Premium structure change

Rather than paying for health insurance according to individual age, common rating takes a ‘pool’ of members and charges them the same premium.

This means that at renewal, the premium no longer increases according to an individual member’s age and the associated claiming for that age group. Rather, any change in premium reflects the number and value of claims of all the members in the common rated group. This is called the ‘pooled’ claims experience. 

Premium reviews also take into account rising healthcare costs (ie the amount charged by healthcare providers to provide treatment and medical services). This is why Southern Cross works hard to manage rising healthcare costs through things like contracting with Affiliated Providers.

We are phasing in a change to Southern Cross' common rating to move it from age 65 to age 75. 

This means that each year for the next 10 years the common rating age will increase by one year, so that by 2026 the common rating age will begin at 75.

Members already common rated (ie those who are 65 or over from 1 November 2016) will see no change and their premium will be unaffected. 

Those already age 65 years or over who keep their health insurance through to age 75 will not be disadvantaged by the change. What they will pay in premiums will be similar to those moved to the new common rating.

Common rating is intended to give more certainty for those at retirement age regarding future health insurance premiums.

However, when members have reached 65 years their premium has increased significantly. Members have told us this large jump wasn’t easy to manage. So, we’re making this transition smoother by gradually increasing the common rating age from 65 to 75 years from 1 November 2016 onwards.

By changing our common rating age from 65 to 75 years, premiums can remain affordable for longer – meaning there isn’t such a large increase at 65. We hope this helps more members retain their health insurance for longer.

While our population is getting older, modern medicine means we are living healthy, active lives for longer. A change to age banded premiums for those aged 65 to 75 will result in lower premiums for longer, as members will only be sharing the claiming risk with other members the same age – until age 75.

The change is effective from 1 November 2016.

We’ve taken an approach that is as fair as possible and does not disadvantage members who had already moved to common rating before this change.

These changes won’t affect you. You’ll stay on the same common rate that you are currently on, and you’ll benefit from this rate continuing to be based on the claims experience of all members who are over 65 in the future, regardless of when they go into the common rate. 

We are changing the common rating age to 75. This means that rather than moving to common rating at 65, you will now be age-rated (ie your premium will be based on your individual age at the time of each annual renewal) until you turn 75. 

When you turn 75 you will be common rated, meaning your premium will no longer increase with age, rather it is based on the claims experience of all members aged 75 and over. 

We’re making this change as members have been asking us to help make it easier to keep health insurance for longer. One of the ways we can do this is to reduce the significant increase that happens currently when members turn 65. The more members we have, especially healthier members, the better for everyone. 

Introducing this change slowly over 10 years is a way to make it fair for all members, including those currently being common rated at age 65 and over. 

Claims experience means the overall value of claims for people within your age band. 

The more people in your age band that have no or low claims, the better the claims experience. This is why continuing to grow membership of Southern Cross across all ages is better for all our members. 

If you’ve never claimed, you will likely qualify for our low claims reward, which provides a reduction in your premium (unless you’re part of a subsidised group).

Different premium arrangements may apply if you have your health insurance through a group or work scheme. Please contact us if you need to know more and we can take a look at your arrangement.

Please contact us and we’ll be happy to help.