In Nigeria, revenue for financing the health sector is collected from pooled and un‐pooled sources. The un‐pooled sources contribute over 70% of total health expenditure, and this can be Out-of-Pockets (OOPs) in the form of fees to healthcare providers at the time of service. The aim of the study was to estimate the out-of-pocket health expenditure of the households in Niger State. A cross-sectional quantitative study was carried out among 1,235 households made up of 6,482 individuals using a multi-stage stratified probability sampling technique. Data was collected using a well-structured survey instrument and analyzed using descriptive statistics and SPSS statistical software version 23. Findings shows that the annual per capita out-of-pocket expenditure on health services was approximately ₦19,463 ($46.9), and 64% of the total OOP expenditure is spent on public facilities. 32% of the OOP was incurred mainly from accessing maternal health services, with 56% likely to incur catastrophic expenditure. 75% of the sampled population expressed willingness to enroll into a form of health insurance, and an average household is willing to pay a monthly premium of ₦798 ($1.9) for health insurance. The study shows the urgency with which policy makers need to increase public healthcare funding and provide social health protection plans against informal OOP health payments. Furthermore, for Niger State to achieve the recommended benchmark of 30% OOP as a percentage of total health expenditure, it is critical that the newly signed into law contributory health insurance scheme is well designed, successfully implemented, and financially sustainable.