How ACC Works for Businesses: ACC CoverPlus Overview

ACC CoverPlus is the standard coverage provided to self-employed individuals and contractors. Here’s a breakdown of how this scheme works:

• Automatic Enrollment: If you’re self-employed or a contractor, ACC CoverPlus automatically applies. If an accident prevents you from working, ACC compensates up to 80% of your taxable income, as reported in your most recent financial year.
• Income-Based Compensation: ACC calculates payments based on your last completed financial year, even if it was an unusually low-income period. 
• Minimum Compensation: You’ll receive minimum weekly compensation of 80% of the 40-hour minimum wage.

While ACC CoverPlus offers basic protection, it doesn’t account for fluctuating incomes or personal preferences for compensation amounts.

ACC CoverPlus Extra: Tailored Protection for Businesses

ACC CoverPlus Extra provides greater flexibility for those seeking control over their income protection. It’s particularly useful for business owners or contractors with variable earnings.

• Customizable Cover: This option allows you to pre-agree on an income level to be covered. Compensation for injuries is paid at 100% of this agreed amount.
• Fixed Levies: Your levies are determined in advance, offering predictable costs to simplify budgeting.
• Best for Variable Incomes: This scheme benefits those with seasonal or fluctuating income patterns. New contractors or self-employed individuals can also gain peace of mind without relying on prior income data.

By tailoring your coverage with ACC CoverPlus Extra, you reduce uncertainty in case of injury.

ACC Levies Explained

ACC’s funding comes from levies paid by businesses and individuals. Here’s how ACC works for businesses in terms of levy payments:

1. Work Levy: This levy funds workplace accident coverage. Rates vary based on your Classification Unit (CU), which reflects the level of risk in your industry. For example, a bricklayer may pay $2.16 per $100 of earnings, while a lawyer pays $0.03.
2. Earners’ Levy: This flat-rate levy applies to all earners and funds coverage for non-work-related injuries.
3. Working Safer Levy: This levy supports WorkSafe NZ’s workplace safety initiatives.

If you’re on ACC CoverPlus Extra, your levies are calculated based on the income amount you’ve chosen for coverage.

Invoicing and Payments

ACC calculates levies using income data submitted to Inland Revenue via your tax return (IR3). You’ll typically receive an invoice from ACC around September each year. The invoice includes the Work Levy, Earners’ Levy, and Working Safer Levy.

For CoverPlus Extra users, the invoice reflects the agreed income level, providing clarity on what you owe.
ACC levies can be paid online, via direct debit, or through your bank. Budgeting for these payments ensures you avoid financial surprises.

ACC for Businesses with Employees

Employers take on additional ACC responsibilities when they hire staff. Here’s how ACC works for businesses with employees:

• Employee Levies: Employers deduct Earners’ Levies from wages as part of the PAYE process. This covers employees for non-work-related injuries.
• Workplace Levies: Annual ACC invoices include Work Levies and Working Safer Levies, calculated based on payroll information submitted to Inland Revenue.
• Classification Units: Employee roles are assigned a CU code that determines the Work Levy rate. Riskier roles incur higher rates.

These levies ensure employees receive income support and care if they experience workplace injuries.

Other Important ACC Considerations

While ACC provides extensive coverage for accidental injuries, it doesn’t cover illnesses or age-related conditions. To fill this gap, many business owners consult insurance brokers to explore additional protection options. Brokers help identify coverage needs, often at no cost unless you purchase a policy.

ACC Compliance: Record Keeping

To manage your ACC obligations efficiently:

• Ensure your income information is accurate when filing tax returns.
• Review invoices carefully to verify the levies charged align with your classification and income level.
• For employers, keep detailed records of payroll and employee roles to avoid overpaying levies.

Protecting You and Your Business

Understanding how ACC works for businesses is crucial for maintaining financial stability in case of accidents. ACC CoverPlus and CoverPlus Extra provide essential protections tailored to different income and risk profiles, ensuring you and your employees can focus on recovery when accidents happen.

By staying informed and proactive, you can navigate ACC requirements confidently, safeguarding your business and team against unexpected challenges.

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