INTRODUCTION TO ACC
ACC is a unique system that provides a comprehensive injury compensation system to individuals who suffer accidental injuries. ACC for business is a key element in the healthcare system.
ACC generally covers medical costs, rehabilitation costs, and may provide financial assistance of 80% of your usual income while you’re recovering. Because of this businesses are legally required to provide ACC business cover for employees and proprietors.
In both cases your health professional will make a claim on your behalf.
Salary and wage earners have ACC deducted from their pay by their employer, and will rarely have to think about it. People in business will have much more involvement with ACC.
ACC OPTIONS FOR SELF-EMPLOYED PEOPLE
If you are self-employed you have two options:
- Cover Plus – standard
- Cover Plus Extra – an option with more control
Self-employed people will automatically be placed on Cover Plus after their first IR3 tax return is filed. On having a workplace accident they will be eligible for financial assistance worth up to 80% of the taxable income in their most recent filed tax return. Full time workers pay for and are covered for a minimum level as set by ACC each year, even if their income was lower. They may elect to state they only work part time to pay for and be covered for a lower amount.
Cover Plus Extra (CPX) is an optional cover product that allows you to choose how much of your income you want to be covered if you have an accident and can’t work. This replaces Cover Plus; the two can’t be combined. After a workplace accident ACC pays compensation based on your agreed cover amount.
CPX is a good option if you have fluctuating income, are newly self-employed, or would like more cover than your income level. The amount of cover you can apply for ranges between $34,679 and $111,507 (as at November 2023), and is benchmarked against similar businesses. The amount of CPX cover will be mutually agreed-upon between yourself and ACC.
STARTING A BUSINESS
When you first start a business you are not covered by ACC as you won’t have filed a tax return for that business activity yet.
If you have an accident within the first year of business, ACC may take your self-employed income and spread this over 12 months to work out your 80% entitlement.
If you are starting a business we suggest applying for ACC Cover Plus Extra so you have certainty about the payments you will receive in case of an accident. We can help with this application process.
Be aware that any late payment of a CPX policy will cause it to be cancelled immediately.