ACC (Accident Compensation Corporation) is New Zealand's unique no fault accident rehabilitation and support system
Ok, most of you know about ACC covering you for your medical expenses to treat you and recover from an accident.
If you have had an accident you probably found this to be partially funded and you had to pay something towards the costs, depending on what you needed to be done. Which is a little disappointing but medical expenses only go so far.
The other aspect people know about is the replacement of income if you are off work in an accident situation, where 80% of your lost income can be replaced after seven days while you recover.
The things people may not fully appreciate are the other benefits and situations ACC cover which you need to be aware of.
- ACC have four key areas they provide benefits for; motor vehicle injury, work related personal injury, treatment injury, and earners injury.
- ACC is mandated under legislation
- ACC provide accidental death benefits called fatal entitlements
- ACC contribute to funeral costs in accidental death situations
- ACC have options to replace income if you are not working for a period of time, sabbatical or leave without pay situations
- ACC have safety discount programs for business and self-employed
- ACC replace income if you are disabled in an accident
- ACC have fixed agreed value cover options for self-employed
- ACC also help and manage rehabilitation and attendant care if it is required
- ACC in certain situations provides lump sum entitlements where there are permanent injuries.
This is used by ACC to manage what levies they charge various sectors of the economy for the accidental cover provided by ACC
It is often been quoted that the law can be an arse, no exception with ACC. Because ACC is mandated under legislation, everything they do is dictated by this legislation. This means ACC can be frustrating in the way they do things, ACC often is not intuitive to how someone would approach a situation. Patience is required; they do get there eventually.
Morbid as the definition suggests, this is about accidental death. If you died in an accident, ACC would provide your family financial benefits for your lost future income.
What do they provide?
In a normal ACC situation, they provide up to 80% of your income at death, for your family after you have died in an accident.
This is broken up as:
- 60% of the 80% for your spouse or partner for five years or until your youngest child reaches age 18, which ever is longer.
- 20% of the 80% per child (maximum of 2) paid to the caregiver or children, depending on age, until age 18 or if in tertiary study until age 21.
If you are self-employed and have cover plus extra, the fatal entitlement is based on the actual cover you have. In most cover plus extra situations, this is a reduction in ACC cover, and you would have directly applied for this if you have it.
If you have ACC cover plus extra, your adviser may not have explained this point and if you have opted to reduce your ACC coverage you have created additional financial risk you may be unaware of.
If you are a Willowgrove client, we covered this, and it will be on the ACC plan page in your report.
When it comes to addressing this risk with cover plus extra restructures, our experience has been 50/50 whether the increased accidental risk is added to or the existing life insurance planning covers the need.
Our view is it is about informed decision making by you with your insurance planning.
If you die in an accident, you can apply to ACC to contribute to the funeral expenses, the entitlements here are up to $10,000 depending on the circumstances. This link will give you a starting point,
You maybe planning to go walk about, take some time out with unpaid leave or quit work to take an extended holiday or break.
What most people do not realise with ACC; if you are not working in paid employment at the time of your accident, ACC has no obligation to pay you loss of income support, weekly compensation, in a disability situation.
The no obligation to pay applies if you were not earning at the time of the accident or later when you are working and need further treatment.
The timeframe on this might surprise you too, 28 days after stopping work if you do not have a job to return to within 90 days, ACC can consider you a non-earner for weekly compensation.
This is usually a surprise to people with injuries, where you need to take time off work for surgery quite some time after the original injury.
This also applies when the original injury was when you were a student or unemployed at the time, which have been most of the situations I have come across.
In these situations, ACC is paying for the treatment but will not pay for the lost income during recovery.
How do you fix this?
Income protection is the best answer but has limits to the leave without pay benefit of 12 months.
If you have income protection but you are looking at taking more than 12 months off work, then you need to look at ACC's TimeOut cover as well for the time past 12 months when your income protection has limits.
ACC TimeOut cover is limited to 24 months of coverage and five years of claim payments, so it is a little restricted but better than no support at all.
If you do not have income protection, then applying for income protection now, when you have plans to stop or leave work, is possibly too late, though we do have one provider who has a speciality product that could be of use.
It might pay to have a chat directly with us if you are in this situation.
Before you take the step into unemployment or unpaid leave, apply to have ACC's TimeOut cover; we can assist with this for you.
ACC's TimeOut cover is not a particularly well known ACC benefit, as most people do not think about the ACC implications when not working until it is too late and they have had an accident.
