Convert workers’ medical allowances to health insurance, experts tell employers
On Tuesday, March 31, 2026, healthcare experts and stakeholders in Nigeria issued a strong call for employers in both the organized private and informal sectors to transition from paying flat medical allowances to providing comprehensive health insurance for their employees.
The recommendation aims to align with the National Health Insurance Authority (NHIA) Act 2022, which makes health insurance mandatory for all Nigerian citizens and legal residents.
The Core Argument: Conversion, Not Extra Cost
Otunba Lekan Ewenla, Managing Director of Ultimate Health Management Services, emphasized that this transition does not require businesses to "borrow money" or increase their overhead. Instead, he proposed a simple administrative shift:
The Model: Just as the Federal Government did in 2005 for civil servants, private employers can convert the roughly 10% of basic salary typically earmarked as "medical allowance" into health insurance premiums.
Efficiency: Under the current system, medical allowances are often spent as general income by workers, leaving them vulnerable to "out-of-pocket" expenses during emergencies. Converting these to insurance ensures they are covered for primary, secondary, and tertiary care.
Productivity: Experts argue that a healthy workforce is more productive, and structured insurance reduces the "catastrophic health expenditure" that currently pushes millions of Nigerians into poverty.
Current State of Health Financing in Nigeria (2026)
The push for this reform comes as Nigeria struggles with high healthcare costs:
Out-of-Pocket Spending: Approximately 70-71% of healthcare in Nigeria is still funded directly by households, which experts describe as "unsustainable."
Coverage Gap: Despite the mandatory nature of the NHIA Act, only about 10-13% of the population is currently covered.
Target: The Federal Government has set an ambitious goal to reach 40% coverage by 2030, with a mid-term target of 20% by 2027.
New Tools for Compliance
To assist employers, particularly Small and Medium Enterprises (SMEs), several new initiatives were highlighted this week:
GIFSHIP Adoption: Ultimate Health HMO formally adopted the Group, Individual and Family Social Health Insurance Programme (GIFSHIP) as its basic package. This standardized plan (costing roughly N38,718 per person annually) eliminates the "arbitrary reduction of premiums" and inconsistent benefit packages.
Digital Savings: Platforms like Clafiya were noted for helping users save incrementally for medical expenses, reportedly reducing employer healthcare costs by up to 60% through pooled demand.
Mandatory Enforcement: Dr. Austin Aipoh, President of the Healthcare Providers Association of Nigeria, suggested that business registration renewals should eventually be linked to proof of employee health insurance enrollment.
"Employers already have a statutory responsibility to cater to the medical needs of their employees. Rather than incur additional expenditure, they can simply convert existing allowances into premiums." — Otunba Lekan Ewenla
