NHIS Contributions for Employees in Nigeria: Complete Guide

The National Health Insurance Scheme (NHIS) provides health coverage for Nigerian workers and their dependents. While not universally mandatory for private sector employers, many businesses participate to provide employee benefits. This guide explains how NHIS works and your obligations as an employer.

What is NHIS?

Overview

The NHIS was established to:

• Provide affordable healthcare for Nigerians
• Reduce out-of-pocket medical expenses
• Ensure access to quality healthcare services
• Cover employees and their dependents

Governing Authority

NHIS is now regulated by the National Health Insurance Authority (NHIA), following the National Health Insurance Authority Act 2022.

Who Must Participate?

Mandatory Coverage

Sector	NHIS Status
Federal Government employees	Mandatory
Federal Government agencies	Mandatory
Private sector (10+ employees)	Becoming mandatory under new law
State Government employees	Varies by state

Private Sector Evolution

The National Health Insurance Authority Act 2022 expands mandatory coverage:

• Private employers with 10+ employees
• Phased implementation
• Check current enforcement status

Voluntary Participation

Employers with fewer employees can participate voluntarily:

• Access same benefits
• Provide employee healthcare
• May receive tax benefits

Contribution Rates

Standard NHIS Rates

Contributor	Rate
Employer	10% of basic salary
Employee	5% of basic salary
Total	15%

Calculation Base

Contributions are typically based on basic salary:

• Not total emoluments
• Not including allowances
• Check specific HMO arrangements

Contribution Caps

Some arrangements may have:

• Minimum contributions
• Maximum contributions
• Tiered based on salary bands

How NHIS Works

The Process

1. Employer registers with NHIS-approved HMO
2. Employees enroll themselves and dependents
3. Contributions paid monthly
4. Employees access healthcare at approved facilities
5. HMO processes claims and payments

Healthcare Access

Enrollees receive:

• Primary healthcare services
• Specialist consultations (with referral)
• Hospitalization
• Maternity care
• Dental and optical (varies by plan)

Dependents Coverage

Standard plans typically cover:

• Spouse
• Up to 4 children (under 18 or 21 if student)
• Additional dependents at extra cost

Employer Responsibilities

1. Registration

Register with an NHIS-accredited HMO:

• Choose HMO based on network, service, cost
• Provide company and employee details
• Receive employer registration number

2. Employee Enrollment

For each employee:

• Collect enrollment forms
• Register dependents
• Obtain enrollee ID cards
• Distribute to employees

3. Monthly Contributions

Activity	Timing
Calculate contributions	With payroll
Deduct employee portion	From salary
Add employer portion	Company expense
Remit to HMO	Monthly, as per agreement

4. Record Keeping

Maintain:

• Enrollment records
• Contribution payments
• HMO correspondence
• Claims information (summary)

Calculating NHIS Contributions

Example Calculation

Employee Profile:

• Basic salary: ₦300,000/month

Contributor	Rate	Amount
Employer	10%	₦30,000
Employee	5%	₦15,000
Total	15%	₦45,000

Multiple Employees

Employee	Basic Salary	Employer (10%)	Employee (5%)	Total
A	₦400,000	₦40,000	₦20,000	₦60,000
B	₦250,000	₦25,000	₦12,500	₦37,500
C	₦150,000	₦15,000	₦7,500	₦22,500
Total	₦800,000	₦80,000	₦40,000	₦120,000

Tax Treatment

Employee Contributions

NHIS contributions may be:

• Tax-deductible (reduces taxable income)
• Deducted before PAYE calculation
• Subject to limits

Employer Contributions

Employer's portion:

• Generally tax-deductible expense
• Reduces Company Income Tax
• Benefit to employees

Benefits of NHIS Participation

For Employers

Benefit	Description
Employee welfare	Healthier, more productive workforce
Attraction/retention	Competitive benefits package
Tax deduction	Contributions reduce tax liability
Reduced absenteeism	Employees access healthcare early

For Employees

Benefit	Description
Healthcare access	Affordable medical services
Family coverage	Dependents included
Financial protection	Reduced out-of-pocket costs
Preventive care	Regular checkups covered

Alternative: Private Health Insurance

Beyond NHIS

Some employers provide:

• Additional private health insurance
• Higher coverage limits
• Broader provider networks
• Executive health plans

Complementary Coverage

NHIS + Private insurance:

• NHIS as base coverage
• Private insurance for additional benefits
• Comprehensive employee healthcare

Compliance Considerations

Current Status

The health insurance landscape is evolving:

• NHIA Act 2022 expanding mandatory coverage
• Implementation timeline ongoing
• State-level variations

Recommended Actions

1. Check current requirements for your sector and location
2. Register proactively if not already participating
3. Choose quality HMO with good network
4. Communicate benefits to employees
5. Maintain compliance with contributions

How Finora Handles NHIS

Contribution Calculation

Finora calculates NHIS automatically:

• Configure basic salary
• Apply employer and employee rates
• Calculate per payroll run

Payroll Integration

NHIS flows through payroll:

• Employee portion deducted
• Both portions tracked
• Shown on payslip
• Ready for remittance

Remittance Tracking

Track HMO payments:

• Record monthly remittances
• Match to contribution periods
• Reconcile with HMO statements

Reporting

Generate reports:

• Monthly contribution summaries
• Employee-by-employee breakdown
• Annual totals

Frequently Asked Questions

Is NHIS mandatory for my company?

Currently mandatory for federal government and increasingly for private sector with 10+ employees. Check current enforcement in your location.

Can employees opt out?

Where NHIS is mandatory, employees cannot opt out. Where voluntary, it's typically employer's decision whether to participate.

What if an employee already has private insurance?

They can still be enrolled in NHIS. Some may prefer NHIS for dependents and private for themselves, or vice versa.

How do I choose an HMO?

Consider:

• Provider network in your area
• Service quality and claims processing
• Cost of contributions
• Additional services offered

What about new employees?

Enroll new employees within the first month. They may have waiting periods for certain benefits.

Common Issues

Issue 1: HMO Service Quality

Problem: Poor service from HMO Solution: Review and potentially change HMOs at renewal; provide feedback

Issue 2: Claims Denials

Problem: Employees' claims being denied Solution: Ensure employees understand coverage; work with HMO on legitimate claims

Issue 3: Contribution Disputes

Problem: Disagreement on contribution base Solution: Document agreement clearly; use basic salary as standard base

Conclusion

NHIS provides important healthcare coverage for Nigerian workers:

• Employer contributes 10%, employee contributes 5% (typically)
• Based on basic salary
• Covers employee and dependents
• Tax-deductible for both parties

As Nigeria expands mandatory health insurance coverage, proactive participation positions your business for compliance and provides valuable employee benefits.

Finora integrates NHIS calculations into your payroll, making contributions accurate and remittance tracking simple.

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