been deducted from his/her salary. The proposed amendment seeks to update the type of evidence of payment of contribution as it is currently a stamp, receipt, record of payment in the register of contributors to the Fund, and the contributor’s monthly pay slip.
S. 22


The Bill proposes to have the Board pay from the Fund, a benefit to an empanelled and contracted healthcare provider for an expense incurred by the provider for the provision of health care services to the number of beneficiaries determined by the Board. Currently, the Act provides for payments to declared hospitals for expenses incurred by any contributor, his/her named spouse, child or other dependant. This is a move from declared hospitals to empanelled and contracted healthcare providers.
The Bill proposes to delete subsection (2), which provides for the Board paying for the medical or health care expenses covering both inpatient and outpatient medical healthcare.


The Fund seeks to limit its expenditure and use this amendment as a means of doing so, more so because the proposed amendment leaves out the expenses that the Fund would cover.
The Bill proposes to delete subsection (3) and substitute it with another, which provides for subjecting the benefits payable from the Fund to such limits, regulations, and conditions that the Board may prescribe and in consultation with the Cabinet Secretary. The Act currently provides for the limits set to what shall be paid out of the Fund i.e. drugs, laboratory tests and diagnostic services, surgical, dental or medical procedures or equipment, physiotherapy care and doctors’ fees, food and boarding costs. Under the proposed provision, the benefits payable will be prescribed in regulations that will follow.
The Bill proposes to delete subsection (4) which provides that no claim or benefit is payable unless the contributor has been making payments and produces this evidence at the time of making the claim or seeking the benefit as well as the card. This proposal is in line with the aim of the Bill to stop using cards for identification purposes when making claims or benefits.
The Bill proposes to add a subsection (5), which provides that where a beneficiary has a private health insurance cover, the private health insurance shall be liable for payment up to the limits the beneficiary is covered and that the Fund shall pay the daily rebate for inpatient. Further, the Fund shall cover the outstanding bill where the private insurance cover’s limits have been exhausted subject to the Fund’s applicable limits. Currently, the Fund tends to be the primary insurer for most people who are co-insured members. Therefore, this move is meant to reduce the Fund’s burden as far as payments and benefits are concerned.
S. 23 The Board is proposed to avail a statement of accounts to a contributor, or a person who is liable to remit standard and matching contributions on their contributions. Currently, for one to get a receipt of payment, they are required to present their card to an officer of the Fund. This is outdated as the Fund uses electronic and mobile payment systems, hence the need to keep the Act up to speed with current norms.

S. 24

S. 25(2)(b) & (c)


S. 26(a)

The Bill proposes to repeal this section, which provides for the printing and sale of National Hospital Insurance stamps at such prices as the Board may from time to time determine.

Further, the Bill proposes to delete the paragraphs providing for offences related to the use of cards or stamps.

The Bill provides for regulations relating to the issue of any stamps or the replacement of cards under the Act.

If the Bill is passed, stamps and cards shall no longer be used as evidence of contribution; making them obsolete hence requiring the repeal of this section 24; paragraphs (b) and (c) of section 25(2) and section 26(a).
S. 25





Subsection (1) provides for offences relating to benefits under the Act i.e. making false statements for the purpose of obtaining a benefit under the Act with a penalty of a maximum of KES 500,000 or to an imprisonment term not exceeding twenty-four (24) months. The Bill proposes to increase it to KES 10 million or to an imprisonment term of sixty (60) months. Concerns have been increasing over the fraud perpetrated to access the benefits of the Fund and the payments from the Fund as well, hence the need to increase the penalties for the same. This amendment is expected to have a deterrent effect and reduce the instances of fraud.
Subsection (2) provides for the offence of impersonating any person whether living or dead with the intent to obtain the payment of any benefit. The Bill proposes to increase the imposed penalty from KES. 500,000 or to an imprisonment term not exceeding three years to KES. 10 million, with the imprisonment term remaining unchanged.
The Bill proposes to delete subsection (5) and replace it with one that obliges the Board to cause the name of every health care provider removed from the register to be notified in the Gazette and at least three newspapers with nationwide circulation. This proposal seeks to widen the publication of this removal to include at least three newspapers with nationwide circulation. It is important for beneficiaries and contributors to know which hospitals have been removed from the register so that they will not seek services from them.
The Bill proposes to add a section 5A, which provides that a health care provider removed from the register shall not be entitled to receive any benefit from the Fund. The Act currently provides for this. The proposed amendment results in a rearrangement of the sections of the Act.
S. 26(d) The Bill proposes to remove the need for the Board to make regulations on rebates for contributors who have no dependants or who fulfil such other conditions or requirements as may be prescribed in cases of voluntary contributions. The rebates would be given at the discretion of the Board, if at all, to contributors without them having to fulfil certain conditions or be part of a certain class of contributors. However, the regulations that the Board may come up with would determine if there are any conditions precedent that would have to be fulfilled to get the rebates.
S. 30



