Did you know there are alternative ACC options for owner-operator businesses that could give you greater insurance cover and certainty for no extra cost?
At Lifetime, we're advocates for small business and ensuring our clients are well informed on what options are available to them.
Could your business survive without you?
If you were unable to work due to illness, injury or death, how would your business cope? ACC CoverPlus Extra when combined with tailored private business cover can provide financial security and certainty.
- Does your income fluctuate year to year? This could impact your entitlement through ACC, as they calculate based on the latest financial year’s performance. If last year was less than your current revenue, then you will get less than you may need.
- Is your business new, or using new remuneration methods? If you don’t have the history to show earnings, then the calculations for your entitlement may also be less than you currently earn.
- Do you income spilt with a partner or spouse? An income split directly affects your entitlement from ACC as they only consider the income in your name. If you split 50%, then your entitlement will be 50%. This also goes for any death entitlements your family may be entitled to, which could be significant. Furthermore, if a claim is made to ACC but no losses are shown as incurred by the business, you could be liable to pay back any entitlement received.
- Do your actual earnings differ from your taxable income? ACC payments are calculated based on your taxable income, if you have a number of costs that are expensed prior to determining your income, then your entitlement would be less than your actual earnings.
If any of the above applies to you, then you need to consider changing your ACC cover to CoverPlus Extra. Nominating a designated amount will mean that you receive your money faster and with less hassle. Guaranteeing your cover will give you an agreed value you can rely on should you need to claim an ACC benefit.
You may also be able to reduce your ACC levy and invest the difference in a more comprehensive insurance plan which can provide cover for a much wider spectrum of risks to ensure you and your business are well protected in any event.
ACC CoverPlus Extra
What You Need To Know
There are two types of cover with ACC for the self-employed; CoverPlus and CoverPlus Extra.
- CoverPlus: The default ACC scheme for self-employed, CoverPlus, can pay you up to 80% of your income before tax if you are injured from a specific accident and unable to work. However, there are no guarantees and there are many situations that can render you unable to work which ACC do not cover.
- CoverPlus Extra: Alternatively you can apply for CoverPlus Extra which will let you nominate a certain amount of cover and pay you that sum until you are back at work full-time.Both forms of ACC work like an insurance policy. You pay your levy and are able to claim if you are injured due to an accident. As your income fluctuates more than an employee’s, it can be hard to prove exactly what you earn at claim time. CoverPlus Extra is an option available to those who are self-employed or non PAYE shareholders. It’s also important to review your industry codes to ensure roles like administration and office duties are not at a higher rate than necessary. If you are self-employed or a shareholder employee you may find that you are paying ACC levies for cover that you may not receive any weekly compensation on.
Some key benefits of ACC CoverPlus Extra
- It can provide certainty of payment and value of payments.
- It removes the need for proof of income at claim time.
- There is no need to provide proof of the financial loss incurred.
- The weekly compensation is 100% of the agreed amount (less tax) as you recover - and you receive 100% of agreed value even if your business continues to generate income.
- Ability to enhance your financial security with cover for additional risks to you and your business through private insurance for potentially the same cost.
While ACC is an impressive benefit of living and working in New Zealand, it is not foolproof. We can help you assess your risks and determine what kind of cover you need to protect you against loss of income. Relying on ACC alone as a form of income protection can be risky. If you are diagnosed with an illness, you will not be eligible for any money from ACC and could have to rely on Work and Income until you are able to work again.
Talk to us about your ACC cover and we can see if changing to CoverPlus Extra would benefit you. Our main concern is the well-being of you, your business and your family. Our objective advice may be able to help you save money or protect you from the risks of lost income.