May 23, 2019 Strong CA

What does ACC actually do?

Whether you are self-employed, a shareholder employee or an employer, you are required to pay ACC levies.
The choice you do have, is whether to opt for the standard cover (CoverPlus) or CoverPlus Extra.

What's the difference?

ACC CoverPlus

Under the standard ACC scheme (ACC CoverPlus or ACC Workplace Cover) there are several complicating factors for shareholder employees and self-employed people when they have an accident.


One of the biggest problems is that there is no guarantee as to what cover you will receive while you are unable to work. ACC will want to know that your accident has caused a financial loss to your business. If you are unable to prove this (for example, maybe the price you are receiving for your goods or services has increased over the last year and your income was going to be up anyway), ACC may require you to pay back any compensation they have advanced to you.


There is also an abatement provision. This means that as soon as you start to return to work – even if only for a few hours a day, the compensation you receive will start to reduce based on the number of hours you work in the business.

ACC CoverPlus Extra

Under ACC CoverPlus Extra, you and ACC enter a contract where you both agree the amount of compensation that you will receive should you have an accident. This amount is then paid on a weekly basis until you can return to work fulltime.


There are some features that make it more flexible for clients:

  • you can nominate a future start date (as opposed to the date ACC receives the application), allowing you to organise lost earnings cover in anticipation of circumstances
  • when an employer company pays a shareholder-employee’s CoverPlus Extra levy (or reimburses them for payment), the amount paid/reimbursed (excluding earners’ levy) is now tax deductible as an expense to the employer company
  • shareholder employees can be classified under their individual occupation rather than the business activity of their employer company. This tailors the cover more appropriately to shareholder employees. However, it is important to note that at least one of the shareholders in the business must be on the business classification


In many instances you can save significant premiums by applying for CoverPlus Extra:
For example, a dairy farmer has an income of $110,000. Under CoverPlus, he must pay ACC levies based on this level of income. He knows however, that if he has an accident, he could hire a farm manager and pay him $60,000 per annum and still maintain his income from the farm. Under CoverPlus Extra, we would apply for cover of $60,000. This would result in a saving in levies, and the farmer would have the certainty that if he were to have an accident, his compensation would be guaranteed.


There is no change to the way in which ACC pays for your other accident related costs – it only affects the income compensation.

What do we think?

When considering ACC, we believe it is worthwhile to have a chat with us and/or your insurance advisor. For instance, you might also consider buffering your CoverPlus Extra with additional income protection or life insurance.
Our experience has shown us that, for people who have been injured in an accident, the whole claim process to obtain income compensation is smoother and simpler if they are covered by ACC CoverPlus Extra.
Though of course each case needs to be assessed on an individual basis, ACC CoverPlus Extra can provide savings and peace of mind. We think this scheme has a lot of merits.


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