ACC CoverPlus Extra, by Jordan Jujnovich, Finsol Northland
If you own a business or work for yourself, you have to pay ACC levies for a form of accident-only disability cover called ACC CoverPlus – it’s designed to cover some of your lost income – up to 80% – if you are injured and unable to work.
While we are fortunate to have ACC in New Zealand this standard product, CoverPlus, can create headaches if you need to make a claim. ACC will require proof of your income, typically from your accountant and can reduce the level of your claim if your business is still generating income in your absence.
There is an alternative and lesser known option, called ACC CoverPlus Extra, that can save you both money on levies and time when you need to make a claim. It is far and away the best option for shareholders and self employed when looking to manage your ACC policy.
With CoverPlus Extra, you can nominate the amount of cover you are happy to receive in the event of making an ACC claim, removing the need to go to your accountant for proof of your income before claim payments are received. Nominating this set level of compensation also means that you can easily forecast your levy bill each year.
This nominated amount is not affected by any further income you may be drawing from your business whilst receiving ACC - the amount you nominate is the amount you receive regardless.
There is also the option for shareholders to be risk-rated individually in terms of the work they perform in a business. Occupation codes are the rating system ACC use to determine your level of risk and in turn, the levies you pay. For example, one shareholder of a construction business may only complete office duties and never touch a tool. Updating their occupation code to reflect this can reduce their individual levy by up to 90%.
CoverPlus Extra can also be set up in the first year of trading. This is often a murky period in terms of income for business owners. Much of the income generated is put back into a business and we have seen instances where a business owner makes an ACC claim but lacks any financial evidence to justify their income to ACC, resulting in no claim payment, believe me it happens.
Setting up a CoverPlus Extra policy in the first year of trading negates this as you agree on the compensation you will receive regardless.
As with any adjustment to your finances and expenditure it is important to seek specialist advice first. Working with an experienced adviser can help you identify the ideal level of ACC cover required. They will also point out any identified risks while ensuring that your nominated level of cover remains relevant. Here in the Far North we are fortunate to have the team at Finsol who have built a business on providing this tailored advice to shareholders and the self employed. Their website, www.finsol.co.nz, is full of good information about ACC CoverPlus Extra and their services are fees free.