The Bill provides for the obligation of the Board to consult the relevant accredited bodies and subsequently publish in the Gazette, a list of empanelled healthcare providers for the purposes of this Act.

The Bill proposes to delete subsection (2) and replace it with another which provides that the Gazette notice above may be accompanied by conditions relating to the fees which may be charged by the healthcare provider to any contributor under the Act.

This is to replace declared hospitals and excludes the Chairperson of the Medical Practitioners and Dentists Board from the process of consultation. Further, the proposed amendment would make this a mandatory obligation. It is currently discretionary.
The Bill proposes to give the Board the discretion to revoke, at any time, an empanelment under this section. Currently, the Act provides that the Board must consult the Minister of Health before revoking any declaration under the Act i.e. declared hospitals. This proposed amendment, if passed, would give the Board greater independence and power in relation to revoking an empanelment and may assist in enhancing efficiency.
The Bill proposes to include a subsection (4) which would oblige the Board to make regulations for the better carrying out of section 30 on the empanelment of healthcare providers. As stated in the foregoing, this system of using empanelled healthcare providers is new and the regulations are necessary to enhance clarity when it comes to actual operationalization.
S. 32


The Bill proposes to amend this section on the inspection of declared hospitals, to replace the words “declared hospitals” with “empanelled and contracted healthcare provider”. This proposed amendment would regularise the use of terms under the Act since the Bill proposes to phase out the use of the term “declared hospitals” under the Act.
In subsection (3) on the offences of obstructing an inspection or refusing to answer questions or furnish information, the penalty upon conviction is proposed to be enhanced to KES 1 million or an imprisonment term not exceeding twenty-four (24) months. These proposed amendments seek to increase the deterrent effect of the penalties and hence increase compliance with the law.
The Bill also proposes to enhance the penalty for an inspector giving false information to a fine not exceeding KES 10 million or an imprisonment term not exceeding sixty (60) months or to both.
S. 34 The Bill proposes to increase the scope of the use of the Board’s investment funds to include the acquisition of supportive infrastructure for empanelled and contracted healthcare providers. Further, the Bill also proposes to have the Board determine the financial viability of healthcare providers that the investment funds may be applied to in the improvement of any underserved area without including the Minister of Health. This widened scope might increase the Board’s capabilities in increasing the efficiency of healthcare providers. The amendment to the proviso is meant to exclude the Minister of Health from determining underserved areas as far as healthcare providers are concerned. This would give the Board independence from the Minister of Health.
S. 41 The Bill proposes to repeal this section, which provides for the power of the Board to determine whether and when a prosecution may be undertaken for offences committed under the Act. This proposed repeal recognizes that the mandate to prosecute is vested in the Director of Public Prosecutions, and as such the Board cannot be involved in the determining whether or when prosecution shall be undertaken.
S.43 This section provides for the recovery of compensation or damages and refers to the Workmen’s Compensation Act in doing so. The Bill proposes to update this to the Work Injury Benefits Act, 2007 which is the relevant legislation. This amendment would align the Act with the Work Injury Benefits Act, which was enacted in 2007.
S. 45 This section provides for a general penalty for offences under the Act which may not have a penalty applied to them. The penalty is currently a fine not exceeding KES 50,000 or an imprisonment term not exceeding two years or to both and is proposed to be increased to KES 1 million. The Bill does not propose to increase the prison term. The proposed amendment seeks to increase the deterrent effect of the penalties and hence increase compliance with the Act.
Second Schedule The Second Schedule to the Act, which provides for the Conduct of Business and Affairs of the Board, is proposed to be amended in paragraph 4 by providing that the quorum for meetings of the Board is two-thirds of the members. Currently, the quorum is nine (9) members, with Board members being thirteen (13) in total excluding the Chief Executive Officer.