9 Types Of Health Insurance In Nigeria

Types of Health Insurance In Nigeria Image

I persuaded and encouraged Kan to get a health insurance scheme for himself and his family but he declined and dismissed the idea as unnecessary. ‘I can always sort things out ‘ he replied, after all, we don’t fail sick often. I might not exhaust the cost of the plan within a year.

Then one day, Kan’s wife was involved in an emergency and had to be rushed to the hospital. Of course, a part payment has to be made before treatment commences.

Guess what?. The initial deposit required was more than the amount required to get Kan and family a yearly health insurance plan. He had no choice than to make the out-of-pocket payment because his wife’s life was on the line.

People often part with huge out-of-pocket expenses because a proper health insurance policy was not put in place. Life is highly unpredictable and as such people should make plans for the rainy day as much as we don’t pray for emergencies to occur.

Have you ever thought of the financial implications if a family member suddenly falls ill or gets involved in a serious emergency without a health insurance scheme in place? The out-of-pocket expenditure will be huge, especially in a private health care facility where the cost is high.

In this article, I will be discussing the various types of health insurance in Nigeria.

Sounds interesting right? Let’s dive into it


Types of health insurance in Nigeria

One of the major protection anyone can have against unforeseen medical expenses is a Health Insurance Plan. According to Wikipedia, health insurance is a type of insurance that covers the whole or a part of the risk of a person incurring his medical expenses. Health insurance coverage in Nigeria is highly insignificant when compared to its population. Due to heavy reliance on out of pocket payments and high levels of poverty, access to affordable healthcare has continued to pose serious challenges for most Nigerians.

Health insurance scheme is one of the channels through which financial protection is achieved from unplanned high cost of using healthcare services. This is one of the backbones of universal healthcare. Research conducted by the World Bank and WHO shows that millions of people are forced into poverty yearly in a bid to access good healthcare.

Though a national health insurance scheme was established by the federal government in 1999, Studies show that as of 2016, less than 3% of Nigerians have health care coverage. The remaining 97% do not have any form of health insurance scheme. Most Nigerians do not have access to affordable health care and so they resort to out of pocket payment. Nigeria ranked the third highest country with the highest out-of-pocket health payments in 2018.

This gap can only be bridged by bringing to the consciousness of people the various types of health insurance schemes operational in Nigeria. Below are some of them.

1. National health insurance scheme( NHIS)

National Health Insurance Scheme is a public health insurance scheme that was established by the federal government under act 35 of the 1999 constitution as a public private partnership aimed at providing accessible and affordable health care services for Nigerians. Statistics show that 96% of the federal civil servants are enrolled with little or no participation from the state and private sector.

NHIS as a regulator regulates the activities of the health maintenance organizations and also acts as an operator in the industry. However, it has not been effectively utilized over the years due to some imperfections.

In NHIS, health care services of benefactors are taken care of from the common pool of funds contributed by the benefactors of the scheme. This scheme is based on a pre-payment plan where participants pay a fixed amount annually and a Health Maintenance Organization(HMO) is appointed to handle and pay for participants that need urgent medical attention.

2. Health Maintenance Organizations(HMOs)

HMOs are medical insurance groups that renders health care services to individuals, families and organizations for a fixed amount annually. They provide this medical assistance by liaising with a network of doctors and other health professionals in hospitals that are under their contract to treat benefactors in accordance with the HMOs guidelines and restrictions.

HMOs have different plans that suites different classes of people and their needs which ranges from diamond to silver, bronze, etc. The choice of a plan depends on the health need of the contributor as well as the financial status. HMOs work with a specific list of healthcare professionals and hospitals which again varies with the plan in place.

HMOs do not cover out-of-service network care for their insured policyholders except in some cases of emergency or where an in-network health care provider for a particular service is not available. To see a consultant under HMOs, a referral letter from a primary health care provider is needed. HMOs cushions the effect of the high cost of health care services on your finances.

Are you in dilemma of which HMO to use? Try reliance.

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3. Preferred Provider Organization(PPO)

In this plan, the policyholder gets a discount for health care services received from a particular network of health care providers. This plan urges its subscribers to use a particular network of preferred hospitals and health professionals. Additional costs are incurred when you use services outside of the list of preferred network.

Here, policyholders have the option of choosing from wide network of professionals in addition to reasonable discounts. Unlike HMOs that require you to get a referral letter before you can see a specialist, the PPO plan says – to go ahead and use any doctor, hospital, or a health care provider outside of the network for an additional cost.

