Undoubtedly the most important asset to any business venture is its human capital. Critical to the success of an enterprise is the existence of a team who buy into the vision, possess the capacity to deliver on the set objectives, and are well-motivated to do this. Consequently, successful entrepreneurs place a premium on the well-being of their teams.

Meeting the healthcare needs of employees, without breaking the banks is an often-underrated need of business owners in Nigeria. The dearth of good healthcare infrastructure and social security privileges are already enough of a challenge, not just for employers who care, but for the population at large. Navigating these challenges to provide decent or at least near decent healthcare benefits, at manageable costs, especially by small business owners therefore requires some tact.

In this piece, we will identify what are perhaps the few options available, as well as the merits and demerits of each.

1. Health Insurance: there are currently no less than sixty (60) Health Maintenance Organisations (HMOs) licensed by the National Health Insurance Scheme (NHIS) to manage the provision of healthcare services through healthcare facilities accredited by the scheme[1]. In recent years, employers have found this to be a preferred option for providing healthcare for staff. Typical of how insurance schemes work, enrollees are able to access healthcare benefits in excess of the premiums they pay, and through a network of hospitals signed up with the HMO. Most HMOs offer a variety of plans to suit the needs of different classes of subscribers. The most basic plans would typically cover out-patient services, optical and dental care at the minimum. 

The health insurance option allows employers to better plan their annual spend on staff healthcare, premiums due are known in advance and pre-paid. This eliminates or at least reduces the need for emergency spending on medicals within the year. Having a pre-paid health insurance scheme in place also provides an incentive for employees to undergo regular check-up without having to pay out of pocket. Some HMOs include access to gym facilities and periodic health talks as value-added services. Coverage can also be extended to the employees’ dependents within available plans. Most HMOs cover the principal, spouse and up to four (4) children below 18 or 21 years under their family plans. 

On the flip side, employers may find this a rather expensive way to provide healthcare benefits, where employees have no need for claims within the coverage period. Premiums paid are rarely refundable but can be leveraged on to negotiate lower rates while renewing for the next cycle. Moreover, with insurance being a game of numbers, MSMEs may be disadvantaged in getting discounts on premiums as they would most likely not have the required headcounts to negotiate significant discounts. As a matter of fact, HMOs specify the minimum number of enrollees they can take up from any organisation. Small businesses that cannot meet up to such numbers would therefore not be able to access coverage.

2. Retainerships with Specific Hospitals: before health insurance schemes began to gain traction in Nigeria, most employers provided healthcare to their employees through retainership arrangements with specific hospitals. This practice is still fairly popular, especially with employers who have not signed up to the health insurance schemes. Retainership fees, scope of coverage and other terms are negotiated directly with each retained hospital or healthcare provider. The cost of maintaining this plan might be cheaper for employers, especially small businesses than what annual premiums on individual and family plans would cost.

However, compared to the health insurance schemes, a limitation of this option is that employees’ options are limited to the specific providers their employers are able to retain. It could also end up being a more expensive option where the employer seeks to increase the number of retained providers. Similar to the insurance premiums, retainership fees might also end up as locked up funds, where employees do not have medical needs within the coverage period. This demerit may however not exist where the retainership is operated on a pay-as-you-go basis, whereby payments are made to the healthcare service provider only when services are rendered. Rates would have been pre-agreed in the retainership contract.

3. Reimbursable Expenses: this might come across as the most cost-effective option for managing healthcare benefits, and one that most small business owners might find most attractive. Unlike the Health Insurance and Retainership arrangements, under this arrangement, employers do not make any pre-payments to an HMO or a healthcare provider. Staff are required to settle hospital bills out-of-pocket and get reimbursed on presentation of receipts from the hospital. Limits are pre-defined either in the employment contracts or company policies.

An unintended consequence of this practice is that it might provide an incentive for staff to make fictitious claims using fabricated receipts. To guard against such, employers would typically insist on evidence of payment from “recognised providers” only. Such conditions may only limit the extent of falsified claims but would not entirely eliminate them. Healthcare is best provided as a “benefit-in-kind” and treating it as such provides a win-win situation for the employer and employee.

While the options discussed above do not represent an exhaustive list, they are workable options within the reach of MSMEs operating in the Nigerian environment. Choices are dependent on a variety of considerations, which include employer capability, workforce size, and scope of services available from healthcare providers, amongst others.

[1] https://www.nhis.gov.ng/hmo-accreditation-guidelines/ Accessed July 30, 2018