AI agents for business finance: what they can and can't do
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The short answer
The National Health Insurance Authority Act 2022 makes health insurance mandatory for every resident of Nigeria and brings employers with five or more staff into the scheme, according to KPMG's commentary on the Act. Employers register with their State Health Insurance Scheme and remit as that state's rules require, even where they also buy private HMO cover. Costs range widely: Oyo's state scheme quoted ₦13,500 a year in 2024, while one HMO's small-business plans start at ₦68,400 per person a year as at October 2026.
What the Act says, in plain terms
The NHIA Act 2022 replaced the old National Health Insurance Scheme. KPMG Nigeria's June 2022 commentary on the Act highlights the points that matter for employers:
- Section 14: health insurance is mandatory for every resident of Nigeria.
- Section 13: the scheme covers employers and employees in organisations with five or more staff, as well as the informal sector.
- Section 31: employers must register with the State Health Insurance Scheme and remit contributions as that state's law specifies, even where they already pay premiums for private cover.
- Section 48: offences carry a fine of ₦1 million and/or two years' imprisonment for a first offence, and ₦2 million and/or five years for a repeat.
- State councils set contribution rates, so the amount differs by state.
The NHIA's own FAQ adds one practical point: health insurance contributions replace a medical allowance. An employer that pays for cover does not also owe a separate medical allowance for the same purpose, unless the contract says so.
Your two routes: an HMO plan or the state scheme
| Private HMO plan | State Health Insurance Scheme | |
|---|---|---|
| Who runs it | An HMO accredited by NHIA | The state agency (for example EDOHIC in Edo, OYSHIA in Oyo) |
| Price | Set by the HMO by plan level | Set by the state |
| Hospitals | The HMO's network, often including private hospitals | Accredited public, mission and private facilities in the state |
| Where to check | The HMO's plan page and NHIA code | The state agency's office or portal |
Because section 31 says employers register with the state scheme even if they buy private cover, do not assume an HMO contract alone settles your obligation. Ask your State Health Insurance agency what it requires from employers that already have HMO plans; some states accept evidence of private cover, others expect registration and remittance.
Labelled cost examples
These are published prices on the dates given, not quotes for your business:
| Plan | Published price | Date |
|---|---|---|
| Oyo State scheme (OYSHIA) | ₦13,500 per person a year | Reported Mar 2024 |
| Reliance HMO small business, Red Beryl (staff only) | ₦68,400 per person a year | Page modified 16 Oct 2026 |
| Reliance HMO small business, Alexandrite | ₦108,300 per person a year | 16 Oct 2026 |
| Reliance HMO small business, Diamond | ₦177,700 per person a year | 16 Oct 2026 |
| Reliance HMO small business, Red Diamond | ₦268,850 per person a year | 16 Oct 2026 |
Reliance's small-business plans are for groups of 3 to 19 principal members; family cover costs more. Prices change, so check the HMO's page or the state agency on the day you buy.
Steps for an employer
- Count your staff. Five or more brings you squarely within section 13; with fewer, cover is still mandatory for each resident individually.
- Contact your State Health Insurance agency and ask how employers register and what they remit.
- If you want broader hospital choice, compare two or three NHIA-accredited HMOs.
- Decide whether staff contribute. The contract or staff handbook should say who pays what.
- Enrol staff with the details the scheme or HMO asks for, and give each person their card and the list of hospitals.
- Keep enrolment records and premium receipts with your payroll files.
Choosing a plan your staff will actually use
The cheapest plan is poor value if the nearest listed hospital is an hour away. Before you sign, ask each HMO or the state agency for the list of facilities near your workplace and near where most of your staff live, and ask a few staff which hospitals they already use. Check what the plan says about waiting periods, maternity cover, drugs and referrals to specialists, and how quickly the HMO issues authorisation codes for treatment. A slightly dearer plan with a good hospital close by is often the better choice.
What to tell your staff
Give every employee a one-page note: the scheme or HMO name, their membership number, the hospital they are registered with, the HMO's phone number for emergencies, and how to change hospital. Explain whether any part of the premium comes from their pay. Staff who understand the cover use it early, which tends to mean fewer long absences.
Complaints about an HMO or the scheme go to NHIA offices, the HMO, or NHIA's call centre, per its FAQ. If you are hiring your first employee, also read what the law requires, and see the full cost picture in our first payroll checklist.
Where Pryme fits
Pharmacies are one of the sectors in Spaces, Pryme's merchant ecosystem in Lagos, Abuja and Port Harcourt. For the employer side, bulk payouts can pay monthly premiums alongside the salary run.
Questions people ask
Is health insurance compulsory for employers in Nigeria?
Yes. The NHIA Act 2022 makes health insurance mandatory for every resident, and KPMG notes it brings in employers with five or more staff. Employers register with their State Health Insurance Scheme.
How much is HMO for staff in Nigeria?
It depends on the plan. As at October 2026, Reliance HMO lists small-business plans from ₦68,400 to ₦268,850 per person a year. State schemes are cheaper; Oyo's was ₦13,500 a year in 2024.
Can my employer stop my medical allowance if they give me HMO?
The NHIA FAQ says health insurance contributions replace medical allowance. Your contract may say otherwise, so check its terms.
What is the penalty for not providing health insurance?
KPMG's commentary cites section 48: ₦1 million and/or two years for a first offence and ₦2 million and/or five years for a repeat.
Sources
- KPMG Nigeria: Commentary on the National Health Insurance Authority Act 2022 (Jun 2022) · accessed Oct 2026
- NHIA: Frequently asked questions · accessed Oct 2026
- Reliance HMO: Small business health plans (page modified 16 Oct 2026) · accessed Oct 2026
- Radio Nigeria Lagos: Oyo targets informal sector, insists on mandatory health insurance (23 Mar 2024) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.