IRA and RBA plan lifetime health cover retirees could buy with one payment from medical savings

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Retirees could soon pay once for medical cover that lasts the rest of their lives, instead of buying a new policy every year, under a plan being explored by the Insurance Regulatory Authority (IRA) and the Retirement Benefits Authority (RBA).

The two regulators want insurers and actuaries to design products that let a retiree turn the money saved in a post-retirement medical fund into a single premium for lifetime health insurance. The idea borrows from annuities, where a retiree hands over a lump sum and an insurer pays a monthly income until death.

Officials from both bodies discussed the proposal on Thursday, October 22, at a stakeholder meeting convened by insurance broker Liaison Group.

Why the current model worries regulators

At the moment, people who have saved in a post-retirement medical fund use that money to buy annual health covers once they stop working. Premiums tend to rise as policyholders age and their risk of illness grows, so the savings can run out within a few years of retirement. Many retirees then dip into their pension to pay hospital bills, leaving less to live on.

No medical insurance product on the Kenyan market currently works like an annuity, according to the regulators.

Peter Mugambi Muthuri, the principal officer in the RBA’s supervision directorate, said the authority is checking whether insurers, including the Social Health Insurance Fund (SHIF), would be willing and able to cover retirees for life. He argued that if insurers already accept a lump sum to pay annuities for the rest of a person’s life, they could also consider covering medical needs from age 60 until death through one premium.

Kalai Musee, the IRA’s director of supervision, said the single-premium proposal is under consideration and that the two regulators sit on each other’s boards, so talks are ongoing. Insurers are already free to develop such products, he added, but they would need actuarial studies before taking them to market.

Medical fund savings are growing

RBA data shows contributions to post-retirement medical funds reached KSh220.7m at the end of June 2026, up from KSh164.6m a year earlier. By the end of September there were 97 active schemes, 19 of them sponsored by employers.

The funds are still young. Retirement benefits rules were changed in 2016 to let scheme members make extra voluntary contributions towards medical costs in retirement. The RBA Act was amended in 2023 to formally recognise post-retirement medical schemes, and regulations for them were gazetted in August 2026.

Millicent Onditi, who chairs the board of trustees of the Kenya Utalii College Pension Scheme, said the save-then-buy-yearly model is not sustainable and that multi-year cover would stop retirees from draining their medical fund and then their pension. Dennis Karanja, Liaison Group’s general manager for regional business, said customers have been asking how such covers could be structured.

What it means for workers saving for retirement

Nothing changes yet. The plan is at the consultation stage, and no insurer has announced a lifetime product or its price. Workers who belong to a pension scheme can ask their trustees whether the scheme offers a post-retirement medical fund and how contributions are invested.

Anyone planning for retirement can also read our guides on the retirement age in Kenya, how income drawdown compares with an annuity and what you can withdraw from a pension when you leave a job. For cover before retirement, see our explainer on SHA, NHIF and SHIF contributions and our comparison of medical insurance covers in Kenya.