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Kiwis Pay Less For Health Insurance


Kiwis Pay Less For Health Insurance

The country’s largest health insurer has stemmed the tide of rising health insurance premiums for half a million Kiwis.

Southern Cross' health insurance premiums for around eighty percent of members are expected to either decrease or stay the same over the next year.

As well as today’s announcement that Southern Cross Healthcare is holding its premiums for the bulk of its 800,000 members they have also introduced new rewards, including an ongoing Low Claims Reward scheme, and a Founding Members Reward of up to 15% discounted for two years.

Those rewards combine to give total annual savings for Southern Cross members of $35 million.

Southern Cross Healthcare Chairman, Dr John Matthews said, “We’re pleased to be in such a good financial position where we can give benefits like this back to our members.

“These benefits mean that several hundred thousand members will pay less for their Southern Cross health insurance then they did last year.

“Southern Cross has well and truly turned around its business performance – for the betterment of members’ future healthcare. This is the real advantage of being a not-for-profit organisation, where any financial improvement can be passed back to members,” said Dr Matthews.

“For example, if a 50 year-old member has had continuous membership since the 1960’s, is a low claimer and is on a RegularCare policy - they would be entitled to a 15% Founding Members Reward and a 10% Low Claims Reward. Even taking into account the effect of aging on their premium they would obviously still be saving money.”

Around 300,000 adult members with low claims over a previous two year period are expected to receive the Low Claims Reward – an expected savings for that group of around $22 million.

Southern Cross Healthcare Group Chief Executive, Dr Ian McPherson added, “Many members receive tremendous value from their insurance through claims such as for surgical procedures, while people with low claims can sometimes perceive they are not getting value.

“The Low Claim Reward is in recognition of those low claimers, but also a way to actively encourage people to adopt healthy lifestyles.”

Thresholds vary depending on plan type and age and will typically be reviewed each year at the time of a member’s annual policy renewal.

For example, a 40-year old on a RegularCare plan can receive claim reimbursements up to $600 over two years and still earn the 10% reward. A 60-year old on UltraCare has a higher threshold of up to $1800.

A further $13 million will be saved by 130,000 long standing Southern Cross members who are being recognised with a reward as founding members of the Friendly Society.

The Founding Members Reward will give various discounts off premiums over two years for those who have had continuous membership with Southern Cross Medical Care Society since before 1982.

“We are more financially secure, delivering higher standards of service and going against the current national trends of increasing health care costs – by delivering lower premiums to many of our members”, said Dr McPherson.
Original date of joining the Southern Cross Medical Care Society Founding Members Reward Discount on current premium
1961 - 1974 15%
1975 - 1978 10%
1979 - 1982 5%
- ends -

Case study examples:

A single person: UltraCare 400 Brad is a 33 year old male who became a Southern Cross member in 2001. Though he was a high claimer for the first two years, based on current claiming patterns he is eligible for 10% Low Claims Reward. He is not eligible for Founding Members Reward as he joined after 1983. He currently pays $1,352.04 a year; this is expected to drop to $1,231.92.

76 years old: KiwiCare Budget Doris has been a member since 1965. As such she qualifies for the 15% Founding Members Reward. The claims threshold for people of Doris’s age group on KiwiCare Budget is $900 for LCR. Doris has had no claims in the last two years so she also qualifies for the 10% LCR. She can expect her annual premium to go down from $907.44 to $680.52

A Hamilton Family: KiwiCare Mary is a 48 year old mum and has been a member since 1971, husband and dad, John is 49 and has been a member since 1994 – they have a 12 year old daughter, Caitlin who has been a member since 1994. Mary doesn’t qualify for Low Claims Reward as has had some health issues in the last few years and has made a few thousand dollars worth of claims (and has therefore received value from her Health Insurance, in the form of claiming). She does however qualify for a full 15% Founding Members Reward. John qualifies for the 10% Low Claims Reward as his claims are under the threshold. Caitlin doesn’t qualify for either the Low Claims Reward as she is a child, or Founding Members Reward as she joined after 1983. They are currently paying $822.12 a year; this is expected to drop to $746.20.

NB: The above examples cover a range of circumstances from individual policies to voluntary group schemes.

About Southern Cross Healthcare Southern Cross Healthcare is comprised of two organisations that focus on the health sector in New Zealand:

One organisation, the first created, is the Southern Cross Medical Care Society with over 800,000 members. It is a not for profit Friendly Society that focuses on delivering health insurance services for both individual members and group schemes.

The other organisation is the Southern Cross Health Trust. It consists of the Southern Cross Hospitals - New Zealand’s only private hospital network, and Southern Cross Travel Insurance.

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