HMO terms explained: 12 words to understand before you sign

HMO brochures are full of terms that sound simple but hide important details. Knowing these twelve will help you compare plans properly and avoid surprises after you sign.

Words about money

1. Premium

The amount you pay the HMO for each person covered, usually quoted per year. This is the main cost you budget for.

2. Annual limit

The most the HMO will pay for one person in a year. Once it is used up, the employee or the company pays. Check whether the limit is for all care together or split by type (for example, a separate limit for surgery).

3. Sub-limit

A smaller cap inside the annual limit for a specific benefit, like ₦X for glasses or ₦Y for delivery. Sub-limits are where plans often differ most.

4. Co-payment

A share of the bill the employee pays themselves, such as a percentage of drug costs. Many group plans have none, but check.

Words about how care works

5. Primary hospital (primary care provider)

The hospital or clinic each employee chooses as their first stop. Most care starts here.

6. Capitation

A fixed monthly amount the HMO pays the primary hospital for each person registered there, whether they visit or not. It covers routine care.

7. Referral / authorisation code

Approval from the HMO before specialist or expensive care. The hospital asks for it. How quickly an HMO gives these codes makes a big difference to your staff, so ask about it.

8. Provider network (hospital list)

All the hospitals your staff can use on a plan. Higher tiers usually include more, and better, hospitals.

Words about what is not covered

9. Exclusions

Treatments the plan will not pay for at all. Common ones include cosmetic surgery, fertility treatment, and some very costly procedures. Read this list carefully.

10. Waiting period

Time a new member must be on the plan before some benefits start. Maternity and major surgery often have one. Ask whether it is waived for group plans.

11. Pre-existing condition

An illness someone had before joining the plan, such as hypertension. Some plans cover these fully, some partly, and some not at all.

12. Dependant

A family member covered under an employee's plan, usually a spouse and a set number of children under a certain age. Plans differ on how many and up to what age.