Nobody plans on falling sick. We don’t wish or pray for it, but then, life wouldn’t be life if it were predictable, which is why health insurance is significant. However, despite an agreement with the heads of other African countries at the Abuja Declaration of April 2001 to allocate at least 15 per cent of the budget for the fiscal year to health, Nigeria’s health system has been historically underfunded.
Consequently, more than 70 per cent of the money spent on healthcare by Nigerians comes from individual pockets, especially at point-of-care, which increases their risk of falling into poverty.
Definition of health insurance
Health insurance is a kind of insurance that wholly or partly covers the chance of a person incurring medical expenses when seeking healthcare. It is a type of insurance coverage that generally pays for medical, surgical and prescription drugs or other medical costs incurred by the insured individual or policyholder.
The insurance premiums, which are paid to cover the incurred medical expenses, help alleviate the cost of paying for healthcare out-of-pocket.
Types of health insurance plans in Nigeria
Preferred Provider Organisation (PPO)
This medical healthcare arrangement discounts insured individuals for services they receive from specific healthcare providers. It encourages insured individuals to use a particular network of preferred health professionals and hospitals. You will incur higher costs if you seek services outside your specific network arrangement.
PPO participants can visit any hospital or doctor without referrals from their primary healthcare physicians.
Health Maintenance Organisation (HMO)
HMOs provide medical care via a network of doctors and other health providers under contract for a monthly or annual fee. In this case, you must have a primary healthcare physician in your HMO network who coordinates your care, and you cannot seek care outside this network. If you do, the HMO won’t pay for it, except in emergencies or when it doesn’t have an in-network provider for the health service.
HMO plan encourages policyholders to use a specific network of healthcare professionals and hospitals. It may be more economical as HMP providers are paid per-member basis, regardless of how many times they attend to a member. A referral from a primary health care doctor is required to see a specialist under an HMO, and you also have the convenience of having a primary health care doctor who manages your care.
Point of Service (POS)
This hybrid of HMOs and PPOs is a managed health insurance service that provides value depending on whether you use in-network or out-of-network medical services.
For a POS, you need to choose a primary healthcare doctor, but you will still require your primary doctor’s referral before seeing a specialist, just like in an HMO. However, it also covers out-of-network services, although these cost more (as in PPOs) unless your primary healthcare provider made the referral.
Exclusive Provider Organisations (EPOs)
This type of health insurance mandates that you get your care exclusively from professionals or hospitals with which your EPO has a contract, or else your EPO will not pay; the only caveat is in case of emergencies. With an EPO, you don’t require a primary healthcare physician, although one is recommended, and they do not need referrals before you can see a specialist.
EPOs are similar to HMOs but with a more extensive network and are more affordable than PPOs. They also have lower rates than some other types of plans.
Indemnity plans are also fee-for-service health insurance plans, although some have argued that it is not insurance plan in the real sense. Instead, it is a comprehensive type of insurance where the insurance company pays a predetermined percentage of expenses for given health services while the policyholder pays the rest.
Indemnity plans put you in charge of your healthcare and allow you to visit any healthcare professional or hospital of your choosing, and there is no provider network. Your insurance company will not mandate choosing a primary healthcare physician; you don’t need referrals to see a specialist.
Health Savings Account (HSA)
The HSA is similar to the general personal savings account, except that the money is used for healthcare alone. In addition, the account is owned and managed by the user, not an insurance company, and is not taxed.
A particular type of insurance known as a High Deductible Health Plan (HDHP), a plan with a higher deductible than the traditional insurance plan, is needed to open an HSA. Even though the monthly premium is usually lower, you will foot more health bills yourself before the insuran`ce company steps in and starts paying its share, which is your deductible. A high deductible plan (HDHP) can be merged with a health savings account (HSA), allowing you to pay for certain medical expenses with tax-free money.
Health Reimbursement Arrangement (HRA)
This health insurance reimburses employees for insurance premiums and qualified medical expenses. Employers set up this insurance to cover their employees’ medical costs; they decide the amount to be put into the plan, and employees can only request reimbursement up to this amount. Thus, employees will cover subsequent bills but must first incur the expenses before a rebate is possible and submit proof of incurred costs.
Employers can claim tax deductions for HRA reimbursement, and employee reimbursements are tax-free. However, workers lose HRA benefits when they leave the employer’s company.
Most employers prefer this plan because it gives them more control. In addition, HRA is an excellent choice for small businesses that want to avoid dealing with employee group insurance, which may be too expensive or complex.
State Health Insurance Schemes
The National Health Act allows states to set up state health insurance schemes. A strong and effective state health insurance system will enable vulnerable people in communities to access healthcare and reduce out-of-pocket expenditures for healthcare.
Over 25 states have either established State Health Insurance Schemes or are at various stages of their implementation journey. If successfully implemented, these schemes become an essential mechanism for effectively channelling government healthcare spending to individuals with clearly measurable outcomes.
Health insurance in Nigeria: Does it exist?
The National Health Insurance Scheme (NHIS), established in 1999 and operational in 2005, is the only agency legally mandated to protect Nigerians from financial distress incurred by healthcare expenses. The NHIS formulates policies guiding the operations of HMOs, regulates their designs and services, administers various health packages and collects premiums for different healthcare packages.
The NHIS was also created to regulate and monitor the activities of private health insurance companies. Hence, it was expected that, between the NHIS, the State Health Insurance Schemes (SHIS), Community Health Insurance Schemes (CHIS) and private health insurance organisations, the majority of Nigerians should be able to have access to affordable healthcare.
However, almost two decades later, subscription to the NHIS still needs to grow. According to a recent statement by its executive secretary, Nasir Sambo, the health insurance scheme presently covers less than 10% of Nigerians, most of whom are federal employees and dependents.
To make matters worse, when President Muhammadu Buhari signed a N17tn budget last year as the projected budget for 2022, just 4.2% was allocated to the health sector. And while this can be seen as an increase compared to the 4.18% given in the previous year’s budget, it is still significantly less than what was agreed upon at the 2001 Abuja declaration.
Getting health insurance coverage that will suit your healthcare needs is essential. With the existing number of health maintenance organisations in Nigeria, signing up with one might look easy. Still, you must understand the different types of health insurance schemes available to meet your needs and navigate the various health insurance options.
Your choice of health insurance will be dependent on several factors, such as:
- Plan and network types
- The flexibility of health insurance
- The total cost of healthcare
- Your peculiar health needs and risks.
- Quality of health care you seek.
- Type of cover either by self, company, or government?
Asking questions from your employers or health insurance company to help you to navigate the best healthcare insurance based on your peculiar needs and costs will be an excellent way to start.