Paying your ACC levies is one of those mandatory and grudge costs of being in business ... but how well do you understand what you are paying for?
Below we explain ACC CoverPlus versus ACC CoverPlus Extra, the key when reading through this is to remember, this is intended as general information not personal advice you would need to review your own situation to decide what is best for you.
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When you are self employed, or a shareholder employee in your own company, you are automatically registered with ACC on 'CoverPlus'. ACC also offers 'CoverPlus Extra' which is not widely known but potentially has the ability to save you hundreds and in some cases thousands of dollars on your ACC levies.
ACC CoverPlus is not necessarily the best solution and can be limiting at claim time - which of course is not something we are made aware of until we need it most! ACC only provides for replacement income in the event of being unable to work due to injury - it provides nothing for being unable to work due to sickness.
Standard ACC CoverPlus provides 80% of your lost income due to injury, based on the last 12 months taxable income for your business and only to a maximum of $89,335pa in cover. This taxable income may have acutally been less than the amount which dictated your ACC levy too, meaning you are paying for cover you possibly may never get! This does start one week after being off work granted you can satisfy all the pre-requisite proof of income that quickly!
BUT, may not pay at all under the following circumstances:
1. if you have staff or business income that continues to pay you while you are off work.
2. if your injury can be deemed a 'degenerative condition' and only exasperated by the injury.
3. if you return to work even for the smallest amount of time, it will cease.
4. if you split your income with your partner for tax purposes, you only get 80% of the split declared under your name.
ACC CoverPlus Extra key features include:
Agree to a value you are happy to receive from ACC at claim time - knowing that you have in place income protection and/or mortgage repayment insurance.
The option to dial back to a minimum of $21,216pa - giving you certainty that this as a weekly amount kicks in 7 days into your injury with no need to prove your income!
Will continue to pay IF...
1. you have staff or a business that continues to make income without you!
2. if you return to work for just a few hours a day.
3. as a fixed individual level of cover that has been agreed, regardless of how your income is presented for tax purposed.
THE MYTH around ACC is that by paying a levy we will receive a guaranteed Government service - when in fact your ACC levy is like an insurance premium, which requires proof of income to have the insurance actually provide for you at claim time.
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Business best practise would normally include some form of annual business planning, and this should always include risk management - which means, a review and considered approach to maintaining adequate protection in the key areas of your business.
Make sure that when the unexpected happens you, your business, lifestyle and family are covered!
EXAMPLE comparing ACC CoverPlus with ACC CoverPlus Extra
Self employed consultant earning $100,000 taxable income
ACC CoverPlus @ 80% = $1,538 Weekly Compensation & Annual Levy $2,677
ACC CoverPlus Extra dialed down to minimum $21,216pa = $408 Weekly Compensation & Annual Levy $991
Savings of $1,686 off the ACC Levy!
It may not be in your best interests to dial back but you won't know until you go through a review - find out today! Talk to a Registered Financial Adviser who not only specialises in insurance for the self employed but also knows all the in's and out's of ACC - find out if they are ACC agents, together with your Accountant it may be worth taking a closer look!
If you've found this information useful please fee free to pass it on! If you have any questions email us or phone 09 360 5622.
Disclosure Statement is available on request free of charge!
