ACC CLAIMS AND ACC LEVIES, GET THEM UNDER CONTROL.

It may even be a money saver, tradies you’ll want to read further.

ACC is the Accident Compensation Corporation. You pay your levies to ACC and if you have an accident ACC pay a claim. It does what it says on the label, pays a claim for an accident. Whether it’s a trip to the GP for a sprain, an operation after an injury or extended death benefits for dependents, ACC comes to the party. Simple really. Well, not if you’re self-employed. For the self employed ACC levies can be expensive and ACC claims can be tricky. It can mean financial hardship if an ACC claim is far lower than earnings. It can hurt the bottom line if ACC levies are more expensive than they need to be.

That is why ACC claims and ACC levies can be a tough conversation with the self employed.

WHAT’S THE PROBLEM?

Whether you’re in Kaitaia, Kaka Point or here in Kapiti a discussion on ACC is guaranteed to cause debate amongst the self-employed. ACC, while great for the employed, can be expensive and confusing for those that work for themselves. Complaints include high levies, lack of flexibility and lower claims than expected. Most people don’t know that they have the power to get on top of ACC claims and levies, but they do.

HOW DO I CONTROL MY ACC CLAIMS AND LEVIES?

It’s always easier to explain with an example.

John is a builder, he’s been self-employed for 10 years and not taking a PAYE salary. He pays his standard ACC levy every year. John believes he is covered if he has an accident. I’m writing this in March so let’s assume John has an accident tomorrow and is due weekly compensation. John expects to earn $130,000 this year. He pays his shareholder wife 50% to do the books and admin and that works well for tax reasons.

After the accident John is expecting to get 80% of his $130,000 salary, however his letter says that his compensation will be $846 a week. This is not the $2000 a week he was expecting. A quick call to ACC confirms the compensation is correct. They explain why. John is not happy.

As ACC is calculated on the last available tax return, last years, it is lower than the projected earnings for this year. Last year John took $110,000 from the business and paid half to his wife, so ACC was calculated on just $55,000. John’s family earnings have now gone from $140,000 to $44,000. John is very unhappy.

COULD HE HAVE DONE SOMETHING ELSE?

Yes. He could have joined ACC Cover Plus Extra instead. Cover Plus Extra is designed for the self-employed. It allows the self-employed to set their ACC payment at a level that suits them.

John could have set it to the maximum $111,507 or he could have set it to the minimum $34,679.

Before John sets his Cover Plus Extra to the minimum he should seek advice from a qualified insurance adviser first. There could be serious consequences if he does a DIY job.

There are other benefits. As Johns wife is taking a split of his earning she is paying builders levies even though she is only doing admin. A change to Cover Plus Extra would offer considerable savings. No-one likes paying higher levies than they have too.

The money that John saved could have bought him a private Income Protection policy. This could even be tax deductible. As ACC only pays for accidental injury the private cover would be there if he got too sick to work.

If John had talked to an adviser he could have been in a much better financial situation after his accident, this would mean less stress and more energy to spend getting back on the tools. Having control of his ACC Claims and ACC levies could have been life changing.

TIME FOR A RECAP

ACC COVER PLUS EXTRA:

1 – Allows you to tailor your cover, setting it to an amount that works for you.

2 – All shareholders that draw a salary can set their levy to their job description. Not the businesses.

3 – The savings can go towards private income protection which covers accidents AND illness.

JUST REMEMBER:

1 – A reduction in ACC means a reduction in death benefits and you may need to consider extra life cover.

2 – It’s not permanent and if you miss a payment it will revert back to standard ACC after 14 days.

DO I NEED AN INSURANCE ADVISER?

You are an expert in your industry with years of training and experience and insurance advisers are the same. At Cover Yours our advisers know how ACC works. We know how it interacts with private insurance policies, so it’s a good idea to get in touch with us before you botch a DIY job. If you think you would like to know more get in touch. You can get control of your ACC claims and ACC levies.

_{Cover Yours Ltd (FSP769531) and Marc Hamilton (FSP306046) are registered Financial Service Providers and you can search the register here. Marc Hamilton is a member of the FSCL Disputes Resolution Service. Cover Yours Ltd and Marc Hamilton’s disclosures can be found here or by emailing marc@coveryours.co.nz}