What Is an HMO and How Does It Work in Nigeria?

If you have ever started a new job in Nigeria, you have probably been asked to “choose your HMO” or “pick a hospital”. But what is an HMO, how does it work, and do you need one? This guide explains HMOs in plain language: how they work step by step, what they cost, what they cover and how to choose the right plan.

What is an HMO?

HMO stands for Health Maintenance Organisation. In Nigeria, an HMO is a company licensed by the National Health Insurance Authority (NHIA) to manage health insurance plans.

You, or your employer, pay the HMO a fixed amount called a premium. In return, the HMO arranges and pays for the healthcare your plan covers at a network of partner hospitals, clinics, pharmacies and laboratories. Instead of paying the hospital yourself every time you are sick, the HMO settles the bill.

HMOs do not run hospitals or treat patients themselves. Their job is to manage your plan, approve care and pay the hospitals in their network.

HMO vs health insurance: what’s the difference?

In Nigeria, the two terms are often used to mean the same thing. Health insurance is the product: protection against the cost of medical care. An HMO is the company that manages that protection, links you to hospitals and pays them. Some insurance companies also sell health plans, but most Nigerians get health insurance through an HMO, either directly or through their employer or a state scheme.

How does an HMO work? Step by step

1. Choose a plan. Plans differ in price, the hospitals you can use, what is covered and the yearly benefit limit.
2. Pay the premium. Usually yearly. Some HMOs offer monthly or quarterly payment, and employers pay for staff on company plans.
3. Register and pick a primary hospital. You choose a hospital or clinic from the HMO’s network, usually near your home or office. This is your first stop for care.
4. Get your HMO ID. You receive an enrollee ID or card, often in an app, which you show at the hospital.
5. Visit the hospital when you need care. The hospital confirms your plan with the HMO. For routine visits you are seen straight away.
6. Get approval for bigger care. For specialist visits, scans, surgery or admission, the hospital requests a pre-authorisation (PA) code from your HMO. Once approved, you receive the care.
7. The HMO pays the hospital. You pay nothing for covered care, apart from any co-payment your plan includes. Care not covered by your plan, or above your benefit limit, is paid by you.

Read more about how pre-authorisation codes work.

Key HMO terms to know

• Premium: The amount you pay for your plan, usually per person per year.
• Benefit limit: The maximum amount your HMO will pay for your care in a year.
• Hospital tier or network: The group of hospitals your plan lets you use. Higher tiers usually include bigger private hospitals.
• Primary care provider: The hospital or clinic you registered with, which handles most of your care and refers you onwards when needed.
• Pre-authorisation (PA) code: An approval code the hospital gets from your HMO before giving certain treatments.
• Waiting period: A period after you join before some benefits, such as surgery or maternity care, become available.
• Exclusions: Treatments your plan does not cover.
• Pre-existing condition: A health condition you had before joining the plan. Learn how HMOs handle pre-existing conditions.
• Capitation: A fixed monthly amount the HMO pays your primary hospital for each enrollee registered there, whether or not they visit.

Types of HMO plans in Nigeria

• Individual plans: Bought by one person for themselves.
• Family plans: Cover a principal member plus spouse and children.
• Company or group plans: Bought by employers for staff and often their families. Group plans are usually cheaper per person. See our plans for small businesses and larger companies.
• State health insurance schemes: Run by state agencies, such as Ilera Eko in Lagos.
• Plans for family abroad: Bought by Nigerians in the diaspora for parents and relatives at home.

Is health insurance compulsory in Nigeria?

Yes. The National Health Insurance Authority Act of 2022 makes health insurance mandatory for all Nigerians and legal residents. Some states have gone further: Lagos State’s 2024 executive order requires residents, employers and workers in the state to subscribe to a health insurance scheme. In practice, enforcement is still growing, but more employers, government agencies and states now ask for proof of cover.

What does an HMO plan cover?

Cover depends on the plan, but most include:

• General doctor consultations
• Prescribed medicines
• Laboratory tests and scans
• Treatment of common illnesses such as malaria and typhoid
• Emergency care
• Hospital admission and surgery, within limits

Higher plans may add specialist visits, maternity and newborn care, dental and eye care, mental health support, physiotherapy and annual health checks. Always read the benefits list before you buy. For example, see the benefits of Reliance HMO’s personal plans.

How much does an HMO cost in Nigeria?

Individual plans range from around ₦12,000 to well over ₦100,000 a year, depending on the hospital tier, benefit limit and what is covered. Reliance HMO’s personal plans start at ₦92,340 per person per year for the Red Beryl plan. See our full HMO price guide, or compare plans in our guide to the best HMO in Nigeria 2026.

Benefits of having an HMO

• Protection from big bills: A hospital admission or surgery can cost hundreds of thousands of naira. Your plan absorbs that.
• Earlier care: When you are not worried about cost, you see a doctor sooner, before small problems become serious.
• Predictable spending: You know what you will pay each year.
• Preventive care: Many plans include check-ups and screenings.

How to choose an HMO

1. Check that the HMO is accredited by NHIA.
2. Make sure good hospitals near your home and office are on the plan you want.
3. Compare benefit limits and what is covered, not just the price.
4. Ask how quickly pre-authorisation codes are issued.
5. Check for a mobile app, telemedicine and 24/7 support.
6. Read the exclusions and waiting periods before you pay.

Frequently asked questions

What does HMO stand for?
Health Maintenance Organisation.

Can I register for an HMO on my own?
Yes. You do not need an employer. You can buy an individual or family plan directly.

Can I use my HMO at any hospital?
No. You can use hospitals in your HMO’s network that are included in your plan. In an emergency, go to the nearest hospital and contact your HMO as soon as you can.

Can I change my HMO?
Yes. Individuals can switch when their plan is due for renewal. On a company plan, speak to your HR team about switching.

Do HMOs cover pregnancy?
It depends on the plan. Maternity care is more often included in company (group) plans, while many individual and family plans exclude it or have a long waiting period. Check the benefits and exclusions before you buy if you are planning a pregnancy. Read more: does HMO cover pregnancy?

Related guides: how to register for an HMO in Nigeria and how to use your HMO at the hospital.

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