The Nation, 22 November 2002, Councils Owe Health Insurance Fund Sh2b

Nairobi - The NHIF Act clearly spells out stiff penalties for non-compliance

The National Hospital Insurance Fund is owed Sh2 billion by the local authorities in unremitted dues.

Many councils had not forwarded contributions for as long as five years, the NHIF chief executive, Mr Ibrahim Hussein, said.

The Nairobi City Council was a leading defaulter, he added.

The fund is now seeking the intervention of the ministry of Local Government to recover the outstanding statutory deductions directly through the Local Authorities Transfer Fund.

Mr Hussein said that although most local authorities had financial problems, they were obliged to give priority to the health of their workers by remitting the statutory deductions on time.

The chief executive sounded an alarm over employers who had not registered with the fund, but were most likely deducting money from their workers.

The National Hospital Insurance Act empowers employers to act as agents, and it is an offence to withhold the money.

In an interview with the Nation, Mr Hussein said local authorities were public institutions and it was difficult to take them to court.

But the Local Government Act, under which all local authorities are established, stipulates that councils are independent legal entities that are capable of suing or being sued.

However, statutory deductions such as the NHIF, National Social Security Fund and Pay As You Earn are given secondary priority by the local authorities.

Said Mr Hussein: "As a public institution, it would be inappropriate to take them to court, but instead, we need to exhaust other channels."

The fund has agreed with some councils on the modalities of payment, but some have been very difficult to deal with.

He said the fund had waived some penalties arising from default by the councils in light of their financial difficulties. "We have had to waive penalties specified in the NHIF Act to accommodate them."

Added Mr Hussein: "It pains me that councils and some State corporations should be keeping the employees' money, which they have not remitted because of specific problems they have been experiencing."

The NHIF Act clearly spells out stiff penalties for non-compliance, for instance, that if an employer does not remit the deductions or contributions within specified times, penalties of about five times the premium are levied.

Mr Hussein says that for cases where local authorities that are in arrears want to negotiate for new agreements, the Fund has been very humane in waving some of the punitive penalties spelt out in the NHIF Act.

He quickly points out that the the institution is "very healthy" in terms of financial stability such that it was able to increase the members' benefits.

"We have increased the members benefits by 110 per cent in the last one year and if we get the outstanding money from the local authorities we shall give our members another Christmas gift".

Mr Hussein said it was important for all Kenyans to ensure they enrolled with the Fund to benefit from the services it provides.

He explained that for a premium of Sh30 a month one can enjoy a benefit of Sh2,000 a day for 180 days in a year for as many as 15 dependants".

In addition to that, Mr Hussein says the NHIF does not have any pre-existing conditions that would exclude Kenyans from access to enrolment like the case for other insurance companies.

Some insurance companies will say they don't cover HIV/AIDs, hypertension diabetes and other chronic illness but the NHIF does not have such conditions under principles on which the Fund was established 36 years ago, Mr Hussein said.