Annual HMO or NHIS cost and the income-tax relief it earns.
Annual premium
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Income-tax relief
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Net cost after relief
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What this calculator is actually doing
Most premium calculators stop at the sticker price. This one goes a step further and shows you the part almost nobody quotes: the slice of the cost the taxman effectively pays back. In Nigeria, premiums paid into the National Health Insurance Scheme or an approved health plan are treated as an allowable deduction from your income before tax is worked out. So your real outlay is not the premium you hand over. It is the premium minus the tax you no longer owe because your taxable income just dropped.
The tool takes a monthly premium, scales it by a family loading (1x for an individual, 2x for a couple, 3.5x for a family of four, 5x for a large household), and multiplies by twelve to get the annual cost. It then runs your gross income through the personal-income-tax scale twice: once with no deductions, and once after subtracting the annual premium as a health-insurance relief. The gap between those two tax figures is your relief. This is why the cash you save depends entirely on which tax band the premium falls inside.
Who should bother running it
If you are a salaried earner already paying for an HMO out of pocket, or weighing whether to move from a basic individual plan to family cover, this is for you. The relief only has teeth once your income clears the tax-free floor. Under the structure this calculator models, the first NGN 800,000 of taxable income carries 0 percent, so a very low earner gets little or no cash benefit from the deduction. The higher your top band, the more each naira of premium is worth back to you.
A couple on NGN 9 million, step by step
Take the tool's own defaults and the rates this calculator applies. A NGN 25,000 monthly premium at couple cover (2x) is NGN 600,000 a year. On a gross income of NGN 9 million, that NGN 600,000 deduction sits squarely inside the 18 percent band, so it shaves NGN 108,000 off the tax bill. The premium still costs NGN 600,000 in cash, but the net cost after relief is NGN 492,000.
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Put visually, the deduction turns the gross premium into a lower net cost, with the gap being the tax saved.
The trap of reading the relief as a discount
A common mistake is to assume the relief scales with the premium at a fixed percentage. It does not. The calculator isolates the marginal effect of the premium with every other deduction set to zero, so the saving reflects only the band the premium straddles. If your income is lower and the premium falls partly in the 15 percent band, the same NGN 600,000 returns less. And if your annual employment income is at or below the national minimum wage, currently NGN 840,000 in the figures the tool uses, you owe no tax to begin with, so the deduction buys you nothing in cash. Health cover is still worth holding for its own sake. Just do not buy it expecting the tax break to be the main prize.
One practical tip: when you compare HMO quotes, run each through the tool at your real income. A plan that looks NGN 5,000 a month dearer can land closer once the deduction is counted, especially if the extra premium pushes deeper into a higher band. The headline price and the after-tax price are different numbers, and only one of them leaves your pocket for good.
Where the rules sit, and what to confirm
Nigeria reshaped its tax code with reforms that began phasing in around 2026, so several reliefs, bands, and exemptions are in transition. The deduction for health-insurance premiums is part of the stable architecture of itemised reliefs that reduce chargeable income, but the precise band rates and the tax-free threshold this calculator applies have not been independently verified and could move. Personal income tax and PAYE in Nigeria are administered by your state internal revenue service, for example the Lagos State Internal Revenue Service, working within the federal framework. Confirm the current relief treatment and the band figures with that state revenue service and with the Federal Inland Revenue Service before you rely on a number for filing.
Does my employer's group HMO cover count for the relief?
Generally the relief attaches to premiums you actually pay. If your employer funds the HMO entirely, you have not borne the cost, so there is nothing for you to deduct. Where you contribute toward a group plan, only your share is your premium. Keep the payment record, because the state revenue service can ask you to evidence what you personally paid.
Can I stack the premium relief with pension and rent relief?
Yes. The health-insurance deduction sits alongside pension, the National Housing Fund, and rent relief, and they add together to cut your chargeable income. This tool shows the premium on its own so you can see its standalone effect. To model the combined picture, use the tax-relief calculator linked above.