What is ACC Cover Plus? And ACC Cover Plus Extra?
In our previous article, we covered what ACC is and what it does and doesn’t cover. However, once you move into the self-employed space things can get a little trickier and that is where ACC Cover Plus and ACC Cover Plus Extra come into play.
ACC Cover Plus
ACC Cover Plus is basically the self-employed version of ACC cover. The rate of cover provided, what is covered and the services available are all the same as ACC. What changes is how you pay your levy and how your cover for lost earnings is decided.
When you are an employee your ACC levy is automatically deducted from your income, however when you are self-employed you are invoiced each year by ACC according to your previous year’s income and your industry. This means your ACC invoice can vary from year to year depending on your income or if you change industries.
When you are an employee and you lose your income due to an injury there is a very clear line as to what that lost income would be - your wages or salary. Self-employed incomes can fluctuate dramatically from month to month or year to year and this can cause some challenges and uncertainty when trying to get covered by ACC.
As we said in the previous blog, New Zealanders are lucky to have access to ACC, and with ACC Cover Plus even as a self-employed person, you are covered. However, there are two main areas that ACC Cover Plus can be challenging. The first is with the levy based on the previous financial year’s income there is uncertainty each year as to what it will be. Secondly, the uncertainty around cover with a fluctuating income can leave self-employed people more vulnerable.
This is where ACC Cover Plus Extra comes in.
ACC Cover Plus Extra
With ACC Cover Plus Extra you agree with ACC on a level of cover for lost earnings, to suit your personal circumstances. This means if you make a claim there is no need to prove your earnings, as the weekly compensation has already been agreed upon. It also means you know what your ACC levy will be each year which makes financial planning smoother.
Moving on to ACC Cover Plus Extra puts you back in control of your premiums, puts you in control of what you get paid at claim time and gives you peace of mind regarding what you will get paid.
Is there a better way of managing risk for the self-employed?
ACC is an expensive type of cover when compared with private insurance. And as we covered in the previous ACC blog there are some gaps with regards to illness and degeneration and we gave some recommendations on plugging those. The same is true for the self-employed and moving onto ACC Cover Plus Extra is the first step to make things easier.
The next step, which we often recommend to clients where suitable, is to reduce their ACC cover to the absolute minimum, which can be done with ACC Cover Plus Extra, and take on income protection and mortgage protection to top it up to adequately cover their income, should they be unable to work for any reason.
There are three main benefits to taking this approach.
As ACC only covers accidents taking this approach means you will also be covered in case of illness, and if ACC declines to cover your injury on the basis of degeneration.
More cover for less – taking this approach can save you money on premiums.
Peace of mind – you know how much cover you have and you know that you are covered regardless of the circumstances of your lost income.
We have had clients who have income protection in place, but are also paying the default ACC Cover Plus Levy – essentially doubling up and paying twice. You can only claim on one of these so you shouldn’t be paying for both of them.
It is important to remember that reducing ACC Cover Plus Extra also reduces the entitlement for accidental death cover. This is where talking to one of our advisers is important so they can advise you of all the implications and how to best cover yourself.
If you are ready to review your ACC levy and make sure you have the most comprehensive cover in place, get in touch with one of our team.