4. Exclusive Provider Organization (EPO)

Just like the name suggests, you get your health care services exclusively from hospitals or healthcare professionals they have a contract with. Your EPO will not pay if your agreement of not seeking services outside of their exclusive network with them is violated except in case of emergency.

EPOs are similar to HMOs but they have a wider network and do not need referrals before a consultant or specialist is seen. Their plans are more cost effective than PPO plans.

5. Point of Service (POS)

In this plan, you are covered whether you use in-network or out-of-service health care services. I would say that it is a blend of Preferred Provider Organization(PPOs) and Health Maintenance Organization(HMOs).

Even though an additional cost is incurred in out-of-network services like PPO, POS provides coverage for that, more so when the referral comes from a primary health care provider emphasizing the need for the out of network service. POS has an added advantage due to its out-of-network coverage flexibility.

6. Indemnity-based Insurance Plan

Under this plan, a certain amount of money is agreed upon between the insurer and the policyholder. When there is a health challenge that requires treatment, indemnity-based insurance takes care of the medical expenses incurred during the treatment up to the tune of the policy sum insured limit.

It is an insurance policy where the insurance company takes up a pre-agreed proportion of charges for given health care services while the policyholder pays the rest of the charges. The policy offers you the flexibility of choosing any health care professional or hospital that best suits your health needs. There is no provider network and no referral letter is needed before a specialist is seen.

7. High Deductible Health Insurance Plan(HDHP)

This is a health plan where the insurer starts paying for your covered medical expenses after you must have paid out-of-pocket up to the amount of the plan’s deductible. A deductible is a specified amount of money you pay for covered health care services before your insurer takes over and starts to pay. There are different deductibles for different plans so the plan you chooses has a fixed amount of deductible applicable to it.

Typically, a high-deductible health plan (HDHP) has a lower monthly premium and a higher deductible. Normally, plans with high deductibles has lower monthly premiums while low deductibles has higher monthly premium. A high deductible health plan may be paired with Health Savings Account(HSA) which allows you to make payment for your medical expenses with money that is tax-free. Money deposited in HSAs are tax- free and can earn you some interest.

8. Health Reimbursement Arrangement(HRA)

In this insurance plan, the employer funds the health plan and reimburses employees for medical expenses incurred that they were entitled to. This particular insurance plan is set up by employers to cover the medical expenses incurred by employees who can only ask for reimbursement up to the amount in the plan.

An employee must show proof of incurred expenses before reimbursement is made. Subsequent medical expenses are taken care of by the employee. Employees lose this health insurance benefits when they leave the company.

9. State Health Insurance Schemes

Various states have started the implementation of health insurance schemes in their states with the directive from the National Health Insurance Scheme(NHIS) act which empowers states to set up state health insurance schemes. This is to make health care accessible to the poor and vulnerable in the communities and reduce the rate of out-of-pocket expenditure on medical expenses.

The scheme offers a prepaid package of health care services for enrolled members of the public/community. The state designs and administers different health benefits packages that offer enrollees and their dependants primary health care services for the most common healthcare occurrences. A specified amount of prepaid premium is paid by the enrollee on monthly basis to ensure access to the services at the primary health care facility.

Factors that may affect your choice of a health insurance plan

When it comes to health coverage, everyone has different health needs and preferences. Each health insurance plan has its own features, advantages and disadvantages. Since there is no one-size-for all plan out there, your choice will depend on the following variables;

  • A health plan that fits your top requirement. There are different packages for students, young families, couples, senior citizens, etc.
  • The standard/quality of health care that you need
  • Your individual health need and that of your family if you have one
  • The features of the various plans and their list of network providers
  • The flexibility of the health insurance plan
  • The cost of the plan

Take Away

Health care is expensive anywhere in the world even in Nigeria. Many part with thousands of naira during a single visit to the hospital and even pay more if the treatment warrants 2-3 days stay in the hospital depending on the type of care being provided.

Out-of-pocket payments for medical expenses can be expensive and many people cannot afford such amounts so this is where health insurance plans come in. Health insurance plans offers ways of reducing these huge out-of-pocket expenditure.

The health insurance company collects a premium upfront from the enrollee depending on the package he/she chooses and the payment allows the enrollee to share risks with other enrollees that made payment for similar package. The premium collected is used to cover the medical expenses of the relatively small number of enrollees that require medical attention.

Take action today!. Protect your health by going for a health insurance plan that best suits you.

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Paschal Achunine
Paschal Achunine
Paschal Achunine Is the founder of Health Emergency Initiative(HEI) for Indigent patients. HEI stands as next -of-kin to indigent patients in public hospitals and also for road accident victims.

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