TimeOut cover really is worth considering, as I mentioned above, ACC will only provide weekly income support if you are employed at the time of the injury.
ACC TimeOut cover mitigates this risk for you, as it is more likely that you will injure yourself in a different environment to your usual one, being on unpaid leave.
Run your own business; you probably want to have a look at safety discounts for your business
ACC can add up to 20% in discounts to your annual levy account if you meet their criteria and have implemented a certified safety program.
If you have had a history of workplace accidents having a closer look at this aspect of your business could well return more than it currently costs you.
This is not an area we directly assist with, but we do work closely with a business risk & safety company who can help you. Drop us a line and we will put you in touch.
Replacement income, or weekly compensation in ACC speak, for employees
If you are an employee, it is simpler than for those self-employed.
You pay an ACC levy in your tax deductions that your employer takes out, so you do not see it usually.
If you are disabled in an accident ACC will start contributing to your income after 7 days, this payment is up to 80% of your gross taxable income up to a maximum of $122,063 (2016/2017) of gross earnings.
Above this level, you need to have income protection to cover accidental disability payments.
ACC does not cover medical or degenerative disabilities. So if you have a back problem and it did not start with a fall or an impact of some sort, it is unlikely ACC will cover you.
I have talked to several people who have found this out too late, it can happen to anyone. This is where having a good income protection plan comes in.
Additionally ACC is about compensation while you are not working, once you are able to go back to work they will turn the tap off.
If you cannot go back to work in your own occupation but you can work in another, ACC will send you there.
This is where the strength of a good income protection plan comes in; income protection is about you being able to do your occupation.
In this situation, Income Protection would be paying you. Have a chat to us about your income protection needs, this is an area we specialise in.
If you want to read more, this article is a good place to start.
Replacement income for self-employed
For Self-employed it can get a little tricky if your accounts are not up to date. Usually, you won’t receive anything until they are. I came across a business owner recently that still had to complete their 2012 accounts, writing this in June 2014.
There is a significant risk with this situation. Because the accounts are so far out of date, ACC could assess that this business may not be trading, this would potentially make the business owner non-earning from a weekly compensation position.
It would make it difficult to prove that they were working, even if the accounts were done. Statements after the fact do not hold up as well as statements and records before an event.
The challenge is in getting accounts up to date; there are implications for tax due and payable as well as ACC levies for the financial years to be tidied up.
We can asset with helping you through this with some additional planning and cash-flow management; this article talks more about your options as a business owner.
Rehab and Attendant Care
If you are injured, then ACC is responsible for your recovery. ACC do a lot of work in the rehabilitation area with people.
They are generally very good at getting you in front of the right people. The challenge is often people are not quite as motivated to comply with the treatment recommended.
You do need to keep in mind non-compliance with your treatment can put your weekly compensation at risk, similarly with income protection too.
This potentially leaves you with an ongoing disability but no on going financial support, a situation you do not want to get into.
If you are so injured that you cannot do things for yourself, then ACC can provide attendant care to assist with the things you can’t do, or if you need it 24-hour care.
For example someone with a neck injury and tetraplegia, they cannot do anything for themselves, ACC would arrange for 24-hour care for the rest of their natural life.
This is quite expensive if you were to have to fund it yourself. Similarly for someone with a head injury, cognitive impairment has a massive impact on quality of life and potentially would have similar needs.
I am sure there are many more examples out there too.
Lump Sum Entitlements
This area is a bit like a trauma cover on the life insurance side of things.
With Trauma cover, the usual claims are Cancer, Heart, Stroke, and Kidneys with accidents being in the 5% of the other 40 conditions contributing to claims.
ACC have entitlements for lump sum payments if you have an injury, and you do not fully recover.
These lump sum entitlements are subject to what is called whole body impairment measurements.
This is something assessed by a medical specialist for the individuals situation. An example would be in the situation where someone lost and arm, it is not going to grow back; ACC would assess this for a lump sum entitlement.
This link to the ACC site has more information.
While this has been a long article, hopefully, it has given you a better understanding of what ACC covers you for and what it does not.
If you want to discuss your situation and how you can add appropriate levels of insurance for what you are not covered for, get in touch we would be happy to assist. Or contact J-P on 021 022 69 127.
The information is only intended to be of a general nature and should not be relied upon in any part without obtaining full details of the products and services by contacting Willowgrove Consulting Limited. All product and service details, terms, conditions and other information are subject to change at any time without notice. Terms, conditions and fees apply to the various products and services and are available on request. A disclosure document will be provided to you on request free of charge.