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Everyone must pay ACC levies, so you may as well pay for something you need and know with certainty that it will be paid. Unfortunately, at claim time, it can come as a surprise that the amount you receive is different to what you thought you would be entitled to.
The default cover for everyone is ACC Cover Plus. However for self employed persons who are on non payee earnings there is an additional option to move to a product called ACC cover plus extra. The word “Extra” denoting something more is available.
I will try and explain the main difference and the extra bit available under ACC cover plus extra.
ACC Cover Plus:
1. You may be paying ACC levies for no benefit – benefit will not be paid if business continues to generate income. If your business continues to generate royalties, renewal commissions etc. the chances are even when injured these incomes will be offset by ACC and you will not get any payout although you pay levy currently on your taxable income
2. Benefit will be calculated based on previous years earning whileas on date of the accident your current income levels could be much higher- there will be a mismatch on what you expect and what you will be paid
3. You can be caught out with a low payout – in an income splitting scenario. For example: A husband and wife income splitting where wife does minimal work for the business is a common tax practice and of course then the risk is on whoever is the main earner that they are not getting the best outcome from ACC
4. People cannot pick and choose the levels of weekly compensation, the levy is based on income return filed by your tax accountant.
5. You will be paying levies based on the levy rate applicable to the industry you are on. Like a manager in trucking business will pay the higher trucking rate although you might not be driving the truck but be just a manager of the business.
ACC Cover Plus Extra:
1. Benefit will continue to be paid even if your business generates a income on account of royalties, renewal commission etc. As long as you are medically unfit to get back to your own occupation the ACC CPX benefit will continued to be paid.
2. Agreed value gives you certainty at claim time instead of basing your payment on previous year’s earnings. You will exactly get the $ amount you are paying levies for.
3. In case of income splitting for tax purpose it is still possible to get a higher agreed sum assured from ACC after discussing your situation with the ACC underwriting team to align with your true earnings not just taxable earnings.
4. You can agree to a weekly payments equalling between $440 and $1818 per week less tax.
5. If you are the manager of a trucking business you can save a lot levy by moving to lower levy rate based on activity you do in the business and avoid being charged the higher rate applicable for trucking business on your income
You can see that there may be some benefits by moving your ACC cover to Cover Plus Extra. However, some words of caution:
- You may not be eligible for cover plus extra. For example, if you are on PAYE or earn less than $28,080 p.a it is unlikely that you would qualify or
- Even if you do qualify it may not be appropriate for you. You should seek professional advice before making ANY changes.
You can check your eligibility and the potential cost/benefits available by using our request an ACC restructure request form: click here